Biotechs Beware: Royalty Offset Clauses Can Seriously Damage Your Health

Cambridge Antibody's royalty dispute with partner Abbott over potential blockbuster Humira sends a sobering message to biotechs: beware poorly-constructed royalty offset clauses. The argument won't help Abbott's partnering image, either.

Few European biotechnology companies have succeeded in getting products to market, so when potential blockbuster adalimumab (Humira), co-developed by Cambridge Antibody Technology Group PLC (CAT) and Abbott Laboratories Inc. , was launched in the US earlier this year, the news provided a welcome boost for both the biotechnology company itself and the broader sector. This was evidence that all the investment and faith in European biotechnology looked like it was finally starting to pay off.

A few months down the line however, and things look a lot less promising for CAT. In mid March 2003, Abbott notified CAT that it wants to apply royalty offset...

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