Intellectual property (IP) is a pharmaceutical or biotech company’s most valuable resource, and its protection is a key to that company’s future success. Recent challenges over patents for HIV drugs has reminded the industry that progress is still needed in balancing the opposing forces of innovation through protection of IP rights, versus the provision of affordable drugs for the developing world. Pharmaceuticals companies must face the daily challenge of creating value through the exploitation of IP rights, but avoiding considerable reputational harm. This situation was well illustrated in South Africa during the late 1990s when the balance between IP protection and the urgent needs of patients were not aligned. Since then, companies have become more aware of the potential damage that can be caused by too strict an interpretation of IP rights. Working in collaboration with national governments, trans-national organisations such as the WHO, and non-governmental organisations such as the Bill and Melinda Gates Foundation, pharmaceuticals companies have begun to find ways through the minefield of IP protection in less developed countries, and most now have donation schemes for drugs to treat diseases such as leprosy and HIV.
In relatively strong emerging markets such as China and India though, additional issues prevail. Multinational pharmaceuticals companies require and expect IP rights to be strictly enforced in countries where there are countless local manufacturers with the ability to produce cheap counterfeit copies of patented drugs, which often find their way back to western markets. At the same time, the implementation and enforcement of IP laws in India and China is improving. Combined with the ability to leverage lower cost expertise, on the whole, these countries are still very much an opportunity rather than a threat. Nevertheless, companies need to be aware of and able to manage the considerable risks of doing business there. Closer to home, drug patents are coming under increased attack from generics companies who believe they have identified a weakness in the IP protecting a product. For instance, in 2004 a major ulcer treatment drug was the subject of a patent challenge in the US by a generic manufacturer just three years after its launch. With the generics industry consolidating and becoming more aggressive, pharmaceutical companies are facing more rigorous and frequent challenges to their intellectual property monopolies and growing pressure internally to bring the realisation of value in R&D forward, without compromising standards or regulatory compliance.