LEVERAGING INTELLECTUAL PROPERTY AS A COMPETITIVE STRATEGY

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LEVERAGING INTELLECTUAL PROPERTY ASA COMPETITIVE
STRATEGY

• Dr. Ajit Dangi
• Director General
• Organisation of Pharmaceutical Producers of India
• avdangi_at_indiaoppi.com
• ABLE BIOINVEST 2007
• November 1 2, 2007

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ORGANISATION OF PHARMACEUTICAL PRODUCERS OF INDIA
(OPPI)

• Founded in 1965
• Over 75 Members
• Research-based International large Indian
  Pharma
• Companies
• Affiliated to International Federation of
  Pharmaceutical
• Manufacturers Associations (IFPMA), Geneva,
  Switzerland and World Self-Medication Industry
  (WSMI), France
• 3 Fundamental Beliefs
• - Adherence to TRIPs Compliant IPR
  (Intellectual Property Rights)
• - Ethical Sales Promotion based on IFPMA
  Guidelines
• and OPPI Code of Conduct
• - Adherence to International GMP Quality
  Standards

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Patents
Copy Rights
Design Rights
INTELLECTUAL PROPERTY
Traditional Knowledge TK
Know How
Geographic Indications
Trademarks
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TRANSITION TO KNOWLEDGE ECONOMY
Knowledge Economy

• Industrial Age Economy
• (e.g. Ford, Boeing) (e.g. Google,
  Microsoft, Infosys)

20 Tangible
20 Intangible
80 Tangible
80 Intangible
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I.P. INSTRUMENTS
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I.P. INSTRUMENTS
contd.
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REGISTERED GEOGRAPHICAL INDICATIONS
Illustrative list
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BIODIVERSITY RESOURCES AS A SOURCE OF NEW
MEDICINES

• Anti-cancer drug from pacific yew tree bark
  marketed by BMS TAXOL
• Anti-malarial drug from sweet wormwood marketed
  by Novartis COARTEM / RIAMET
• Anti-malarial drug quinine from chincona
  ledgriana
• Anti-diabetic drug from venom of lizard developed
  by Amylin Pharmaceuticals
• Isabgol (psyllium husk) for constipation and
  reducing cholesterol

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INTELLECTUAL PROPERTY PROTECTION
STRONGLY INFLUENCES
PHARMACEUTICAL COMPANIES
INVESTMENT DECISIONS
Percentage of companies reporting that
intellectual property protection has a strong
effect on their investment decision in RD
facilities
100
88
86
Chemical and Drug Companies
Source Mansfield, Edwin, Intellectual Property
Protection, Direct Investment and
Technology Transfer, International Finance
Corporation, 1995
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IDEAL IPR POLICY FOR INDIA
NATIONAL INTEREST
SCIENCE TECHNOLOGY AND RD
INTELLECTUAL PROPERTY RIGHTS
AVAILABILITY MEDICINE PRICES
HEALTHCARE NEEDS
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INDIAN PATENT LAW AREAS OF CONCERN

• Narrowing the definition of Patentability
• Broadening the scope of Compulsory Licensing
• Pre Post Grant Opposition
• Lack of Data Exclusivity/Protection
• I.P. Infrastructure

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1. PATENTABILITY

• TRIPS Allows NCEs, Polymorphs, Chiral Isomers,
  New Indications etc. (e.g. once a day Cipro
  Ranbaxy)
• Section 3(d) of the Patent Act
  Salts,
  esters, ethers, polymorphs, metabolites, pure
  form, particle size, isomers, mixtures of
  isomers, complexes, combinations and other
  derivatives of known substance shall be
  considered to be the same substance, unless they
  differ significantly in properties with regards
  to efficacy.
• Dr. Mashelkar Committee Report withdrawn for
  Technical Inaccuracies.

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2. COMPULSORY LICENSING

• CL Provision broadened to include
  Affordability, not worked in India, etc.
• Should be restricted to true NATIONAL EMERGENCY
  situations (e.g. Epidemics, Pandemics, etc.)
• Only for NON-COMMERCIAL USE
• Interests of the Licensee can never be placed
  above those of Inventor
• Broad based Compulsory Licensing only
• helps the Copier and not the Patient

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3. POST VS. PRE GRANT OPPOSITION

• Pre-grant Opposition has resulted in frivolous
  objections delaying the grant of patent.
  Practice of serial oppositions.

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4. DATA PROTECTION

• TRIPS Article 39.3 Protection of undisclosed
  information
• through Data Protection.
• Consumer Safety DP ensures higher degree of
  overall
• safety and efficacy of Drugs launched in the
  market.
• Incentive for Innovation Gives enhanced
  protection and
• incentive to originator to discover drugs based
  on original
• research.
• Period U.S.A. - 5 years
• E.U. - 6 to 10 years
• China - 6 years
• India - Nil
• (From the time the product is approved for sale)
  
• Ms. Satwant Reddy Committee report released May
  2007 (Calibrated Approach)

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5. I.P. INFRASTRUCTURE

• Massive Patent Literacy Programme Formal
  Courses at school, graduate and post graduate
  levels.
• Patent Infrastructure Examiners,
  Digitalisation, Information Processing
• Training of Judiciary Quick and Effective
  Disposal
• Dedicated I.P. Courts

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• If HP knew what HP knows, we would be
• three times as profitable
• - Lewis Platt
• Chairman
• Hewlett Packard

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(MIS) MANAGING INTELLECTUAL PROPERTYKODAK VS
POLAROID CASE STUDY - 1

• Polaroid invents instant photography. Captures
  15 of the market.
• Polaroid protects its invention with a wall of
  cleverly worded patents.
• Kodak tries to circumvent the patents and
  launches its own instant camera with much fanfare
  in 1976.
• Polaroid responds with a lawsuit claiming
  infringement of 12 of its patents.

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(MIS) MANAGING INTELLECTUAL PROPERTYKodak Vs
Polaroid Case Study - 1
contd.

• RESULT
• Ensuing trial takes 9 years. Kodak loses.
• Total loss to Kodak
• U.S. 925 Mn. in damages to Polaroid
• U.S. 1.5. Bn. lost in closure of instant camera
  manufacturing plant
• 700 workers laid off
• U.S. 500 Mn. spent on buying back 16 million
  cameras already sold.
• Legal fees U.S. 100 Mn.
• Remainder RD cost written off
• Customers sued Kodak who bought the camera
• U.S. 150 Mn.
• Total Cost U.S. 3 Bn.
• Kodak instant camera business destroyed.

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IBM BENCHMARK IN I.P. MANAGEMENT

• CASE STUDY - 2
• IBM 1998 RD Budget U.S. 5 Bn.
• Lou Gerstner, CEO of IBM decides to use I.P. as
  revenue generator.
• IBM Technology Group (ITG) was born. 2,500
  Patents every year.
• Strategy
• Instead of using patents as a defensive mechanism
  
• to protect its RD work, use IP as aggressive
• commercial weapon to generate sales

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IBM BENCHMARK IN I.P. MANAGEMENTCASE STUDY -
2
contd.

• RESULT
• ITG in the first 6 months of formation
• generated U.S. 8 Bn. by way of licensing
• revenues and component sales with a goal
• of U.S. 20 Bn. per year

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REVOCATION OF TURMERIC PATENT

• CASE STUDY 3
• U.S. Patent 5401540 granted to University of
  Mississippi by USPTO for Turmeric Wound Healing
  Properties - 1995.
• CSIR requested for re-examination giving 32
  references from Ancient Indian Literature (e.g.
  Ayurvedic Pharmacopoeia, The Wealth of India,
  Indian Home Remedies, etc.) 1996.
• CSIR proved that use of turmeric is not novel and
  it is prior knowledge.
• Based on CSIR representation USPTO revokes
  Turmeric Patent 1998.

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CASE STUDY - 4

• Alza Corporation U.S.A.
• Leadership Dr. Al Zafforani Ph.D.
• Strategy NDDS (Transdermal Delivery)
• Products Fentanyl, Estradiol,
• Scopalamine,
  Nicotral, etc.
• Acquired by Johnson Johnson for 10.2 Bn. U.S.
  
  

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CASE STUDY - 5

• Sepracor Inc., U.S.A.
• Strategy - Improved Chemicals Entity (ICE)
• - Single isomers of Racemates through
  CHIRAL Chemistry
• 19 ICE drugs by 2009
• Global market for ENANTIOPURE Drugs
  50 Bn. U.S.
• (Faster onset of action, reduced side effects,
  enhanced receptor potency)

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• VALUATION OF INTELLECTUAL PROPERTY

Cost-based qualifies the amount of capital
required to replace the future capability of
I.P., including cost of failures (e.g. Viox)
Income-based net economic benefit during life
of Assets
Market-based brand equity Market capitalisation
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MANAGING REPORTING ON INTANGIBLES

• The Meritum Guidelines Best Practices of
  Eighty European Firms
• Human Capital Knowledge, skills, experience and
  abilities of people
• Structural Capital Database, procedures,
  systems, cultures, etc.
• Relational Capital Companys relations with
  stakeholders (investors, creditors, customers,
  suppliers, etc. and their perceptions about the
  company)
• Danish Guidelines Describes how to prepare
  Intellectual Capital Statement

Measuring Intangibles to Understand and Improve
Innovation Management
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PHARMACEUTICAL I.P. INDEX
TO BENCHMARK INDIA

• Based on 5 Criteria
• Term of Exclusivity
• Scope of Exclusivity
• Strength of Exclusivity
• Barriers to full I.P. Exploitation
• Enforcement

Ref. Meir Pugatch, University of Haifa The
Journal of World Investment Trade
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PHARMACEUTICAL I.P. INDEX
Ref. Meir Pugatch, University of Haifa

The Journal of World Investment Trade
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5 STEP APPROACH FOR SUCCESSFUL MANAGEMENT OF I.P.
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Measure performance and review periodically
4
Develop organisational capabilities
I.P.literacy
3
Identify new areas and build the I.P. portfolio
2
Define approach for building I.P. as a part of
overall business strategy
1
Evaluate current I.P. Status and prepare I.P.
Portfolio
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It is believed that thousands of artisans had
their fingers cut off after they built the Taj
Mahal so that the creation could not be
duplicated.
Fortunately, there are better ways to protect
what you create
Pfizer
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Thank You
Thank You
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Dr. Ajit Dangi heads the OPPI Secretariat as its
Director General. Organisation of Pharmaceutical
Producers of India (OPPI) is a premier
association of research based international and
large Indian pharmaceutical companies. Dr. Dangi
is a veteran in the Pharmaceutical Industry and
is former President Executive Director of
Johnson Johnson, India. He has served as Vice
President of OPPI and Chairman of its HRD
Committee. He is on the Advisory Board of United
States Pharmacopeia, Washington and Indian
Institute of Intellectual Property Studies,
Mumbai. Dr. Dangi holds Masters and Doctorate
degrees in Pharmaceutical Chemistry from
University of London, U.K. and has undergone an
Advanced Management Programme at the Kellogg
Graduate School of Business, Chicago, U.S.A. He
has over three decades of rich and varied
experience in Research, Manufacturing, Sales
Marketing and General Management in
Pharmaceutical Industry in India and abroad.