Drug Delivery Report

By Mark Dempsey and  Kate Hopkins
PharmVentures Ltd, Oxford,  UK

Introduction

Early in 2001,  PharmaVentures  undertook a survey to  assess pharmaceutical licensing activities, including  the  organization  of the  licensing function  and  trends  in licensing deals,  and  their financial terms.  Participants  originated  from Europe,  the  US and  Japan.  Respondents were  professionals  from the pharmaceutical industry who  had  replied to  an initial licensing questionnaire.

All respondents were  involved in licensing agreements, with 87%  involved in out-licensing,  78%  in collaborative  research and  development, 63%  in in-licensing pre-clinical, 54% involved in mergers  and  acquisitions,  39%  in in-licensing Phase III/Marketed products  and  35%  in in-licensing Phase I/II products.

The Results

The results  indicated  that  between 1998  and  2000,  there  was an increase  in the  number  of companies  that  carried  out  deals within the  pharmaceutical industry from 76%  in 1998  to  89% in 2000.

Subsequently  there  was  an increase  in the  number  of deals carried  out  over the  same  period. This increase  is reflective of the  general  trend  of increasing  number  of deals within the  pharmaceutical industry (Source: PharmaVentures proprietary  deal database, PharmaDeals).  Companies  are  using these  deals to  supplement research  efforts,  bolster  their product  portfolios  and  move  into  new  markets.

Between  1996  and  2000,  technology  and  licensing deals both  showed  a progressive  increase  in number  whereas Merger,  Acquisition and  Collaborative  R&D agreements remained  at  a steady  level (Source: PharmaDeals  News December  2000).
The survey respondents also indicated  the  number  of licensing deals their  companies  were  looking to  complete during  the  period  2001-2003. The majority of companies (40%)  indicated  that  they would  be looking to  complete
between three  and  five deals and  an additional  33%  indicated that  they were  aiming  to  complete  between six and  ten  deals.
Companies  were  also asked  about  the  organisation  of their business  development function. The majority of companies  (57%)  used  a cross-functional  team,  48%  used  a dedicated business  development department and  4%  used external  consultants to  complete  business  development
projects.  The majority of companies  (67%)  did not  have  a dedicated budget for deal making,  nor  did they have  a target number  of deals to  complete  each  year.

Companies'  trends  in deal making  were  also studied.  When licensing-in, the  majority of companies  (59%)  were  interested at  the  pre-clinical stage  (Figure 3). However,  when  licensing- out,  the  majority (47%)  of companies  were  interested at  the Phase II  stage.

Therapeutic  interests  for licensing agreements over the  past 2 years are  shown  in Figure 5. The questionnaire respondents' interest  in the  different  therapeutic areas  correlated  very well with  the  number  of deals carried  out  in the  different therapeutic  areas  as determined by PharmaDeals  over the  same period.

When  asked  about  the  success criteria required  for deals,  the factors  that  companies  believed to  be important were:
• Structure  of the  deal;
• The overall cost  of the  deal;
• A lead to  further  collaboration;
• Timing;  and
• Deals that  closed the  targeted gap.

A high  failure rate  for deals was  reported. The reasons  why companies  believed deals failed were:

• Poor implementation of the  deal;
• Cultural clashes  between the  companies;
• Lack of commercial  success; and
• Some problems  of 'buy-in'.

Companies  were  also questioned about  the  timing of milestone  payments.  These occurred  at  deal signing,  license application  submission  and  product  launch.  Further information on  financial  structures  of deals was  also provided  and  is part of the  full report  available from PharmaVentures.

PharmaDeals  is the  world's  leading  data  source  for worldwide  deals between pharmaceutical, biotechnology, academic  and  technology  transfer  organisations. Over 160  new deals are  detailed  each  month,  making  PharmaDeals  a powerful,  expanding, strategic  information  source,  vital for daily business  activities.

Mark Dempsey  Ph.D. is an Associate  Consultant  and Kate Hopkins is the  Publishing Editor at PharmaVentures  Ltd.

For further  details about  this survey, or to  obtain  a full copy, please contact  Jane White  MBA (Consultant) at PharmaVentures  Ltd.