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The Contract Manufacturing & Intellectual Property Challenge: Solution? Don’t Compete With the Customer.

Intellectual property rights have always been integral to negotiations for pharmaceutical contract manufacturing services, but growing complexities surrounding global IP issues, complex science, inevitable process improvements, IT infrastructure & security, and more have further placed IP front and center as an issue.

But what’s at stake, and how bad could it really be?

OMG – Outrageous Manufacturing Group, Inc. to Pharmaceutical Customer:

“Yes, we can contract manufacture your drug for you. We can also help you produce it faster/cheaper/more safely than you already are. By the way, each of those improvements may produce intellectual property…patents, you understand? Our companies can negotiate those…we’ll get a bunch of multinational lawyers involved, and create tons of paperwork. But don’t worry – you’ll have your product.

Oh, one last little thing… One day, we might make this product as a generic.

It’s not really competing against you. We’ll just sell the same thing you sell, only cheaper. See the difference?

So, you ready to sign? Let’s get some lawyers salivating, what do you say?”

Contract Manufacturing – Who’s Patent Is It?
Intellectual property (IP) protection remains a priority as companies look for CROs/CMOs around the globe. IP is – after all – the backbone of the drug industry. This is perhaps truer today than ever before. The rise of virtual pharma in the nineties created companies whose sole assets were (and are) intellectual property. For firms who rely on outsourcing – from early R&D through final dose manufacturing – novel IP can emerge at almost every stage on the road to market.

There are a number of IP-related issues that arise when working with a contract manufacturer. Among them:

  • Global Intellectual Property Protection
    The globalization of pharma has raised the IP stakes considerably. With countries issuing their own unique patent rules that may – or may not – be locally- or globally enforceable, life sciences companies are faced with uncertainty. A piece a while back at Contract Pharma touched on this:

“If you are considering CMOs outside the U.S., make sure to understand that country’s approach to protecting IP assets, because some countries offer no protection and corporate fraud is rampant. Some countries do offer civil litigation, but that can be expensive, time-consuming and trials may be biased against foreign companies.”

  • Process or Product Improvements
    Some of the biggest challenges that come about with contract research and manufacturing involve process modifications. For example, a contract firm’s team might develop an alternate synthetic route that reduces both genotoxic impurities and the number of steps needed. The improvements are based on the ‘background IP’ – what the pharma company brought to the table – but they represent ‘foreground IP.’ Often this becomes the subject of exclusive or non-exclusive freedom to operate licenses, or other negotiated terms. Typically, the earlier firms are in the development process, the more likely it is to arise as an issue.
  • Secrecy & IP Protection
    In today’s world, working with contract firms located far afield means transmitting information electronically. Entire posts could be dedicated to the subject of contract manufacturing IP protection, and it’s top of mind among most Pharma CXOs. IP integrity depends heavily on IT infrastructure, document handling policies and auditability. These have become primary selection criteria for CRO/CMO providers.

A Hands-Off Approach to Customer IP
Not all CRO/CMOs operate in such ways. At Neuland, our customers come to us for our complex chemistry & regulatory capabilities, not complex legal negotiations. Our approach to intellectual property has always been to take it off the table as a customer concern. Your process belongs to you. Any process we develop for you belongs to you. Any improvements we make to your process ….good guess…they belong to you.

The outcome of this policy – which has been in place since we first began in the industry 30 years ago (we’re 30 this year!) – has been lower costs for both our clients and us. It has also resulted in generally simpler, faster project startups, along with improved openness and cooperation between companies.

More importantly, because it removes IP as an issue between the supplier (us) and the client, it fosters the scientific creativity needed to develop better, faster, safer, less-expensive drug development & manufacturing processes. Our clients benefit from the breadth of Neuland’s expertise and innovation, and we benefit by building successful, long-term customer relationships.

How much do intellectual property policies weigh in your selection of a CRO or CMO?


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