Big Pharma Licensing Trends, 2014-18

Big Pharma Licensing Trends, 2012–18
Big Pharma deal-making volume and value peaked in 2015, and fell slightly in 2016–18
Between 2014 and 2018, Big Pharma companies signed a total of more than 1,450 drug-focused deals, growing at a compound annual growth rate of 3%. Deal volume jumped 24% from 2014 to 2015, but dropped 6% in 2016, and remained relatively flat in 2017 and 2018.

Seven Big Pharma dealmakers inked more than 100 deals apiece (in- and out-licensing combined) during the five-year period, collectively signing 920 deals
AstraZeneca was the top Big Pharma dealmaker, with 169 alliances. The company also led in out-licensing volume with 66 deals. Johnson & Johnson was second behind AstraZeneca in total deals, followed by Roche.

The rate of Big Pharma's in-licensing activity outpaced out-licensing
Big Pharma companies signed two to three times as many in-licensing agreements as out-licensing deals annually between 2014 and 2018. Out-licensing peaked in 2015 (98 deals) and again in 2017 (100 deals).

Oncology, neurology, and endocrine, metabolic, and genetic disorders (EM&GD) were the top three therapeutic areas for Big Pharma in-licensing
Approximately 45% of Big Pharma in-licensing involved oncology drugs, including a significant portion in the immuno-oncology field. Nearly a third of Big Pharma out-licensing focused on oncology as well. Neurology comprised 11% of all in-licensing deals. The category had five deals with potential values greater than $1bn, led by Teva’s deal to in-license fasinumab from Regeneron, worth $2.6bn.

During the five-year period, payment metrics on all in-licensing deals diverged
Total deal values gradually increased between 2014 and 2018; however, upfront deal values remained generally flat over the five-year period. In 2014 and 2017, upfront values took off considerably thanks to several outlier deals; the $4.5bn and $3.5bn in upfronts in those years, respectively, represented nearly half of all upfronts made during 2014–18. Merck spent the most money on in-licensing over the five-year period, paying out more than $3.3bn in total upfront value.

Big Pharma balanced its in-licensing efforts for drugs across all development phases, but preclinical candidates led
For deals where the phase was disclosed, in-licenses for preclinical candidates topped the list in terms of volume and total deal value over the five-year period. The proportion of Phase III deals shrank considerably, while Phase II alliances decreased through 2016 but rebounded in 2017 and 2018. This trend may be a result of the scarcity of Phase III assets as well as the valuations those later-stage drug candidates can command.

Most Big Pharma alliances covered rights in select regions across the major markets
Regional deals made up 32% of the total Big Pharma in-licensing deals, compared with 30% that were conducted for rights just in North America, followed by worldwide deals at 23%. The proportion of worldwide rights fell relatively steadily from 2014 to 2018, albeit slowly. Global rights deals continue to comprise more than a fifth of all in-licensing deals by Big Pharma.
Big Pharma companies continued to structure most in-licensing deals with an R&D component
Over the five-year period, 62% (639 of 1,021) of in-licensing deals included development or co-development, and 55% (539 of 1,021) involved research and discovery. Big Pharma out-licensing also involved collaborative deal structures, including development/co-development, commercialization, and research/discovery. However, straight licensing led the overall out-licensing group. Co-development/development deal structures consistently led in proportion across the early-stage phases. As deals move to later stages, including Phase III and marketed drugs, the structures of the agreements change to include more acquisition and commercialization components.

OVERVIEW

KEY POINTS AND OVERALL TOTALS

Deal volume holding steady, but Big Pharma's overall share was small
Big Pharma represented the majority of deal-making spend
Five years of lucrative Big Pharma deal-making
Bibliography

COMPANY ANALYSIS AND CASE STUDIES

AstraZeneca was the leading dealmaker by overall volume within the Big Pharma peer set
Johnson & Johnson’s in-licensing volume is high but trending downward
Roche’s in-licensing is surging, led by oncology
Pfizer's in-licensing fluctuated while out-licensing efforts decreased
Merck & Co’s in-licensing drives strategy to become oncology leader
Overall, out-licensing remained flat
Bibliography

THERAPY AREA ANALYSIS

Oncology dominated Big Pharma deal volume
Neurology deal-making gained speed
Diabetes powerhouses led in EM&GD deals
Oncology also led in terms of partnership dollar values
Oncology was also the focus of most out-licensing deals
Bibliography

DEAL ECONOMICS

Merck & Co was the top dealmaker by dollars spent within the Big Pharma peer set
Sanofi's billion-dollar deals provided a strong position
Merck and Bristol-Myers Squibb spent large upfront sums
Payment metrics on deals remained steady
Average deal values increased
A higher proportion of deal value was still locked up in milestones
There were 54 billion-dollar deals between 2014 and 2018
Bibliography

PHASE ANALYSIS

Early-stage candidates dominated partnerships
Phase I and II candidates led in aggregate upfront payments
Upfront payment sizes fluctuated by year and by development stage

GEOGRAPHIC BREAKDOWN OF DEAL-MAKING

Worldwide deal-making has shrunk

DEAL STRUCTURES

R&D was the most common component of deal structures
In-licensing deal structures varied across phases
Option-based deal-making is possibly making a comeback
Bibliography

APPENDIX

Scope
Methodology

LIST OF FIGURES

Figure 1: Big Pharma’s deal-making volume, 2014–18
Figure 2: Big Pharma’s deal values and share of overall deal-making value, 2014–18
Figure 3: Big Pharma deal-making value ranges, 2014–18
Figure 4: Big Pharma’s deal volume, by company, 2014–18
Figure 5: Big Pharma’s licensing deal volume CAGR, 2014–18
Figure 6: AstraZeneca's deal-making activity: 2015–17 out-licensing surge
Figure 7: AstraZeneca's in-licensing deals, by therapy area, 2014–18
Figure 8: AstraZeneca's out-licensing deals, by therapy area, 2014–18
Figure 9: Johnson & Johnson’s deal-making activity, 2014–18: in-licensing declines
Figure 10: Johnson & Johnson Innovation in-licensing deals, by volume, 2014–18
Figure 11: Johnson & Johnson Innovation in-licensing deals, by therapy area, 2014–18
Figure 12: Johnson & Johnson's in-licensing deals, by therapy area, 2014–18
Figure 13: Roche's deal-making activity, 2014–18: in-licensing increased while out-licensing was flat
Figure 14: Roche’s in-licensing deals, by therapy area, 2014–18
Figure 15: Roche’s out-licensing deals, by therapy area, 2014–18
Figure 16: Pfizer's deal-making activity, 2014–18
Figure 17: Pfizer’s in-licensing deals, by therapy area, 2014–18
Figure 18: Pfizer's out-licensing deals, by therapy area, 2014–18
Figure 19: Merck & Co's deal-making activity, 2014–18
Figure 20: Merck & Co's in-licensing deals, by therapy area, 2014–18
Figure 21: Big Pharma’s out-licensing still outpaced by in-licensing, 2014–18
Figure 22: Big Pharma’s in-licensing/out-licensing activity, by company, 2014–18
Figure 23: Big Pharma’s in-licensing deals, by therapy area, 2014–18
Figure 24: Big Pharma’s deal volume, by therapy area, 2014–18
Figure 25: Big Pharma’s in-licensing deals, by therapy area and phase of development, 2014–18
Figure 26: Big Pharma’s immuno-oncology deals as a share of all oncology deals, 2014–18
Figure 27: Top oncology in-licensing dealmakers, 2014–18
Figure 28: Big Pharma in-licensing volume, 2014–18: oncology, then the rest
Figure 29: Big Pharma’s in-licensing deals, by total deal value, 2014–18
Figure 30: Value of upfront and milestone payments of in-licensing deals, by therapy area, 2014–18
Figure 31: Big Pharma’s out-licensing deals, by therapy area, 2014–18
Figure 32: Big Pharma’s big spenders on in-licensing deals, 2014–18
Figure 33: Big Pharma’s licensing payments, by payment metric, 2014–18
Figure 34: Big Pharma’s in-licensing deals, by payment metric average, 2014–18
Figure 35: Total upfront payment values and upfront payments as a percentage of in-licensing deal value, 2014–18
Figure 36: Big Pharma’s in-licensing deals, by phase of development at deal signing, 2014–18
Figure 37: Preclinical and Phase I in-licensing deals hold sway, 2014–18
Figure 38: Strong representation across all phases in Big Pharma’s in-licensing deals, 2014–18
Figure 39: Marketed products dominated Big Pharma’s out-licensing deals, 2014–18
Figure 40: Big Pharma’s in-licensing deal economics, by phase of development, 2014–18
Figure 41: Big Pharma’s average upfront payments for in-licensing deals, by phase of development, 2014–18
Figure 42: Big Pharma’s average total deal values for in-licensing deals, by phase of development, 2014–18
Figure 43: Big Pharma’s in-licensing deal volume proportions, by licensed geography, 2014–18
Figure 44: Big Pharma’s out-licensing deal volume proportions, by licensed geography, 2014–18
Figure 45: Big Pharma’s worldwide in-licensing deals decreased and North American carve-outs increased, 2014–18
Figure 46: Geographic breakdown of in-licensing geography, by Big Pharma company, 2014–18
Figure 47: Big Pharma’s in-licensing deals, by deal structure, 2014–18
Figure 48: Big Pharma’s out-licensing deals, by deal structure, 2014–18

LIST OF TABLES

Table 1: Big Pharma's lucrative immuno-oncology deals, 2014–18
Table 2: Big Pharma’s in-licensing deal values, by company ($m), 2014–18
Table 3: Top 10 Big Pharma in-licensing deals, by deal value, 2014–18
Table 4: The author's Big Pharma peer set

Table of Contents

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