Strategic Implications of In-Licensing and Out-Licensing in the Asia-Pacific (APAC) Pharmaceutical Market: A Global Perspective

The history and interaction of the APAC pharmaceutical industry

In the dynamic landscape of the global pharmaceutical industry, the rapid expansion of pharmaceutical companies is noteworthy. While regulated markets, such as the United States and Europe, maintain industry leadership, the Asia-Pacific (APAC) Region, notably driven by countries such as China, Japan, India, and Australia, is experiencing explosive growth.

In the evolution of the pharmaceutical sector, projections indicate that the APAC region is poised for robust growth, transitioning from $70 billion in 2022 to nearly $132 billion in 2032. This trajectory sets the stage for significant shifts in the global pharmaceutical landscape.

Compared to its Western counterparts, the Asia-Pacific region boasts a distinctive pharmaceutical landscape characterized by a heterogeneous regulatory environment and diverse pharma industry infrastructures. Its innovative market access strategies set APAC apart, including unique business models such as in-licensing and out-licensing assets, effective stakeholder engagement, and a meticulous go-to-market strategy.

In-Licensing and Out-Licensing in the APAC market are pivotal in facilitating the transfer and acquisition of new innovations, technologies, or drug molecules within companies.

Understanding the Concept of In-Licensing and Out-Licensing

In the pharmaceutical sector, In-Licensing refers to the process wherein a company (the licensee) obtains the rights to a product or technology from another company (the licensor). This encompasses the rights to develop, manufacture, and market a particular pharmaceutical product, new formulation, or new technology for drug delivery. In-licensing enables the licensee to expand its product portfolio, access innovative technologies, and enter new markets without in-house development.

Advantages of In-Licensing:

• Expanding the product portfolio: In-licensing allows companies to acquire new products or technologies, diversify their offerings, and reach new markets.
• Accessing innovative technologies: By acquiring licenses to innovative technologies, companies stay competitive and keep up with industry advancements.
• Reducing development costs and risks: In-licensing saves time and resources associated with in-house development, mitigating risks related to product development and regulatory approvals.

On the other hand, Out-Licensing occurs when a pharmaceutical company (the licensor) grants the rights of a product or technology to another organization (the licensee). The licensor typically receives royalties, upfront fees, or milestone payments from the licensee. Out-licensing enables the licensor to generate revenue, capitalize on the licensee’s expertise, or enter new markets through an established presence.

Advantages of Out-Licensing:

• Generating revenue: Out-licensing allows companies to monetize their assets, generating revenue through royalties, upfront fees, or milestone payments.
• Capitalizing on the licensee’s expertise: Companies can leverage the licensee’s expertise in product development, regulatory approvals, and marketing.
• Mitigating risks: Out-licensing helps companies reduce risks associated with product development, as the licensee assumes responsibility for development, approval, and marketing.

Impact of Licensing in APAC on the Global Market

In-licensing is particularly crucial in the pharmaceutical industry, allowing companies to acquire rights for marketing or developing products or technologies from other companies. With the rising prices of licenses in the highly innovative US biotech industry, many pharmaceutical companies are seeking alternative sources of innovation outside the US, making APAC a land of opportunities.

Recent collaborations, such as Incyte Corporation’s global license and collaboration agreement with Jiangsu Hengrui Medicine Co., Ltd., highlight the increasing trend of Chinese biopharma out-licensing their drugs to global players.

In developing New Chemical Entities (NCEs), Indian generic players have been active out-licensors, developing technology/drug molecules up to a specific phase and then out-licensing them to major pharma companies. Examples include Zydus Cadila, Dr. Reddy’s, Glenmark, and Sun Pharma.

Recognizing the potential, some Indian pharmaceutical companies have embraced in-licensing as a strategy for rapid growth in the competitive market. Notable companies include the UK Modi group (Win Medicare, Modi-Mundipharma), Elder Pharma (acquired by Torrent Pharma), Walter Bushnell, Emcure, Alkem, Dr. Reddy’s, Torrent, Glenmark, USV, Zydus Cadila, Cadila Pharma, Sun Pharma.

Glenmark Specialty SA’s licensing agreement with Jiangsu Alphamab Biopharmaceuticals and 3D Medicines (Beijing) Co for envafolimab (KN035) across multiple regions indicates the expanding collaborations in the APAC pharmaceutical market.

A Strategic Approach to In and Out-Licensing in the APAC Market

The adaptation of in-licensing processes in the APAC pharmaceutical industry aims to address new drug development and innovation challenges by seeking access to US/EU investors and partners. This approach facilitates enhanced healthcare services for customers. It enables major global biotechs to develop NCEs at a lower cost by reducing phase III and phase IV trial expenses in APAC.

In conclusion, the Asia-Pacific pharmaceutical market, characterized by a unique blend of established and emerging players and innovative strategies, is poised to redefine the global pharmaceutical industry outlook. The next few years promise exciting advancements, making the region a focal point of global pharmaceutical endeavors.

At Product-Life Group, we aim to strategically partner with our customers in their journey from drug development to market approval. With over 30 years of rich experience in drug development, regulatory affairs, and clinical trials, we offer comprehensive solutions for pharmaceutical companies seeking to streamline operations, maximize efficiency, and demonstrate the value of their products.