Kellogg on Biotech

Value drivers in licensing deals

by Katie Arnold KSM ’02, Anthony Coia KSM ’02, Scott Saywell KSM ’02, Ty Smith KSM ’02, Scott Minick (Archventures, Seattle, Washington) and Alicia Löffler, Kellogg School of Management, Northwestern University

This paper analyzes the value drivers for human therapeutic licensing deals. Value drivers are defined as those variables/factors that have an impact on the resulting size of the deal, and therefore drive the value of the deal. It provides necessary information for managers to derive a potential licensing strategy for drug development companies. The study incorporates quantitative and qualitative data from over 100 human therapeutic biotech deals and interview surveys with over a dozen key industry executives. The analysis of value drivers and levels of significance is determined by regression analyses.