Timing is Everything: The 20 year patent countdown
Patents are usually only valid for around 20 years however, as patenting occurs early in the R&D process, the countdown begins a long-time before the medicine reaches the market. This reduces the length of the exclusive period from the time of product launch.
This length impacts the profitability of a innovative pharmaceutical as once the patent expires, competition heightens because generic and biosimilar products can launch. Market share and price are thus reduced.
Generics and Biosimilars
Both, generics and biosimilars are usually encouraged by payors as they pose an opportunity for significant cost savings.
They also help to:
- establish a competitive market and reduce monopolies from forming,
- reduce the likelihood of drug shortages,
- aid procurement processes to take into account factors beyond price e.g. supply chain reliability.
Navigating Patent Loss
Loss of exclusivity (LOE) is right at the edge of the commonly called “patent cliff”.
Pharmaceutical companies try to navigate this strategically, and the approaches can generally be split into four types:
- Prevention strategy
- Innovation strategy
- Extraction strategy
- Adaption Strategy
Goal: to prevent competition by extending the length of the exclusive period.
- Strategic patenting
utilising secondary patents to create ‘patent clusters’.
- Supplementary protection certificates (SPCs)
SPCs can extend the exclusivity period, they aim to promote research in more difficult areas.
- Orphan drug status and paediatric clinical trials
An orphan drug status and/or undertaking paediatric trials can lead to patent extensions.
Goal: avoid competitors by outpacing them.
- Product-line extensions
Drug/manufacturing improvements can help to maintain market share.
- Indication expansions
Repurposing the drug for treatment in another area can acquire exclusivity in a new indication.
- Follow-on products
A new product that demonstrates improved patient outcomes.
- Prescription to over the counter
Switching to an over the counter product can
increase the market size.
Goal: exploit the current position of the product with minimal further investments.
Companies can compete directly with generic manufactures by adjusting the price of the product and promoting it. Price can also be adjusted up to target the price insensitive market.
- Out licencing
The company can sell or license the product to a generic company prior to patent expiration. This gives the generic company a competitive advantage in the generic market and can foster collaborations to e.g. explore additional indications.
Goal: establish the company as an active competitor in the generic market.
- Wholly owned generic subsidiary
Launch a generic through a separate company. This allows for more efficiency as it enables:
– different organisation of the businesses,
– improved market research.
- Generics supplied through main company
Developing the generic under the main company name offers increased credibility and allows targeting of both price sensitive and insensitive markets however poses a possibility of cannibalisation.