In 2003, licensed products accounted for more than $70 billion in revenues for the top 20 global pharma companies. And according to research by Wood Mackenzie, that figure will top $100 billion by 2008 and will represent nearly a third of the industry's total projected revenue. By these measures, licensing is and will continue to be big business for Big Pharma. In fact, some companies embrace it as their core business development strategy. This article highlights some of the findings of a 2004 study that reviews the evolution of Big Pharma's R&D licensing strategies during the last 15 years. (See "Study Methodology,".)
Interestingly, the greatest number of deals is not the same as the greatest degree of financial success. Pfizer has the most revenues from licensed products, although it has fewer deals than GSK. Pfizer's revenues from licensed products, including Lipitor and Celebrex, topped $15 billion in 2003. Bristol-Myers Squibb pulls in the most money in terms of pure sales from licensed products.
Geographically Desirable The United States continues to be the most active region for licensing activity, with 55 percent of the deals struck by large pharma companies taking place with US-based companies. Europe accounts for 28 percent of the total, Japan contributes 15 percent, and the remainder is spread throughout the world.
An interesting cultural difference is playing out on the global stage. European and US companies collaborate with US, European, and Japanese companies in similar proportions, reflecting the global nature of pharma R&D on both sides of the Atlantic. In contrast, Japanese companies strike the greatest proportion of deals locally. Takeda, for example, positions itself as the partner of choice for smaller firms in Japan, but also for Japanese companies seeking to extend their international presence.
A few companies exhibit geographic preferences—80 percent of Pfizer's deals are with US companies, for example, while 70 percent of BMS's agreements are with non-US companies.