Chemical, Pharmaceutical & Clinical R&D on the Move Towards Asia Part-II
IPR Protection - A Neccessity for Outsourcing Contract Research to India & China

Frank U. Floether

Why is sufficient patent protection in India and China important? Firms in these countries are important suppliers of low – priced API’s and increasingly finished products domestically, to developing countries and to the West (India). So there has been a fear that the introduction of product patents will destroy these industries and lead to increased drug prices in the importing countries. But the impact of the changed patent regime is much broader: besides access to new medicines in India and China, changing IPR is influencing the business strategies of Indian and Chinese firms and their incentive to invest in R&D in order to move up the product / market hierarchy. Furthermore Western MNC’s operating in those countries (may that be by selling their products as well as by investing in a local presence in either R&D or manufacturing operations ) are highly affected. The IPR situation in China is still perceived as “tricky”. MNC’s are further establishing or expanding their presence in China allowing them also to test the conditions of the market and establish relationships for the future. Many of the local engagements will remain focussed on discovery research activities, avoiding projects that are from IPR standpoint considered “sensitive”. Quite some companies are still reluctant to bring those projects to China.
India API manufacturers provide evidence that confidence is building that pharma companies are now bringing more sensitive projects to India. However, India still has a reputation of relatively weak IPR protection.
While perceived as an issue, IPR protection is a decreasing barrier to offshoring R&D activity. In particular these kind of R&D activities to be offshored which are in focus of this article, i.e. chemical and pharmaceutical development, are generally less affected. To make it illustrative: upscaling and optimizing an API manufacturing process for a NME, formulation development, analytical method development and validation as well as running analytical stability studies are all activities which typically happen in a late stage of the R&D process long after completed patent protection of a new molecule. Furthermore, generally they are less related to IP origination. Based on the information available in public domain and also on personal knowledge, up to now, there haven’t been any IPR issues or violations occurred across industry. The author believes that with proper contractual agreements in place and careful selection of a vendor (reputed), this danger may be effectively managed. One may have to understand that for major pharmaceutical firms (especially in India), who are putting lot of efforts for establishing themselves as a significant players in international pharma market, infringing on the intellectual properties of the customer is not in the best interest of the service provider.


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