Patenting, Licensing and Partnership in Biotechnology Industry
The success of a biotechnology company also depends on its patent portfolio and licensing revenue. Therefore, right from the very beginning, a biotechnology company needs to design carefully its patent portfolio. The patents on biological inventions were not allowed before 1980, and became necessary only with the advent of biotechnology (consult Chapter 55). Consequently, patents are now allowed for biological inventions involving micro-organisms, vectors, DNA/RNA, proteins, monoclonal antibodies and hybridoma, isolated antigens, vaccine compositions and transgenic animals and plants. Patents have also been allowed for methods involving (i) isolation or purification of biological material, (ii) gene cloning and production of proteins, (iii) diagnosis, (iv) treatment and use of a product and (v) screening methods.

Biogen, for example made about $600 million from its licensing activity during 1991-95, which was a pre-requisite for licensing its first product, Avonex in the year 1996. In the year 2000, licensing revenue of Biogen, comprised about 18% of its total revenue. This example suggests that biotechnology industry depends heavily on long-term deal with their pharmaceutical partners, which not only determines the total revenue, but also the company’s share price in the stock market. For instance the very news that Curagen (USA) has entered into a deal for drug development alliance with Bayer (Germany) sent Curagen’s share price up 35% to around $ 36. This illustrates that survival of biotechnology companies sometimes depends on successful deals with pharmaceutical and other companies.

Once a deal has materialized following the above three steps, it is necessary to nurture and improve the relationship between partners, since there are examples of bad relationship affecting business adversely and also those of good relationship boosting the business. For instance, Johnson and Johnson and Amgen entered into a deal for marketing Erythropoietin (EPO) for anemia and had serious problems affecting business. In contras the productive relationship between Pfizer and Neurogen, which involved licensing the drug NGD-91 for treatment of Alzheimer disease, led to further fruitful collaboration, since both partners invested heavily in building trust in partnership.