Adopting a creative IP approach towards biotech clusters

In recent years biotech clusters have become an increasingly important part of pharmaceutical companies’ research and development strategies. Traditionally, major drugmakers have carried drug development projects from cradle to grave on their own research campuses, away from the prying eyes of the rest of the world. That paradigm is rapidly changing, and the pharmaceutical industry is responding to increasing cost and commercial pressures by opening up to collaboration and outside resources.

The biotechnology industry has embraced collaboration and outside resources through the development of a number of well-established clusters. These include the San Francisco Bay area and Boston in the US, and the ‘golden triangle’ of Cambridge-Oxford-London in the UK. While biotechnology is R&D-intensive and notoriously high-risk, biotech clusters have helped to mitigate that risk by providing an environment rich in academic, clinical and commercial resources, allowing nascent businesses in the field to thrive. This innovative ecosystem is becoming increasingly attractive to pharmaceutical companies that are looking to fill their pipelines with new, cost-effective drugs.

Conventionally, the patents of a pharmaceutical company have been handled by specialist IP departments, with large budgets and access to scientists who are employed directly by the company. This has allowed the patent process to be tightly controlled and so that cast-iron protection can be obtained for key assets in large numbers of different jurisdictions.

Moving on from this traditional model, many pharmaceutical companies have been keen to tap into the innovation stream of biotech clusters through collaborations and deals with resident biotechnology companies. This has often led to their wholesale acquisition, if an asset is deemed sufficiently promising. Other pharmaceutical companies have been prepared to completely embed themselves within a biotech cluster. For example, AstraZeneca has relocated its entire corporate HQ and R&D function to the heart of Cambridge’s biotech cluster.

However, when dealing with assets whose patent protection may not correspond to the traditional model, the adoption of a more flexible and creative approach will need to be implemented. Biotechnology companies typically lack the resources to be able to employ a large IP team, with the CSO or CEO more likely to wear the additional hat of ‘patent manager’. This could result in protection that is not as thorough as more traditional pharmaceutical assets. For example, protection might be limited only to certain key jurisdictions, such as the US and Europe. To remedy this, an asset owned by a biotechnology company might be made more attractive to pharmaceutical companies by a more rigorous and better-resourced approach to patents.

Questions of ownership are generally straightforward when drug assets are invented and developed by employees in a pharmaceutical company’s own laboratories. However, the assets that pharmaceutical companies are looking to acquire from biotech clusters may already be the subject of licences and other deals, and will already be owned by third parties. The intellectual property issues that arise are therefore more complex and challenging than those from traditional in-house research programmes. Complex provisions need to be negotiated to ensure that the requirements of all parties are met, and due diligence is required to establish the ownership and extent of any protection before any deal is made. Legal agreements incorporating these positions need to be carefully crafted, as disputes over ambiguous wording in legal agreements are common.

The protection of pharmaceutical assets through strong patents is the lifeblood of the industry, and provides the building blocks for the complex licences, collaborations and other deals that bring new drugs to the market. The ability of pharmaceutical companies to reap maximum benefit from their interaction with biotech clusters depends on their ability to meet the IP challenges that arise from collaborative innovation and drug development.

Given this trend and the benefits we are already witnessing, biotech clusters are likely to be major engines of pharma industry growth in the future. The traditional approach of pharmaceutical companies to innovation may therefore need to be adapted. As a result, the various intellectual property issues raised will need to be considered by both biotechnology and pharmaceutical companies to fully harness the potential of this collaborative approach to drug development.