Biotech Values

[DewDiligence]

China threatens compulsory licenses for certain branded drugs:

http://www.reuters.com/article/2012/06/08/us-china-medicines-patents-idUSBRE8570TY20120608

China has overhauled parts of its intellectual property laws to allow its drugmakers to make cheap copies of medicines still under patent protection in a move likely to unnerve foreign pharmaceutical companies.

…The amended Chinese patent law allows Beijing to issue compulsory licenses to eligible companies to produce generic versions of patented drugs during state emergencies, or unusual circumstances, or in the interests of the public.

The deliberate language in the last quoted sentence above is used to slip through a rather wide loophole in the WHO rules that generally require enforcement of foreign company’s patents.

It remains to be seen whether China’s new polciy is merely a threat to gain leverage on the pricing of patented drugs or is the first step toward India-like compulsory licenses; in either case, the result will be lower prices for certain on-patent branded drugs in China.

So, is this policy change a disaster for drug/biotech companies? I think not. Many branded drugs sold by multinational drug companies in emerging markets already face cheap generic competition, but such branded generic drugs sell well because consumers want the quality assurance that comes with a product from a big-name company such as PFE or ABT and are willing to pay a higher price to get it.

For related info, see #msg-61960541 (and the 30+ replies to that post), #msg-66551481, #msg-50473238, #msg-39315651, and #msg-63363435.