pharmaceutical globalization: where are drugs invented?

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Globalization of Drug Discovery

Drug Discovery Partnerships: Filling the PipelineOctober 17th 2011Yali Friedman, Ph.D. – [email protected]


Globalization of Drug Discovery

Why it matters:- Challenges of not having domestic drug R&D

How to measure it:- Using patents to track globalization of innovation


Global Biopharma Overview

Location matters• Workforce cost, availability• Access to skilled management, supportive

services• Proximity to innovative science and markets

Who is doing what, where?


Technology producers vs. consumers

Innovators • Drugs tailored to domestic healthcare needs

• Reliant on others to develop drugs for domestic needs• Non profit-enabling

diseases are unlikely to attract investment

Followers

Importers Exporters

•Gain foreign currency

•Tax revenues from domestic companies and workers


Strong market opportunities drive innovation

Why is the U.S. the world leader in biotechnology?• World’s largest prescription drug market– Not divided like European countries

• World’s strongest patent protection• World’s largest absolute expenditures on R&D– The U.S. once spent more on R&D than the rest of the world

combined• No government price controls

But, who is inventing the next generation of drugs?


What happens when you don’t develop drugs?

Case Study: Philippines• Limited domestic drug production capacity• Must purchase essential medicines from foreign countries

with higher wage-costs (e.g. Singapore)– This is effectively reverse-offshoring

• Government has a limited budget, must make difficult decisions about how much of which vaccines to buy

• Domestic production would reduce costs, preserve foreign currency, keep revenues domestic, and could train workers for innovative drug development


Acquiring Medicines

Develop a domestic drug development industry• Pros: Can develop drugs for domestic needs, can drive tax

revenues, can derive foreign currency from exports• Cons: Expensive, takes time, requires unwavering government

support

Buy drugs from foreign countries:• Pros: No need to invest in risky R&D, gain access to best drugs

produced by global leaders• Cons: Expensive, depletes foreign currency, doesn’t generate

tax revenues


Solution: Produce foreign drugs locally

Weak patent laws enable domestic production of drugs developed elsewhere

• Pros: Low-cost domestic production of many drugs using domestic workers, tax revenues from production and sales

• Cons: Reduced foreign investment by global firms, reduced motivation to develop drugs for locally-endemic conditions


Costs of Weak Patent Protection

India (mostly) adopts TRIPS accords in 1995• Amends patent laws to protect product patents, with the

notable extra criteria that new drug products must “differ significantly in properties with regard to efficacy”

• In 2007 Novartis failed to obtain a patent on Glivec (sold as Gleevec in the US)

• Novartis CEO: unfavorable patent ruling is “not an invitation to invest in Indian research and development.” Company will redirect hundreds of millions of dollars in investments to countries where it has greater IP protection.


Who benefits from not patenting Glivec?

Novartis provides Glivec free to most patients in India• Because Indian manufacturers would be unable to

compete with Novartis’ free domestic distribution, their target markets would likely be in other countries, where they could potentially erode Novartis’ market.

Is India forfeiting investments from Novartis simply so that Indian companies can sell Novartis’ drugs

abroad? Does this serve the public?


Mexico accepts Amgen drugLong-standing law:• International drugmakers must conduct at least some of their

manufacturing in Mexico

Pros: Training of Mexican workersInstallation of domestic biotechnology infrastructureFacilitates growth of domestic biotechnology industry

Cons: Some companies may decide not to sell drugs inMexico, depriving the country of valuable medicines

Amgen insists that they only want to have one manufacturing facility, in California

Mexico amends rule• Defines a list of drugs (e.g. anti-HIV, vaccines, hormones) able to be

imported without Mexican manufacturing facilities


Overcoming weak/poor markets

Mectizan• River blindness drug developed by Merck• Affected individuals unable to pay for drug, so Merck distributes

the drug for free• This model is unsustainable. Doesn’t incentivize development of

drugs for these conditions, instead relying on companies to support tangential discoveries.

OneWorld Health, Bill & Melinda Gates Foundation, etc.• Non-profit drug company solicits foundation support to actively

develop shelved drugs for neglected populations


Meeting national needs: Economic Development

Three basic models

India, Brazil, Thailand• Weak IP, focus on generic production and foreign sales

Israel, Cuba, maybe India• Moderate IP, leverage generic production skills to develop innovative

drugs

Singapore, Puerto Rico• Strong IP, attract manufacturing investments from global leaders


Where are drugs invented?Friedman, Y. (2010) “Location of pharmaceutical innovation: 2000–2009” Nature Reviews Drug Discovery 9:835-836


Indexed patents covering FDA-approved drugs

Source: DrugPatentWatch.com


Assigned relative inventorship based on inventor locations


US is slipping, EU stable, Asia rising

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

1020304050607080

North America

Europe

Central and South America

Middle-east

East and South Asia

Australia

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Global Trends in Drug Inventorship

AustraliaEast and South Asia Middle-eastCentral and South AmericaEuropeNorth America

Prop

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n of

dru

g pa

tent

inve

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But, which are the leading countries?


And… what about individual US states?

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

20

40

60

80

100

120

140

Top 10 States for Drug Inventorship

TexasMinnesotaIllinoisFloridaNorth CarolinaPennsylvaniaNew YorkOhioMassachusettsCaliforniaNew Jersey

Adju

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f dru

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vent

ors


Questions?Yali Friedman, Ph.D.

[email protected]

www.DrugPatentWatch.com


http://www.BiotechBlog.com

www.Logos-Press.com

pharmaceutical globalization: where are drugs invented?

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