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Kellogg on Biotech

Working together in the pharmaceutical, Biotechnology and Medical device Industries: Contractual Terms and Conditions

By Joseph Schohl KSM'04

Collaborations between companies is essential for success in the pharmaceutical, biotechnology and medical device industries. The efforts required to bring a therapy from discovery through development, regulatory approval, manufacturing and marketing are rarely the result of one company’s efforts. Instead, there is typically joint activity at one or more stages along the product development timeline. Collaboration is a broad concept and can be better understood by examining the specifics of the types of agreements into which companies usually enter. These range from traditional product and technology licenses that allow one company access (whether exclusive or not) to another’s intellectual property to full-scale research and development and, eventually, commercialization agreements between two companies. Although each deal is unique, collaborations can be categorized into several basic structures for further analysis. This paper examines the various types of collaborative efforts commonly undertaken by companies in the pharma, biotech and medical device sector. By studying actual legal provisions in contracts governing real-world examples of each type, the author explores the basic structure, motivating factors, and key issues raised by each type of arrangement.

©2007 Kellogg School of Management, Northwestern University