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More acquisitions are expected as the patent cliff pushes the pharma industry into a critical phase, with many executives believing that the industry will be unable to innovate sufficiently from within to replace blockbuster drugs.
More acquisitions are expected as the patent cliff pushes the pharmaceutical industry into a critical phase, with many executives believing that the industry will be unable to innovate sufficiently from within to replace blockbuster drugs.
The findings come from a survey of 381 executives across the pharmaceutical and biotechnology sectors, conducted by Marks & Clerk, an international intellectual property group. Almost 70% of respondents forecast substantial acquisition activity to take place in the next two years, with 19% anticipating major activity within the next year. Fortunately, the patent crisis has come at a time when the economic landscape is beginning to improve-more than 60% of respondents believe that the climate for doing business and access to funding have improved in the last 12 months.
"There has been a shift in concern from the global economic backdrop and the subsequent funding draught to more immediate industry-specific problems," Gareth Williams, a partner at Marks & Clerk, said in a press statement. "Pharmaceutical companies may now have the confidence and the support of institutional investors to press ahead with acquisitions, although at this stage selecting the right acquisition targets will be critical to their future R&D success."
As the industry looks to rebuild its development pipeline and seek alternative sources of innovation, it will be increasingly reliant on patent term extensions to buy itself time and to squeeze out product revenues for as long as possible-97% of respondents expect the industry's reliance on patent term extensions (or supplementary protection certificates (SPCs) in Europe) will continue or intensify as blockbusters near the end of their patent life.
Because of this, the industry is also increasingly calling for a reform of the European patent system to better support the commercial realities of the pharmaceutical industry. In particular, respondents wanted SPCs to be granted for secondary drug formulations. Under the current SPC system, protection is only granted to the product subject to initial marketing approval, which rules out protection for incremental improvements to the drug. Seventy-eight percent of respondents claim that critics of secondary patents do not give sufficient recognition to the role incremental innovation plays in advancing medicine, and 82% of respondents believe that the increasing cost of R&D means that innovators should be given a longer term in which they can market their products exclusively.
"Patent term extensions are becoming of central strategic and commercial importance to companies, whereas they were once simply one tool among many for securing future revenue," Williams explained. "However, extensions will only postpone the inevitable for so long."
As such, Marks & Clerk believes that innovator companies will look to the budding biotechnology sector as a source of new drug development. Williams also adds: "We are also likely to see considerable convergence where originator companies move into some areas of generic competition, particularly in the area of biosimilars where they identify considerable commercial opportunity and threat."