Despite Patent Challenges, Emerging Markets Offer Pharma Growth Opportunities

RESEARCH TRIANGLE PARK, NC--(Marketwire - April 5, 2010) - US and European drug companies are increasingly turning to emerging markets to stimulate growth. The transition is a challenging one, though, and one of the most frustrating obstacles involves protection of patents and intellectual property.

Only recently, for example, has India moved to make its patent code more palatable to drug makers. Before 2005, India allowed patents on manufacturing processes but not active pharmaceutical ingredients. As long as a generic company manufactured a drug in a manner that differed from the established, patented process, it could legally sell the product.

Under this system, companies produced copycats of some of the world's leading branded medications and sold them in India and other developing countries. In so doing, they undercut the prices and profits of branded medications.

Once increased protections were added to India's patent code, multinational companies began expanding rapidly in the country. Challenges to intellectual property, however, still presented problems. In changing the patent code, India incorporated a clause that disallows patents for treatments that are not more efficacious than those already available. This clause has been the basis for several patent refusals by the Drug Controller General of India, namely for Roche's Tarceva, Novartis' Glivec and Bayer's Nexavar.

These issues slow progress, but won't halt it. "Even though there are many issues yet to be resolved, there's no question that global drug companies will continue to invest in countries like India," said Jason Richardson, president of Cutting Edge Information. "These regions offer attractive markets as well as an abundance of intellectual talent that can be a real asset moving forward."

Even when intellectual property isn't an issue, simply penetrating a new market offers stiff challenges. Some companies overcome initial barriers to market entry by partnering with local companies.

"Partnering with a company already in-country offers one path to success," said Richardson. "It offers a win-win relationship that builds goodwill, bridges gaps among drug makers, physicians and patients, and paves a communication pathway between companies and governments."

Cutting Edge Information's research identifies effective strategies for pharmaceutical companies looking to increase their presence within emerging markets. Its study, "Pharmaceutical Alliance Management" (http://www.cuttingedgeinfo.com/alliance-management/), provides alliance management and partnership best practices. For more information on emerging market research, please e-mail shaylyn_pike@cuttingedgeinfo.com.

Contact Information: CONTACT: Stephanie Swanson (919) 433-0212