Patents Critical to Pharma Industry

It’s common to read headlines regarding technology companies and patent lawsuits. These companies fight fiercely to protect their innovations. Further, their innovations often cross paths, causing confusion and more risk among competitors. While technology companies work diligently to build patent portfolios to beat the competition, pharmaceutical companies work just as diligently for the same reasons.

Patents provide great value to the pharma industry for a variety of reasons. Among those reasons is the ability to keep others from the market. When a pharma company has a patent on a specific drug, it’s much harder for a generic alternative to hit the shelves before a patent expires. This affords the company with a patented drug years of exclusivity. This exclusivity has garnered billions of dollars for pharmaceutical companies.

Patents also provide pharmaceutical companies great protection in the event of a lawsuit. Among pharma companies, lawsuits are common. According to Pricewaterhouse Cooper’s 2014 Patent Litigation Study, pharma companies gain great awards (or losses) in lawsuits. Biotechnology/pharma and medical device companies rank the highest among patent holders that have the most success rates in the event of a lawsuit. In addition, these same companies rank second and third, after telecommunications, with higher median damages awards than other industries. In fact, the largest damages award case involved a biotechnology company and pharmaceutical company in the amount of $1.7 billion, Centocor Ortho Biotech Inc. vs. Abbott Laboratories.

For these reasons, pharma companies seek to build their patent portfolios. The top pharma companies have no less than 500 U.S. patents, with many owning thousands. (And this doesn’t take into account international patents!) While patents can be costly, the cost invested in time, effort, and money for the creation of new drugs is greater. Therefore, the protection patents give to pharma companies is worth it. Patent protection may give pharma companies the ability to recoup investments in new products. Without this protection, pharma companies don’t stand a chance in the market.

Further, patents spur pharma companies to continue with their innovations. If there were no protection, then these companies would not put forth the effort to create new drugs. Without these new drugs, cures for cancer, autoimmune disorders, and other life-threatening diseases may never happen. With patents, the pharma industry can continue to improve the health of society and our quality of life.