The Pharmaceutical industry is driven by intensive investigative research and development addressing healthcare solutions especially for life threatening diseases . Ground Breaking research leading to “blockbuster therapeutic breakthrough” would not have been possible without the support of Intellectual property protection and the research funding made available from commercialization or licensing out of such new chemical or biological entities.

In today’s exceedingly competitive markets, the use and protection of intellectual property (IP) is often the difference between continued success or impending failure of a an enterprise in pharmaceutical industry .Making strategic use of IP is necessary  to increase the business value from intellectual assets via more comprehensive valuation and management .

Innovations in Pharmaceutical Industry

Innovation is the key to success of pharma industry. Innovation can only be successful with the support of strong R&D facilities.The R&D structure in the Indian pharmaceutical industry has  four dimensions. These are: (i) development of generics, (ii) novel drug delivery systems  (iii) development of new processes and (iv) new drug discovery and research.

Protection of Pharmaceutical Test data : To introduce a new chemical  entity (NCE) or a original drug molecule (NME) pharmaceutical companies make huge  R&D expenditure in extensive testing and reporting on efficacy, safety ,and quality  of new drug to get approval  for market use. This is done through a complex and lengthy process of clinical trials.

Pharmaceutical test data  generated by pharmaceutical company is submitted to health regulatory agencies to obtain marketing approval and these studies  represent a major portion of the R&D investments of the company. Article 39 .3 of TRIPS states that  submission of undisclosed tests or other data to health regulatory agencies must be protected against unfair commercial use .The kind of Intellectual protection is known as market or data exclusivity. The data exclusivity term provided for an original drug molecule  is 5 years in US and 10 years in European Union.

Pharmaceutical Product /Process Patents: Patents are a vital aspect of the global pharma industry.  As the Pharmaceutical  products are an outcome of heavy R&D expenditures ,patent protection is essential to keep a check on competitors and also help  pharma companies create necessary financial incentives by providing monopolistic rights on the patented  product. In order to be patented, an innovation must meet the requirements of novelty, inventive step and being capable of industrial application (TRIPS Art. 27).Innovation centric pharmaceutical  companies obtain patent protection on active ingredient in the new drug molecule , obtain   patents  relating to the  same new active ingredient ( incremental inventions)   eg new formulations , compositions, new dosage forms ,routes of administrations, salts ,derivatives of active ingredients, Processes and Intermediates  etc.

The pharmaceuticals companies also use trademark protection obtained for their drugs (eg a product name ,brand name ,or distinctive logo) to extend  their market monopoly beyond patented drug’s expiry date . Patented drugs are usually marketed under their brand name rather than the generic name

Biological and pharmaceutical enterprises may adopt a combination of the protection methods as listed above and formulate a comprehensive IPR protection strategy for their products.

IPR Management

Innovations are protected through registration of IP . Like any other corporate asset, IP needs to be managed. Managing and exploiting IP in the right manner ensures maximum returns  for the company.

IP audit

Making an IP audit of the company is an important first step for identifying protectable assets that may not have been adequately exploited by a company in the past.IP audit is a systematic review of the IP owned, used or acquired by the company .At this stage, the company conducts an IP audit  in order to identify and classify its existing  IP portfolio.

The end result of the audit is to provide management with a snapshot of the organization’s IP asset . This information is essential if the company’s IP is to be managed strategically.

Eg : A pharmaceutical  company  conducted an audit of its 30,000 patents. From the information collected,  management was able to classify the patents into three categories — core patents it would maintain, non-core patents it would license out and non-core patents that it would abandon. It was the licensing of non-core patents that led to company’s  patent licensing revenues from US$25 million to more than US$125 million and the abandonment of non-core patents that resulted in savings of more than US$50 million in taxes and maintenance fees.

Training need identification:

It is important to asses current IP awareness level of scientists /engineers in the company It is essential to educate the staff /inventors to strategically manage company’s IP.

 Registration :

IP rights are territorial rights, and in order to obtain protection in foreign markets, it is necessary to register  for protection  of IP with effect in those countries. Pharmaceutical Company must disclose its intellectual property to  a government agency responsible for registering IP.

Pharmaceutical  companies must consider best protection strategy  to cover  various aspects of a new drug and must ensure  that all the rights are acquired in the relevant markets eg. Patenting a drug covers various aspects like  chemical compound, processes, new uses for the same compound, improved variations, dosage regimens, etc

Registration action plan :

Companies  that approach IP registration  without any plan  result in: IP not being registered in the right places, the wrong IP being registered, the right IP not being registered, etc. which results in  huge loss to the company.

  • A listing of all IP owned by the company (an IP audit will reveal this).
  • This list should classify the IP into categories of importance; those which are most important should be registered first and registered in all the countries where the company will exploit the IP.
  • A cost benefit analysis – is the cost of registration and maintenance of that registration justified by the commercial returns from that IP? Revenue forecasts for the IP should be compared against the registration costs.

 Renewal of  IP Rights :

Existing IP rights are subject to renewal periods and fees, and failure to maintain  IP may jeopardize IP rights to exploit it. So it is necessary to keep a track on IP rights of company to timely renew them to be in the market. Eg :  Timely paying renewal  fees to maintain product patents on new drugs .

Valuation of existing and new inventions:

Value estimations studies may be  conducted for the existing and new inventions within the portfolio to determine the total potential of invention based on licensing revenue generation. Valuation report should comprise of technology assessment report, freedom of operation  and financial evaluation of the invention.

Eg: patent valuation  may be done during the invention phase, prior to submitting the patent application, as during the application process the applicant will incur costs that they must be able to justify.It is hardly worthwhile for a company to maintain or defend a worthless patent.

Identification of potential licensees for existing and new inventions :

Licensing is widely used as a means of commercializing IP-protected pharmaceutical products .It can be  exclusive and/or non-exclusive licensing agreements with one or more other companies ,or  through cross-licensing agreements to  obtain access to other company’s  technology

FTO searches in different jurisdictions for existing and new inventions: FTO search is done jurisdiction wise to find  valid patents and pending application  that may need review and attention before commercializing /developing product/technology .If the company launches the product without FTO ,it may infringe the IP rights of third party.

IP Monitoring

i) Monitoring  activities of competitors  :As an IP right holder enterprises need to ensure that third parties do not take advantage of their  registered IP right without their permission.  Current research activities of competitors  ,their business strategies  should be constantly monitored  to take timely action against filing of conflicting IP rights by the competitors and  third parties .

ii) IP Portfolio Watch :  It is important for  a  company  to regularly search  patent databases  to keep a track on   technical developments , new technologies, identify new licensing partners, suppliers or new market opportunities, to  ensure  its  freedom to operate by searching  legal status of a patent.

iii) Infringer watch : Companies will need to monitor the market to identify possible infringement  of  their IP Rights by other companies. (e.g. the use of  trademark by others that may be eroding  company’s own trademark or the release of an infringing generic).

 IP Enforcement

Taking action against a person/company  who infringes owner IP rights is known as enforcement. The value of IP rights is directly related to the ability of the pharmaceutical enterprises  to enforce them.

To establish legal action against an alleged infringer ,owner  must  prove  :

  • Owner owns those  IP rights or are otherwise entitled to act on behalf of the owner; for example, as the exclusive licensee of the rights
  • the precise property in respect of those rights actually exists
  • the infringer’s product is a copy of the whole or a substantial part of the owner’s product
  • the infringer made its product without the licence or authority of the owner of the IP rights.

 Developing  an infringement strategy

An infringement strategy is not  just the  intention to commence legal proceedings when owner  IP rights are infringed. It involves a strategic assessment of  IP rights and setting parameters for beginning and ending infringement action.

Such a strategy should include:

  • Identification and awareness: Identify and record details of each IP  asset , and record details of permissions or licences to use IP.
  • Detection methods- Setting  out  methods  to detect infringements. Detection methods can be periodic review of competitors’ products ,advertising to campaigns specifically targeted at identifying infringements and infringers.
  • Setting  goals for infringement action -These goals can include obtaining”interim injunction” and/or initiating civil proceedings against the infringing company, recovering damages or deterrence through the use of publicity.