Article originally published in the Cross-border Life Sciences Handbook 2006/07

Pharmaceutical and biotech companies are turning with increasing frequency to in-licensing and collaboration agreements – pharmaceutical companies to put new products in their pipelines and biotech companies to access the resources needed for final-stage development, clinical trials, manufacturing, and distribution. One result of the increasing importance of these agreements is the greater prominence of anti-trust issues. There are at least two reasons for this:

  • In-licensing and collaboration agreements frequently involve competitors, or at least potential competitors, which means that there is often a threshold issue of whether the agreement is permissible at all under the antitrust laws.
  • These agreements have become so central to the business of many companies both in strategic and financial terms, that it is essential to ensure their provisions are enforceable. Often, the clauses that deal with the most business-critical issues, such as exclusivity, non-compete obligations, field-of-use restrictions, territorial and customer restrictions, and the ownership of intellectual property (IP) rights, are precisely the ones that will be the most suspect under the anti-trust rules and therefore potentially the most vulnerable to challenge. The invalidity of a specific clause (or the entire agreement if the clause is central to the agreement) may not only undermine a key business goal, but it may result in the emergence of an unrestrained competitor instead of a contractually-controlled ally.

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