Licensing demand for biotech products will increase

The recent acquisition of Forest Laboratories Inc. by Actavis for USD 25bn shows the trend of generic producers to move into the innovative drug space. With fewer blockbusters on the market, companies focused on generics will need to move into innovative therapeutics.

The acquisition of Forest Laboratories Inc. by Actavis is a clear sign where the future growth of generic companies will be – it’s the patent protected innovation. Such projects can either be generated in-house or through licensing / M&A of innovative young biotech companies. Through the extension of the business model of generic companies, they will be able to control the whole life cycle of drugs from the patent protection into the generic phase. Novartis has actually implemented this approach many years ago with the purchase of Hexal and Eon Labs, for USD 7.3bn in 2005, which later became Sandoz. Now generic companies are going the opposite direction from generic to innovation.

The same trend we also notice in Asia where many generic companies are based. There is an increased appetite for innovative projects from Europe and North America. Based on our own analysis of data in Biotechgate where we track which companies are looking for what kind of in-licensing opportunities, the demand in Asia is led by China, followed by South Korea. About a third of the companies that are seeking in-licensing projects in Asia focus on oncology followed by metabolic diseases. In terms of stage, over half are looking for pre-clinical products and about a forth for clinical stage products. Find more information on Biotechgate and what companies are looking to in-license here.