Using patent information to track globalization

Using patent information to track globalization

ACS CHALMarch 28th 2011Yali Friedman, Ph.D. – [email protected]

Using patent information to track globalization

Why it matters:1) Challenges of not having domestic

drug R&D

How to measure it:2) Using patents to track globalization of

innovation

Global Biopharma Overview

Location matters• Workforce cost, availability• Access to skilled management, supportive services• Proximity to innovative science and markets

Who is doing what, where?

Technology producers vs. consumers

Innovators

Global Biotechnology

• Drugs tailored to domestic healthcare needs

• Reliant on others to develop drugs for domestic needs• Non profit-

enabling diseases are unlikely to attract investment

Followers

Importers Exporters

•Gain foreign currency

•Tax revenues from domestic companies and workers

Strong market opportunities drive innovation

Why is the U.S. the world leader in biotechnology?

• World’s largest prescription drug market• Not divided like European countries

• World’s strongest patent protection• World’s largest absolute expenditures on R&D

• The U.S. once spent more on R&D than the rest of the world combined

• No government price controls

But, who is inventing the next generation of drugs?

What happens when you don’t develop drugs?

Case Study: Philippines• Limited domestic drug production capacity• Must purchase essential medicines from

foreign countries with higher wage-costs (e.g. Singapore)• This is effectively reverse-offshoring

• Government has a limited budget, must make difficult decisions about how much of which vaccines to buy

• Domestic production would reduce costs, preserve foreign currency, keep revenues domestic, and could train workers for innovative drug development

Acquiring Medicines

Develop a domestic drug development industry• Pros: Can develop drugs for domestic needs, can

drive tax revenues, can derive foreign currency from exports

• Cons: Expensive, takes time, requires unwavering government support

Buy drugs from foreign countries:• Pros: No need to invest in risky R&D, gain access to

best drugs produced by global leaders• Cons: Expensive, depletes foreign currency, doesn’t

generate tax revenues

Global Biotechnology

Solution: Produce foreign drugs locally

Weak patent laws enable domestic production of drugs developed elsewhere

• Pros: Low-cost domestic production of many drugs using domestic workers, tax revenues from production and sales

• Cons: Reduced foreign investment by global firms, reduced motivation to develop drugs for locally-endemic conditions

Global Biotechnology

Costs of Weak Patent Protection

India (mostly) adopts TRIPS accords in 1995• Amends patent laws to protect product patents, with

the notable extra criteria that new drug products must “differ significantly in properties with regard to efficacy”

• In 2007 Novartis failed to obtain a patent on Glivec (sold as Gleevec in the US)

• Novartis CEO: unfavorable patent ruling is “not an invitation to invest in Indian research and development.” Company will redirect hundreds of millions of dollars in investments to countries where it has greater IP protection.

Global Biotechnology

Who benefits from not patenting Glivec?

Novartis provides Glivec free to most patients in India

• Because Indian manufacturers would be unable to compete with Novartis’ free domestic distribution, their target markets would likely be in other countries, where they could potentially erode Novartis’ market.

Is India forfeiting investments from Novartis simply so that Indian companies can sell

Novartis’ drugs abroad? Does this serve the public?

Global Biotechnology

Overcoming weak/poor markets

Mectizan• River blindness drug developed by Merck• Affected individuals unable to pay for drug, so Merck

distributes the drug for free• This model is unsustainable. Doesn’t incentivize

development of drugs for these conditions, instead relying on companies to support tangential discoveries.

OneWorld Health, Bill & Melinda Gates Foundation, etc.

• Non-profit drug company solicits foundation support to actively develop shelved drugs for neglected populations

Global Biotechnology

Meeting national needs: Economic Development

Three basic models

India, Brazil, Thailand• Weak IP, focus on generic production and foreign

sales

Israel, Cuba, maybe India• Moderate IP, leverage generic production skills to

develop innovative drugs

Singapore, Puerto Rico• Strong IP, attract manufacturing investments from

global leaders

Global Biotechnology

Where are drugs invented?

Friedman, Y. (2010) “Location of pharmaceutical innovation: 2000–2009” Nature Reviews Drug Discovery 9:835-836

Indexed patents covering FDA-approved drugs

Source: DrugPatentWatch.com

Assigned relative inventorship based on inventor locations

US is slipping, EU stable, Asia rising

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Global Trends in Drug Inventorship

AustraliaEast and South Asia Middle-eastCentral and South AmericaEuropeNorth America

Pro

port

ion o

f dru

g p

ate

nt

invento

rs

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

1020304050607080

But, which are the leading countries?

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

50

100

150

200

250

Top 10 Drug Inventor Locations

CanadaDenmarkBelgiumSwitzerlandFranceSwedenGermanyJapanUnited KingdomUnited States

Adju

ste

d n

um

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of

dru

g p

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nt

invento

rs

And… what about individual US states?

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

20

40

60

80

100

120

140

Top 10 States for Drug Inventorship

TexasMinnesotaIllinoisFloridaNorth CarolinaPennsylvaniaNew YorkOhioMassachusettsCaliforniaNew Jersey

Adju

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of

dru

g invento

rs

Questions?

Yali Friedman, [email protected]

www.CommercialBiotechnology.com

www.DrugPatentWatch.com