White Papers
Understanding Headline Deal Values A PharmaVentures Guide to the Interpretation of Deal Terms and Terminology
Deal making is the lifeblood of the pharmaceutical sector. In- and out-licensing and other types of agreements are key mechanisms by which intellectual property (IP) of innovative products and technologies is transferred between companies for achievement of development and commercialisation objectives. It is vital that companies execute good deals as this underpins their future profitability, drives share price and demonstrates management competency.
Benchmarking against past transactions is one of the fundamental ways that deal makers and analysts judge value and the appropriateness of deal terms. Many publicised deals do not reveal financial terms and those that do typically only report the headline deal value comprising minimal information about payments such as upfront, milestones, R&D and equity. Significantly, royalty rates, the deal component that normally represents the greatest value contribution to the IP licensor, are infrequently publicised with the norm to keep this information highly confidential.
To continue reading this article, please download the pdf from the section on the right.
