Recent Trends in Effective Royalty Rates of Biopharma Alliances

The September 2017 issue of les Nouvelles published an article entitled “Effective Royalty Rates in Biopharma Alliances: What They Are and Why Use Them in Negotiations.” This article was based on an analysis of approximately 1,350 unredacted biopharma licenses and related agreements commenced between 1997 and 2016. The 2017 analysis utilized effective royalty rates (EFRs) as the basis for evaluating post-commercialization terms of biopharma alliances. Briefly, the concept of EFR entails the application of an agreement’s specific royalty rate provision to three assumed annual sales levels, namely $200M, $500M and $1 billion