Negotiating Better Licensing Deals
William Bologna, chairman of Columbia Laboratories, a women's hygiene-pharmaceuticals manufacturer based in Hollywood, Fla., wanted to take advantage of international growth opportunities despite his company's relatively small -- $12 million -- size. His strategy: to negotiate supply, manufacturing, and licensing agreements with corporate giants including Warner-Lambert in the United States and Canada. "We've been able to strike lucrative international deals in which we receive 30% of our partners' sales income, or a 15% royalty rate," Bologna explains. Here's how:
* Exclusivity. With the help of international-property lawyers, Columbia files for exclusive patents and an international trademark in each country it targets for expansion. "It's worth the cost, because a pharmaceuticals product with a good reputation in one country tends to sell well elsewhere."
* Quality control. Columbia's partners are responsible for marketing and distributing its products. But Columbia handles all research and development and production activities itself, to ensure that quality and its trademark's reputation remain high worldwide.
* CEO involvement. Bologna handles all negotiations, monitors quarterly financial statements filed by each corporate partner, and consults daily with a top Columbia executive stationed in Europe to closely monitor all international deals.
* Test-marketing. "We've reserved the U.K. market for ourselves, so we can develop and test-market every product before we negotiate licensing deals," says Bologna. "That way, companies can see the great potential of our product and benefit from the reputation we're building in the U.K."
-- Jill Andresky Fraser