Interesting Pharmaceutical Patent Decision from India

[speakingtohe]

Originally Posted by SteveEisenberg

The analogy I would make is that university biomedical researchers are like authors, and pharmaceutical companies are like publishers. India is like someone on this board who hardly ever reads a pirated book, but might in a rare special situation.

As for it taking hundreds of person-years to get US and EU governmental approvals, that's true. But how much value is there, to India, in that approval process? One can argue the point. Tests mandated in the West are not geared to how the drug may be used in India. Also, Western drug companies spend more more on marketing than R&D. They'll tell you that a lot of the marketing is for drug reps to help the docs use their products more effectively. Regardless of whether you buy this, I don't think many of those drug reps are visiting India.

I don't pretend to understand this, but if I am vaguely understanding it as we have no right to tell India and China how to operate when we cannot effectively understand or police our own business community then I agree.

Helen

[nogle]

Originally Posted by SteveEisenberg

The analogy I would make is that university biomedical researchers are like authors, and pharmaceutical companies are like publishers. India is like someone on this board who hardly ever reads a pirated book, but might in a rare special situation.

Not a bad analogy.

As for it taking hundreds of person-years to get US and EU governmental approvals, that's true. But how much value is there, to India, in that approval process? One can argue the point. Tests mandated in the West are not geared to how the drug may be used in India.

Actually, the testing carried out for US and EU approval do have value in other jurisdictions as the tests are to show safety and efficacy. Efficacy and safety do not recognize national borders.

Also, Western drug companies spend more more on marketing than R&D. They'll tell you that a lot of the marketing is for drug reps to help the docs use their products more effectively. Regardless of whether you buy this, I don't think many of those drug reps are visiting India.

Big Pharma is not really into new drug discovery any more and hasn't been for at least 2 decades. When a Big Pharma acquires a new product, the accounting does not allocate the purchase price to R&D. $100s of millions may have been spent of development up to the point of being acquired, but it is accounted for as goodwill.

Accounting is not a substitute for reality.

[HansTWN]

I think lately most of the new drugs big pharma introduced came from their purchases of biotech companies. Sort of like the publishers, one big hit helps cover the losses of many losers.

[nogle]

Originally Posted by HansTWN

I think lately most of the new drugs big pharma introduced came from their purchases of biotech companies. Sort of like the publishers, one big hit helps cover the losses of many losers.

Correct. Big Pharma acquires product by licensing from smaller R&D companies or purchasing the company outright. In either case, the cost is allocated to goodwill, not R&D. And in fact, Big Pharma is moving further from R&D; a decade ago, it would acquire a promising product after good phase I results. Now, they wait for a clear efficacy signal before purchasing; often waiting until the bulk of human testing is complete. This further shifts the expenses from R&D to goodwill.

[HansTWN]

Originally Posted by nogle

Correct. Big Pharma acquires product by licensing from smaller R&D companies or purchasing the company outright. In either case, the cost is allocated to goodwill, not R&D. And in fact, Big Pharma is moving further from R&D; a decade ago, it would acquire a promising product after good phase I results. Now, they wait for a clear efficacy signal before purchasing; often waiting until the bulk of human testing is complete. This further shifts the expenses from R&D to goodwill.

The question is, is this bad for R&D in the field? A lot of the small biotech companies couldn't survive on their own, many are running on the income generated by just one drug. Seems their goal is to make themselves attractive enough for just such takeover, they are not necessarily capable of adequately marketing the new drugs they have developed.

[nogle]

Originally Posted by HansTWN

The question is, is this bad for R&D in the field? A lot of the small biotech companies couldn't survive on their own, many are running on the income generated by just one drug. Seems their goal is to make themselves attractive enough for just such takeover, they are not necessarily capable of adequately marketing the new drugs they have developed.

For small R&D companies, the drug is the product and the customer is the big pharma, not the patient. It comes down to understanding what you are good at; for the small biotech, it is R&D not distribution and sales. Big Pharma is good at sales, distribution, and regulatory affairs, not R&D. The value chain is fragmenting/has fragmented; vertical integration doesn't add value in this industry.

There are biotech companies that are opperating solely on developing products and licensing them to Big Pharma. There is nothing wrong with this; their revenue line is made up of royalties, license fees, R&D payments and milestone payments. If the revenues are greater than expenses on an ongoing basis, they will continue.

There are also companies that develop one drug or one platform of drugs. These companies are built to be sold. And there is nothing wrong with that.