Biotechs "set to seek higher royalties, increased IPR share"

The near-complete sequencing of the human genome is raising theimportance of platform technology agreements, which offer smaller biotechnology companies the chance of greater recognition and revenue, says a new Datamonitor study. However, it adds, these firms still generally end up with less than they bargained for in licensing negotiations.

Most such deals have a relatively short-term perspective, due to the in-licensors' dominant negotiating position and the technology owners' need for cash, as reflected in fee-for-service payments to the out-licensor and no significant royalties on sales. Non-exclusive licensing in the form of fee-for-service gives the out-licensor immediate return on investment, but does not foster effective long-term relationships, says the study.

To alleviate the imbalance in payment and intellectual property rights, the study suggests combining fee-for-service and royalty payments on products resulting from platform agreements. Both sides should share ownership of such products, taking account of the differences in each partner's contribution. For example, it says, rights to resulting products could be split by indication or therapy type - Roche and deCode Genetics' 1998 agreement being an example of a product split by therapy type - while to promote shared responsibility, the owner of a technology platform should receive royalties on sales of resulting products of around 5%.