Patent Evaluation and Patent Investment of Biopharmaceutical Industry
Date Issued
2010
Date
2010
Author(s)
Lee, Chi-Feng
Abstract
Biopharmaceutical industries have encountered many difficulties that need to overcome such as research and development or subsequent marketing. In particular, acquisition of innovative technology, upgrading of machinery, capital funds and human resources are the key element to operate a biopharmaceutical companies. Hence, for them to survive, they must constantly develop new products to increase the revenue. Other than developing new products or incorporating with others, shortening the launch time for new products is one of important competitive strategy for facilitating company growth. Developing new drugs is a high risk investment that requires a long period of time and large amount of funds. Once the developed products launch to the market successfully, these products will monopolize the market under the protection of intellectual property law. Consequently, the returned profit will be multiplied. Therefore, it is an interested topic to discuss how biopharmaceutical industries apply patent layout and knowledge of investment and management on increasing enterprise competitive
According to Porter’s five forces theory and SWOT analysis on case studies reveal that due to financial crisis in 2008, the total number of global pharmaceutical industry policy in strategic alliance has declined. However, the number of biotech companies participating in the alliance is increasing every year. This indicates biotech companies play an important role in product developments and patent technology layout. The biotech companies have greater advantages in complementary competition of patent strategy alliance. Thus, if the biotech companies could incorporated with others with innovated technology and investing strategy on patent layout and authorizing cooperation, it not only brings more funds but also shares many risks on enterprise developing.
To enhance competitiveness, during the research and development phase in biopharmaceutical production, patent application mode and global patent layout investing strategy can be proposed in several directions. Firstly, both researching and manufacturing are performed by the patent holder. Secondly, partners, in the strategic alliance, manufacture with authorized license from the patent holder. Thirdly, the patent holder constructs a specific landmine for patent layout. Fourth, the patented technology can be exchanged among the strategic alliance partners. Lastly, the patent license can be sold to a third party. A case study on global biopharmaceutical industry operating strategy shows that the developed product close to launch time, the risk is lower and the revenue might be higher. To accelerate patented product to be on the market, it is suggested to develop low risk candidate drugs, obtain patented technology transferring and cooperate with others in order to solve the problem for biopharmaceutical industrial are not capable to launch product in a short period of time. Following the trend of global industrial strategic alliance, the domestic biotech industry should be actively seeking product licensing, technology transfer, authorized manufacturing, and collaborative marketing. To open the oversea market or shortening the product development timeline, the global strategic alliance is an important developmental model for small and medium sized biopharmaceutical enterprises to breakthrough.
Although there are plenty hypothesis of patent evaluations, there is no such a standard evaluation model for biopharmaceutical industry. In order to establish strategically patent investing evaluation tool, according to concept of financial and economic evaluation, the analysis of case study on biotech patent evaluation model suggests investment expectations, risk adjusted net present value, real option, and compound option are combined to form evaluation process on new drug patent. In particular, from financial analysis discovers key success factors for the successful patent investments are focused on new drug development, enough number of patented product combinations, investing abundant resources, establishing cooperative alliance operating model from global layout, and incorporation with government policy and international regulation. With all above, a suitable and reflex patent layout investing strategy can be built. Thus, enough fund raise must be achieved in order to complete on patented clinical trials. Nevertheless, if fixed costs were higher than expected during new drug developments, it would be the priority subject to resolve for the enterprise. Cost down, for instance, can be performed to make up revenue shortages. Establishing specific targets, targeting distinct service segments, and launching international business values containing products are essential for a long lasting enterprise to operate.
The theory of value chain and the evaluation of patented technology serve as a basis for analyzing the case studies on the patent evaluation of the biopharmaceutical companies and product investing strategies. Hopefully, a series of analysis from above can provide beneficial references on constructing the patent layout and investment strategy.
Subjects
patent evaluation
patent investment
biopharmaceutical industry
patent layout
strategic alliance
competitive strategy
key success factors
patent license
patent strategy
value chain
investment strategy
Type
thesis
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