By Michael German, Mark Goodman and Henry Lebowitz
In recent years, larger pharmaceutical companies have expanded their developmental pipelines by entering into collaborative agreements with smaller drug-development companies to in-license potential new products.
When successful, such agreements allow the licensee to expand its drug portfolio and the licensor to take advantage of the licensee’s expertise. When such agreements fail, however, the result is often that one or both sides suffer significant economic and reputational harm. Lawsuits invariably follow soon thereafter. Litigating these types of cases is costly, and the loser is often faced with a large monetary penalty. While licensees in these types of collaboration agreements often have the resources to manage such litigation, licensors do not.