Succeeding in the biotechnology and pharmaceutical sectors without developing one’s own intellectual property

Julien Verneau and Paul Roustan, with the collaboration of Nicolas Charest and Jean-Raphaël Champagne

Can a company thrive in the biotechnology and pharmaceutical sectors without developing its own intellectual property (“IP”)?

Licensing makes it possible to answer this question in the affirmative. Licences can serve as a strategic lever to access existing technologies, reduce certain risks (particularly in research and development), and accelerate time to market.

This article aims to explain what a licence is, its main advantages, the different possible scopes, the regulatory obligations applicable in Canada, as well as key limitations and points of caution.

What is a licence ?

A licence is a contract under which the holder of an IP right (the licensor) grants a third party (the licensee) the right to use that IP without transferring ownership, generally in exchange for consideration, most often financial.

In practice, IP licences can cover many facets of intellectual property, including: patents (products, processes, uses); trade secrets or know-how; industrial designs; trademarks (logos, names, etc.); and copyrights (works, code, databases, etc.). A single licence may cover several of these categories at once. In the pharmaceutical and biotechnology sectors, patent and know-how licences are particularly common, as the operational value of a technology often extends well beyond the wording of the patents themselves.

Licence agreements often contain complex clauses designed to clarify the rights and obligations of the parties, such as: field of use, geographic scope, whether the licence is exclusive or non-exclusive, ownership of any improvements, each party’s responsibilities in co-development or co-commercialization of the final product, termination conditions, included know-how, confidentiality commitments, and liability acknowledgements or indemnities in the event of disputes. Rigorous and integrated negotiation is essential to protect one’s interests while supporting the business relationship.

The advantages of a licence

For the licensor, licensing enables monetization of IP while retaining ownership of the rights, without requiring additional investment. This can be particularly advantageous for entities with limited resources or without a local presence.

For the licensee, a licence provides (rapid) access to a new technology while bypassing the research and development phase. It therefore allows entry into a market with a product that would otherwise be inaccessible, enabling the licensee to gain a significant—though sometimes limited—competitive advantage.

The scope of a licence

The scope of a licence is one of the most strategic elements of the agreement.

In the pharmaceutical and biotechnology sectors, patents alone are rarely sufficient to fully and effectively exploit a technology. Optimal conditions (for manufacturing, formulation, etc.), as well as regulatory dossiers where applicable, are often protected as know-how or trade secrets. For this reason, it is essential that the licence include all elements necessary for the commercialization or effective use of the technology.

Licences may also be exclusive or non-exclusive. An exclusive licence grants the licensee sole rights to the IP covered by the licence, meaning no other party may access those same rights. A non-exclusive licence allows the licensor to grant the same rights to multiple licensees simultaneously. For these reasons, exclusive licences are often preferred, though they are typically more costly.

In addition, licences generally have a defined geographic scope. A licence may, for example, be exclusive but limited to a single country. Restrictions by field of application (therapeutic indication, product type) are also common. These parameters must be consistent with supply chain, manufacturing, and commercial strategy considerations, particularly when multiple jurisdictions are involved (counterfeiting risks, import/export issues, subcontracting, etc.).

Licences and regulatory obligations

In Canada, the commercialization of a pharmaceutical product entails strict regulatory responsibilities, particularly with respect to product authorization and conditions of sale (overseen by Health Canada) and pricing when the product is patented (supervised by the Patented Medicine Prices Review Board).

Depending on the agreements between the parties, the licensee may assume regulatory obligations, including those related to clinical trials, notices of compliance, and post-market surveillance. While this typically grants strategic autonomy to the licensee, it also entails significant responsibilities and substantial investment. As a result, regulatory responsibility and legal risk such as in the event of litigation should be explicitly defined in the licence agreement.

Limitations and points of caution

A licence does not guarantee full freedom to operate. The licensee must ensure that: all IP relevant to the targeted technology is covered by the licence; the territories of interest are included; and no third-party IP blocks exploitation of the product. With respect to the latter, additional searches may be required, and further licences may need to be negotiated with other third parties whose IP could hinder commercialization.

The ability to sub-license IP is often critical, particularly for contract manufacturing or distribution partnerships. Similarly, issues relating to co-development, ownership, and exploitation of improvements derived from licensed IP-who owns what ? who can file patent applications ? who pays ? who exploits ? under what conditions ?-are frequent sources of dispute and must therefore be clearly addressed during negotiations.

Conclusion

Licensing is a powerful tool for succeeding in the biotechnology and pharmaceutical sectors without developing one’s own IP. However, its effectiveness largely depends on clearly defined strategic objectives, a solid understanding of legal and regulatory issues, and proactive management of commercial relationships. Proactivity and contractual rigor remain the keys to a licence that truly creates value.