Some Big Year-End Dealmaking From SkyePharma
SkyePharma keeps its promise of profitability in 2002 by licensing its two most prominent pipeline candidates to Endo Pharmaceuticals. But now that the company has reached that benchmark, longer-term growth may require it to develop its own commercial capabilities.
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Newly-created Medeus Pharma hasn't waited long to sign its first in-licensing deal. Only two months after its creation, through the acquisition of Elan's European sales and marketing infrastructure, the firm has secured European rights to SkyePharma's sustained-release post-op pain treatment DepoMorphine for €100 million. SkyePharma continues shifting the source of its revenues from milestone payments to more predictable royalties; Medeus flexes its muscle as a viable, fast-moving competitor to larger pan-European in-licensers.
SkyePharma fulfilled its profitability promise in 2002. Yet warnings of a revenue slip in the middle of 2003 have highlighted the group's reliance on the timing of uncertain milestones. But by building up its clinical and regulatory capabilities, increasing the proportion of its revenues derived from royalties, and leveraging a full pipeline which includes improved biologics, SkyePharma aims to increase its development control over its own and partners' programs and thereby maintain and grow its newfound profitability.
Since 1998, through a series of inexpensive acquisitions, SkyePharma has assembled a wide range of drug delivery technologies, positioning itself as a one stop shop. But the company still has to convince both its customers, and its investors, that it has not sacrificed quality for quantity.