There is a range of occasions when licensing your IP to someone else (called ‘licensing-out’) can be beneficial. It can provide a means for the IP owner (the “licensor”) to make their IP work harder by providing another organisation with access to it.
National Skin Centre (NSC) of Singapore realised these benefits by concluding a licence agreement with an experienced partner, Good Pharma Dermatology (GPD), for an anti-itch cream for eczema sufferers. The licence agreement offered a means of productising the results of NSC’s clinical research and getting the product to market quicker, benefitting society by reaching many more sufferers of itchy skin conditions outside of NSC’s skin clinics. Income from the licence has also provided NSC with a means of funding further clinical research."
Licensing intellectual property is an effective way for inventive companies to find routes to market for their new technologies, and licensees to develop their product ranges more quickly and cost-effectively than re-creating an in-house alternative. In this instance, Good Pharma Dermatology (GPD) was able to access innovations, specialist resources and know-how owned by the National Skin Centre (NSC), which was not in a position to exploit its research outputs directly. GPD also benefitted from the use of the NSC name and associated goodwill on a new anti-itch cream, Suu Balm, as well as establishing an ongoing collaborative relationship.
GPD is a privately held consumer healthcare brand company founded in Singapore in 2013 by Jason Humphries, an ex-Asia President for a Multinational Pharmaceutical Company, and Dr John O’Shea, an ex-doctor and pharma strategy consultant. GPD’s goal is to develop products to address the unmet healthcare needs of individuals through non-prescription products from its headquarters in Singapore.
GPD commercialised its first product, Suu Balm, in 2015 after an introduction to Intellectual Property Intermediary (IPI), an affiliate of Enterprise Singapore, which connects Singapore-based businesses with solution providers to enhance innovation capability through open innovation. IPI helped to facilitate a licensing agreement between GPD and NSC owing to its knowledge of inventions available for licence.
NSC’s Dr Tey Hong Liang, a consultant dermatologist, had developed a product after realising many eczema patients attending his skin clinics did not moisturise their skin frequently enough to protect the skin and stop itching symptoms. Often eczema patients are frustrated with side effects of steroid-based creams, and the hassle and discomfort of applying moisturisers in a hot and humid climate.
Dr Tey created his own non-steroidal formulation—a non-sticky, menthol-containing balm—which he had shown provided rapid itch-relief for his eczema and psoriasis patients after trial use on over 1,000 patients at NSC. The formulation was shown to encourage frequent use by those tormented by chronic itching, due to the cooling effect of the balm on the skin. While the formulation may sound simple, it took NSC many years to refine the formulation based on feedback from trials by its patients. This patient feedback and NSC’s credibility was of great interest to GPD.
Licence Benefits - Licensor
Licensing can be a beneficial strategy for academic or clinical partners, such as NSC, as it provides a route to funding for further work as well as a means of increasing the impact of their research. In some cases, it can also be used for gaining access to large amounts of commercial or other useful data, and create opportunities for students to gain experience in a commercial setting.
As a major public health institution specialising in skin conditions, NSC is not in a position to place the outputs of its research on the market directly, such as Dr Tey’s formulation to treat itchy skin. Nevertheless, as Dr O’Shea from GPD learned from the licence negotiations
“A remit of NSC is to help the health of all Singaporeans, not just those attending NSC clinics."
Furthermore, NSC is also obligated to find a way of ensuring any such product that can make it to market is affordable to Singaporeans. GPD, therefore, was a perfect fit as a partner for NSC to help launch this innovative treatment for the benefit of all, especially given GPD’s aim of providing affordable healthcare solutions.
NSC concluded a licence agreement with GPD in December 2013 to manufacture and market Dr Tey’s itch-relief solution. As is typical of licence agreements, the licence terms set out that NSC (and Dr Tey) would receive royalties for any products sold. Importantly, for NSC’s needs as a public health institution, any royalties received would be used to fund further dermatological research and NSC could also purchase the product at a reduced cost, as well as being kept informed of GPD’s development plans. As Dr Tey puts it,
"By signing the contract between the National Skin Centre and Good Pharma Dermatology to launch this innovative treatment, we knew Suu Balm would bring about a real and tangible impact on the lives of many."
Licence benefits - Licensee
In many cases, companies develop their inventions in-house. However, often small or early-stage companies with financial constraints need to seek enterprising ways of meeting market demand as well as staying ahead of their competitors by implementing the right innovation strategy; this can often mean working with external partners.
Use of Open Innovation approaches is an increasingly popular way to accelerate a company’s development process. The argument is that a company should not rely solely on its own R&D, but instead buy in, or license in, processes or inventions to complement internal effort. This can have the advantage of helping to move a whole market forward by early adoption of preferred formats or technologies and keep competitors at bay.
In the case of GPD, it means it can introduce new innovations to the market in a more cost-effective and timely way, without the need to finance everything in-house from scratch. Dr John O’Shea of GPD explains
"You could start something from scratch—you could identify an unmet need, develop a solution for the need and so on, but here was a doctor that identified two unmet needs and came up with a solution, prototyped it and tested it. Licensing it to GPD gave us a package that was possibly more interesting than something we could have come up with ourselves. From a marketeer’s perspective, it handed us something that was differentiated already in a crowded consumer healthcare marketplace."
GPD was also able to tap into NSC’s clinical expertise and reputation. Dr O’Shea explains the importance of launching its new product Suu Balm on the market through the collaboration with NSC:
"For people to take our new Suu Balm product seriously, it is invaluable to have evidence of where the product is coming from and that it is from a skin expert at NSC. If users are going to try a new product like Suu Balm they need a reason and motivation to do so."
It was, therefore, important to ensure reference was made to NSC on the product packaging.
"This provided credibility (and goodwill) in the eyes of the public and also other doctors with the awareness that the formulation had already been tested favourably on patients during use in NSC’s clinics."
Based on this licence agreement, GPD was able to launch the product both in Singapore and globally, using its commercial expertise to create a new brand for the product and to design related product packaging and marketing materials. GPD also made sure to register the Suu Balm trade mark several territories, both where distributors were already in place, and where the company intended to launch its product in future. The process of registering trade mark rights was helped by a Singapore government grant to engage the services of a trade mark lawyer.
GPD and NSC continue to collaborate and have since signed separate research and collaboration agreements. These have led to new products being added to GPD’s portfolio, which have been launched under separate licensing agreements with NSC.
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