Licensing involves receiving permission from a company, referred to as licensor, to manufacture and sell its product within a certain defined market area. The company which receives this license, known as licensee, pays a royalty fee to the licensor, which is the original owner or innovator of that product.
When an organization enter clinical trial for their drug product, they usually look for another company with whom they can make licensing deal to manufacture and sell their innovative drug product in the specified market. This licensing opportunity is beneficial for both the parties involved.
Licensing opportunity is high when a molecule is under development for certain disease. Depending upon its safety and efficacy in the trial, the licensing opportunities increases, as the chance of launching that molecule increases.
For example, to identify licensing candidates (referred to as molecules/drugs in clinical trial) for Diabetes, the following things are required to analyse the overall deal.
How many candidates are under development
The first to analyse is the number of candidates that are under development for Diabetes, as it ill gives an idea of exactly how many molecules/candidates can be available for licensing in future.
As of now there are approx. 6200 candidates present in clinical trial for Diabetes.
In what phase of development
The next thing to analyse is the number of candidates present in different phases of development. This will give an idea of how many molecules are present in all phases and the ones in phase 3 will have more chances to be launched.
For diabetes, there are approx. 2000 candidates that are present in Phase-3, which gives a high licensing opportunity for the companies.
MOA (Mechanism of Action) Study
When entering licensing deal, it is important to understand the exact mechanism by which the molecule will work in the body.
Study safety and efficacy data
Any organization before making a licensing deal, always looks at the safety and efficacy data for that candidate, because if the candidate’s safety and efficacy information is not positive, then dealing in such molecules will be a waste of time. So, it is important to study safety and efficacy data of the molecule for which one is thinking to take license.
Study commercial aspects
A licensing deal is made to manufacture and commercialize the molecules in the market and knowing the commercial aspects is essential.
If a molecule does not have a good future forecast, some companies will not find it worthy for the investment. So, when making a licensing deal for a molecule, make sure that the future forecast of that molecule has a good growth rate.
Recommendation of molecules
It is always better to get recommendation of molecules that can give a profit in the coming years. Recommendation of molecules can be done based on its progress in clinical trial, such as its safety and efficacy. If a molecule has entered Phase-3, it is likely that it will be launched in the market and will also have high safety and efficacy factors.