Practical Strategic Reasons For Manufacturers Licensing A Medical Patent

Medical Patents Broker Inc.
By Kenneth Pearce, President

In business, there are usually more questions than answers. The “Why” behind an action ranges from “gut feelings” to extrapolated AI predictions or a group consensus. The variables associated with the end game—the ultimate win or loss—are infinite. Some of the reasoning associated with the licensing of a medical patent includes the following:

1) Infringement Suits Drain Capital

If a medical patent appears to be valid, an exclusive license can be the remedy for a potential defendant. For example: your company’s invention uses three carbons and a hydroxyl group, but a university professor’s prior patent uses two carbons and a hydroxyl group. To prevent infringing the university’s patent, the midcap company licenses the university patent, pays a royalty, and pushes its three-carbon pharmaceutical over the finish line. This strategy provides the licensee with a "Freedom to Operate" shield.

2) When the Legal Monopoly Dies

Every year, there are medical patents whose terms are deeded back to the public because the available Hatch-Waxman extensions have been burned. The great invention becomes a generic. The patent holder has limited options: reduce production of the brand name, slash prices to compete with generics, or quickly replace the brand name with a newer patented invention.

The brand-name company can license a next-generation medical invention that has positive Phase II results and looks promising in Phase III. This is a shortcut to market and an upgrade in the current space. The upgrade increases the potential of keeping current patients and adding new ones. This symbiotic relationship can roll along until the end of the life of the new patent and its own Hatch-Waxman tail.

3) The 510(k) Special

Regulatory speed is a form of medical currency. If a manufacturer licenses an invention that already has clinical data and a clear predicate path, the launch can occur significantly sooner than competitors. This "laundry" can shave two years off a launch schedule. The license can extend the current market share of a closely related previous device that buyers already know. Plus, it’s “New and Improved!”

4) The Best Offense is a Good Defense

Sometimes, a company takes an exclusive long-term license just to "bury it" so no other entity can use it. If you are the licensor, you must ensure there are substantial annual or quarterly payments (minimums) to ensure you have steady cash flow, even if the licensee chooses to keep the technology in the barn.

The President’s Viewpoint

Licensing is just another tool where the medical patent can benefit both the Licensor and the Licensee. Licensing is akin to insurance; virtually anything can be insured, and virtually anything can be licensed. Similar to that famous London insurance market maker, MPB is glad to be your medical patents marketplace.