Identifying the customer or collaborative arrangement

Biotech signs an agreement with Pharma to share equally in the development of a specific drug candidate.

Is there a customer in the scope of IFRS 15?


It depends……….and this is the reasoning:

It is unlikely that the arrangement is in the scope of IFRS 15 if the entities will simply work together to develop the drug.

It is likely in the scope of IFRS 15 if the substance of the arrangement is that Biotech is selling its compound to Pharma and/or providing research and development services to Pharma, if those activities are part of Biotech’s ordinary activities.

Entities should consider whether other applicable guidance (IFRS 11 Joint Arrangements) exists that should be applied when an arrangement is a collaboration rather than a contract with a customer.

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