Collaboration has always been important in the life sciences and medical device sectors and in the current economic climate effective partnering is be even more vital to driving development of new products.
Charles Darwin said, “In the long history of humankind those who learn to collaborate and improvise most effectively have prevailed.” Recent research in the sector confirms that this still holds true.
When the management consultants PricewaterhouseCoopers (PwC) recently carried out a survey of the industry in Scotland, Martin Cowie, Biotech and Life Sciences specialist at PwC Scotland, commented that, “If the industry is to unlock the potential that is undoubtedly out there, then it is not just a matter of being more efficient. A more collaborative approach is also required: this can accelerate and facilitate innovation and discovery and development, which in turn can reduce costs and benefit both large and smaller companies.”
What does collaboration mean in practice?
Collaboration can take many forms. Large companies with big research budgets can work with small companies to develop niche products; small companies may collaborate together, sharing research costs to allow faster and more cost-effective product development and to increase market penetration; academic institutions work with companies of all sizes.
Communication is the key
Successful collaboration is all about communication. It is essential that the parties take time at the outset of any project to consider how they will approach and resolve the key issues:
- Who will own the intellectual property (IP) contributed to the project?
- Who will own the new intellectual property created as a result of the collaboration?
- What are the roles of each party in the collaboration?
- Who will manage the project?
- How will parties communicate with each other and with third parties?
- How will decisions be taken?
- What are the consequences of termination or default?
- What are the dispute resolution mechanisms?
Discussing these issues with partners at the outset of a project will be seen as taking a proactive and commercially responsible approach to managing the collaboration. If the project requires grant or bank funding, a formal collaboration agreement is likely to be a precondition of access to that cash.
Models for Collaboration
There are endless possibilities for structuring collaborative/partnering relationships, which allows for bespoke agreements to meet the individual needs of any project. As a starting point the most common models in relation to research collaboration are:
- The university owns the new IP and grants a non-exclusive licence to its partner to use this IP in a specified type of business or location.
- The university owns the new IP and licences its partner to use this in a specified type of business or location, and the partner also has a right to acquire an exclusive licence/assignment of that IP.
- The partner owns the new IP but the university retains the right to use and publish this for academic purposes, provided that the ability to obtain a patent is not affected.
- The partner owns the new IP and the university has no right to publish or use it at all.
Moving away from research-type contracts, other collaborations are often multi-party arrangements. Again, these can be specifically tailored for the needs of each individual project. The starting point for discussions is usually as follows:
- Each party owns the IP and results it creates and grants the other parties a non-exclusive licence to use the results for the purposes of the project and for any other purpose thus allowing any party to exploit the results.
- If an exploitation strategy has been agreed in advance and it is intended that one of the partners carries out the exploitation, the other parties can assign their IP and results to the party that undertakes to exploit. In return there will be a share of the revenues generated from the exploitation, or lump sum payments.
- Appropriate commercial terms can be agreed relating to the exploitation of those results.
- It is possible that each participant will wish to own the IP and results that it creates and to grant the other parties a non-exclusive licence to use them for the purposes of a specific project only. If any member wishes to use the IP for something else, it will have to negotiate a licence at the appropriate time. This is more than likely where no exploitation strategy for the end results of the project is agreed in advance.
In all collaboration agreements, it is important to ensure that the terms of the collaboration are acceptable to any funders, including those providing grants or other public sector funding.
Getting good legal advice at an early stage can allow agreement to be reached more quickly and ensure that the commercial interest of all parties is properly protected.
Getting products to market
Partnering, collaboration and joint ventures are undoubtedly the way forward for the life sciences industry. Investors are increasingly cautious about supporting businesses in this sector given the long-term nature of any such investment. Using collaborative models can provide a cost effective and efficient way to move projects forward and can shorten the route to market.
Those companies that adapt most quickly to a more collaborative way of doing business will increase their chances of economic success and find it easier to attract funds.Catherine Feechan, is a Partner in the Corporate Team, Brodies LLP, a commercial law firm based in Scotland. She can be contacted by phone at +44 (0)141 245 6747, or by email.