For decades, partnering was the lifeblood of large pharma and small biotech alike. Today, small biotechs increasingly have the upper hand as technology enables more competitive products and rich capital markets decrease the deal imperative.

Today’s open markets offer ever growing licensing opportunities and increased late-stage funding for biotechs. New players in the field offer a wider array of potential partnerships.

These factors afford biotechs greatly increased choice in how to fund their products, as well as enhanced leverage in selecting a partner and negotiating the details of a contract. As a result, transformational global collaborations throughout the industry are displaying new levels of creativity and flexibility. Companies are considering nonexclusive deals, shared territories and molecules, co-development and co-promotion rights, fast closings and other innovative structures.


Many emerging co-development partnerships centre on clinical trial collaboration. Changes in the regulatory environment have made it possible to combine two novel agents in a clinical trial, opening up new flexibility in clinical partnerships. These collaborations can take a variety of forms, such as sharing costs with the goal of also sharing clinical data, or providing a drug for a partner’s clinical trial in a combination setting.

Drug development, particularly in oncology, is moving at a rapid pace, and these clinical collaborations allow organisations to explore more possibilities, faster. By forming a partnership for Phase 1 research, parties can work together on an exploratory basis without the contractual burden of a long-term commercial agreement or exclusivity terms.


If a successful product has the potential to be used across multiple indications, biotechs may look to a partnership to maximise the value of their brand for indications that they lack the resources, time or expertise to develop. Partnership with a large pharmaceutical company, for example, can allow a biotech to extract additional value from its successful product. However these types of transactions are still relatively rare and can pose significant difficulties, such as antitrust concerns in the European Union and China. Careful negotiation is therefore key, and partnerships should be meticulously structured to avoid any overlap.


In recent years, China has become a major driver of global licensing deals, and a potential partner’s development capabilities in China and other Asian markets is often an area of keen interest for biotechs. China offers immense potential for reaching large numbers of patients in a short timeframe, thanks to rapidly growing investment interest in life sciences products. For example, a midsize biotech with operations in the United States and Europe recently partnered with a Chinese organisation to develop a drug for treatment of ovarian cancer. Within one year of signing the contract, the Chinese organisation was able to start pivotal clinical trials. It is expected that the final product will be available not only in China, but in other Asian markets as well, within another year.

Joint development partnerships, rather than geographic splits, are increasingly common in China and in other Asian markets. Pharmaceutical companies are working to develop multiregional global trials that enroll patients in China, the United States and Europe. While such trials facilitate approvals in multiple jurisdictions, they also raise complexities regarding allocation of responsibilities, costs, and rights to data and intellectual property.

Indeed, these issues soon may become even more pressing. The China Food and Drug Administration (CFDA) recently ruled that China will begin conducting clinical trials in accordance with International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) guidelines. This means that data from clinical trials conducted in China might be applicable for international regulatory filings in the future. Uncertainty remains, however, about how Chinese clinical trials would factor into multinational entities’ global clinical registration programs. The CFDA would need to release additional guidance regarding cross-border movement of tissue samples and certain types of data, as these currently are prohibited from being transferred outside of China.

It should be noted that Japan remains a very different regulatory environment from other Asian markets, and requires separate partnerships to leverage expertise specific to Japan’s development pathways.


When coming to the negotiation table, biotechs are wise to seek forward-looking contract considerations in the event of a successful product. Big pharma is engaging in licensing deals earlier than ever, not only in the pre-clinical stages, but sometimes even before pre-clinical assets are available. An increasingly important question for biotechs, therefore, is how to structure a contract to avoid giving away too much of the company’s value too soon.

Another key factor in ensuring a successful partnership, beyond financials and market capabilities, is cultural fit. For example, a small biotech may benefit from a partnership with another smaller organisation that is equally nimble and energised, and committed to similar goals and values.  

"Having a champion on each side of the partnership to handle the flow of information and manage day-to-day tasks is therefore vital"

Even after the contract is agreed, challenges still can and do arise in the operational aspects of a collaboration. Having a single strategic point of contact within each partner organisation can help smooth the process. This individual should have the organisational knowhow to identify employees responsible for key tasks and obtain necessary information or data, and thus facilitate the collaboration’s administrative aspects. The individual should also serve as a gate-keeper for information and resource requests, particularly in the case of a small biotech partnering with a large pharmaceutical company. The latter may have hundreds of employees on its teams and committees while the biotech might has only a dozen. Having a champion on each side of the partnership to handle the flow of information and manage day-to-day tasks is therefore vital.

Even in the best of partnerships, industry or corporate changes can throw a collaboration off course. Currently, almost 90 per cent of all licensing collaborations ultimately fail. Reasons for early termination can include loss of interest, change in corporate strategy or priorities, or lack of financial resources. Parties to a life sciences partnership should therefore conduct thorough due diligence on issues such as manufacturing practices, development capability, scientific understanding and regulatory requirements, and include in the contract clearly defined goals that are both firm and reasonable. Seasoned legal counsel with multijurisdictional experience can offer valuable assistance in navigating these various challenges, from pre-contract due diligence to licensing negotiations and beyond.