Navigating the various legal and regulatory requirements for a multinational launch, in which the requirements differ in each jurisdiction and are in a state of constant evolution, is a huge undertaking, reports Tim Belcher, Partner and UK and European Patent Attorney at EIP.
Start-ups and scale-ups in the sector are commonplace in the early stages of the development pipeline.
Small groups, often through collaborations with universities or contract research organisations, can complete the proof-of-concept science efficiently and cost-effectively; many will see products into at least Phase I clinical trials.
However, as the cost ramps up through the clinical trial process, attracting the necessary investment becomes harder and harder; this is, after all, a process that terminates the development of most clinical candidates.
As such, many smaller pharmaceutical companies often look to “Big Pharma” to take assets through the latter stages of clinical trials — either through sale of the company or through joint development agreements.
Big Pharma has the infrastructure in place to perform large-scale clinical trials, with all the necessary and accompanying backroom support … and so can complete trials at a lower overall cost.
Big Pharma is a natural investor/acquirer. It has the infrastructure in place to drive assets through the regulatory process and the knowledge and expertise to bring a product to market worldwide.
And, it probably goes without saying, it’s cash rich, with some estimates putting the total current investment-ready capital at more than $1 trillion.
Although Big Pharma does of course have internal early stage R&D capacity, the diversity of start-ups/scale-ups (working on a huge number of different targets) is not generally replicated in-house.
Moreover, Big Pharma is facing an uncertain few years owing to a looming patent cliff; that is, the expiration of patents for leading products, which will allow competitors to introduce generic versions at lower prices.
The top 20 biopharma companies collectively face $180 billion in sales at risk because of patent expirations between now and 2028, according to estimates from EY. Their new drug pipeline is vital for these companies to protect their turnover and revenue.
To strengthen their pipeline, acquisitions by Big Pharma have become commonplace; the number of M&A transactions in this space generally increased year-on-year during the last decade (taking out the COVID years, which caused a slow-down in transactions).
Given the impending patent cliff, we expect the number of acquisitions to increase as Big Pharma looks for the next blockbusters.
Recent deal valuations range from several million up to approximately $2 billion — with prices dependent on the stage of drug development and contingent value (with some payments only being made when certain milestones are hit).
Pharma start-ups and scale-ups are operating in a crowded market of competitors seeking investment. What can these companies do to stand out? This is an important aspect of running an early stage pharmaceutical company and one that must be planned for from day one.
Investment readiness
Proof of principle experiments (showing efficacy against target and an acceptable toxicology) are vital. However, all additional value in the company (which is pre-revenue) is in intangible assets and, primarily, in patents.
Patents can be used to protect the new chemical or biological entity, but also delivery vehicle, composition/formulation, polymorphs, combination treatments, dosage regimes, novel treatments and targeted patient groups, and a well-designed patent strategy will utilise these various protection types to maximise the patent monopoly scope and term.
Solid IP protection can be worth millions of dollars daily at the end of patent term for a blockbuster drug. Accordingly, getting the right IP in place — which will stand up to scrutiny in 15–20 years — is vital.
Extensions to patent terms are available in some jurisdictions for pharmaceutical products (to compensate for loss of effective patent term owing to delays in marketing authorisation); ensuring your patent strategy takes advantage of these extensions is also worth huge sums.
The timing of patent filing should be influenced by envisaged clinical trial timescales.
Of course, the point at which investment is sought is much sooner and the IP needs to be “investment ready” at that stage. An IP strategy that optimises the IP position on a 3–5 year timescale, and on a 15–20 year timescale, can add several zeros to a company valuation!
It is also worth considering the identity of likely buyers; an evaluation of their patent filing plans will allow an early stage pharma company to generate a portfolio that is as attractive as possible to a possible acquirer.
Changes to the UK pharma legal scene
The after-effects of Brexit are still being felt in the UK pharma market. In the first years following the decision not to remain, fewer medicines were approved in the UK than in the EU … and many that were UK-approved relied on the EU-approval process.
The UK pharmaceutical market is comparatively modest (2.4% of the global market) and fears were expressed that, following Brexit, drug manufacturers might not bother to seek approval in the UK.
To allay these concerns, the UK Medicines and Healthcare products Regulatory Agency (MHRA) introduced the International Recognition procedure (IRP), a new pathway for medicine approvals, at the start of 2024.
Approvals from trusted regulatory partners worldwide can be used to simplify and accelerate UK approval. The IRP aims to get more drugs approved in the UK but there is insufficient data at present to assess its effect.
Pharmaceutical companies hoping to launch products in the UK should evaluate and understand this path to market.
Another consequence of Brexit was the unique status of Northern Ireland (NI); the post-Brexit NI agreement generated complicated regulatory provisions for pharmaceuticals here, which had a knock-on effect in Great Britain.
Happily, these have been greatly simplified by the Windsor Framework and the whole UK now operates under the same law.
Changes on the continent
Various regulatory changes are currently working their way through the EU parliament that, when they become law, will impact UK pharma companies significantly. The current best estimate is that the law change will be enacted before the end of 2025.
Under the current proposed changes, the periods for data exclusivity will shorten; the initial EU plan was to reduce the term significantly to boost competition and access to medicines, with an expressed concern that European pharmaceutical R&D is falling behind non-European rivals.
This initial proposal has been softened (the reduction in term is less severe) following submissions by the pharmaceutical industry. It remains to be seen what the final implementation looks like!
As part of the proposed EU changes, it is also likely that more information about clinical trials in the EU will be made public sooner. This will have implications for IP filing strategy and may affect the locations in which the pharmaceutical industry goes into the clinic.
The (new) UK government has not yet indicated whether it will follow the EU on data exclusivity and clinical trials. It remains to be seen whether the UK government (a) chooses to follow the EU’s lead or (b) perceives there to be a competitive advantage in adopting a different regime.
We can expect action on this in the UK in the coming months.
The Supplementary Protection Certificate (SPC) regime (effectively patent term extension for the API designed to compensate for product launch delays caused by marketing authorisation) is also going to change significantly.
SPCs for EU member states will soon be managed through a centralised procedure as opposed to the existing system whereby SPCs are sought nationally.
There will also soon be a “unitary SPC” that covers more than 18 member states in one right (tied to a unitary patent — a topic too long for this article).1 The UK pharmaceutical industry will soon need to get to grips with these changes.
Reference
- https://eip.com/uk/insights/article/what_is_the_unitary_patent_and_how_do_i_get_one#:~:text=A%20unitary%20patent%20may%20only,Patent%20will%20not%20be%20compulsory.