In-Licensing in Pharma Essay Example for Free

In-Licensing in Pharma EssayINTRODUCTIONThe process of bringing a unused drug to market is an extremely expensive atomic number 53, practically costing above $200 million. This enormous cost can be explained by the fact that a very small fraction of molecules in query and development ultimately become pharmaceutical intersections. However, the rewards of a successful new produce can be tremendous generating, depending on the therapeutic vault of heavens in which the product will be used and the disease it will directed to, from millions to billions of dollars of sales annually worldwide. Many pharmaceutical companies are facing a tune crack cocaine because of the increasing economic burden and uncertainty associated with internal re hunt club and development programs designed to develop new pharmaceutical products. The need for large pharmaceutical companies to forever and a day replenish the supply of potential blockbusters requires a consistent and dedicated approach to drug RD. However no longer is inhouse research expertise sufficient.To fill this pipeline gaolbreak, pharmaceutical companies are increasingly relying on in-licensing opportunities. Business development and licensing department identifies new pharmaceuticals that satisfy unmet needs and are a good strategic see to it for the company, completes valuation forges and forecasts, evaluates the ability of the company to develop and launch products, and pursues in-licensing agreements for pharmaceuticals that cannot be developed internally on a timely basis. The in-licensing process provides a source of new drugs to a given company to supplement internal laboratory research, to reach the companys goal in marge of largess and future portfolio.As competition in the pharmaceutical market continues to grow, effective business development strategies become critical to maintain momentum and improve global market address for the leading pharma companies. An increasing proportion of reven ues are expected to be generated from licensed products and as a result licensing will become an ever more important component of the overall business development mix (source Wood Mackenzies Licensing insight Multi-Client study, April 2003)The in-licensing process might imply enormous effort by the company. It can be compared to the proverbial search for a needle in the haystack. First, the haystacks are large and require a massive amount of searching. Second, no one knows how many needs are in the haystack. There might be none, or multiple. Third, the search is conducted in public and multiple companies compete for innovative therapies, and choice allocation and financial aspect play a role in such competition. The key to pursing in-licensing opportunities is rapidly to identify individuals and companies with the intellectual property sought by the company. New business development team ups maintain a business development customer relationship management information system. The information stored in this system has been self-contained from personal networking contacts, industry available organization directories, membership directories, commerciallyPubMed, and online databases. The system contains the contact information, therapeutic interest areas, development stage information for products in development, and different relevant information needed to identify potential in-licensing partners, such as key clinical researchers, biotechnology companies, and small specialty pharmaceutical companies. A search of this system provides a list of potential inlicensing partners. To supplement this list, the new business development team begins a systematic marketing campaign in involve industry trade publications and Web sites to promote the companys desire for an in-licensing partner. The campaign highlights the companys strengths in clinical development, manufacturing, and sales and marketing. Information regarding the flake of product desired (therapeutic cla ss, clinical development stage, and so forth) and the type of licensing agreement being sought is specified.From the list of potential in-licensing partners, the new business development team selects the most appropriate candidates and begins to evaluate the feasibility of in-licensing each potential partners product. Despite there is no standard formal process in in-licensing of pharmaceutical products, it is quite standard to utilize a stepwise approach, composed of go/no go gates, that can be summarised in the following stages 1. rating of potential in-licensing opportunities 2. first circulate review 3. product evaluation 4. due diligence 5. in-licensing contractual negotiation and deal closing. This stages are ordered following a timeline perspective, so to have a subsequent flow of actions.The approach includes examining opportunities from other pharmaceutical companies and from academic centers involved in research. Once the opportunity has been identified, the first pass r eview consist generally in the evaluation of information provided by the potential licenser, the medical and scientific literature, and specialised consultant if there is a in-house gap in specific knowledge. This initial step has often been based on a gut feeling and the company overall strategy in term of therapeutic area focus.For those opportunities not rejected in the first pass review, a more detailed evaluation of the scientific, commercial and financial issues, are undertaken. additive people with various area of expertise participate in this secondary evaluation. Only if the entire evaluation is positive the opportunity is taken to senior management, that last approves the in-licensing after due diligence and a full negotiation on terms of the agreement.One aspect that is often underestimated in in-licensing opportunity is the in reasonableness commercial assessment of the putative candidate, leaving the go/no-go decision mainly at strategic fit in terms of therapeutic ar ea focus or financial aspect taken from capital budgeting calculations. In this regards, sales forecast plays a critical role in assessing the net present value of the in-licensing opportunity, but they need to be supported by a complete, although preliminary, full product evaluation.This evaluation has to include external analysis in the circumstance of the future scenario, internal analysis of the given putative candidate, and a preliminary but clear product strategy. The scope of the development of a qualitative model for a full product evaluation in the context of an putative in-licensing opportunity is to define the key relevant steps within the full product evaluation related to commercial aspect that are critical for the precise and coherent definition of the sales potential of the product, that will used in the detonator Budgeting (e.g. Net Present Value) models to assess the financial aspect of the opportunity and set the basis for the full negotiation.Common financial an alysis measures for valuation of an in-licensing opportunity cook up Back Period (PBP) Length of time required to recover the cost of an investment Discounted Cash Flow (DCF) Analyzes future free cash flow projections and discounts them use the after tax weighted average cost of capital to arrive at a present value (value in local currency at the time of analysis) DCF analysis estimates the money a company would receive from an investment and adjusts for the time value of money.