Large healthcare companies, scrambling to create viable products for their pipelines, are eager to in-license promising pharmaceuticals, diagnostics and medical devices. The consolidation of large healthcare companies has led to record numbers of executives venturing into the start-up world, creating or growing offerings of their own. Universities have now married pharmacy, medical, and/or engineering schools with their business schools to spin off new healthcare related companies at a steady, rising pace. In parallel, VC funding, angel funding and national grant funding in the US and Europe has receded significantly. As a result, over the years there has been a rising tide of start-up and small healthcare related companies seeking growth and funding support via licensing or co-development partnerships with profitable mid-size and large healthcare companies that can handle the extraordinarily high costs and time commitments of later stage clinical trials, regulatory submissions and commercialization.

The marketplace is now flooded with offerings, and smaller companies aiming to out-license their products are more often finding it difficult to achieve a good valuation in a timely manner. In this paper we address three main mistakes that companies make when trying to out-license their drug or medical device, or when attempting to secure a co-development partner.

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