Life Sciences industry welcomes European Unitary Patent

23 Apr, 2013

Marks & Clerk’s latest Life Sciences Report gauges industry attitude to the two major reforms –

  • Whilst a clear majority (64 per cent) of respondents feel that the creation of a Unitary European Patent will be positive for the industry, just under half (47 per cent) feel that recent US patent reform will be of net benefit
  • Yet almost half of respondents (48 per cent) believe that until European policymakers throw their weight behind a genuinely comprehensive European Patent, Europe will fall behind
  • The US and Europe dominate rankings for regulatory attractiveness, whilst China and India come third and fourth
  • Yet a majority (53 per cent) say the Chinese regime has improved significantly in the last five years – more than any other territory

Although the life sciences industry is broadly welcoming of recent European IP reform, opinion is split on recent US patent reform, according to new research released today by leading international intellectual property firm Marks & Clerk.

The study – involving a survey of 338 members of the pharmaceutical and biotechnology industries, including senior executives, researchers, academics, and investors – shows that a clear majority (nearly two-thirds, 64 per cent) expects the creation of a single European Unitary Patent and Unified Patent Court to be of net benefit to the European life sciences industry.

By contrast, just under half (47 per cent) feel the same about the impact of US patent reform (the America Invents Act) on the American life sciences industry.

Around four in 10 believe that the main beneficiaries of both reforms will be larger corporations (39 and 41 per cent for European and US reform respectively), but a higher percentage feel that the European reforms will benefit the sector as a whole than the US reforms (30 and 20 per cent respectively).

Over two thirds (67 per cent) consider that the changes in Europe will go some way towards addressing the historical problem of a fragmented marketplace. Nonetheless it should be noted that almost half (48 per cent) of respondents also stated that until European policymakers throw their weight behind a genuinely comprehensive European Patent, Europe will fall behind competing markets.

Gareth Williams (pictured), Partner at Marks & Clerk, comments:

“These results demonstrate that patent reform and changes to regulatory regimes have the potential to seriously affect the life sciences industry – for better, or for worse. It is therefore of crucial importance that legislators get the balance right when introducing changes to these systems. Interestingly, when asked a similar question in our 2010 report, 59 per cent of respondents believed that the proposed US patent reform would benefit the sector as a whole. It is clear this initial optimism has now been tempered by the realities of reform, and the growing sense that the AIA will principally be of benefit to larger organisations.

“The reaction to the European reforms is markedly more positive, which may reflect relief that Europe is finally, to some limited extent, taking concrete steps to address one  of its major disadvantages as a market: fragmentation. Discussions on the Unitary Patent have been brewing for decades. However, as always, the devil will be in the detail, much of which will only become evident once the system is up and running – the European experiments have a number of shortcomings which could put the sector at risk. It will be interesting to see where industry opinion stands on this a year from now.

The rise of Asia and the difficulties face by Europe

The study also looked at sentiment towards different territories in terms of market attractiveness and regulatory regimes. Ranking by market attractiveness showed China and the US racing ahead of Europe, with India hot on Europe’s heels. Where the US had a net rating of 81 (with 84 per cent of respondents rating it as attractive and three per cent rating it as unattractive) and China a net rating of 70 (77 per cent attractive, seven per cent unattractive), Europe’s net rating was just 57 (65 per cent attractive, eight per cent unattractive). India achieved 55 (65; 10) and South East Asia 54 (63;9).

Sentiment regarding regulatory regimes has yet to catch up with this new world order, however, as no region had a net score higher than 50. The US and Europe receive the biggest vote of confidence (47 and 42 per cent ranking them as attractive, respectively), while China and India occupy the other end of the scale, with a quarter of respondents (25 per cent) finding the Chinese regime unattractive, and almost a quarter (23 per cent) saying the same for India. A significant minority regards these territories as both a regulatory and IP ‘minefield’ (15 and 17 per cent respectively). However, respondents with views as to the improvement or deterioration of regulatory regimes over the last five years were far more likely to vouch for China than other territories, with a majority (53 per cent) saying the regime there has improved versus 15 per cent saying it has deteriorated.

Gareth Williams, Partner at Marks & Clerk, comments:

“These results are a sign of the times for the life sciences industry, and reflective of wider economic shifts: the rise of Asia and the continued difficulties faced by Europe, for whom these findings are particularly significant. For the first time in our series of Life Sciences Reports Europe is no longer regarded as one of the top two markets in terms of commercial opportunity. The US and China are clearly seen to be the markets of the future.

“There is evidently a long way to go for regulators across the world if they are to make their territories attractive to life sciences organisations. With no jurisdictions’ regulatory regimes particularly favoured by respondents, companies are facing regulatory barriers no matter where they turn. Policymakers in countries like China and the US, whose markets are otherwise so attractive, need to keep pace with the demands of industry.”

The changing IP landscape of the life sciences industry

The study revealed that issues relating to intellectual property are high on the list of challenges the industry is facing over the next five years.

A slight majority (56 per cent) predict that as the patent cliff begins to bite, we will see increased usage of and litigation related to SPCs, as originators increasingly look to squeeze all possible sources of revenue.

Changing technology is also having an impact: a clear majority (67 per cent) believe it is essential for the future of the Life Sciences industry that clear provisions regarding the market entry of biosimilars be established as soon as possible.

Reactions to the  2011 CJEU ruling that prohibited the patenting of inventions based on the use of human embryonic stem cells were strong: nearly two thirds (64 per cent) of those with a view felt the consequences would be negative for the European life sciences industry. Over half (54 per cent) state that the consequences would be negative; within this, 29 per cent feel the R&D would relocate elsewhere as a result.

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