5 ASIAN LEGAL BUSINESS CHINA • 亚洲法律杂志-中国版 WWW.LEGALBUSINESSONLINE.COM/CHINA projects do not target only one product but are based on comprehensive cooperation across the entire product line.” It is precisely because of such complexity that despite the hot market, sometimes it is necessary to make deals more “solid” and uphold a relatively calm “long-term” spirit, which puts forward many new requirements on lawyers advising such deals. First is to have a “panoramic view”. “We need to consider deal-related issues against the entire market. Lawyers must have a rich skillset to help clients arrange the entire project in various aspects such as regulation, compliance, deal-making, intellectual property, etc. Advising an out-licensing deal well often requires an all-around and one-stop team,” says Zhou. Second is to have an international perspective. Zhou admits that some domestic innovative drugs companies are not yet familiar with international deal-making, business practices, valuation models, etc., which requires transactional lawyers to undertake some commercial functions to “help clients clarify business demands and complete project implementation”. Third is to have outstanding coordination ability. According to Huang, outlicensing often involves many functional departments within an innovative drugs company, such as operations, finance, and supply chain. “Lawyers need to have strong coordination skills, have indepth contact with various departments, understand their concerns and needs, and ultimately coordinate the interests of all parties and reflect those interests in legal texts. The most challenging part of advising out-licensing deals is these value-added services.” In addition, despite the bustling market environment, Zhou has already dealt with many cases of “product return” or even disputes in out-licensing deals, such as the failure to achieve predetermined targets in product milestones such as R&D, examination and approval, and sales making it impossible to trigger milestone payments, or significant changes in industry environment, policy adjustments, or controlling power of one side to the transaction. BIG STORY recent years. For example, “in 2023, the pipelines for out-licensing were mainly in ADC, mono/dual antibody drugs, CGT drugs, and GLP-1 drugs, with GLP-1 drugs being particularly popular. This year is not expected to be very different,” says Yu. Certainly, the ability to “go global” is essentially attributed to the growing strength of Chinese pharmaceutical companies, which has led to the production of excellent drugs. According to Charlene Huang, partner at Global Law Office, “multinational pharmaceutical companies have recognized China’s R&D capabilities and hope to introduce drugs to overseas markets as soon as possible through cooperation as supplements to their own product pipelines.” In fact, everyone can benefit from out-licensing. On one hand, with high down payments, innovative drug companies can compensate for financing difficulties, promote pipeline R&D, lower R&D risks, and learn from overseas clinical development experience and commercialization capabilities, thus obtaining high milestone payments and shares from overseas market sales in the future. On the other hand, for licensees, purchasing “licenses” can also amortize R&D risks and costs and enrich product pipelines. If pipelines with great market potential successfully go to market, they can also quickly grab market share and earn handsome returns. “LONG-TERMISM” NEEDED Although the logic of out-licensing deals is relatively straightforward, Zhou notices that the out-licensing process is becoming more complex as it continues to grow in popularity. “First, out-licensing deals are often bundled with equity deals, making mixed transactions more common. For example, several projects handled by our team also include M&A and investment. Second, an out-licensing deal may require both parties to discuss how they will jointly complete the entire process of clinical R&D for early-stage development, production and CMO, commercial operations, etc. Both sides need to engage in a slew of negotiations and cooperation. Third, some more in-depth As a matter of fact, “the overall success rate of innovative drugs R&D is not high, and there are often disputes over long-term cooperation after a deal is completed. Whether the contract terms written by lawyers before the transaction can protect the interests of clients in the disputes that may inevitably arise later cannot be achieved simply by copying contract templates,” reminds Zhou. “To become a top transactional lawyer for out-licensing, one must go through not only the ‘beautiful moments’ of official deal announcement but also the potentially ‘ugly’ moments of litigation and arbitration.” “In my experience, transactional lawyers need to predict as much as possible the difficulties that may arise in future integration when preparing agreements, and include solutions in the agreements and help both sides establish a proper communication mechanism. This way, even if disputes occur in the future, companies can quickly find effective solutions based on that mechanism,” says Huang. 对2024年第一季度仍显冷清 的交易市场来说，创新药行业构成了 一股“清流”。 过去三个月，从并购交易，到对 外授权许可（license-out），中国创 新药企业频频与阿斯利康、诺华等海 外医药巨头“交手”，展现出国际市 场对于中国创新药研发水平的认可， 也以产业板块之力，提振了当下市场 信心。 锦天城律师事务所高级合伙人 虞正春律师对此颇有感触。“1至2 月，中国创新药企业与海外药企完成 了超过30起以上的跨境交易，包括 并购、股权融资、权益合作等多种类 型，其中以license-out交易为主。” 他说。 这延续了2023年的势头——实 际上，过去一年中国license-out合 作项目超过百起，交易金额及首付款 比例都创下历史新高。 虞律师解释道，中外药企的交易 形式主要包括两类：一类是并购交 易，主要包括股权并购、资产并购；
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