Patent expiry to hasten consolidation in pharma industry

Life sciences research from Marks & Clerk predicts substantial acquisition activity

More than 8 in 10 (82%) of those working in the drugs industry in the UK believe Big Pharma will be unable to innovate sufficiently from within to replace blockbuster drugs going off patent, a survey by Marks & Clerk has revealed.

The latest annual life sciences research from the international intellectual property group also found that 97% of respondents expect patent life extensions to continue to grow in importance as companies seek to squeeze out revenue streams as blockbusters move towards patent expiry.

In addition, 68% predict substantial acquisition activity within the next two years.

The findings are based on a survey of 381 executives across the pharmaceutical and biotechnology sectors.

Now that the gains from yesterday’s small molecule-based drug discovery have been largely enjoyed, the picture for r&d is far more complex, with the study predicting increased industry convergence driven principally by acquisitions.

Despite the global economic outlook improving over the last year, the research identifies a number of industry specific problems. The most pressing of these is the fact that large numbers of blockbuster drugs are set to come off patent between now and 2014.

There is also uncertainty about the direction the new Conservative-Liberal Government will take. Under the Labour party, commitments were given to r&d sectors through the creation of a patent box and a strategic investment fund, which committed public money to sectors including biotechnology. The Conservative-Liberal manifesto, however, has already said that it will focus on other areas of economic activity – in particular energy, utilities and transport.

Dr Gareth Williams, partner at Marks & Clerk, said: ‘While it is encouraging to see that the pharmaceutical industry is slowly returning to health, our research merely indicates a shift in concern from the global economic backdrop and the subsequent funding drought to more immediate industry specific problems.’

87% of respondents believe that SPCs should be granted for secondary, follow-on drug formulations. More than three-quarters (78%) claim that critics of follow-on drug development do not give sufficient recognition to the role incremental innovation plays in advancing medicine.

While only 55% argue that patent term extensions fail to compensate adequately for the time lost in drug approvals, 82% believe the increasing cost of r&d means innovators ought to be given a longer term in which they can market their products exclusively. 92% of respondents suggest that increasing incentives to reward r&d would in turn help boost inverstment.

However, Williams said patent extensions would only postpone the inevitable for so long.

‘It is only a matter of time until innovator companies start to look to the fledgling biotechnology sector in earnest to lay the foundations of the drug development pipelines of the future,’ he said.