The changes of exchange mode in the field of pharmaceutical technology

By Kevin Nie, China IP,[Patent]

CTEX Patent Auction (Biopharmaceuticals Section) auction was officially launched in July 2013, it was hosted by TIPR, IP Reserve and Exchange Center of Tianjin Taipu Pharmaceutical Science & Technology Development Co. Ltd., and organized by CTEX. 30 invention patents covering new compounds, new processes, new pharmaceutical preparations and new applications were showed in the auction, and some of them were auctioned without a minimum bid.

According to the host, the auction is the first of its kind for state-owned pharmaceutical institution to show and sell pharmaceutical patents on a large scale by auction.

Pharmaceutical industry-hardly optimistic

The pharmaceutical industry is directly related to public health. Therefore, it is facing extremely strict administrative examination, approval, regulation and intervention; moreover it should focus more on IP protection. The particularity of the industry generates complexity, from market access, product development, technology transfer to manufacture.

The pharmaceutical industry is a typical advanced technology industry, and technological innovation is essential to the industry development. Therefore, medical technology R&D is an important business for pharmaceutical enterprises and research institutions; and the ultimate aim of R&D is to realize enterprise’s business objectives. At present, Chinese pharmaceutical enterprises are in a dilemma: on the one hand, they are facing intense competition from transnational pharmaceutical giants; on the other hand, they are in lack of innovation. How should Chinese pharmaceutical enterprises develop their own independent IP and promote its utilization level become the main problem of the industry.

Relevant research shows that China’s pharmaceutical industry is weak in R&D and slow in technology industrialization. Many experts suggest that the transformation of R&D achievements must be speeded up, market-oriented technology development system must be established and technology exchange mechanism must be improved; besides, a sound IPR protection system should also be established, investment and financing approaches for pharmaceutical industry must be enriched, and various countermeasures should be taken to promote the development of the pharmaceutical industry.

Innovation in technology exchange mode

As is known to all, the main products of China’s pharmaceutical enterprises are generic drugs, however R&D of innovative drugs is hard and slow. Most of the Chinese pharmaceutical enterprises are in great shortage of R&D investment and excellent personnel, which should be responsible for the limited IP achievements and the weak core competitiveness. Therefore, getting IP through licensing is a more viable option.

Zou Meixiang, Vice President of TIPR, believes that China is in the leading place of patent quantity around the world, and also has a growing pharmaceutical market. Combining the technology with market and maximizing the product value are inseparable from IP flow and grafting.

Intermediary services are important in technology industrialization. China’s technology market, after nearly 30 years of development, has become the main channel for the industrialization of scientific and technological achievements; however, it still faces many bottlenecks, such as difficulties in pricing, defective credit system and poor incentive mechanism, these bottlenecks have seriously restricted the healthy development of the technology market.

In view of the traditional one-to-one technology trading negotiation which provides relatively limited choices for both buyers and sellers, and has low transaction efficiency, CTEX introduced the bidding exchange mode and had successfully organized three patent auctions and several net bidding activities.

Li Zhonghua, the Vice President of CTEX, told China IP that patent auction is not to replace the traditional technology transfer mode, but to create a technology transfer channel with a variety of transfer forms; it is one of the steps in the exchange process rather than a separate segment.

“Patent auction, as an effective complement to technology transfer, can make the transfer process more equal for both the buyers and sellers; it provides normative and effective market-based circulation channel to promote rapid transfer of patent technology as well as scientific and technological achievements, and to realize an efficient win-win connection between enterprises and institutes, moreover to satisfy the technical requirements of the enterprises and revitalize the suspended IP resources with potential value.” Li Zhonghua said.

CTEX adopts the bidding exchange mode in the recent several programs entrusted by other enterprises. It can be seen that bidding is becoming a conventional mode that CTEX adopts in IP exchange.

CTEX’s exploration in practice

Since its establishment, CTEX gives full play to its resources advantages, including international medical personnel, technology, information, capital and etc. In order to promote pharmaceutical research and innovation ability, and effectively connect the relevant industries, CTEX has conducted a lot of explorations on technology exchange mechanism and mode in practical pharmaceutical industry and has achieved positive results. The following are some successful cases.

On August 14th 2009, TIPR’s project of a new drug Manidipine hydrochloride was successfully transferred with the help of CTEX, and was located in Life Science Park in Changping District of Beijing.

On November 12th 2009, CTEX, The Fourth Military Medical University and Beijing Yibuke Technology Co., Ltd. signed a tripartite agreement. CTEX evaluated the ETI technology developed by The Forth Military Medical University which was going to be licensed to Beijing Yibuke Technology Co. Ltd., and meanwhile provided share buying and the third party settlement service; moreover CTEX also provided full service to Beijing Yibuke Technology Co., LTD. on financing of EIT technology industrialization. CTEX’s practice not only displayed the innovative technology transfer mode in industrialization of scientific and research achievement in universities, but also provided practical reference for Zhongguancun equity incentive reform pilot work.

On December 28th 2009, CTEX signed its first exchange project successfully. In this project, Sichuan Dongsheng Liquor Ltd. entrusted Beijing ODK Medical Technology Co., Ltd. to conduct R&D work at a price of 360,000 yuan through CTEX’s trading platform. CTEX, as a “matchmaker” in this project, provided third party project supervision and fund settlement services.

The success of the project marks that CTEX official launched its ability exchange service which provides R&D ability demonstration and exchange service for technology research institutions. Meanwhile, it also provides more choices for technology demanding party.

On June 28th 2010, Fangzheng Pharmaceutical Institution signed contracts with Beijing Collab Pharma Co., Ltd., Hangzhou Kaifei Pharma Co., Ltd., Beijing Doctor Ante on 5 new pharmaceutical technology projects including “FBR-1501 double effect medicine” and “FBR-6408,” which worth 18.2 million yuan in total.

In November 2010, with CTEX’s help, TIPR and Shiji Tianlong Pharmacy signed the technology transfer and related patent license agreement on “Longjiatongluo Capsule” at a price of 50 million yuan which is the highest technology transfer price on Chinese medicine in China. During the transfer, CTEX played an important role in the whole project by providing high quality service on trading structure design, technology assessment and etc. Shiji Tianlong Pharmacy expressed that market-oriented pricing mechanism of the technology project was fully reflected in this project.

On November 11th 2010, “China International Biomedical Project Supply and Demand Fair” was successfully held by CTEX.

(Translated by Emily Tan)

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