Pharma tops most IP-intensive list

The study, Economic Effects of Intellectual Property: Intensive Manufacturing in the United States, found that two-thirds of the value of the US' large businesses comes from IP, especially patents and trademarks, with the pharma industry topping the list. Because of the scientific, technological and innovative nature of the pharma industry, there was a need for IP protection, which drove its intensiveness, study author and former undersecretary of commerce to President Clinton Dr Robert Shapiro told US-PharmaTechnologist.com. "To provide an incentive for the development of new products, we grant monopolies, that's what patent rights do and that's to give people incentives. Without IP, the pharmaceutical industry would not spend much on R & D. They compete on innovation,"​ he said. According to the study, which measured IP-intensiveness by R & D, pharmaceutical manufacturers spent an average of $70,055 per employee on R & D over the year 2000 to 2004, the average employee produced more than $425,000 in value every year during that period, and the average wage for the industry was $65,702. The study also found that while the manufacturing sector as a whole lost 16 per cent of its workforce over the four-year period, the pharmaceutical industry was the only individual industry where jobs increased - by 8.3 per cent over that time. The intensive nature of the pharmaceutical industry in the US, reflected the elaborate university and research centers in the country and the ease and rate at which new businesses could be developed in the US compared to other advanced countries, Shapiro said. "Most innovation comes from young companies, particularly in the biotech sector which will dominate the pharmaceutical industry in the next decade." ​ The intensive nature also reflected the amount of resources available and relative creativity required in the industry. Patents were an important part of pharmaceutical manufacturing and drug development, with competition high. Patents were sought early on for drugs long before efficacy had been studied, Shapiro said. As a result, only 20 per cent of patented drugs made it to market, he said. Many companies were racing against the patent clock to develop new formulations on drugs before patents expired, effectively to extend patent life. Shapiro said this was not classed as IP-intensive as the amount of R & D involved was limited in reformulations. At the present time IP-intensiveness was accelerating, particularly in the area of biologics, he said. "New areas are opening up and economic demand is going up. This is for two reasons, firstly, as countries get more prosperous they value improvements in healthcare more highly, and second, society's aging - most people die older." ​ However, Shapiro said that in about 10 years, healthcare systems would face a funding crisis resulting in tighter price controls, lower rates of return and a shift to lower technology medicines. While the pharma industry would benefit from this, some areas would see cuts in reimbursement rates, which would cut the rate of development, Shapiro added. The research, released by the non-governmental organisation World Growth, noted that after pharmaceuticals, communications equipment, semiconductors, computers and peripherals, and resins and synthetic fibres were the respective top five IP-intensive manufacturing industries.