Insight journal - Deals and alliances

Recent industry analysis on distribution partnering agreements

Posted on 07 July 2014

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Recent industry analysis gathered from our database Current Agreements, showcases a high volume of dealmaking activity in the distribution deal type among the pharma and biotech companies worldwide.

The article here reviews the recent partnering analysis in the distribution deal type area. A distribution agreement is normally between a product manufacturer and distributor in which a manufacturer outsources the distribution of its product(s) to the distribution company in a defined territory.

Distribution deals offer the least value-added for the partner company. This is because there is generally no R&D investment and almost certainty of the product reaching market. The deals normally occur when a manufacturer is seeking to access a territory with high barriers to entry, for example high market fragmentation.

According to Current Agreements life science deals and alliance database, there have been over 1900 distribution deals in the last five years alone.

The figure below indicates that the number of distribution agreements announced has started to fall since 2010, which saw a peak of 554 deals, suggesting that distribution has become less popular for licensors. It should be stated that the majority of distribution deals are reserved rights or options to rights to distribution should the product reach the market. These rights are often reserved/ granted to licensors by licensees as part of the negotiation to obtain access to the partnering rights.

Figure 1: Distribution partnering since 2009








Source: Current Agreements, 2014

Although there is a decline observed the data still indicates a high volume of distribution deals announced since 2009, suggesting that distribution dealmaking is still popular among licensors.

Attributes of pure and multi-component deals

Pure distribution deals tend to occur at the later stages of development, in particular when the product is already marketed or at registration phase.

Whereas, distribution as part of multi-component deals more often occurs at any time of development. In particular, there are numerous instances during discovery and early clinical development phases.

The most active distribution dealmakers are shown below. It is striking to note that unlike other deal type agreements, distribution dealmaking is not popular among the big pharma or big biotech companies.

Figure 2: Most active distribution dealmakers 2009-2014










Source: Current Agreements, 2014

Distribution is a popular method of maximizing the value of a product launched into a market.

There have been numerous high value deals announced since 2009. The majority of these deals derive their value from being part of multi-component deals whereby the value is a sum of the upfront, milestone and potential royalty revenues from the commercialization of the product under investigation.

Figure 3: Top distribution deals by value since 2009










Source: Current Agreements, 2014

The data in this article was abstracted from the Distribution Partnering Terms and Agreements in Pharma, Biotech and Diagnostics report, which provides comprehensive understanding and unprecedented access to the distribution partnering agreements entered into by the world’s leading biopharma companies. In addition the report provides details of deals broken down by deal type, therapy focus, and company A-Z. The report provides a detailed understanding and analysis of how and why companies enter option and evaluation deals - more details here.


The above information has been abstracted from the following resources:



Read: more on distribution deals in pharma, biotech, life science partnering deal news, insights and glossary

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