Royalty rates: Current issues and trends

Abstract

One of the most intensely debated areas in a negotiation is that of the financial settlement: in particular the royalty rate, which is key, as it directly impacts on the profitability of the product long after the development work has been completed. Despite the fact that nearly all companies issue press releases announcing the successful conclusion of their technology licenses and partnerships, the detail of the royalty rates remains, in most cases, strictly confidential. In this paper, we discuss a survey undertaken by Medius Associates to investigate the current trends in pharmaceutical deal-making, including the key factors that influence the setting of royalty rates.