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Pharmaceutical Licensing Market

The Pharmaceutical Licensing Market

Large pharmaceutical companies have traditionally increased market share through acquisitions and mergers with competitors. Now, in-licensing strategies are viewed as a necessary means to supplement internal R&D efforts, achieve more cost effective development of new drugs, mitigate risks in internal development pipelines, and to quickly achieve entry into new markets.

Thus, they have become increasingly dependent on in-licensing of new products, with approximately 50% of global pharmaceutical sales revenues attributable to “externally sourced” or “in-licensed” products.

Whereas the number of alliances remains stable indicating the limited number of available products, the total deal value revenue increased from year to year in the USD bn-range. Most of the deals were made in Phase II (clinical Proof of Concept) – which is the stage that FOCUS IP and its originator clients are seeking to out-license and offer their products.

In-licensing and out-licensing deals typically consist of an upfront payment, milestone payments linked to future development steps, and royalty payments that become due when the product is launched in the market.

Figure 1 focuses on Phase II deals and demonstrates the steep increase of both the number of deals and the total and average cash paid as upfront, thus, supporting the business model of drug development up to Phase II and then exploit the value creation.
FOCUS IP holds a sustainable database of novel commercially attractive drug candidates aiming at a constant output of several license deals per year based on the success of it's industry contacts.