Contents:

Executive Summary 11 Profiled Companies 13 Methodology and Definitions 14 Business Development: Five Principles for Success 17 Business Development Budgets, Structure and Strategy 25 Business Development Budgets 27 Business Development and Licensing Structure 33 Business Development Strategy 55 Opportunity Identification and Evaluation 73 Best Practices 86 The Deal Identification and Evaluation Process 93 Due Diligence 99 Goals and Investments 103 Cooperation in Due Diligence 109 Cross-Functional Involvement 113 Best Practices 122 Deal Negotiation and Finalization 127 Business Development Deal Profiles 147 Deal Profile: Company 8 148 Deal Profile: Company 22 151 Deal Profile: Company 28 154 Deal Profile: Company 25 157 Deal Profile: Company 12 160 Deal Profile: Company 16 163 Deal Profile: Company 17 166 Deal Profile: Company 7 169 Deal Profile: Company 9 172 List of Figures Executive Summary Figure E.1: Deal-Making Challenges 11 Business Development: Building the Future Figure E.2: Business Development Annual Budgets: Companies With Budgets Greater Than $1 Million 18 Figure E.3: Company G: Identification for Therapeutic Areas Covered by General Business Development 21 Figure E.4: Company O: Decision-Making Process 22 Business Development Budgets, Structure and Strategy Figure 1.1: Centralization of Business Development Functions 26 Figure 1.2: Business Development Annual Budgets: Companies with Budgets Less Than $1 Million 27 Business Development Budgets Figure 1.3: Business Development Annual Budgets: Companies with Budgets Greater Than $1 Million 28 Business Development and Licensing Structure Figure 1.4: Business Development Staffing: Companies With 10 or More FTEs 33 Figure 1.5: Business Development Staffing: Companies With Fewer Than 10 FTEs 34 Figure 1.6: Company L’s Business Development Structure 35 Figure 1.7: Company M’s Split System 37 Figure 1.8: Company L’s Small BU Business Development Reporting Relationships 41 Figure 1.9: Company O’s BD&L Structure 46 Figure 1.10: Company Q’s Structure 48 Figure 1.11: Company L’s Primary Care BD&L Function 49 Figure 1.12: Company L’s BD&L Finance Team 50 Figure 1.13: Reasons for Pursuing New Deals 55 Business Development Strategy Figure 1.14: Licensing Enters the Pipeline 56 Figure 1.15: Phases in Which Companies Focus for In-Licensing Deals 57 Figure 1.16: Phases in Which Companies Focus for Out-Licensing Deals 58 Figure 1.17: Phases in Which Companies Focus for Inbound, Co-Development Deals 59 Figure 1.18: Phases in Which Companies Focus for Outbound, Co-Development Deals 59 Figure 1.19: Phases in Which Companies Focus for Inbound, Co-Promotion Deals 60 Figure 1.20: Phases in Which Companies Focus for Outbound, Co-Promotion Deals 60 Figure 1.21: Company T’s Licensing Strategy Structure 65 Opportunity Identification and Evaluation Figure 2.1: Structure of Deal Identification Process 74 Figure 2.2: Deal Challenges: Deal Identification and Evaluation 75 Figure 2.3: Deal Challenges: Identifying Deal Opportunities (by Company) 75 Figure 2.4: Deal Challenges: Establishing Partner Relationships (by Company) 76 Figure 2.5: Company M’s Basic Market Assessment 78 Figure 2.6: Company O’s Identification Process 79 Figure 2.7: Company G: Identification for Therapeutic Areas Covered by General Business Development 80 Figure 2.8: Company G: Identification for Therapeutic Areas Covered by Therapeutically Aligned BD 81 Best Practices Figure 2.9: Company P’s Alliance Review Process 88 The Deal Identification and Evaluation Process Figure 2.10: Company O’s Decision-Making Process 93 Due Diligence Figure 3.1: Deal Challenges: Due Diligence 100 Figure 3.2: Master Due Diligence Model 101 Figure 3.3: Warning Signs 102 Figure 3.4: Due Diligence Duration 103 Goals and Investments Figure 3.5: Due Diligence Investment 104 Figure 3.6: Company G’s Due Diligence Considerations 108 Cooperation in Due Diligence Figure 3.7: Business Development Staffing By Deal Stage: Companies With Up to 10 Cumulative FTEs 113 Cross-Functional Involvement Figure 3.8: Business Development Staffing By Deal Stage: Companies With More Than 10 Cumulative FTEs 114 Figure 3.9: Inbound Deals: Functions Involved in Due Diligence 115 Figure 3.10: Outbound Deals: Functions Involved in Due Diligence 115 Figure 3.11: Prevalence of Tools Used to Estimate Potential ROI 122 Best Practices Deal Negotiation and Finalization Figure 4.1: Deal Challenges 128 Figure 4.2: Business Development Staffing By Deal Stage: Companies With Up to 10 Cumulative FTEs 136 Figure 4.3: Business Development Staffing By Deal Stage: Companies With More Than 10 Cumulative FTEs 137 Figure 4.4: Inbound Deals: Functions Involved in Deal Negotiation/Finalization 139 Figure 4.5: Outbound Deals: Functions Involved in Deal Negotiation/Finalization 139 Business Development Deal Profiles Deal Profile: Company 8 Figure 5.1: Deal-Making Background: Company 8 148 Figure 5.2: Timing and Decision-Making: Company 8 149 Figure 5.3: Finances and Key Challenge: Company 8 Deal Profile: Company 22 Figure 5.4: Deal-Making Background: Company 22 151 Figure 5.5: Timing and Decision-Making: Company 22 152 Figure 5.6: Finances and Key Challenge: Company 22 153 Deal Profile: Company 28 Figure 5.7: Deal-Making Background: Company 28 154 Figure 5.8: Timing and Decision-Making: Company 28 155 Figure 5.9: Finances and Key Challenge: Company 28 156 Deal Profile: Company 25 Figure 5.10: Deal-Making Background: Company 25 157 Figure 5.11: Timing and Decision-Making: Company 25 158 Figure 5.12: Finances: Company 25 159 Deal Profile: Company 12 Figure 5.13: Deal-Making Background: Company 12 160 Figure 5.14: Timing and Decision-Making: Company 12 161 Figure 5.15: Finances: Company 12 162 Deal Profile: Company 16 Figure 5.16: Deal-Making Background: Company 16 163 Figure 5.17: Timing and Decision-Making: Company 16 164 Figure 5.18: Finances: Company 16 165 Deal Profile: Company 17 Figure 5.19: Deal-Making Background: Company 17 166 Figure 5.20: Timing and Decision-Making: Company 17 167 Figure 5.21: Finances and Key Challenge: Company 17 168 Deal Profile: Company 7 Figure 5.22: Deal-Making Background: Company 7 169 Figure 5.23: Timing and Decision-Making: Company 7 170 Figure 5.24: Finances and Key Challenge: Company 7 171 Deal Profile: Company 9 Figure 5.25: Deal-Making Background: Company 9 172 Figure 5.26: Timing and Decision-Making: Company 9 173 Figure 5.27: Finances: Company 9 174

Companies Mentioned

- Abbott Labs - Ablynx - ADVENTRX Pharmaceuticals - Allergan - Altus - Amgen - Amylin - AstraZeneca - Bayer Schering - Biogen Idec - Boehringer-Ingelheim - Bristol-Myers Squibb - Caprion Proteomics - Celgene - Cancer Research Technology - Compugen - CytRx - DSM - Eisai - Eli Lilly - Epix - Eurand - Genentech - GlaxoSmithKline - Implicit Bioscience - Janssen-Cilag - King Pharmaceuticals - Lexicon - MedImmune - Merck & Co. - Merck Serono - Nerviano Medical Sciences - Neurochem - Neurogen - Novartis - Novo Nordisk - NPS - Onyx - Pfizer - Primus - Procter & Gamble - Purdue Pharma - Roche - Sanofi-Aventis - Solvay - Valeant Canada - Vifor