By Ng Wee Pin, Research Analyst, Healthcare

Published 26 May 2006

Biotechnology

Biotechnology is an overused term nowadays. Almost any commodity available in the market, will try to brand itself with the value added word: "biotechnology".

In this "biotechnology-saturated" era, what makes a biotechnology product or even company stand out is its innovativeness. Innovative is not merely about marketing new products, it involves in-depth understanding of the market demand, marketing at the proper timing, and a product that carries new ideas which has not been encountered in the market before.

However, innovativeness comes at a hefty price. A strong foundation of R&D is often required to produce an innovative biotechnology product. Taking into account of the initial financial investment, building of R&D team, R&D time frame required, the competition in the biotechnology industry, and the uncertainty that there might not be a marketable product at the end of the R&D, it is clearly understandable that why not many companies are willing to invest in R&D.

Intellectual property

An industry is at its "sunset" stage, and will eventually come to a dead end, if there is no continuous flow of new, innovative products into the market. Without intellectual property protection (IPP), no company would be willing to commit their resources in R&D, to keep on producing new products. To them, developing a new technology or product which is not IPP-protected is equivalent to throwing cash notes into fire. The reason is simple: if the new product is lucrative, soon there will be tens or hundreds of manufacturers producing the same product within the shortest time possible. This extremely intense competition may result in the original idea creator facing the worst loss due to heavy R&D investment in the earlier stage.

However, with IPP, the launch of new products would create a new niche market, which will co-exist and complement the existing market; thereby stimulating further growth of the existing market. In time, the new niche market would merge with the existing market, creating a larger market size than before, as depicted below:

The significance of intellectual property protection

Intellectual property grants the patentee a 20-year monopoly over the new invention filed for. It protects the benefits and the intelligence of the patentee from being copied by "copy cats". It is also a form of reward to the researcher and the company for investing their time and money in the search for innovation and new technology. Through licensing agreements, new products and technologies will be made available to the biotechnology industry, which will then become tools for newer rounds of research.

The strategy of intellectual property protection

IPP is not the end result of a good business plan in the biotechnology industry. It should be recognized as a part of a process in a business development plan, as illustrated below:

The challenges for intellectual property protection in biotechnology industry

Although the idea of Intellectual Property has been introduced since the age of Thomas Edison, its application in biotechnology is still generating doubt. There are several challenges which have yet to be resolved satisfactorily:

• Differentiating discovery from invention.
• Patentability of life forms, human tissues, genetic sequences.
• Industry understanding of overall IP strategy, especially patent portfolio management and exploitation.

This article was originally published by Frost and Sullivan

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