Patent Protection – An Eternal Topic of R&D-Oriented Drug Companies

Issue 32, By Doris Li, Photo by Zhou Yi, China IP,[Comprehensive Reports]

On August 20, 2004, Sanofi-Aventis Group was founded. Calculated by time, this group should be regarded as a “new” business. However, no one dared to overlook this merger considering the background of the two giant companies. After the “phoenix nirvana”, the two international businesses now target the huge international market of drug industry.

In 1982, Sanofi, as the first foreign investment into China’s drug industry, opened its office in Beijing. The predecessor of Aventis is also well-known. In December 1999, two world-renowned companies, Germany’s Hoechst and France’s Rhone-Poulenc were merged, creating a leading company in life science field – Aventis, which focused its business on medicine and agriculture.

With regard to the merger of Sanofi and Aventis, Director of Global Patent Law Department of Sanofi-Aventis Mr. Robert DeBerardine said: “Sanofi ranks first in Europe and the emerging markets of Asia, but has small market share in the United States. Comparatively, Aventis holds a greater market share in America. Therefore, the merger will help the two companies develop better in the international market.”

“Patent is the only means of protection for drugs”

Sanofi-Aventis is the leading company in seven major drug therapy fields, such as cardiovascular, thrombosis and oncology. Every year the group invests EUR 4.6 billion in R&D. 17% of the annual profits and will also be inputted into R&D to ensure the virtuous circle of development in 2008.

However, investment on pharmaceutical R&D is still not the guarantee for new drugs. First of all, not all of the R&D investment can bear fruits and R&D may fail after all. Secondly, after the success of drug development, there may be a small part that can’t pass the examination of Food and Drug Administration and thus can not be put into production. Mr. Robert DeBerardine said: “The investment in R&D is rather risky for businesses.”

Talking of the difficulties in R&D and the importance of patent protection, Mr. Robert DeBerardine said: “Drug R&D is different from that of other industries. Take electronic products for example. After a new electronic product comes out, it may take one year for copying. At the same time, the new R&D is going on and new products are available in turn. The refresh cycle is short. In contrast, the life cycle of drug R&D is too long, After R&D, new drug would go through repeated clinical testing for several phases, followed by three years’ of examination and approval. With such a process, it should take at least 10 years from R&D to industrialization. However, it is not so complicated to make generic drug, which only needs a few people for a few days. Therefore, patent protection is particularly important for drugs. It can be said that patent is the only means of protection for drugs. The R&D investment should be protected effectively for a certain period of time in order to ensure the recovery of costs and reinvestment into R&D to maintain a virtuous cycle.”

Patent Director of Sanofi-Aventis Group in U.S. Mr. John D. Conway told us his personal experience. Once, not long after a new drug entered market, generic drugs appeared. After investigation, they found that it only took a few people, a small room and two or three days time to produce enough drugs for the whole region. Maybe the generic drug did not have very good efficacy, but their input was very small. If they were also branded with the trademarks of some other drug companies, the damages would be even worse.

Patent application is the direction of enterprise

For R&D-oriented enterprises, consummate and effective patent protection can be compared as the corporate helm, while the use of adequate and effective patent protection for its products is the most advantageous weapon. Therefore, it has become an important development trend for drug companies to explore the best way to achieve the best results of patent application and to give full play to its role.

It has also become a longer-term development strategy for Sanofi-Aventis to study the best products for patent application, the best place for application as well as learning how to effectively apply for patents in different countries.

It is noted that Sanofi-Aventis does not choose global application for all its patents, but choose different application countries according to the market importance. According to Mr. Robert DeBerardine , now the patent application in China is equally important with that in Europe, the United States, Japan and other countries.

Since IP protection in different countries is at different stages of development, it’s impossible for drug companies to choose a global patent pool. Different countries have quite different policies for patent application and protection. Mr. John D. Conway expressed that it was good to see China continuously consummate its IP law and he hoped that other Asian countries could be developed, just like China.

Chinese market is to “explode” soon

“China used only two decades to achieve the development that cost many countries a century, particularly in patent protection.” Mr. Robert DeBerardine and Mr. John D. Conway expressed their appreciation when talking about China’s development in recent years. They compared the developing Chinese market to an erupting volcano and said the outbreak excited them.

In recent years, Sanofi-Aventis Group increased investment in China, and reached cooperation agreements with dozens of Chinese research institutions. The group is also very optimistic about the prospects for the Chinese market and reserves of high-end talents in China. Mr. Robert DeBerardine believed: “Such cooperation is not accidental. With the improvement of China’s IPR protection, R&D is going to boom. They are interacted.”

After years’ close attention to the development of Chinese market, Sanofi-Aventis not only has great expectation for China’s potential, but also has a more detailed understanding and observation on the Chinese market.

For R&D-based drug companies, it is essential to be equipped with a set of perfect patent protection. However, it does not mean that they can rest easy after the products are patented. Patent infringements happen from time to time. In the face of patent infringement, companies should also make full use of legal means to protect their rights.

Mr. Robert DeBerardine said: “China’s development in recent years have resulted in more and more complete legal protection. The revised Patent Law is more practical for enterprises, especially international business, which makes drug companies more confident in China. However, some laws and regulations are still not detailed enough for us to understand each step of the development. If they are clearer, I believe it will be better for us.”

In addition, the duration of the drug patent protection as well as the control over generic drug is also of great concern. Mr. Robert DeBerardine said, “It is necessary to give patented drugs a reasonable and effective period of protection.”

Speaking of generic drugs, Mr. John D. Conway explained his views: “Generic drug companies favor well-known drugs. Since the brand drug needs a long R&D period and also long-term promotion, the patent protection duration may expire when it becomes a well-known product. The main reason why generic drugs favor brand products is that the promotion will be much easier. They can simply say ‘my drug is the same as his’. Furthermore, if patent protection period is too short for R&D-based drug companies, there would not be enough time to create well-known brands, which is also a disadvantage for generic drug companies. We do not oppose the production of generic drugs because their prices are more attractive. However, if the patent protection period is not long enough, it would cause losses to both sides. Moreover, it will do nothing to promote the development of new drug in R&D-based companies, and would not play a positive role for the protection of human life.”

It can be concluded from Mr. Robert DeBerardine and Mr. John D. Conway that drug companies hope to contribute their efforts where innovation is encouraged and the legal environment is clear and transparent. With its rapid development, China is believed to be the most fertile paradise for businesses!

(Translated by Li Yu)

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