confidential 1 patent filing strategies for pharmaceutical products robert silverman concert...
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Confidential1
Patent Filing Strategies for Pharmaceutical Products
Robert Silverman Concert Pharmaceuticals
NJIPLADecember 2008
*Redacted for public/non-client distribution*Redacted for public/non-client distribution
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Reality of the Future: Success in the Biopharmaceutical Industry
300 – 400Public
4,000 – 5,000New Biotech
20 – 30Product
10 – 20Profitable
4 – 6Growth
Leading Biopharmaceutical
Companies3-4
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Global Filing Strategy – Considerations
• Need to protect a broad geographic market• 2007 worldwide sales about $675 billion
• Most companies file in 50-70 countries for promising drug candidate
• Long development time before commercialization• Discovery to market = 12-15 years
• Uncertainty in getting to market• 1 in 5 compounds in Phase I obtain FDA approval
• Lengthy patent applications can be over 100 pages
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Patent Timelines
Years 0 1 2.5 6 21
File US Provisional Application
File PCT Application
PCT National Stage - $$$
Patent Expiration
Patent Grant
EP Validation Phase - $$$
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Patent and Drug Development Timelines
Years 0 1 2.5 6 11 21
PCT National Stage - $$$
FDA Approval
Patent Expiration
EP Validation Phase - $$$
Phase
Preclinical 2 3 FDA Review1
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Global Filing Strategy – Basic Approaches
• Follow conventional wisdom (?)
• Largest markets approach • Disregard cost of filing
• Relative Cost-Benefit approach• Cover the most market per filing dollar
• Valuation approach
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Top Ten Pharmaceutical Markets
+ IMS Health Services
* Based on a 100 page application with 25 claims
2005 Rank 2002 Rank Country%World Market
(2005)+
PCT National Stage Costs (US Dollars)*
1 1 U.S.A. 44.40% 3,323
2 2 EPO 29.13% 9,857
3 3 Japan 10.61% 15,605
4 4 Canada 2.38% 2,353
5 6 China 1.64% 8,700
6 5 Mexico 1.32% 8,406
7 8 South Korea 1.30% 10,762
8 7 Brazil 1.23% 6,985
9 10 Australia 1.12% 3,398
10 9 India 0.88% 2,640
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Second Ten Pharmaceutical Markets
+ IMS Health Services
* Based on a 100 page application with 25 claims
2005 Rank 2002 Rank Country %World Market (2005)PCT National Stage
Costs (US Dollars)*
11 14 Russia 0.66% 7,413
12 11 Taiwan (non-PCT) 0.53% 6,725
13 16 Argentina (non-PCT) 0.36% 3,834
14 15 Indonesia 0.35% 5,628
15 13 Venezuela (non-PCT) 0.33% 3,905
16 23 South Africa 0.33% 2,180
17 19 Norway 0.28% 15,691
18 18 Philippines 0.26% 2,220
19 21 Thailand (non-PCT) 0.24% 7,142
20 17 Colombia 0.22% 3,023
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Small Pharmaceutical Markets: 21st and Beyond
2005 Rank 2002 Rank Country %World Market (2005)+
PCT National Stage Costs (US Dollars)*
21 12 Saudi Arabia (non-PCT) 0.20% 7,468
22 20 Pakistan (non-PCT) 0.20% 2,334
23 NA Algeria 0.18% 8,970
24 22 Egypt 0.15% 4,799
25 25 Chile (non-PCT) 0.15% 2,985
26 29 New Zealand 0.13% 1,894
27 NA Ukraine 0.11% 9,077
28 27 Morocco 0.10% 10,052
29 30 Hong Kong 0.08% 1,755
30 26 Ecuador 0.08% 2,313
31 31 Bangladesh (non-PCT) 0.07% 1,607
32 33 Malaysia (non-PCT) 0.06% 1,854
33 32 Peru (non-PCT) 0.06% 4,696
34 24 Israel 0.06% 1,930
35 NA Lebanon (non-PCT) 0.06% 7,450
36 36 Singapore 0.05% 1,693
+ IMS Health Services
* Based on a 100 page application with 25 claims
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Relative Cost – Benefit Analysis: Methodology
• Calculate Return Value Score for each country at PCT national
stage and for non-PCT countries
• RVS = (Pharma Sales in Country) (Patent costs)
• Normalize scores based on Japan = 100
• Use RVS to select groups of countries
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Cost – Benefit Analysis: Information Resources
• World Pharmaceutical Market ($ Sales) • IMS Health Services
• www.imshealth.com
• Patent Costs• IP Global Estimator
• www.globalip.com
• 100 page patent application, 25 claims
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Relative Cost Benefit Ranking Based on RVS
2005Rank Country
Return Value Score
(normalized)
1 U.S.A. 1964.8
2 EPO 434.5
3 Canada 148.7
4 Japan 100.0
5 India 48.8
6 Australia 48.7
7 China 27.7
8 Brazil 25.9
9 Mexico 23.0
10 South Africa 22.4
11 South Korea 17.8
12 Philippines 16.9
13 Argentina (non-PCT) 13.8
14 Russia 13.1
15 Venezuela (non-PCT) 12.6
2005 Rank Country
Return Value Score
(normalized)
16 Pakistan (non-PCT) 12.4
17 Taiwan (non-PCT) 11.7
18 Colombia 10.7
19 New Zealand 10.1
20 Indonesia 9.3
21 Chile (non-PCT) 7.2
22 Hong Kong (non-PCT) 6.9
23 Bangladesh (non-PCT) 6.5
24 Ecuador (non-PCT) 5.1
25 Malaysia (non-PCT) 4.9
26 Thailand (non-PCT) 4.9
27 Egypt 4.7
28 Israel 4.5
29 Singapore 4.3
30 Saudi Arabia (non-PCT) 4.0
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40%
50%
60%
70%
80%
90%
100%
0 50,000 100,000 150,000 200,000 250,000
Cost (US Dollars)
US, Europe, Canada and Japan
Plus India, Australia, Brazil, Mexico and China
Cost vs Market Coverage for Non-PCT National Stage
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Impact of Translation Costs
• Translations account for 46-72% of filing costs for 100 page patent application
• Translation savings do not greatly improve low RVS scores
• Thailand RVS = 4.9
• Thailand RVS (with 50% lower translation costs) = 7.7
• Norway RVS = 2.6
• Norway RVS (with 50% lower translation costs) = 4.1
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
D C B A
Country Groups
% M
ark
et
Co
vera
ge
$0
$50
$100
$150
$200
$250
$300
(th
ou
sa
nd
s)
% Market Coverage
PCT National Stage Cost
PCT Filing Costs vs Market Coverage
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Millennium’s “A” List in 2005
• US, Europe, Japan, Canada, China, Brazil, Mexico, South Korea, India, Australia, Russia, the Philippines, South Africa, Israel, Norway, Taiwan and Argentina
• “A” List represented 94.5% of 2002 world pharma market
• Country list is flexible
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0
10
20
30
40
50
60
70
80
90
100
Benchmark MarketCoverage
Millennium MarketCoverage
Millennium Costs as % ofIndustry Costs
2003 MPI Study. For important A patent applications, the benchmark group filed in countries representing 97.2% of the world pharma market, while Millennium filed in 94.5% of the world market. At the PCT national phase, MPI’s costs were 60% of the benchmark group costs, which was about $83,000 less per application.
% Millennium Market Coverage and Costs vs Industry Average
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Where should we protect in Europe?
• European Union expansion from 15 to 25 countries (May 2004)
• Central and Eastern European Countries: Poland, Hungary, Czech Republic, Slovakia, Slovenia, Bulgaria, Ukraine, Lithuania, Belarus, Latvia and Estonia
• Combined market of 11 CEE countries < Spain
• Parallel imports and interdependence of markets
• 10 years marketing exclusivity in EU
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Country 2005 Rank % World MarketEP Validation
Cost
Return Value Score
(normalized)
France 3 5.76% 9,238 92
Germany 4 5.50% 9,969 81
Italy 5 3.45% 9,506 53
United Kingdom 6 3.42% 1,122 449
Spain 7 2.64% 10,380 37
Turkey 13 1.22% 8,416 21
Belgium 16 0.80% 1,309 90
Poland 17 0.78% 8,594 13
Netherlands 19 0.65% 13,289 7
Greece 20 0.62% 8,222 11
Switzerland 21 0.59% 1,365 64
Sweden 22 0.57% 17,314 5
Austria 24 0.53% 3,237 24
Portugal 25 0.51% 10,329 7
Hungary 26 0.40% 11,758 5
EP Countries with Largest Market Size
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Country 2005 Rank% World
MarketEP Validation
Cost
Return Value Score
(normalized)
Finland 27 0.37% 15,036 4
Denmark 32 0.31% 14,602 3
Czech Republic 33 0.29% 7,280 6
Ireland 38 0.23% 1,454 24
Slovak Republic 47 0.12% 6,987 3
Bulgaria 49 0.10% 1,653 9
Slovenia 51 0.09% 1,508 9
Lithuania 55 0.07% 1,880 6
Latvia 65 0.03% 1,253 4
Luxembourg 66 0.03% 986 5
Estonia 68 0.03% 8,353 <1
No market data for Cyprus, Iceland, Liechtenstein, Monaco and Romania
No market data for Albania, Bosnia and Herzegovina, Croatia, Serbia and Montenegro
Small Market EP Countries
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Small Market Countries in the EU:Does Membership in the EU Matter?
• Parallel Trade within the EU• No evidence that patent protection affects parallel trade
• Economic Growth
• Patent protection may be required to protect a growing market
• EU Pharma Legislation
• Less need for patent protection because EU pharma law requires 10 years of market exclusivity
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Using Net Present Value (NPV)
PV = Ct
(1 + rt)t
PV is present value
Ct is the cash flow in year t
rt is the discount rate for year t
NPV = PV – Patent Cost
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NPV Inputs
• Drug sales during window of patent-only exclusivity• Window begins after regulatory exclusivity
• Country sales estimated from projected worldwide sales
• % Royalty (or margin) on sales
• Probability of success
• % Loss in sales due to generic competition
• Cost at EP Validation Phase
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Window of Patent-Only Exclusivity in the EU
Patent Expiration and End of Marketing Exclusivity are independent events, but roughly coincide
Years 0 6 11 21
European Marketing Authorization
Patent ExpirationEP Validation Phase - $$$
26
End of Marketing Exclusivity
Supplementary Protection
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Conservative Assumptions for NPV Analysis
• 5-Year window of patent-only exclusivity starting at year 15 after EP validation phase
• Annual worldwide sales = $1 billion
• 3% Probability of success (POS)
• 20% Royalty on Sales
• 80% Loss of sales due to generic competition
• Discount rate = 12%
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-10
-5
0
5
10
15
20
Poland
Hunga
ry
Finlan
d
Czech
Rep
.
Denm
ark
Slovak
ia
Sloven
ia
Bulgar
ia
Lithu
ania
Latvi
a
Estonia
NPV (in $ thousands) of patent investment at the EP validation phase for a worldwide billion dollar drug
NPV for Small European Markets
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-4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000
Base case
2% POS
4% POS
10% POS
10% royalty
30% royalty
3-year period
6-year period
7-year period
Net Present Value (Dollars)
Sensitivity Analysis for NPV of EP Patent in Slovakia
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Other Considerations
• Projecting Future Sales• New drug will not reach market for many years
• Specific Disease Indications• Market size varies depending on disease
• Obesity market not the same as HIV market
• Enforceability• Difficult to factor
• Other Patents Covering the Product
• Interdependence of Some Markets• Free trade may effect value of patent in some EU countries
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Robert Silverman
Concert Pharmaceuticals
99 Hayden Ave, Suite 500
Lexington, MA 02421
Thanks!
Certain information has been redacted from this presentation to make it suitable for distribution to the public.
Clients may obtain an unredacted copy on request.