Globalization in the pharmaceutical industry

Where are drugs invented, and how can easily innovation be seeded in new areas?

This is the first of DrugPatentWatch's publications profiling the locations of pharmaceutical innovation. The location of drug development is important for two reasons. Firstly, it is important to track the global spread of innovation. Much late stage drug development (e.g. clinical trials) and manufacturing have moved to lower wage-cost countries, but trends in the location of invention has not been clearly described. Knowing where drug invention is occurring can help streamline drug development by identifying ideal locations for research facilities. Secondly it is important to know where invention is occurring, because that may affect which drugs are developed.

Early-stage research funding and, by extension, the research itself, is likely to be focused on conditions affecting the countries in which these activities are occurring. For example, research in the United States might focus on conditions such as heart disease and stroke, whereas research in Japan might emphasize stomach cancer.

By examining the patents covering drugs developed over a ten year period DrugPatentWatch was able to ascertain the locations of the inventors. Focusing on inventors is important because it gives a clear indication of where the control of the invention was located. Patents are required to list the names and locations of the individual(s) who maintained intellectual domination of the invention - Failure to list all inventors, or listing too many inventors, can yield an invalid patent. Whereas one might consider assessing globalization of invention by focusing on the location of the company funding the research, or the company listed on the patent, these strategies are flawed. The company funding the research may not be the same company which conducted the research (e.g. Japanese companies funded many of the early US biotechnology companies, but the inventions occurred in the US by US researchers, so focusing on the funder might produce the incorrect conclusion that the innovation was Japan-based), and many companies have facilities in multiple countries, making it impossible to determine in which of the countries an invention might have occurred. Looking at the company listed on a patent is also flawed. The company listed on a patent might not have been the company that housed the researchers or, even worse, it may be a tax shelter based in a country where no invention occurred. So, by focusing on the locations of the listed inventors it is possible to determine where the invention occurred.

So, what were the results? In short, the US and the legacy pharmaceutical countries in Western Europe (United Kingdom, Germany, Sweden, France and Switzerland) have been responsible for the bulk of new drugs invented over the past decade, and there is no indication that this dominance is waning. Emerging economies such as India and China were largely absent.

For more details, please see the paper at http://www.nature.com/nrd/journal/v9/n11/full/nrd3298.html (paywall).

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