After several years of economic uncertainty, the life sciences sector has entered 2026 with a sense of some cautious optimism. While market conditions remain selective and competitive, and wider economic uncertainty remains, partnering deal volumes seem to be holding up, and there is some shift in sentiment with an increasing number of companies looking to out-license to support their strategic goals.
Transactions are, however, becoming increasingly complex with much more variability in deal structure.
In this article we explore some of the key trends shaping life sciences licensing and partnering, and what they mean for businesses preparing to transact. These themes were explored in more detail in our recent webinar on life sciences licensing and partnering. Catch up with the webinar recording, and access the presentation.
A shift in sentiment – from tactical to strategic deals
Across biotech, pharma and medtech, there is renewed confidence in dealmaking. Rather than using licensing purely as a short‑term financing tool, many organisations are once again deploying it strategically to validate platforms, build long‑term relationships and strengthen pipelines.
Among the key drivers for dealmaking are the following:
- Continued pressure on large pharma companies to refill and rebalance pipelines
- Lower levels of M&A, leading to more reliance on partnering as an alternative deal option
- Some signs of a shift to a greater interest in earlier‑stage assets and platform technologies
- Heightened competition for quality assets
As a result, we see companies with multiple programmes increasingly out‑licensing eg in non‑core applications, while also seeing biotech and medtech companies actively in‑licensing to support future growth.
Earlier‑stage assets and emerging technologies
One of the most notable shifts is some growing appetite for earlier‑stage assets, particularly where the underlying science or platform offers scalability or is a “disruptor”. Technology areas attracting particular attention include targeted oncology, metabolic disease, RNA and DNA‑based therapies, and novel neuroscience approaches.
Emerging technologies are also reshaping deal dynamics. Licensing involving artificial intelligence, data‑driven tools and advanced analytics is becoming more common, either as a core component of a transaction or as a critical support to wider R&D programmes. These technologies bring added complexity, particularly around transparency, regulatory engagement and the management of so‑called “black box” systems.
More complex and tailored deal structures
Deal structures are becoming more bespoke. Rather than relying on familiar templates, parties should focus on fitting deal structure to asset, technology and commercial objectives.
Examples of the kinds of deal features gaining prominence are:
- Co‑development arrangements with follow‑on licence rights
- multi‑layered option structures for untested or evolving technologies
- Framework agreements covering multiple programmes or activities
- Greater use of contingent and milestone‑based payments
While these structures offer flexibility, they also demand careful planning, particularly around IP allocation (ownership and cross-licensing), disentanglement mechanics and long‑term control.
The central importance and complexity of IP
Intellectual property remains one of the most heavily negotiated areas of any licensing deal, and this is only intensifying. Modern transactions often involve a complex “IP jigsaw”, comprising patents, data, know‑how and improvements generated during collaboration.
Businesses will need to address the following issues in most deals:
- Clear allocation of ownership across different IP “buckets” or categories of IP
- The scope and impact of improvement provisions, to address developments in the licensed technology
- Alignment between IP rights and royalty or milestone entitlements
- The protection and transferability of data and trade secrets
For licensees, understanding how improvement clauses operate – and how they may restrict future development – is critical. For licensors, retaining sufficient flexibility to support future partnering or asset portability is equally important.
Payment structures under pressure
Payment provisions continue to evolve in response to market dynamics and regulatory change. While recent years have seen a move towards lower upfront payments and more complex milestone structures, negotiating leverage is beginning to rebalance in certain sectors.
At the same time, external factors such as drug pricing and reimbursement regimes are influencing royalty discussions. Businesses are paying closer attention to royalty stacks, reach‑through risks and the definition of what triggers payment, particularly where licensed know‑how is used beyond the strict scope of patent claims.
Geographic and regulatory considerations
Globalisation remains a defining feature of life sciences partnering. China increasingly plays a significant role in the generation of new technologies, with high‑quality assets attracting interest from multinational pharma and biotech companies. However, these deals often involve the licensor reserving rights to local markets, “newco” structures and cross‑border data and materials transfers which require careful navigation.
Regulatory change is also a major backdrop. New and evolving regimes – from data governance to national security approvals – are affecting both deal terms and transaction timelines. In Europe, proposed changes to the pharmaceutical framework, including adjustments to data exclusivity and orphan drug protections, are already influencing how parties assess value and risk in the context of partnering transactions.
Preparing to transact
In an increasingly competitive and volatile environment, preparation is critical. Successful transactions are underpinned by a clear understanding of deal drivers, early alignment through robust term sheets, and realistic planning for internal and external approvals.
Due diligence expectations are rising across IP, data, supply chains and regulatory pathways. Businesses that can present a coherent, well‑supported package – combining strong science, credible data and an experienced team – are best placed to stand out.
Looking ahead
The overarching message is clear: licensing and partnering remain central to growth in life sciences, but the bar can be high. Differentiation, strategic clarity and thoughtful structuring are essential, whether acting as licensor or licensee. Those who invest early in preparation and flexibility will be best positioned to capitalise on the opportunities ahead.
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