The document discusses the globalization of drug discovery and development. It examines factors that influence where research and production occurs such as workforce costs, market size, intellectual property laws, and government policies. Countries like the US and Europe have traditionally led in innovation due to strong markets and patent protection, but Asia is increasing its role with lower costs and a growing skilled workforce. Where drugs are invented is shifting over time, with the US share declining and Asia rising in recent decades.

1. Globalization of Drug Discovery Drug Discovery Partnerships: Filling the Pipeline October 17th 2011 Yali Friedman, Ph.D. – editor@CommercialBiotechnology.com

2. Globalization of Drug Discovery Why it matters: - Challenges of not having domestic drug R&D How to measure it: - Using patents to track globalization of innovation

3. Global Biopharma Overview Location matters Workforce cost, availability Access to skilled management, supportive services Proximity to innovative science and markets Who is doing what, where?

5. Gain foreign currency

7. Non profit-enabling diseases are unlikely to attract investmentFollowers Importers Exporters

8. Strong market opportunities drive innovation Why is the U.S. the world leader in biotechnology? World’s largest prescription drug market Not divided like European countries World’s strongest patent protection World’s largest absolute expenditures on R&D The U.S. once spent more on R&D than the rest of the world combined No government price controls But, who is inventing the next generation of drugs?

9. What happens when you don’t develop drugs? Case Study: Philippines Limited domestic drug production capacity Must purchase essential medicines from foreign countries with higher wage-costs (e.g. Singapore) This is effectively reverse-offshoring Government has a limited budget, must make difficult decisions about how much of which vaccines to buy Domestic production would reduce costs, preserve foreign currency, keep revenues domestic, and could train workers for innovative drug development

10. Acquiring Medicines Develop a domestic drug development industry Pros: Can develop drugs for domestic needs, can drive tax revenues, can derive foreign currency from exports Cons: Expensive, takes time, requires unwavering government support Buy drugs from foreign countries: Pros: No need to invest in risky R&D, gain access to best drugs produced by global leaders Cons: Expensive, depletes foreign currency, doesn’t generate tax revenues

11. Solution: Produce foreign drugs locally Weak patent laws enable domestic production of drugs developed elsewhere Pros: Low-cost domestic production of many drugs using domestic workers, tax revenues from production and sales Cons: Reduced foreign investment by global firms, reduced motivation to develop drugs for locally-endemic conditions

12. Costs of Weak Patent Protection India (mostly) adopts TRIPS accords in 1995 Amends patent laws to protect product patents, with the notable extra criteria that new drug products must “differ significantly in properties with regard to efficacy” In 2007 Novartis failed to obtain a patent on Glivec (sold as Gleevec in the US) Novartis CEO: unfavorable patent ruling is “not an invitation to invest in Indian research and development.” Company will redirect hundreds of millions of dollars in investments to countries where it has greater IP protection.

13. Who benefits from not patenting Glivec? Novartis provides Glivec free to most patients in India Because Indian manufacturers would be unable to compete with Novartis’ free domestic distribution, their target markets would likely be in other countries, where they could potentially erode Novartis’ market. Is India forfeiting investments from Novartis simply so that Indian companies can sell Novartis’ drugs abroad? Does this serve the public?

14. Mexico accepts Amgen drug Long-standing law: International drugmakers must conduct at least some of their manufacturing in Mexico Pros: Training of Mexican workers Installation of domestic biotechnology infrastructure Facilitates growth of domestic biotechnology industry Cons: Some companies may decide not to sell drugs in Mexico, depriving the country of valuable medicines Amgen insists that they only want to have onemanufacturing facility, in California Mexico amends rule Defines a list of drugs (e.g. anti-HIV, vaccines, hormones) able to be imported without Mexican manufacturing facilities

15. Overcoming weak/poor markets Mectizan River blindness drug developed by Merck Affected individuals unable to pay for drug, so Merck distributes the drug for free This model is unsustainable. Doesn’t incentivize development of drugs for these conditions, instead relying on companies to support tangential discoveries. OneWorld Health, Bill & Melinda Gates Foundation, etc. Non-profit drug company solicits foundation support to actively develop shelved drugs for neglected populations

16. Meeting national needs: Economic Development Three basic models India, Brazil, Thailand Weak IP, focus on generic production and foreign sales Israel, Cuba, maybe India Moderate IP, leverage generic production skills to develop innovative drugs Singapore, Puerto Rico Strong IP, attract manufacturing investments from global leaders

17. Where are drugs invented? Friedman, Y. (2010) “Location of pharmaceutical innovation: 2000–2009” Nature Reviews Drug Discovery 9:835-836

18. Indexed patents covering FDA-approved drugs Source: DrugPatentWatch.com

19. Assigned relative inventorship based on inventor locations

20. US is slipping, EU stable, Asia rising

21. But, which are the leading countries?

22. And… what about individual US states?

23. Questions? Yali Friedman, Ph.D. editor@CommercialBiotechnology.com www.DrugPatentWatch.com http://www.BiotechBlog.com www.CommercialBiotechnology.com www.Logos-Press.com