Patent strategies for life sciences companies to navigate the changing patent landscape

Abstract

As a result of the global recession that began in 2008, life sciences companies face a groundswell of new business and regulatory pressures that includes health care and patent reform, increased pricing pressures, and diluted markets. Bringing new products from discovery to market is becoming more expensive and unpredictable. In the pharmaceutical sector, some predict that the age of the blockbuster drug has ended as generics present a growing threat to the pharmaceutical giants. Further, with a large number of key patent expirations looming through 2014, analysts expect that large pharmaceutical companies will lose over US$150 billion of revenues of brand name drugs.

In response to declining sales and rising R&D costs, the life sciences industry is pursuing new market opportunities by expanding beyond the developed markets of the United States, Europe and Japan, and into emerging markets such as China and India. Despite market uncertainties, however, venture capital funding in the life sciences sector (including pharmaceuticals and medical devices) is on the rise with $2.1 billion going into 206 deals during the second quarter of 201l, an increase of 37 per cent in dollars and 12 per cent in deal volume. To survive – and thrive – in these tumultuous times, both large and small life sciences companies face pressure to develop new products and technological advancements.

Patents are pivotal to the life sciences industry. In order to succeed, life sciences companies must distinguish themselves from their competitors through their intellectual property portfolios. A successful patent portfolio represents a well-reasoned business strategy, where each patent is a single strategic building block in a larger portfolio that reflects present and future business objectives. A strong patent portfolio is also important in the current life sciences investment climate, where venture capital funding is often dependent on whether a company has secured its intellectual property assets, thereby validating a company's technology and demonstrating its commercial potential. Although building and maintaining a strong patent portfolio is important for all life sciences companies, it is most critical for early-stage companies. Patent portfolios are often the driving force for major events in the life cycle of a life sciences company, including mergers and acquisitions, public offerings, venture capital investment, strategic collaborations, joint ventures and litigation.

As a result of recent measures taken by the US Congress, the US Patent and Trademark Office (USPTO) and the US Supreme Court to reform the current US patent system, life sciences companies must respond with strong patent strategies that address these reforms without sacrificing the company's competitive edge in the marketplace. Such comprehensive technology strategies must maximize patent coverage of a company's current core technology and future improvements, monitor the patent landscape and explore ways to patent white space, and consider cross-licensing opportunities with competitors. With these strategies in place, life sciences companies can withstand patent reform and ensure their success in today's competitive and rapidly evolving global commercialization landscape.