The objective of the Bachelor thesis project (Abschlussarbeit) is to write a case study based on publicly available information and to compare this to relevant literature.
Background: Large pharmaceutical companies have seen an increase in their internal R&D spending while at the same time being less successful in bringing new drugs to the market. They need access to new compounds, which are often discovered by emergent, innovative R&D firms. One model for cooperation between such smaller R&D firms and large pharmaceutical companies is based on success-dependent milestone payments and royalties from these companies in return for exclusivity. The emergent R&D firm has certain proprietary novel drug targets, and it runs R&D programs for the discovery and development of small-molecule drug candidates. The R&D firm usually receives an upfront payment, milestone payments during R&D if it reaches certain predetermined goals, and payments related to sales if the new drug is brought to market. In return, the alliance partner has the option to license these compounds for further development and commercialization on a worldwide basis. It can exercise these options after different phases of clinical trials. This kind of compensation system is mostly used in a structured development environment where the outcome of a R&D program is highly uncertain.
Project: (1) You write a case study on the R&D firm Galapagos (www.glpg.com). This provides several interesting examples of alliances with large pharma companies using models of milestone payments (Hoekma, 2008). It is a listed company and there is quite some publicly available information. You will describe the historical development of the firm since 2006, using that information.
(2)You search in the scientific literature for research on payment models that are based on R&D milestones. I expect there will be some studies on how such models can be structured, some studies investigating the conditions when these are used and what their effects are, and perhaps some in-depth case studies.
(3) You make a comparison between the Galapagos case and the main findings from your literature search. What can we learn from the Galapagos case study?
Hoekema, A (2008). Sustainable drug discovery: Galapagos’ alliance strategy. Pharma Focus Asia, Volume 8, 14–17.
