KNOWLEDGE

Collaborations in the Life Science Sector

Morton Fraser Senior Associate Julie Nixon
Author
Dr Julie Nixon, WS
Senior Associate
PUBLISHED:
11 March 2022
Audience:
Business
category:
Article

With British Science Week 2022 running from the 11 to 20 March, I thought this would be an ideal time to focus on the rise in collaborations in the life science sector and to note a few contractual points for any company looking to engage with a commercial or academic partner.

The pandemic crisis showed how collaborations can accelerate the development of vaccines which might otherwise have taken years to develop. In a public health crisis one organisation alone will not have the capacity or funds to develop the healthcare products required.

Collaboration in the life science sector isn't new. For years many life science companies have worked in partnership with universities on research projects. And collaborations between big pharma and small biotech companies have been facilitated through the establishment of bioscience clusters. The siloed big pharma R&D model of past years is broken partly from soaring R&D costs which individual organisations can't sustain. Partnering is cheaper, less risky and involves fewer regulatory hurdles than M&A. Meanwhile people are living longer and the demand for personalised medicine is rising. For UK life science companies to remain internationally competitive there is an acknowledgement that industry, academia and government need to work together.

For our own life science clients, we are seeing a rise in agreements for pilot/evaluation periods as a prelude to a collaboration. Some companies are engaging with other partners as part of a consortia, government or privately funded. Here are a few points to consider if your company is engaging in a partnership of some form.

  • For any company where its key asset is intellectual property, protecting that intellectual property is paramount when engaging with other parties. I have seen parties become entrenched however in who owns the intellectual property arising from a collaboration. Do consider licensing options. A licence to arising intellectual property can become more attractive when the owning party agrees to pay all costs to register and/or protect the arising intellectual property. Carefully considered licensing terms are often more advisable that the complications that can go along with jointly owned intellectual property.
  • If another party is evaluating your intellectual property, it should only be testing the intellectual property under an agreed protocol. The outcome of such evaluation is more likely to be data than "improvements" to your intellectual property (although do consider if such improvements could be a possibility and ensure the agreement allows for your company to own the improvements). The evaluating party may wish to own evaluation data, but the agreement should let you access the data under licence.
  • Liability is often a focus when you engage with other parties. Consider the "risk" under the agreement. If you are providing technology for no consideration as part of an evaluation, a list of warranties and indemnities in favour of the evaluating party doesn't make commercial sense and doesn't reflect what should be a low-risk agreement for the evaluating party. Warranties and indemnities may of course be appropriate if the evaluation leads to a valuable commercial relationship between the parties.

Demand for new medicines, better outcomes and more accountability from the life science sector is increasing. Any life science company that wants to fulfil these expectations and compete effectively will have to collaborate with other organisations. We fully expect to see the trend in collaborations continue for Scottish SMEs, and there is perhaps no better time than now to be a Scottish life science spin-out or start-up.

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