Pharma Out-Licensing Process Essentials: Key Steps and Strategies

Pharma out-licensing is a strategic approach where a pharmaceutical company licenses its assets, such as drugs or technologies, to external partners. The process and key steps of out-licensing are crucial for companies looking to expand their reach, enhance their product portfolios, and capitalize within the industry.

Pharma Out-Licensing Process Essentials: Key Steps and Strategies

This guide streamlines the out-licensing process, regardless of experience level, and covers the fundamentals of pharmaceutical out-licensing by examining regulations, observing market trends, enhancing partner communication, and offering guidance for more informed decision-making.

What is out-licensing in Pharma?

It involves one company (the licensor) allowing another company (the licensee) to use its intellectual property, such as patents or know-how, for a specific purpose, often in exchange for financial compensation, royalties, or other agreed-upon terms. 

This strategy helps a company reach a product or technology without the licensor having to handle all aspects of development, marketing, or distribution.

  • Out-licensing is a process that helps companies optimize their portfolios, foster innovation, and create mutually beneficial partnerships in the dynamic world of pharmaceuticals.
  • Out-licensing allows a company to grant external partners rights to develop or sell its drugs or technologies. 
  • This strategic approach allows the company to expand its reach, collaborate with other entities, and capitalize on shared expertise.
  • It involves sharing or licensing one’s pharmaceutical assets to external parties, enabling both parties to benefit from their strengths.
  • Because the licensee handles product development, approval, and marketing, it also helps the licensor reduce development risks. 

What are the differences between in-licensing and out-licensing in Pharma?

Pharma partnership deals come in two types: out-licensing and in-licensing. Out-licensing means giving another company the right to use your stuff and getting fees, milestones, and royalties in return. In-licensing, on the other hand, is when you pay another company for the rights to use their stuff and develop it further. Simply put, outlicensing is sharing your assets, and in-licensing is using someone else’s assets by paying for the privilege.

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What’s good to know before starting the licensing process?

Before diving into out-licensing in the pharmaceutical industry, it’s crucial to understand a few key points. 

  • Firstly, clearly define your goals and objectives for the out-licensing venture. 
  • Know the strengths and potential of your assets. Research and identify suitable partners who align with your objectives.
  • Understand the regulatory landscape to ensure compliance. 
  • Have a clear understanding of market trends and competition.
  • Establish a solid intellectual property strategy to protect your assets. 
  • Lastly, be prepared for effective negotiation, considering terms like royalties, fees, and milestones. 

Being well-informed about the aspects described below will enhance your chances of a successful and mutually beneficial out-licensing deal.

Development stage

Out-licensing later in development lowers risk and boosts value. Early out-licensing is riskier but shares cost from the start. Decide based on prioritizing lower risk and higher value later or sharing risks for cost benefits early on.


If the costs of finishing late-stage trials and selling a product are too high for the licensor, partnering helps share the financial risk and recover some investments made earlier. Yet, the licensor needs to balance this with getting the most value possible.

Patent development timeline

Out-licensing assets with early patent protection gives the licensee more time to use the technology before dealing with generic competition after the patent ends.


When a company lacks the needed skills, facilities, or resources to move an asset through late-stage trials and regulatory approval, it is necessary to find an external partner. 

Access to the market 

Expanding into new areas beyond the licensor’s initial focus becomes a profitable strategy through partnering. Many Western companies out-license assets to cover emerging markets, forming deals with regional companies in those areas.

Dealing with the competition

To deal with the competition in the pharma out-licensing sector, focus on innovation, robust partnerships, and unique value propositions. 

Continuously assess market trends, refine your offerings, and build strong relationships. 

Stay adaptable, prioritize quality, and establish a solid reputation to stand out and thrive in the dynamic pharmaceutical licensing industry.

Understanding the value

Checking an asset’s expected top sales, probable profit margins, and overall market opportunity helps decide if out-licensing is the best way to get the most value clinically, competitively, and economically. 

Multiple valuation methods are available for this assessment. Analyzing these intertwined factors gives a clear picture of when it’s right, what values to offer, and which partners to consider for a mutually beneficial deal.

Out-licensing partnering

To out-license a biopharmaceutical asset successfully, identify potential partners by researching companies active in relevant areas. 

  • Look for strategic synergies.
  • Consider firms with existing partnerships.
  • Attend industry events to network.
  • Use licensing databases to find suitable matches. 
  • Explore collaborations with major pharmaceutical companies.
  • Choose partners with established operations in target markets.
  • Search for researchers publishing related studies. 

An effective out-licensing partner possesses complementary capabilities, relevant experience, strong relationships, and strategic alignment. 

Establishing contacts and building relationships facilitates successful deal execution.

What are the steps of the out-licensing process?

Starting out-licensing in the pharmaceutical field means understanding the step-by-step details. Even though it might seem complicated, companies need to get the hang of these basic steps.

Dealing with legal stuff, finding potential partners, and discussing agreements are crucial. By doing these things right, companies can make their out-licensing process go smoothly and successfully.

  • Asset identification: Pharmaceutical companies identify valuable assets, such as drug candidates, technologies, or research findings, in their portfolio.
  • Market assessment: Conduct a thorough analysis to understand the commercial potential of the identified assets, considering market dynamics, competition, and potential partners’ interests.
  • Strategic planning: Develop a clear plan that outlines the scope of the license, including geographical regions, specific uses, and any limitations.
  • Intellectual property protection: Ensure the protection of intellectual property through patents to safeguard the value of the licensed property.
  • Partner search: Actively seek suitable external partners based on expertise, resources, and a track record that aligns with the strategic goals of the licensor.
  • Negotiation: Engage in negotiations with potential partners to define licensing terms, financial arrangements, milestones, and responsibilities.
  • Due diligence: Both parties conduct a comprehensive review of financial, legal, and technical aspects to ensure transparency and minimize risks associated with the collaboration.
  • Regulatory compliance: Navigate regulatory requirements to secure necessary approvals and ensure compliance with industry standards.
  • Implementation: Implement the collaboration plan with ongoing monitoring and communication to address challenges and ensure alignment with agreed-upon goals.
  • Revenue generation: As the licensed product progresses through development and commercialization, the licensor receives financial benefits, such as upfront payments, milestone payments, royalties, or a share of profits, as per the negotiated terms.


In wrapping up the essential steps of pharma out-licensing, it’s clear that this strategic process isn’t just about sharing; it’s about orchestrating success. From spotting valuable opportunities to forming partnerships, every step is vital. By adhering to this guide, not only discover new potentials but also contribute to a cooperative future in pharmaceutical innovation. 

If you have questions or need help with out-licensing, share your requirements with our experienced team. We’re here to assist you throughout the process.

Credevo In-licensing services in Pharma

The development of great products often needs a collaborative effort. Credevo’s In-licensing support is all about connecting with excellent products, and developers worldwide.

With Credevo’s global network of companies engaged in the development of new products or those looking for new products to invest in, it becomes easier to find such attractive opportunities.

Credevo offers its services in the United States, Canada, Europe, Australia, Japan, China, South Korea, and many other regions globally.

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