29 Billion reasons to litigate?

The most successful IP strategies in the pharma industry are often aggressive.  They have to be.

US $29 Billion in drugs come off patent this year – however that’s the innovators’ current markets – these products will all have multiple generic suppliers on patent expiry, and so with price competition, the actual markets will be much smaller.

The fruits go to those companies who don’t wait for patent expiry before launching, and instead develop non-infringement or invalidity strategies.  High risk, but high reward.

Of course, the same forces apply in other industries too.  However, an exclusive originator as the supplier of a patent protected product is much less common.  Instead, there are usually one or more cross-licensing deals based on IP that would otherwise block new products from entering the market.  

It’s interesting to think about how this latter model might apply to pharmaceuticals.  Something to explore, especially given that there is no longer a clear distinction between many of the ‘innovator’ and ‘generic’ companies.

3 Comments on “29 Billion reasons to litigate?

  1. I think there’s a general misconception that the entire value of an innovator product is up for grabs the day after the API patent expires – and this is probably the assumption used in the $29 billion figure.  Of course a certain portion of the market is, but other constraining patents mean that market share is still retained by the innovator for certain lines for many years.  Also these figures don’t take into account second generation patents such as polymorphs, formulations etc which in some cases extend the monopoly.
    Furthermore, generics companies are now realising the First to Market is not the only key differentiator and are looking for other ways to add value post-expiry as well as the invalidity/non-infringement options you suggested. The game is definitely changing towards the other market types that you allude to with the prevalance of authorised generics and settlements, but the disincentive for the innovator to do a deal with many generics means that most will be left looking for another ‘value-add’ post expiry.
    I believe that the unique combination of the regulatory authorities and distinct patent protection means that this market will predominantly revolve around ‘true’ generics for many years to come, unless some other force plays a part (user fees, compulsory licencing etc.)

  2. Thanks LeightonI think you’re right for molecules which are first in class.What about the situation where the molecule is second or third generation?  Many of the earlier patents may also cover it.  This would apply to small molecules as well as biologicals.Also – following the push towards personalised medicine, the situation will possibly become even more complicated as the market offering will increasingly include a diagnostic element – to identify the correct medicine, titrate dose, etc.  Such diagnostic patents could also be relevant to multiple drugs.

  3. Food for thought definitely… From what I’ve seen there are an increasing number of these types.  My gut feel is that the innovators curretnly tend to do deals with the innovators as the need arises very early in the lifecylcle from such patents being granted (e.g. a Novartis patent was Orange book listed under Lipitor for a while, then there’s the Simvastatin double -patenting case).
    I think you’re absolutely right that the weapons may change over time in terms of the types of patents, but again I think that these are more likely to be innovator initiatives – unless of course (as I think you are suggesting) the generic companies start to work in this area (whoever they are!?)
    This is too much for my Jet-lagged brain to handle at the moment…

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