R&D Milestone Payments in Pharmaceutical Drug Development
This paper consists of a case study which takes a detailed look at the design, implementation and payment structure of milestone payment contracts in a publicly listed biotechnology company called Galapagos with headquarters in Belgium. The study was conducted based on the press releases of this company between the 1st of January 2006 and the 31st of December 2016. The aim of this is to give an overview over the application of milestone payment contracts in the pharmaceutical industry. The study shows that there is a significant difference between the allocation of payments stated in the contract terms and the payments Galapagos managed to archive. Also, Galapagos was not able to earn more than 45% of the scheduled milestone payments of a contract and a huge number of contracts are determined before the handover point which annihilates the possibility of profit for all these contracts.