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Pharmaceuticals should take hope from licensing

Date published: 14/12/2005

Pharmaceutical companies are being urged to take advantage of licensing as the top 20 companies are facing poor growth outlooks, according to a new report. Datamonitor, the independent market analyst, has found that among the biggest 20 companies only Amgen will achieve double-digit growth over the next six years.

The report into the pharmaceutical industry suggests with high competition for products, firms need "to leverage their assets and offer creative deals to successfully win them from their competitors when licensing". The problem of declining research and development (R&D) productivity, with pharma companies putting more money into R&D but failing to generate promising candidates that will provide a high return is also highlighted.

Datamonitor pharmaceutical industry analyst Romita Das said: "However, licensing is providing hope for the industry as a means to overcome these problems, but only if companies can get their hands on the promising candidates under favourable terms." In the last five years the number of licensing deals signed has increased by 16 per cent.

Furthermore, firms have become increasingly dependent on licensing to generate sales, with an average of 19.5 per cent of their ethical sales coming from licensed products in 2004, or $63 billion, compared with 17.5 per cent, or $48 billion, in 2002.

The report, Licensing Strategies: Trends in the Top 20 Pharmaceutical companies' activity, also highlights GlaxoSmithKline and MSD's (Merck Sharp & Dohme) parent company Merck as being the most active deal makers when it comes to licensing.

However, Merck's activity in the first nine months of this year fell with only six deals signed compared with 30 signed in 2004, which is put down to an after effect of the withdrawal of Vioxx.

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