A top brand in the GW portfolio was in the waning years of its product life cycle. Yet, despite its financial importance (4th largest brand in the Company), little had been done to develop an end-of-life management strategy. Leisa Dennehy, currently a principal of BioPharma Consultants, Ltd. was assigned the brand. As her first priority, Leisa initiated a complete analysis of strategic options available from "stay the course" to "abandon." Surely, Leisa thought, there must be something in between theses extremes that would meet our corporate goals while minimizing risk?
Due diligence on emerging trends suggested that "small pharma" was interested in-licensing under-resourced older brands. Why? They realized they could put the resources behind "forgotten" brands to tap into overlooked potential. Out-licensing the brand had its obvious advantages, but it also had its pitfalls. After the big windfall of the out-licensing earnings, in future years, the brand originator has to contend with a gaping revenue hole.
"An industry environment analysis made it apparent that a hybrid between a promotion agreement and an out-license agreement could allow GW to meet its future financial goals while minimizing risk and resource commitment," says Leisa. She sponsored a "Deal Team" to bring this vision to reality and began evaluating potential partners.
The team began to work out all financial, legal, regulatory and marketing terms. They had to work fast. The average licensing deal takes many months and it was already April. If the deal was not complete by September in order to hand over the brand at the beginning of the next Respiratory season, the financial benefits behind the deal would fall through.
"I remember feeling like a presidential candidate asking for the vote when I lobbied the Deal Team to close a deal in six months," says Leisa." I painted a vision of how this would provide major financial benefits while minimizing risk. Apparently, my passion and logic struck a chord." Team members agreed to make the project an A priority. A team leader was assigned the mission to close a great deal with the right partner within five months.
The team quickly issued an RFP, screened candidates, and initiated due diligence with top candidates. The deal closed. Never before in GWs history had such a complex deal gone from "idea" to "signed" in under six months. The structure of the distribution agreement gave Distribution, Sales and Marketing rights to the licensee, while GW remained the owner of the intellectual property and continued to manufacture and administer regulatory actions. GW was able to discontinue all commercial investments, and yet still receive a guaranteed revenue stream each year until the license ended. This novel deal structure guaranteed that major financial goals would be met, but avoided the downsides of traditional out-licensing deals.