Intellectual property as heartbeat of pharmaceutical industry

GENERATING more than $333 billion and supporting over $3.4 million jobs in the US alone, the pharmaceutical industry is considered to be one of the largest and rapidly growing industries on the planet. Apart from making available the drugs and other health products that help to ensure a healthy and productive workforce, the industry also provides quality employment to citizens, contributes to the gross domestic product (GDP), and promotes the social wellbeing and quality of life of a nation.  Currently, the industry contributes to nation building with aggregate investments in excess of #300 billion, pays taxes and other tariffs, and employs over 600,000 persons. Yet, with an estimated size of $1.78 billion, the Nigerian pharmaceutical industry is less than 0.3 percent of the national GDP and is practically nonexistent on the world pharmaceutical map.  An overall assessment of the Nigerian pharmaceutical sector using the ‘Strengths, Weaknesses, Opportunities, and Threats’ (SWOT) analysis is presented below. With the country’s large population and heavy disease burden, pharmaceutical spending has been rising at 16 percent compound annual growth rate and the pharmaceutical market has grown significantly over the years. This growth shows no signs of slowing down. Technical skills, local expertise and experience, trained manpower, and basic manufacturing infrastructure exist, with more than 150 drug manufacturing companies.

The weaknesses however include poor infrastructure, high cost of operation, and lack of constant power supply which increases the cost of local medicine manufacture and distribution. There is insufficient research and development infrastructure, especially in the areas of analytical equipment like spectroscopic equipment, chromatographic equipment, extraction equipment, animal testing equipment, tissue culture equipment, microbiology and biotechnology equipment, etc. And there are opportunities. Nigeria has a population of over 180 million, and an abundance of human and natural resources. Like any other investment that thrives in population density, investment in the pharmaceutical industry has a high potential of succeeding. The rise in non-communicable diseases such as diabetes and heart disease is inevitable and spending on drugs and health care is bound to increase. The threats include the very weak purchasing power which threatens the scope for marketing health products and encourages the proliferation of informal open markets. Corruption is widespread in most transactions. Drug counterfeiting also constitutes an enormous threat. Frost and Sullivan estimates that nearly 17 percent of essential generic drugs and as high as 30 percent of anti-malarial medicines are routinely faked in Nigeria.

We live in a new age.  Science, technology, and globalisation have changed—and continue to change—the way we live, interact, and conduct businesses. ‘The world is witnessing a paradigm shift and the economy is shifting towards intangibility.’  The value and importance of tangible assets such as stock and real estate have declined, the incredible value surge of intellectual property (IP) has defied the old laws of economics, and basic IP rights such as copyrights, trademarks, trade secrets, and patents now account for almost 80 percent of corporate value. Intellectual property  is the new gold. Now, due to its cost structure, time-consuming processes, and extreme innovativeness, the pharmaceutical industry beats every other industry in term of the need to acquire and protect intellectual property. Industry estimates confirm that developing a new drug and bringing it to the market takes 12-15 years and costs a pharmaceutical company around $3 billion. In addition, out of every 5,000-10,000 compounds that a pharmaceutical company tests, only one will be approved after all the clinical test. Knowing this, no company will like to risk its IP becoming public property without adequate returns.

The stakes are feverishly high.  Without intellectual property, it would be difficult, if not impossible, for any individual or business to invest in or reap any benefits from their inventions—inventors would not be encouraged to invent; investor would not be enticed to make any investment and millions of people who rely on the pharmaceutical industry for life-saving drugs and treatments would suffer. The economy too would suffer. And life as we know it would come to an ill and sick end. What types of IP do pharmaceutical companies need to protect? A patent provides its owner the exclusive right to prevent others from making, using, offering for sale, selling, or importing the patented invention without permission. Patents are arguably the most valuable IP rights that any innovative company must possess. This is especially true of the pharmaceutical industry where millions of dollars is spent on clinical researches and processes, pharmaceutical formulations and drug combinations, drug trials and approval. Without patents protection on these sequences, copycats could simply copy or reverse-engineer any discoveries or processes.

Patents also attract investors. No one wants to put their money in a venture where there are absolutely no guarantees. I know I wouldn’t.  A copyright grant exclusive rights to the author/owner of an original idea expressed in a fixed form, and as a consequence, prevent anyone from using the protected work without the express permission of the owner. Blue prints, customer files, databases, manuals, and software qualify as works protected under the domain of copyright. Under the Nigerian Copyright Act, copyright, in the case of a body corporate, lasts 70 years after the end of the year in which the work was first published. A trademark is a sign capable of distinguishing the goods and services produced or provided by one enterprise from those of other enterprises.  Now, although patent is the favourite weapon of choice, a strong pharmaceutical brand strategically places a company in a league of its own, helps it gain worldwide recognition, and brings financial reward in the long term.

• Adeyoju, a graduate of the World Intellectual Property Organisation Academy, is currently studying at the Nigerian Law School.