Pharmaceutical Licensing Overview

Introduction

Big Pharma continues to restructure its internal R&D departments as part of widespread cost-cutting measures to help reduce the impact of the impending 2011 patent cliff. To fill pipeline voids with new products, companies continue to make acquisitions and form partnerships with small pharma, biotech companies and academia, although the relationships between each are becoming increasingly dynamic.

Scope

*Overview of Big Pharma's current and anticipated future reliance on externally sourced products

*Overview of drivers and resistors of licensing deals and an assessment of key trends and factors that will shape the future make-up of licensing

*Analysis of key product deals during 2008-09, analyzing trends for in-licensing, out-licensing and manufacturing/supply arrangements

*Assessment of drug discovery and technology deals made by the top 10 pharmaceutical companies during 2008-09

Highlights

The number of in-licensing deals in 2009 increased by 12% over 2008, confirming that Big Pharma is actively seeking acquisitions and licensing agreements as a more cost-effective means of gaining access to novel products than carrying out extensive in-house R&D.

Although deals for drugs at the earliest stages of development accounted for almost 60% of all product in-licensing deals analyzed, Big Pharma greatly increased its focus on Phase II and III products in 2009 as it looks to offset the 2011 patent cliff by incorporating more advanced-stage products into its pipelines to enhance short/mid-term growth.

GlaxoSmithKline was by far the most active Big Pharma player. While many of its Big Pharma peers have participated in large M&A deals over the past 2 years, GlaxoSmithKline has thus far preferred to focus on incorporating externally acquired products into its pipeline.

Reasons to Purchase

*Appreciate the drivers and resistors companies face when licensing products, and the resultant strategies some companies are employing

*Identify suitable pharma partners to target when considering out-licensing your technologies and products

*Understand the direction the constantly evolving pharmaceutical licensing landscape is moving in order to identify the best strategies to succeed

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ABOUT DATAMONITOR HEALTHCARE 2
About the Healthcare Strategic Analysis Team 2
Geographic specific reports: 2
Global issue reports: 2
1. About This Report 3
Chapter structure 4
Executive summary 4
Licensing trends overview 4
Evolving trends in the licensing landscape 4
Product licensing deals and trends 4
Technology licensing deals and trends 4
Bibliography 4
Contributing experts 5
Related reports 5
Upcoming related reports 5
2. Executive Summary 6
Strategic scoping and focus 6
Key findings 6
Key definitions 8
Deal definitions 8
Company classifications 8
Explanation of launch/core/expiry analysis 8
Table of Contents 9
3. Licensing Trends Overview 10
Key findings 10
Big Pharma trends 11
Big Pharma's reliance on externally sourced products drives sales growth 11
Big Pharma's sourcing of external products is set to grow 12
AstraZeneca to become more reliant on in-licensed products as internal products face generic competition 13
Abbott's recent M&A activity will reduce reliance on in-licensed products 14
Pfizer's acquisition of Wyeth will see it more reliant on sales from in-licensed products 15
Licensing deal trends 17
Annual change in deal activity 17
Big Pharma increases number of in-licensing deals during 2009 17
Cash-rich Big Pharma capitalized on economic situation through second half of 2009 18
Deals by subject 19
The majority of Big Pharma's licensing activity focuses on deals for drug candidates 19
Deals by company 20
GlaxoSmithKline was the most active Big Pharma player 20
GlaxoSmithKline raised its level of in-licensing activity in the second half of 2009 21
Eli Lilly to focus on internal R&D capabilities rather than externally-sourced products 22
4. Evolving Trends in the Licensing Landscape 23
Key findings 23
Introduction 24
Both Pharma and Biotech face the same core challenges 24
Drivers and resistors of licensing 25
Big Pharma's internal R&D crisis drives licensing quest 26
Poor returns from Pharma's internal R&D the confounding issue 26
Widespread cost-saving measures and essential refocusing central to Big Pharma's streamlined R&D 27
Biopharma's needs to collaborate are manifold 27
Big Pharma's cash and expertise is essential to advance Biopharma's pipeline candidates 28
Alliances allow companies to share the cost and inherent risks of drug development 28
Accessing external resources and capabilities 29
Future outlook for licensing deals 30
Big Pharma evolution 30
Partnership agreements become more intricate as licensees look to share development risk 30
How far can Big Pharma take its cost-cutting strategies? 30
Big Pharma's near-term focus 32
Late-and mid-stage deal activity set to increase as Pharma looks to offset the patent cliff 32
Deals with academia to multiply and become more complex 33
Pharma will turn increasingly to universities for early-stage innovation 33
Closer collaboration will reduce academic caution 34
Niche indications and orphan drugs are attractive licensing propositions 35
Smaller patient populations offset by attractive economic incentives 35
GlaxoSmithKline and Pfizer show greater concentration on orphan drugs 36
Push towards personalized medicine will shape technology deals 36
Strategic licensing options available for Pharma in growing diagnostics market 36
Big Pharma out-licensing to increase as internal R&D focus is realigned 38
Big Pharma divestitures could represent opportunities for smaller companies 38
Early-stage deal structure changes highlight Big Pharma's aversion to shouldering risk 39
Smaller upfront fees and additional milestone payments replace large opening values for riskier early-stage products 39
Option-based deals - a low-cost method of securing rights to potentially innovative early-stage products 40
Big Pharma's specialist external arms represent an alternative way to invest in and incorporate innovation 42
Big Pharma venture and option funds provide another route to team up with biotechs 42
GlaxoSmithKline's Centre of Excellence for External Drug Discovery focuses on option-based deals 43
Focus on emerging markets will increase 43
Regional rights sought to fuel push into emerging markets 43
Asia to become a key source of innovation in years to come 44
5. Product Licensing Deals and Trends 45
Key findings 45
Pharmaceutical licensing trends 46
In-licensing trends 46
Deals by primary goal 46
Research and discovery and product license deals most popular deal types for Big Pharma 46
Deals by therapy area 47
Infectious diseases is the most common therapy area for Big Pharma's product in-licensing deals 47
Influenza vaccine developments head anti-infective in-licensing deals 49
Central nervous system deals focus on the emergence of biologic treatments for Alzheimer's disease and pain 50
GlaxoSmithKline and Sanofi-Aventis up their focus on in-licensing oncology candidates in 2009 52
Deals by stage of development 54
Research/discovery stage products represent more than a third of all product in-licensing deals made by Big Pharma 54
Big Pharma moves its attention to in-licensing products at more advanced stages of development 55
Full license agreements form the majority of clinical stage product in-licensing deals 56
Marketing, promotion and distribution deals most commonly associated with marketed products 57
Deals by value - upfront fee paid 57
A premium upfront fee is standard for drug candidates that have reached Phase III development 57
Deals for central nervous system drugs commanded the highest upfront fees during 2008-09 58
Deals by drug type 60
Small molecules remain the main target of in-licensing deals amid increasing focus on biologics 60
Pfizer leads the way in stem cell therapy deals as Big Pharma generally refrains from mass investment 62
Deals by leading dealmakers 63
GlaxoSmithKline leads the field in terms of product in-licensing deals 63
Abbott and Roche restrict product licensing deals as attention turns to mega-merger activity 64
Eli Lilly, Sanofi-Aventis and Roche focus on securing the full licensing rights to a product 65
Johnson & Johnson ties up the greatest proportion of research and discovery deals 65
All Big Pharma companies in-license products across a range of therapy areas 67
Roche and Eli Lilly's in-licensing deals focus on small molecules with biologic candidates largely acquired through M&A activity 69
GlaxoSmithKline focuses on acquiring vaccines while Sanofi-Aventis leads the way in monoclonal antibody deals 70
Deals by source company type 72
The smallest pharma/biotech companies are the source of most in-licensed products 72
Vast majority of deals with mid-sized and fellow Big Pharma companies are for marketing rights 73
Deals by region 74
2009 saw a significant increase in product in-licensing deals for specific regions 74
Asia expected to become a key source of innovation in years to come 75
Out-licensing trends 76
Deals by primary goal and region 76
More than half of Big Pharma's product out-licensing deals are for marketing/promotion/distribution purposes 76
Leading dealmaker trends 77
GlaxoSmithKline and Pfizer more than double product out-licensing activity in 2009 77
Marketed products accounted for over half of all out-licensed products 78
Novartis largely out-licensed commercially-ready products for co-promotional reasons 79
GlaxoSmithKline divests US rights for Wellbutrin XL to Biovail for $510m 80
Out-licensing agreements for clinical-stage products 80
Innovative risk-mitigation deal struck by Eli Lilly for Alzheimer's disease candidates 81
Pfizer out-licenses products following R&D prioritization 82
Manufacturing and supply deals 84
Deals by leading dealmakers 84
Sanofi-Aventis signed the most manufacturing/supply product agreements 84
Eli Lilly extends previous alliance with Amylin to include supply of a once-weekly diabetes product 85
Leading source companies 86
Lonza emerges as a key partner for Big Pharma's outsourced manufacturing 86
6. Technology Licensing Deals and Trends 87
Key findings 87
Technology licensing trends 88
Trends in technology deals 90
Focus of technology 90
The majority of deals are for drug discovery and diagnostic technologies 90
Diagnostic technology deals 91
Drive towards personalized medicine results in numerous deals for diagnostics 91
Biomarkers seen as a tool to enhance clinical development 91
Deals to identify companion biomarkers for cancer subtypes facilitates move towards targeted therapies 92
Drug discovery technologies 93
An array of technologies are available to increase drug discovery productivity 93
Sanofi-Aventis gains access to a number of biopharmaceutical discovery/development platforms 94
Assay/screening is high on GlaxoSmithKline's agenda 95
Bioinformatics software designed to improve internal efficiencies of drug development 96
Drug delivery technologies 96
Novel delivery optimization technologies focus on improving delivery of biologic drugs 97
Drug production technologies 98
Big Pharma seeks high-yielding and more cost-effective biologic production processes 98
Medical device technology 98
Johnson & Johnson's specialist subsidiaries license catheter and stent device technologies for cardiovascular diseases 98
Leading technology dealmakers 99
Johnson & Johnson signed the most technology licensing deals with its specialist subsidiaries featuring heavily 99
Abbott focused on diagnostic technology deals supporting its market-leader status in the field 100
Sanofi-Aventis sought drug discovery technologies to help identify its next generation of revenue drivers 100
7. Bibliography 101
Company press releases 101
Other web-based articles 104
Other sources 105
Datamonitor reports 105
APPENDIX 107
Company classification 107
Contributing experts 110
About Datamonitor 111
About Datamonitor Healthcare 111
About the Healthcare Strategic Analysis team 111
Geographic specific reports: 112
Global issue reports: 112
Datamonitor consulting 112
Disclaimer 114
List of Tables
Table 1: Big Pharma's influenza vaccine in-licensing deals, 2008-09 49
Table 2: Big Pharma's central nervous system biologics in-licensing deals, 2008-09 50
Table 3: Sanofi-Aventis's oncology product in-licensing deals, 2009 53
Table 4: Leading central nervous system product in-licensing deals by upfront fee and value, 2008-09 59
Table 5: All 235 product in-licensing deals performed by the top 10 pharma companies by type, 2008-09 62
Table 6: Big Pharma's South and Central American product in-licensing deals, 2008-09 75
Table 7: Big Pharma's clinical-stage drug out-licensing deals, 2008-09 81
Table 8: Select diagnostic technology licensing deals made by the top 10 pharma companies, 2008-09 92
Table 9: Top 150 pharmaceutical companies in terms of 2008 sales 107
List of Figures
Figure 1: The PharmaVitae Explorer 3
Figure 2: Sales forecast dynamics of the top 10 pharma companies, 2009-2014 11
Figure 3: Top 10 pharma companies' reliance on externally sourced products, 2002-2014 12
Figure 4: AstraZeneca's prescription pharmaceutical sales by source ($m), 2009-2014 13
Figure 5: Abbott's pre-Solvay acquisition prescription pharmaceutical sales by source ($m), 2009-2014 14
Figure 6: Pfizer, Wyeth, and combined Pfizer-Wyeth reliance on externally sourced products, 2002-2014 16
Figure 7: Licensing deals performed by the top 10 pharma companies, 2008-09 17
Figure 8: Licensing deals performed by the top 10 pharma companies by quarter, 2008-09 18
Figure 9: Subject of licensing deals performed by the top 10 pharma companies, 2008-09 19
Figure 10: In-licensing deals performed by the top 10 pharma companies by category, 2008-09 20
Figure 11: In-licensing deals performed by the top 10 pharma companies by quarter, 2008-09 21
Figure 12: The key drivers and resistors facing licensees and licensors in today's pharmaceutical industry 25
Figure 13: The growing cost of drug discovery and allocation of R&D investment by function (%), 1975-2008 26
Figure 14: Stage of development at signing for all 235 in-licensing product deals performed by the top 10 pharma companies, 2008-09 32
Figure 15: Primary goal of all 235 product in-licensing deals performed by the top 10 pharma companies, 2008-09 46
Figure 16: Therapy area focus for all 235 product in-licensing deals by the top 10 pharma companies, 2008-09 47
Figure 17: Therapy area focus for all 235 product in-licensing deals by the top 10 pharma companies, 2008 versus 2009 48
Figure 18: Big Pharma's oncology product in-licensing deals, 2008-09 52
Figure 19: Product in-licensing deals by stage of development at signing by the top 10 pharma companies, 2008-09 54
Figure 20: Comparison of product in-licensing deals by stage of development at signing by the top 10 pharma companies, 2008-09 55
Figure 21: Product in-licensing by stage of development at signing and primary goal by the top 10 pharma companies, 2008-09 56
Figure 22: Mean upfront fee value ($m) by stage of development at signing for all in-licensing product deals performed by the top 10 pharma companies, 2008-09 58
Figure 23: All 235 product in-licensing deals performed by the top 10 pharma companies by type, 2008-09 60
Figure 24: All 235 product in-licensing deals performed by the top 10 pharma companies by type and quarter, 2008-09 61
Figure 25: Product in-licensing deals performed by the top 10 pharma companies, 2008-09 63
Figure 26: Primary goal of all 235 product in-licensing deals performed by the top 10 pharma companies, 2008-09 65
Figure 27: Stage of development of all 235product in-licensing deals performed by the top 10 pharma companies, 2008-09 66
Figure 28: Therapy area of all 235 product in-licensing deals performed by the top 10 pharma companies, 2008-09 67
Figure 29: Product type of all 235 product in-licensing deals performed by the top 10 pharma companies, 2008-09 69
Figure 30: Biologic product in-licensing deals performed by the top 10 pharma companies by type, 2008-09 70
Figure 31: Source company of all 235 product in-licensing deals performed by the top 10 pharma companies, 2008-09 72
Figure 32: Source company and primary goal of all 235 product in-licensing deals performed by the top 10 pharma companies, 2008-09 73
Figure 33: Product in-licensing deals performed by the top 10 pharma companies by region, 2008-09 74
Figure 34: Primary goal of all 94 product out-licensing deals performed by the top 10 pharma companies, 2008-09 76
Figure 35: Product out-licensing deals performed by the top 10 pharma companies, 2008-09 77
Figure 36: All 94 product out-licensing deals performed by the top 10 pharma companies by stage of development, 2008-09 78
Figure 37: Novartis's key ex-US out-licensing regional co-promotion deals, 2008-09 79
Figure 38: All 17 manufacturing and supply licensing deals performed by the top 10 pharma companies, 2008-09 84
Figure 39: Application of different technology types across the drug development process 89
Figure 40: Focus of all 133 technology licensing deals performed by the top 10 pharma companies, 2008-09 90
Figure 41: Breakdown of drug discovery technology licensing deals performed by the top 10 pharma companies, 2008-09 93
Figure 42: The role of drug delivery technologies in a drug's lifecycle 97
Figure 43: Focus of all 133 technology licensing deals performed by the top 10 pharma companies, 2008-09 99

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