Expert insight:

Test your knowledge of pharmaceutical licensing

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By David Scott, expert-trainer of The Pharmaceutical Out-Licensing Course.

Here are 8 questions that test your understanding of the licensing processes.  See if you have the knowledge to help ensure your company does successful deals! Scroll down for all answers and explanations.

1) Which of the following elements are NEVER included in any licensing deal?

  1. Corporate development policy
  2. A combination of fixed and variable payments
  3. Product warehousing and distribution
  4. A level of exclusivity defined in terms of geographical and therapeutic areas
  5. A sales force deployment plan
  6. Rights to a patent or trademark

2) What is meant by the term “Field” in a licensing agreement?

  1. The countries where the product is marketed
  2. The therapy areas included in the agreement
  3. Where the product is tested for agricultural residues

3) Which one of the following statements is an accurate description of co-promotion?

  1. Co-promotion involves two companies marketing different brands of the same product
  2. Co-promotion involves two companies marketing the same brand in the same country
  3. Co-promotion involves two companies marketing the same brand in different countries

4) Which one of the following statements is true?

  1. A termsheet is a binding agreement and commits both parties to the deal
  2. Heads of Agreement are sometimes used as a means of setting out a legally binding summary of the intended agreement
  3. Nothing is legally binding until the final licensing agreement is signed
  4. The termsheet should never be written down

 5) What is the best approach to contact a target company?

  1. It is better to write to all potential targets rather than miss a potential opportunity
  2. It is best to make verbal contact directly with the licensing manager in the target before sending anything in writing
  3. You should only make direct contact with people you know

6) Under due diligence, what is the licensor legally obliged to do?

  1. Disclose all confidential data once a CDA is in place
  2. Disclose all the potential negative information on the product
  3. Answer truthfully any questions raised.

7) For a development product being out-licensed, which is the first material to be prepared at the start of the licensing activity?

  1. A Termsheet
  2. Confidential prospectus
  3. Non-confidential brochure

8) As a licensing executive seeking partners, how many different companies should you manage “live” at any one time?

  1. As many as possible
  2. Up to four
  3. Just one




1) A - C - E

All agreements need to identify what products are to be included, and what levels of exclusivity are involved.  Licenses usually grant rights to use the patents and (where they exist) trademarks that protect the product, and will normally define what payments are to be made to the licensor.  A company corporate development may be important in justifying why a license is needed, but has no relevance to the actual agreement.  Details of the sales deployment and distribution activities are obviously important to the licensee, but again would not be referred to in the actual license agreement as they would not normally involve the licensor.

2) B

In the pharmaceutical world, the Field is often defined in terms of the therapy areas for which the product may be used. If other potential applications are found outside this definition, they would not be covered by the agreement. For this reason many agreements define the field as “all human therapeutic or diagnostic uses”

3) B

Two companies marketing different brands of the same product is called “co-marketing”

4) B

A termsheet is usually (but not always) a written, but not signed, non-binding summary of the intended agreement that can be used by lawyers to draft the actual agreement. A signed “Heads of Agreement” is legally binding and can result in damages being paid if a final agreement is not signed. Although the legal relationship between the two companies will be primarily defined by the final, signed, agreement, there may be other signed documents that are also legally binding such as a representation or a confirmation of a particular product specification.

5) B

Unsolicited letters and emails frequently go unanswered, so it is always best to try and speak with someone in the target company before sending anything to them. 

6) C

There is no obligation for the licensor to disclose everything (although it is sensible to tell a potential partner everything that they need to know) and it is up to the licensee to make sure they ask the right questions rather than expect the licensor to volunteer information on every aspect of the product.  However, if a question is raised, the licensor must answer truthfully or may become liable for mis-representation.

7) B

Although the first information given to a potential partner is the non-confidential brochure, the information for this should be taken from the confidential prospectus, which must be prepared at the start of the licensing activity.

8) B

You need to make sure you have the resources to deal with questions etc from potential partners and if you have too many live contacts it can be difficult to do this properly. Up to four companies probably represents a safe maximum.

The above test has been designed by David Scott, C.E.L.forpharma’s expert trainer in pharmaceutical licensing.  More detailed explanations of these answers and much more is to be found by joining David’s 2-day The Pharmaceutical Out-licensing Course.

Last update: September 2017