The Shifting Mix

Even if it is difficult to determine the true value split of confidential deals, a definite shift occurs in the comparable deal-term mix for products early in development, compared to drugs later in development. Of course, the prices paid for products are higher as they survive development, but it is also evident that the deal-component mix shifts. Early product deals are heavier with contingent milestones, while later-stage deals merit higher upfront fees and equity investments. Deal-makers adjust the terms of the deal in order to balance risk and cash at risk.

All deals are different. Finding two identical product-license or acquisition opportunities is no more likely than finding two identical poker hands. Like each bet at the gaming table, the wagers and payoffs of pharma deals must be condsidered on their own merits, using careful due diligence to achieve a beneficial deal structure.