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
ber
of
dru
g p
ate
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
ste
d n
um
ber
of
dru
g invento
rs
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