Publications

Journal of the Licensing Executives Society International (LESI): The billion-dollar handshake: How licensing strategies are reshaping MedTech innovation

24 March 2026

With over $10 billion in licensing deals signed in 2025, strategic partnerships have become the primary playbook for medical device companies racing to innovate faster, cheaper, and smarter.

In this new era of medical innovation, the most valuable asset exchanged is not physical, it is the right to use breakthrough technology. Recently, when executives from two healthcare giants inked a deal worth more than the GDP of some small nations, no products changed hands and no factories were sold. Instead, what transferred was intellectual property. This is the new economics of medical innovation, where licensing agreements serve as the currency of competitive advantage.

Bringing a single medical device to market can demand an investment of $500 million and several years of development, a daunting reality in today’s fast-paced, high-stakes environment. Increasingly, companies are realizing that the smartest way forward is not always to build everything from scratch. Instead, they are strategically fast-tracking innovation by licensing validated technologies from external partners.

This shift is reflected in the booming global MedTech licensing market, which now exceeds $10 billion[1] in annual deal volume. In 2025 alone, there were 20 major licensing partnership agreements. Although only the $200 million Roche-Freenome deal disclosed its financial details[2].

Behind these deals lies a sophisticated chess game of strategy. This chronicle uncovers how MedTech’s top players use licensing not just as a business tool, but as a lever to redefine ownership of medical breakthroughs and determine who reaps the financial rewards.

Strategy 1. In-licensing: Buying innovation instead of building it

When a blockbuster MedTech product faces imminent patent expiration and rising competition, companies often turn to in-licensing deals to rapidly fill the gap. A concrete example is Abbott Laboratories’ 2018 agreement with Surmodics[3]. Rather than spend years developing its own next-generation device for peripheral artery disease, Abbott secured exclusive worldwide rights to Surmodics’ SurVeil drug-coated balloon. A technology that was already validated in pivotal trials. The deal included a $25 million upfront payment and up to $67 million in milestone payments, giving Abbott quick access to an externally proven technology. This allowed Abbott to compress time-to-market dramatically, expanding its vascular portfolio and leveraging Surmodics’ groundwork instead of starting from scratch. By in-licensing an asset with demonstrated proof-of-concept, Abbott reduced technical and regulatory risk while using its established sales channels to maximize the product’s value.

It is worth noting that not all partnerships qualify as in-licensing driven by urgency. For instance, the GE HealthCare–Sutter Health alliance (2025) is not an in-licensing deal to replace an expiring product; it is about adopting cutting-edge diagnostics through collaboration [4]. This deal valued at $1 billion is primarily a strategic partnership to deploy GE’s AI-powered imaging technology across Sutter’s hospital network.

Nevertheless, in-licensing is not without risk. Companies may end up overpaying for technologies that fail to deliver or struggle to integrate external innovations into existing product lines. If the licensed technology underperforms or strategic synergies do not materialize, the expected time savings and market gains can evaporate.

Strategy 2. Out-licensing: Monetizing innovation without going broke

For every company buying innovation, another is renting it out. Out-licensing is especially valuable for smaller players and academic spin-outs lacking the infrastructure for full-scale commercialization. By partnering, they can monetize their IP while transferring the burdens of clinical validation, regulatory approval, and commercial launch, without going broke.

Senseonics partnership with Roche Diabetes Care (2016) is a case in point^[5]. By granting Roche exclusive rights across Europe for its Eversense glucose monitor, Senseonics, an academic spin out, enter Europe quickly without building the overhead of building a continental sales infrastructure, while Roche expanded its diabetes portfolio.

Mazor Robotics[6], a spin out specializing in spine surgery robots, partnered with Medtronic (2016), receiving a $20 million investment and exclusive distribution rights for its robotic spine surgery devices. By 2017, Medtronic had invested $72 million and gained global rights for Mazor X, helping Mazor cut operating costs by 25% (about $13 million annually). Medtronic later acquired Mazor (2018).

The August 2025 Freenome–Exact Sciences deal[7] offers a different perspective. Freenome, a start-up, transferred exclusive US commercialization rights for its blood-based colorectal cancer screening test to Exact Sciences, in a deal worth up to $885 million. The financial structure combined a significant upfront payment with milestone payments tied to FDA approval, commercial launch, and annual sales thresholds. For Freenome, out-licensing provided immediate capital and external validation; for Exact Sciences, it secured the next-generation technology needed to maintain market leadership in cancer diagnostics.

Strategy 3. Cross-licensing: When competitors decide to share

In technology-driven industries, product development often involves multiple overlapping patent families, making cross-licensing a crucial mechanism for sustained innovation. At its core, cross-licensing is a reciprocal exchange of IP rights between parties with complementary or blocking patents. This approach is particularly valuable in MedTech, where patent litigation can be prohibitively expensive and outcomes are unpredictable. Rather than risk mutually destructive legal battles, companies increasingly turn to cross-licensing as a way to secure freedom-to-operate and unlock innovation.

The December 2024 Dexcom-Abbott agreement is a landmark example[8]. After years of patent disputes over sensor technology and glucose monitoring algorithms, both companies settled on a reciprocal exchange of patent rights. The deal featured a ten-year mutual non-assertion provision, under which neither party could bring infringement claims against the other for covered patents. This arrangement allowed both companies to redirect resources from litigation to product development, and the positive impact was reflected in their share prices.

Similarly, Medtronic and Edwards Lifesciences settled their transcatheter heart valve patent dispute (2014) with a global cross-license[9]. Medtronic paid Edwards $750 million upfront plus royalties through 2022 on CoreValve sales. Both dropped all patent claims and agreed not to sue each other for eight years in the Transcatheter Aortic Valve Replacement (TAVR) field. The deal cut litigation costs, let Medtronic sell CoreValve worldwide.

Yet, while cross-licensing unlocks new opportunities, these arrangements require careful navigation of competition law. Deals that divide markets or restrict independent development may violate antitrust rules, especially in the EU.

Strategy 4. The exclusivity premium: Paying for monopoly rights

Choosing between an exclusive or non-exclusive license involves a clear trade-off. Exclusivity can secure a devoted partner and big investments but usually at a high price and with strings attached to ensure performance. Non-exclusivity can speed adoption and spread an innovation widely, but without the singular commitment (or the hefty upfront payments) an exclusive deal might bring. Both approaches have their place. The key is aligning the license structure with the business goals and the nature of the technology in play.

Abbott’s 2024 exclusive alliance with Medtronic[10] on continuous glucose monitoring illustrates exclusivity’s rationale. In this arrangement, Abbott gives Medtronic exclusive rights to integrate and distribute a special version of its FreeStyle Libre glucose sensor in Medtronic’s insulin pump systems. In return, Medtronic is expected to aggressively commercialize the integrated system.

On the flip side, a non-exclusive license takes a platform approach. For example, Philips[11] has often opted for non-exclusive deals when integrating third-party AI algorithms into its imaging equipment. In one case, Philips licensed radiology AI software from a startup (like Tempus) without demanding exclusivity. Philips prioritized broad market penetration over a monopoly, accepting that the AI provider could also license its algorithms to competing MRI or CT manufacturers. This non-exclusive structure let the AI innovator maximize its reach across the industry, while Philips benefited from quick, hassle-free integration of new technology without paying an exclusivity premium. Here, the trade-off is clear: by not seeking exclusive rights, Philips gained flexibility and speed, and the developer gained a wider user base, even if it meant Philips had to share that innovation with rivals.

Strategy 5. Carving up the world: Territorial and field-of-use segmentation

Territorial and application-based segmentation has become a cornerstone strategy for maximizing licensing value in today’s MedTech landscape. Because regulatory requirements vary widely among authorities, companies must tailor their licensing strategies to each territory. Successful deals also address data localization, local manufacturing, post-market surveillance obligations, and evolving cybersecurity standards.

The Medtronic’s 2023 arrangements for the Mazor X robotic guidance platform in Southeast Asia and Latin America exemplify this strategy[12]. Regional partners assumed responsibility for navigating local regulatory submissions, including NMPA registration in China and PMDA approval in Japan, as well as compliance with local data privacy and cybersecurity requirements. By licensing to partners with established relationships with national regulators and local legal counsel, Medtronic accelerated market entry and managed operational complexity while retaining control over core IP.

The 2025 Roche–Freenome licensing agreement[13] exemplifies a geographically segmented out-licensing strategy. Freenome divided its rights by territory: the domestic US market was covered through a prior deal with Exact Sciences ($885 million), while Roche secured rights for the rest of the world in a transaction exceeding $200 million[14]. This dual partnership enables Freenome to monetize its IP across two continents, leveraging established partners for clinical development, regulatory submissions, and large-scale commercialization. For Roche, already a leader in early cancer detection, gaining exclusivity to an innovative platform for international markets further strengthens its position.

Similarly, field-of-use restrictions enable segmentation by application rather than geography. One notable example is the wireless charging technology of WiTricity[15], a MIT spin-out. WiTricity licensed its patented wireless power transfer platform exclusively to Greatbatch (2015) for use in implantable medical devices, while separately licensing the same core technology to Toyota for wireless charging of electric vehicles. By dividing rights along these distinct applications, WiTricity expanded its innovation’s reach without pitting its licensees against one another, as each partner focused on its specific field.

Strategy 6. Hybrid deals: The license-to-acquisition pipeline

Contemporary licensing increasingly blends traditional models with collaborative development, risk-sharing, and option agreements. These hybrid structures blur the line between partnership and acquisition, establishing extended relationships that may last years before culminating in a full buyout.

Boston Scientific’s journey with Farapulse, ending in a $1.5 billion acquisition (2023)[16], exemplifies this sequential approach. The initial licensing phase, which began in 2019, allowed Boston Scientific to evaluate Farapulse’s pulsed field ablation technology in clinical practice. The agreement included milestone payments tied to CE marking, FDA clearance, and specified procedural volume thresholds. Upon achieving these milestones, Boston Scientific exercised its acquisition option at a valuation reflecting de-risked commercial potential. For Farapulse, the arrangement generated interim revenue, validated its technology through a major partner’s clinical network, and preserved exit optionality.

Other MedTech deals mirror this hybrid “license-to-acquire” structure. Boston Scientific invested $90 million in Millipede (2018), securing an exclusive acquisition option. The buyout price was set at $325 million plus $125 million for a commercial milestone, allowing “try before buy” access while funding Millipede^[17]. Similarly, St. Jude Medical paid $60 million for a 19% stake in CardioMEMS (2010)^[18], with an option to acquire the rest for $375 million if milestones were met. After FDA approval, St. Jude bought CardioMEMS for a total of ~$435 million (2014). This structure let St. Jude limit risk and CardioMEMS secure funding and validation.

The future runs through licensing

The billion-dollar deals chronicled here are more than mere transactions, they are reshaping the very pathways through which medical innovation reaches patients. Strategic choices among in-licensing, out-licensing, cross-licensing, and hybrid models, coupled with careful calibration of exclusivity and territorial scope, enable companies to align their licensing tactics with broader corporate strategies.

The vertically integrated model is fading. Today, innovation has become too complex and costly for any one company to master every piece of the puzzle. As the MedTech industry evolves under regulatory pressure and intensifying competition, strategic licensing will remain a cornerstone of commercial success.

Companies that master the six-strategy toolkit will not just survive the coming transformation. They will define it.

[1] JP Morgan, Q4 2025 Medtech Licensing and Venture Report, December 2025

[2] https://www.freenome.com

[3] https://www.biospace.com, https://www.nsmedicaldevices.com and https://www.abbott.mediaroom.com

[4] https://bloomberg.com and https://www.investor.gehealthcare.com

[5] https://www.biospace.com

[6] https://en.globes.co.il

[7] https://www.freenome.com

[8] https://www.fiercebiotech.com

[9] https://www.ir.edwards.com

[10] https://www.medtechdive.com

[11] https://www.dotmed.com