22 Jul 2021

Why Is Pharma Out-Licensing Its Compounds?

Posted Byroysr

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When you hear the term “in-licensing,” simply think of the word “investor“. In-licensing is the process of creating a contract that allows another firm to provide capital to the development and launch process, thus taking on financial responsibility. This is a very popular licensing process for small bio-pharma start-ups to get their drug off the ground. There are pros and cons to this type of licensing; for example, it can provide the capital a company needs, but then the profits need to be shared once the drug enters the market.

Out-licensing is more focused on opening up the delivery pipeline to assist you with getting your drug “out the door.” Out-licensing encompasses finding a partnership, or partnerships, that will help identify your target market and assist you in getting your product into the right hands. This process may include working with marketing firms or legal firms. The financial relationship is very different in this type of licensing than the one outlined in the in-licensing section above.

Now the question is why pharma companies out license it’s compounds?

Inlicensing is an opportunity to infuse new IP in the organization, bring diversity in operations, boost the growth engine, supplement new revenue stream and enhance credibility of the organization through their association with various partners. At the same time outlicensing company gains the revenue from the molecule which they out license, which they are finding difficult to commercialize. If royalty worked out properly, it will be continuous revenue for outlicensing company.

In today’s competitive scenario, BD team must structurally approach licensing as a well thought over strategy that will be imperative mainstay in placing their organization ahead of the competition.