The period during which a life sciences company can benefit from patent protection plays an important role in drug development, on account of the long period from first filing a drug patent application to grant of market authorisation. Only from that point can a biopharmaceutical company generate returns on the significant sums that it has invested in developing the drug. The period during which the company sees no sales income from the drug – around 12 years – is justified only by the existence of adequate IP protection.
Life sciences undertakings are generally divided between development companies and companies primarily involved in late-stage development, registration and marketing. The first group comprises start-ups that take a promising technology or product to the proof-of-concept stage, while the second group assumes the risk of further development and registration.
Most start-ups are backed by venture capital, which means that they have a limited lifespan. These companies ultimately succeed when a so-called ‘exit’ is reached – either an initial public offering or an acquisition by a larger biopharmaceutical partner. Exit always occurs long before the product under development reaches the market, because few investors are willing to finance costly Phase III clinical trials. For these companies, the intellectual property is essentially their only monetisable asset and represents the true value, regardless of the valuable clinical, regulatory and manufacturing data that can be shared. Intellectual property is at the core of the due diligence activities relating to these exits, which entails evaluating the scope, validity, geographical coverage and duration of the granted patents and the likelihood that any patent applications will be granted with the right scope of claims.
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Published in IAM Life Sciences 2017
This article first appeared in IAM Life Sciences 2017,a supplement to IAM, published by Globe Business Media Group - IP Division. To view the guide in full, please go to www.IAM-media.com.