Can Innovation Offset Biopharma Firms’ Losses From Patent Expiration?
The biopharma industry continues to be an incredibly lucrative and profitable sector despite the pressing issue of patent expirations. The impact of these patent expirations can create significant losses for biopharma firms in terms of lost revenues due to them no longer being able to maintain exclusivity on the drugs they originally developed. However, despite the drastic losses, there are still ways that biopharma firms can recoup some of these losses through innovation.
What Is Patent Expiration?
Patent expiration is the process of a issued patent’s rights expiring and the development of a patented product becoming available to the public, allowing others to develop similar products. Expiration dates for patents vary depending on the jurisdiction, however, in the United States, the expiration date is typically 20 years from the date the patent application was filed.
When a patent expires, other companies no longer have to pay for a license or interaction to use or sell the product. This leads to a lower cost for similar products, in turn, reducing the original biopharma firm’s market share and revenues from that product.
Impact of Patent Expiration on Biopharma Firms
The impact of patent expiration on biopharma firms can be significant. Not only does it result in reduced revenues due to the lack of exclusivity on their patented drugs, it can also lead to devaluation of the company in that its inherent value is diminished. Investors look at patent expiration dates to determine the potential growth potential of a biopharma company and whether it is likely to continue to generate significant and continuous revenue past this expiration.
Furthermore, due to the high cost of innovating and developing a new drug, the losses experienced due to patent expiration can be much more significant than the profits a firm was able to generate in the pre-expiration period. This is because a drug’s lifecycle tends to be relatively short, thus any extended period of patent protection is beneficial in helping biopharma firms to maximize their return on investment.
Can Innovation Offset Losses From Patent Expiration?
In spite of the drastic losses related to patent expiration, biopharma firms can still recoup some of these losses through innovation. Innovation in biopharmaceuticals can be used to develop smarter drugs, more effective treatments and therapies, or even to develop new, more lucrative markets for their existing drugs.
One way biopharma firms can utilize innovation to offset losses from expiration is through the development of combination treatments or therapies. Combination treatments have been growing in prevalence, as the combination of two drugs together can create a more synergistic impact than the single drug alone. Furthermore, the use of combination therapies can create a new form of exclusivity as the combination drugs are harder to replicate and not as easily copied.
In addition, another way biopharma firms can utilize innovation to offset losses is through fast-to-market drug development. This involves biopharma firms finding a new drug development strategy that shortens the drug development process. This could mean utilizing existing drugs and treatments in novel ways or even combining drugs with existing technology to bring a promising drug to market faster. Fast-to-market drug development allows biopharma firms to capitalize on emerging trends and capture previously unrealized markets.
Finally, biopharma firms can also utilize innovation in product marketing to generate more revenue and lower the impact of patent expiration losses. Factors such as pricing to ensure that it matches the individual customer’s needs, offering discounts or loyalty programs, or finding novel channels or outlets to reach potential customers can all be implemented in product marketing to help increase sales and revenue.
The biopharma industry continues to experience the issue of patent expiration, leading to drastic losses for the biopharma firms due to the lack of exclusivity on their patented drug products. Despite this, biopharma firms can still take action to offset and even recoup some of these losses through innovation. Strategies such as the development of combination treatments, fast-to-market drug development, and product marketing can all help to lessen the impact of patent expiration on biopharma companies. Ultimately, it is vital for biopharma firms to remain agile and creative in order to stay competitive on the market and continue to generate big profits in the industry.
