The in- & out-licensing processes at a glance

The out/in-licensing process consists of 8 distinct and consecutive steps, of which the most critical step is the first one: the licensing strategy. As with any business process: if you don’t know where you are going at the start, the only certainty is that you will not get there! This strategy will determine what products a company may be seeking to either inward or outward license.

The preparatory steps required will differ for inward and outward licensing activities because outward licensing involves selling the product, whilst inward licensing involves selling the company as a partner.

The processes meet when the licensor and licensee establish contact to explore partnership opportunities.  A successful outcome can be enhanced by following a well-planned contact process, but this should always be flexible enough to allow for serendipity – the chance for unplanned contacts with potential partners.

Once an opportunity is identified, then two activities will run in parallel: the evaluation and due diligence of the product and of the potential licensing partner, and the legal processes, which include negotiation of a term sheet and a full agreement. Proper management of these activities can go a long way to ensuring a successful outcome.  Of course, signature of a deal is the start rather than the end of the process, and successful deals will always depend upon a clear implementation strategy that ensures both partners can get what they are seeking from the deal.