Strategies for Navigating the Pharma Patent Cliff: Insights from Industry Leaders
As the pharmaceutical industry faces an imminent surge in patent expirations, companies are increasingly focused on strategies to protect their key products and replenish their pipelines. At the 2024 Financial Times Global Pharma and Biotech Summit, industry experts discussed the looming “patent cliff” and explored various approaches to safeguard intellectual property, defend market share, and capitalize on opportunities in generics and biosimilars.
The Scale of the Patent Cliff
Moderator Ian Johnston, global pharmaceutical correspondent for the Financial Times, opened the discussion by asking the panel about the potential impact of the patent cliff. Mads Jessen, managing director at Moelis & Company, projected that the pharmaceutical industry could face a loss of $180 billion to $200 billion in sales due to expiring patents by 2030. He emphasized that this growing issue is now front-and-center for companies, significantly influencing merger and acquisition (M&A) strategies as businesses look to strengthen their pipelines.
Virginia Acha, associate vice president of global evidence and regulatory policy at MSD, echoed Jessen’s concerns, noting that the expiration of blockbuster patents is a reflection of success in drug development. “These expirations are a sign that companies have developed effective therapeutic treatments,” Acha explained. “While the value of the products is still there, companies need to be mindful of the competitive dynamics they’ll face once the patent protection ends.”
Strategic Responses: M&A, Portfolio Defense, and Patent Amendments
The panelists discussed various strategies to mitigate the impact of patent expirations. Marjan Noor, partner at A&O Shearman, pointed out that many companies are strengthening their broader portfolios by defending their patents and exploring potential amendments. “Companies are actively looking at ways to make their patents more robust, especially in the face of challenges from competitors,” Noor said. This includes tweaking patent claims to protect specific product features or exploring new indications to extend exclusivity.
When asked about Merck’s approach to managing the patent cliff with its leading oncology drug, Keytruda (pembrolizumab), Acha highlighted the company’s ongoing investment in the product’s development. “Keytruda has been crucial in oncology, and we’ve expanded its indications to 41 different uses,” Acha noted. “The original patents, as well as the subsequent ones, illustrate why the patent system is essential—it incentivizes innovation by granting protection in exchange for full disclosure of the science behind the drug.”
The Importance of the Patent System
Both Acha and Noor emphasized the importance of the patent system in fostering continued innovation. Noor explained that the patent system allows companies to secure new indications for existing products, thereby extending their market life. “This system is carefully scrutinized,” she said, “and when a patent is granted, competitors can oppose it if they feel the new patent is unjustified.”
Acquiring Assets with Extended Exclusivity
Jessen discussed the increasing trend of acquiring or licensing assets that offer extended exclusivity periods. While some companies focus on acquiring assets that fit well within their existing portfolio, others are specifically targeting products with longer exclusivity windows to shield against the patent cliff. “The decision to acquire assets depends on the commercial opportunity and the potential return on investment,” Jessen explained. “Larger organizations may find it easier to integrate new assets, but the basic investment calculus remains unchanged.”
Conclusion: Preparing for the Future
With patent expirations looming large, the pharmaceutical industry is navigating a critical crossroads. As companies explore ways to extend the life of key products, whether through patent amendments, acquisitions, or expanding indications, it’s clear that the upcoming decade will demand careful planning and strategic investments to maintain revenue streams. For generics and biosimilar manufacturers, this creates significant opportunities, but also a highly competitive market. As the industry adapts, the patent cliff serves as a reminder of the ongoing need for innovation and agility in an ever-evolving landscape.
Source: Pharm Exec November 7, 2024
