According to a recent study from Bentley University’s Center for Integration of Science and Industry, the financial terms of biotechnology licenses from academic institutions are significantly less favorable than those of comparable licenses between commercial firms. The research, which was published in the journal PLOS ONE, demonstrates that for comparable licenses and products at the same stages of development, academic institutions receive significantly lower royalties and payments than do commercial firms.
The first article to explicitly compare academic and commercial licenses is titled “Comparing the economic terms of biotechnology licenses from academic institutions with those between commercial firms.”. The transfer of scientific discoveries made with government-funded research grants to businesses for the development of commercial products is made possible by the licensing of biotechnologies from academic institutions. These licenses enable industry to develop cutting-edge products, create jobs, and promote economic growth while also providing financial returns to the public sector, which universities can use to support research or education.
Our prior research has established that the U.S. supports each unique, first-in-class drug with a government investment of more than $1 billion in early-stage basic or applied research. According to Fred Ledley, director of the Center for Integration of Science and Industry and senior author of this study, “here, we looked at how much of the profit from such products is returned to the public.”. The findings indicate that the public sector is not earning as much money from similar licenses as a business would.”.
“Previous study has revealed that the US government invests more than a billion dollars in early-stage basic or applied research that underpins each revolutionary, first-in-class medicine. We investigated how much of the earnings from such products is returned to the public.”Fred Ledley, Director of the Center for Integration of Science and Industry,
According to a Bentley University study, 239 academic institutions’ licenses to biotechnology companies were compared to 916 comparable commercial firm licenses in terms of economics. Academic licenses had lower deal sizes ($900,000 versus $31 million), lower royalty rates (3 percent versus 8 percent), and lower precommercial payments ($1 million versus $25 million). The difference between academic and corporate licenses was less than half explained by differences in the stage of development, despite the fact that academic licenses typically involved products at a later stage of development than corporate licenses.
Academic licenses had royalty rates that were 3% to 6% lower than corporate licenses, deal sizes that were $11 point4 to $12 point2 million lower than corporate licenses, and precommercial payments that were $7 point6 to $9 point4 million less than corporate licenses when differences in stage of development, along with differences in research payments, co-development, co-commercialization, exclusivity, or grants of stock, were taken into account.
More information: Comparing the economic terms of biotechnology licenses from academic institutions with those between commercial firms, PLOS ONE (2023). DOI: 10.1371/journal.pone.0283887