In a survey conducted by 2Value of 261 CEOs and licensing executives of biopharma companies, 84 percent acknowledged they are challenged by one or more of the following: 1) ability to identify quality candidates, 2) competition for attractive compounds, 3) overexposure of US-based licensing opportunities that drive up headline values.
The art of licensing deal making is a craft developed over time and experience. Therefore, it is no surprise that many emerging companies are facing challenges while trying to identify in-licensing opportunities that will simultaneously serve as growth engines and maximize shareholder value.The following is a description of vital elements that are essential for executing a successful in-licensing strategy.
SET REALISTIC SEARCH CRITERIA The importance of setting realistic search criteria cannot be understated. Generally unrealistic expectations involve the perception of a large market opportunity, low developmental risk, and the unanticipated constraints of limited capital to establish an attractive licensing arrangement. Having unfocused (too wide or too narrow) criteria makes the search inefficient and very expensive considering the time and opportunity cost (i.e., spending internal resources that can be better utilized if a proper strategic evaluation process has occurred earlier).
Companies should approach a licensing strategy process by reviewing the licensing landscape (including an accurate analysis of unmet medical needs), correlating the target market with investment trends, and clearly defining their ability to raise capital around the licensed assets. Utilizing a measured approach can increase the probability for identifying search criteria that fulfill a company's strategy. Companies stating that they are "opportunistic" regarding licensing activities find themselves floundering with an inefficient and resource consuming process resulting in few successful licensing candidates.
The internal team should define a process to identify, review, and evaluate a licensing opportunity within a certain timeframe and to recommend further action to management. Proactive efforts to source licensing opportunities include, but are not limited to: reviewing scientific journals; attending scientific, financial and partnering conferences; and conducting a creative survey of the target market(s) for niched opportunities.
External Resources . The use of a professional BD company or investment bank can dramatically expedite and increase productive deal flow. Considering the fierce competition for the few attractive opportunities available, having introductions to relevant opportunities ahead of the competition can become a critical advantage.
Passive Channels Company Website and Collateral . Publish in-licensing/partnering search criteria and contact information of staff members responsible for new opportunities on the company's website. Spread the word about the search among employees and create a process to capture ideas stemming from the employees' industry network. Scientific expertise frequently overlaps and the dissemination of new findings is often discussed among scientists with little regard for the proprietary nature of potent avenues to new products.