Intellectual Property Business Models Using Patent Acquisition: A Case Study of Royalty Pharma Inc.
DOI:
https://doi.org/10.5912/jcb736Keywords:
Royalty Pharma, Translational Research, Patent Aggregation, Patent BrokerAbstract
In the pharmaceutical industry, companies are currently facing great challenges in developing new products due to patent expiration and decreasing profitability. In particular, the decrease in R&D productivity caused by the constant increase in the development period and cost of innovative new drugs means that the expectations of investors cannot be met. This study examined the successful case of Royalty Pharma’s business model, which adopted securitization, a new investment method that makes advance payments of future profits in order to overcome the decline in R&D productivity and enables the pharmaceutical manufacturers (as patent owners) to resolve the issue of attracting investment funds, while also making these funds available for other development projects. It examined the role in the biopharmaceutical sector of patent aggregating companies in providing the competency to analyze patent technologies and to create investment megafunds, as well as the success factors that can lead to a virtuous cycle of product development. From this analysis, the application of a patent-based business model is proposed for small and mid-sized pharmaceutical industriesReferences
Woolf, S.H. (2008) The meaning of translational research and why it matters. JAMA 299 (2): 211–213.
EvaluatePharma (2014) World Preview 2014, Outlook to 2020, available at https://scholar.google.co.kr/scholar?hl=en&as_sdt=0,5&q=evaluatepharma+outlook+2020#0
Fernandez, J.-M., Stein, R.M. and Lo, A.W. (2013) Commercializing biomedical research through securitization techniques. Nat. Biotechno 30 (10): 964–975.
Rüther, F. (2013) Patent Aggregating Companies. Wiesbaden: Springer Fachmedien Wiesbaden, doi: 10.1007/978-3-8349-4455-9.
Jensen, M.C. and Meckling, W.H. (1976) Theory of the Firm : Managerial Behavior, agency costs and ownership structure. Journal of Financial Economics 3(4): 305–360 (1976).
Eisenhardt, K.M. (1989) Agency Theory: An Assessment and Review. Acad. Manag. Rev. 14 (1): 57–74.
Magliocca, G.N. (2007). Blackberries and Barnyards: Patent Trolls and the Perils of Innovation. Notre Dame Law Rev. 82 (5): 1809–1838.
Lo, A. W. and Naraharisetti, S.V. (2014). New Financing Methods in the Biopharma Industry: A case study of Royalty Pharma, Inc. J. Invest. Manag. 12 (1): 4–19.
Pharma, R. (2014) History. Royalty Pharma. Available at http://www.royaltypharma.com/about-us/history
Pharma, R. (2014) Current Portfolio. Royalty Pharma. Available at http://www.royaltypharma.com/portfolio/current-portfolio
Pronker, E.S. (2013) Innovation Paradox in Vaccine Target Selection. ERIM Ph.D. Series Research in Management, available at http://hdl.handle.net/1765/39654
Fernald, K., Pennings, E. and Claassen, E. (2014) Biotechnology Commercialization Strategies: Risk and Return in Interfirm Cooperation. J. Prod. Innov. Manag. 32 (6): 971-996, doi:10.1111/jpim.12218
Lim, S.Y. and Suh, M. (2015) Product and Process Innovation in the Development Cycle of Biopharmaceuticals. J. Pharm. Innov., doi:10.1007/s12247-015-9214-9
Trott, P. (2008) Innovation management and new product development. World Wide Web Internet And Web Information Systems 39.
Goldblatt, E. and Lee, W. (2010) From bench to bedside: the growing use of translational research in cancer medicine. Am. J. Transl. Res., available at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2826819/
Sarkar, I.N. (2010) Biomedical informatics and translational medicine. J. Transl. Med. 8: 22.
Pisano, G.P. (2006) Can science be a business? Lessons from biotech. Harv. Bus. Rev. 84: 114–24, 150.
Pisano, G.P. (2010) The evolution of science-based business: innovating how we innovate. Ind. Corp. Chang. 19: 465–482.
Crowley, W.F. et al. (2003) Central Challenges Facing the National Clinical Research Enterprise. JAMA 289.
Yim, C.-N. and Kim, S.-W. (2013) Classification of Business Model of Patent Based Business. Korea Intellect. Prop. Soc. 41: 373–421.
Pharma, R. (2014) Case Studies. Royalty Pharma., available at http://www.royaltypharma.com/approach/case-studies
Korea Health Industry Development Institute (2014) 2014 Pharmaceutical Industry Analysis Report. Korea Health Industry Development Institute 90.
Drews, J. (2003) In quest of tomorrow’s medicines. Springer Science & Business Media.
KDRA (2016) New Drug Approval Status of Major Korean Pharmaceutical Companies by Therapeutic Category. Korea Drug Research Association, available at http://www.kdra.or.kr/website/03web02.php
Kim, S.-K. (2006) Inter-organizational Collaboration and Innovation in the Korean Pharmaceutical Industry. Sci. Technol. Policy Inst. 6.
LGLS (2015) Balance Sheet. LG Life Science, available at http://www.lgls.com/ir/financial/balance.jsp
MSKCC (2015) 2014 Annual Report. Memorial Sloan Kettering Cancer Center, available at https://www.mskcc.org/sites/default/files/node/103899/document/2014-annual-report.pdf
