While licensing in pharmaceutical and bio pharmaceutical business, if licenses are issued to different partners based on indications or disease and therapy, then this concepts is known as Indication Splitting. Here same molecule licensed to two or more partners based on the different indications.
How frequently, we see the indication splitting in pharmaceutical and biopharmaceutical business?
This concept is known from past decades, but not quite frequently found in pharmaceutical and biopharmaceutical business space because of the operational challenges.
What are the possible advantages of the indication splitting?
- Generally it can be ideal for the novel molecule having precise indications.
- Benefit for licensor, as the multiple partners will focus on the multiple indications, will increase reach, acceptance, revenue more likely.
- Can increase probability that the product will be developed for multiple indications.
- Can find best suited partner for each indication, who has strong market dominance in that particular indication.
What are the challenges of Indication splitting?
- It can be done, but complicated as measuring sales outcome based on indications will be the major challenge.
- Separation of product in the market is also a challenge.
- Is the product substitutable between indications?
- Off-label sales – If so, who will be getting the sales credit ! Can lead to confusion and lot of financial engineering.
- In general, once the drug or biomolecule is approved for one indication, MDs can prescribe for any indication, therefore measuring the success of the sales obtained approved split indications can be really a tough task.
- Safety and pricing issues are not indication-specific. So, it can be challenging, as pricing based on indication will be a demand from licensing partner. At the same time keeping a pricing based on indication not feasible, as drug regulators may not agree with the multiple pricing for same molecule.