Discussion about the pharmaceutical licencing process and different steps involved in the process, current trends in licencing process and types of licences.

1. PHARMACEUTICAL
LICENCING PROCESS
Presented to. Presented by:
Prof.Dr.Farhaan Jalees Ahmed Areeba Siddiqui
Department of Pharmaceutics,SPER M.pharm 2nd sem (QA)

2. CONTENTS
1. Introduction
2. Trends in pharmaceutical licencing
3. Types of Licences
4. Steps in Licencing process
5. Payment in Licensing
6. References

3. INTRODUCTI
ON
-Licensing is the transfer of rights to a third party (the Licensee) to
use the Intellectual Property owned by an innovator (the Licensor)
under mutually agreed terms and conditions.
-Licensing can be for manufacturing and/or marketing rights in
select geographies, renewable after the initially agreed period.This
Intellectual property offered by Licensor (Innovator) can be one of
the following:
•A patent covering a product or process
•The right to the use of a trademark or brand name
•Copyright of process / technology
•Manufacturing know-how on products or processes (that is not
patent the subject of a patent)
•Supply of API, semi-finished and finished formulation

4. TRENDS IN
PHARMACEUTICAL
LICENCING
 Licensing novel molecules and technologies is a relatively newer
phenomenon in the Indian Pharma Industry; however, it has now
taken enormous importance in formulating new product strategy
of pharma organisations that have aggressive growth plans at the
global and national level.
 As per the global data, in the pharmaceutical industry, the value of
the licensing deal exceeded USD 40 billion in 2020.
 And from this data, the cancer-related assets account for more
than half, with four in the cancer immunotherapy area.The
complete cancer deals have a value of almost $24 billion out of a
total of just over $40 billion overall.

5. In 2022, there were 256 deals recorded involving top pharmaceutical
companies in the three months to April with a number of high profile
contract service agreement, licensing agreement, partnership, merger,
venture financing, equity offering, asset transaction, debt offering,
acquisition and private equity deals.
That’s according to GlobalData’s Cinancial Deals database, which tracks
market activity across a variety of sectors and deal types.

6. TYPESOF
LICENCES
There are two types of licences that can be issued:
1. In-Licencing
2. Out-Licencing

7. IN-
LICENCING
In-licensing is the process of creating an agreement that allows
another firm to provide capital to the development and marketing
process, thus taking over the financial responsibility of the
innovator.

8. ADVANTAGES
OF IN-
LICENCING
1. Helps to address weak growth areas such as therapeutic segments
and/or geographies .
2. Acquire technology, regulatory approvals, manufacturing, marketing
rather than building up from scratch.
3. Licensing generally requires a relatively smaller capital with a high
Return On Investment (ROI).
4. Saves both the cost and time involved during development.
5. Shortens the time for market entry and gains an advantage over the
competitor and/or neutralizes the competitor’s move.
6. Provides an advantage to launch a differentiated or specialized
product in the market so as to first maintain or obtain a critical
competitive advantage.
7. Provides access to new drug delivery technologies, manufacturing
processes, etc.
8. Helps domestic companies to expand their horizon, capability, and
global reach.

9. DISADVANTA
GESOF IN-
LICENCING
However, along with advantages, in-licensing has some risks and has a
few disadvantages and these include :
-The benefits or profits on the products may be less as the innovator
needs to share the profits with the licensee.
-There is always a risk that the licensee sells a similar competitive
product after the license agreement expires, and the efforts of the
licensor may go in vain, and the return timeline reduces drastically.
-The innovator may lose control over the manufacturing and marketing
of its IP .
-The partner’s inability to utilize the product/process efficiently and
take the maximum advantage of the innovation.
-Uncertainties in doing business with a partner in unknown territory,
language barriers, cultural differences, political risks, and currency
fluctuations.
In order to avoid these cons, the innovator needs a great
understanding of the investor and understand their capabilities in
taking the innovative product further.

10. OUT-
LICENCING
Out-Licensing is a process of finding partners who help in
identifying the target market and assist in getting the product into
the right hands.This process may include working with marketing
firms or legal firms.
The Intellectual Property (IP) offered by the licensor (Innovator) to
the licensee can be one of the following;
-Process/technology copyright
-Supply of API, semi-finished and finished formulation
-Product or process patent
-Trademark or brand name rights

11. STEPS IN
LICENCING
PROCESS
Usually, the dedicated or business teams consider the following steps in
licensing:
Step 1 Lead generation:The usual resources for lead generation include-
tracking participating companies inconferences, paid reports, company
directories ,online licensing sources, scientific discussion forum, daily alerts
and newsletters, review articles,etc.
Step 2: Refine the leads: The teams usually perform this based on the
strategic focus area of the companies.They sort out by applying various
criteria such as dosage form,molecule, geography, therapy focus, etc.

12. Step 3: Creating slides/deck/presentation:The company needs to
create slides/decks/presentations to create an interest in the
innovator (target company) in order to showcase their capabilities
and convince the innovator for the opportunity.
Step 4: Connect with key personnel:Contacting the key personnel
in the target company (head of business development & licensing,
CSO, CEO, sourcing or procurement head, business unit or country
head, etc.) with the slides/deck presentation document is crucial.
Step 5: Confidential Disclosure Agreement (CDA) or Non-
Disclosure Agreement (NDA):Though most of the statements in a
CDA or NDA remain neutral, the country of the jurisdiction where
the agreement is made remains a critical concern.

13. Step 6: Discussion:TheConfidential Information Package (CIP) will elaborate
on the business proposal and define the exact commercial terms and other
relevant points that become the starting point for discussion andleads to the
next step.Usually, the business proposal discussion covers the following points.
-The current stage of innovative product/process development.
-Pre-clinical which include target selection, lead identification & optimisation,
candidate selection, in-vitro studies & in-vivo studies / Non-GLP/GLP studies
(animal testing) etc.
-Status of IND (filed or approved/ Phase- /Phase-1/Phase-ll/FDA review etc.).
-Market size (molecule, drug class, disease prevalence/incidence, competitors).
SWOT of new product & targeted market (Therapeutic benefit over existing
drugs such as safety, efficacy, dosing, form, strength, route of administration,
etc.)
-Further investment is required (R&D, trials, marketing).
-Potential market share (next five to 10 years) in the category & cash flow.
-Time phrase to market (from dealconfirmation and completion to
commercialization).
-Distribution channel (existing vs. new).

14. Step 7:Terms and conditions:It is one more crucial step of licensing
and incorporates broad discussion on commercial terms and other
terms & conditions.That includes licensing details, geography,
commercials (such as price, volume, payment terms, three to five-
year projections), license duration, mutual liability, etc., between
the involved parties.
Step 8: Data exchange:When the two parties sign and exchange
the non- binding term sheet, the process of due diligence starts with
the face-to-face meeting(s), an on site visit, the interaction of
technical and legal teams between the involved parties.
Step 9: Deliberation on the agreement:This is the most crucial and
end phase where all aspects of the deal are captured and narrated in
legal language. Here the business development department plays a
key role to define and incorporate all terms & conditions in the
definitive agreement. After concerning, both parties sign the
mutually agreed definitive agreement or MSA (Master
ServiceAgreement) and seals the deal.Now, after the agreement,
the regulatory and marketing teams become active in order to
commercialize as early as possible.

15. PAYMENT IN
LICENCING
The payment for the licensing can take any or a combination of the
following ways
•One-time payment
This type of payment is usually considered mainly for finished
formulation or technology transfer kinds of deals, based on five-
year revenue projections.
•Upfront fees + milestone payment
This applies when the deal includes further development of
technology/ drug molecule since risks are involved in the final
outcome .

16. •Upfront fees + Milestone payment + Royalty
As the above point however innovator wants to be involved in the
entire process of commercial launch thus expects a share in sales.
•Upfront fees + Cost of goods + Royalty
Primarily when the deal involves API.
•Upfront fees +Transfer price
When deal involves finished formulation to be imported.
•Royalty payment
Most of the commercial terms involve upfront or licensing fees,
however, it depends on negotiations and mutual decision of
involved companies.

17. References
1. https://credevo.com/articles/2021/06/25/pharma-licensing-why-
how/
2. https://www.expresspharma.in/pharma-licensing-framework-
and-the-way-forward/
3. https://www.pharmaceutical-technology.com/features/these-
were-the-biggest-pharmaceutical-deals-in-early-2022/

18. THANK YOU