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Intellectual Property as the Heartbeat of the Pharmaceutical Industry

by Ademola Adeyoju, ademola@infusionlawyers.com.ng

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Introduction

Generating more than $333 billion and supporting over $3.4 million jobs in the US alone, the pharmaceutical industry is considered to be one of the largest and rapidly growing industries on the planet. Apart from making available the drugs and other health products that help to ensure a healthy and productive workforce, the industry also provides quality employment to citizens, contributes to the gross domestic product (GDP), and promotes the social wellbeing and quality of life of a nation.

Rapidly aging world population, rise in chronic diseases, and higher disposable incomes are driving pharmaceutical consumption. According to Frost and Sullivan, the world pharmaceutical market is currently worth about $1.6 trillion and is expected to increase by 7.2 percent every year up to 2020.

Located on the West Coast of Africa, Nigeria is the most populous black country on earth. And with a pharmaceutical market that’s worth $1.78bn and the fastest growing economy in Africa, the country’s pharmaceutical industry is fairly well developed.

And the industry is still growing.

Analyses show that the Nigerian pharmaceutical market could rise by as much as 9 percent a year over the next ten years to reach $3.6 billion by 2026, making it as large as the South African market. Over the same period, Nigeria could contribute between $1.9 billion and $2.2 billion to pharmaceutical sales growth. Currently, the industry contributes to nation building with aggregate investments in excess of #300 billion, pays taxes and other tariffs, and employs over 600,000 persons.

Yet, with an estimated size of $1.78 billion, the Nigerian pharmaceutical industry is less than 0.3 percent of the national GDP and is practically nonexistent in the world pharmaceutical map. Annually, the country loses over #1.5 billion to the importation of raw materials used in finished pharmaceutical products known as Active Pharmaceutical Ingredients (APIs), and her quest to become self-sufficient in drug production is bleak.

Using the Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis, below is an overall assessment of the Nigerian pharmaceutical sector:

 

Strengths

  • Nigeria—the continent’s most populated country—adds roughly 11,000 newborn to her population every day. With her large population and heavy disease burden, the country’s pharmaceutical spending has been rising at 16 percent compound annual growth rate and the pharmaceutical market has grown significantly over the years. This growth shows no signs of slowing down.
  • 60 percent of pharmaceutical production in the ECOWAS countries is domiciled in Nigeria and there is still abundant underutilized manufacturing capacity that can be applied upon demand.
  • Technical skills, local expertise and experience, trained manpower, and basic manufacturing infrastructure exist, with more than 150 drug manufacturing companies.

Weaknesses

  • Poor infrastructure, high cost of operation, and lack of constant power supply increases the cost of local medicine manufacture and distribution.
  • Only 30 percent of the drugs sold in Nigeria are manufactured locally. Even those locally manufactured drugs rely almost exclusively on imported materials both for the active components of the drugs as well as the fillers.
  • With pervasive poverty and extreme inequality, only a small percentage of the population can afford quality health care and quality drugs.
  • There is insufficient research and development infrastructure, especially in the areas of analytical equipment like spectroscopic equipment, chromatographic equipment, extraction equipment, animal testing equipment, tissue culture equipment, microbiology and biotechnology equipment, etc. Other inputs like standard drugs and chemicals, solvents and reagents are not readily available locally.

Opportunities

  • Nigeria has a population of over 180 million, and an abundance of human and natural resources. Like any other investment that thrives in population density, investment in the pharmaceutical industry has a high potential of succeeding. Large markets increase the possibility that economies of scale can be achieved in the production process, meaning that essential medicines can be sold at affordable prices. Consequently, the commercial prospects for local drug manufacturing are positive.
  • The rise in non-communicable diseases such as diabetes and heart disease is inevitable and spending on drugs and health care is bound to increase.
  • Positive economic growth in recent years and macroeconomic stability are helping to reduce poverty and increase purchasing power.
  • The increasingly visible and active National Agency for Food and Drug Administration and Control (NAFDAC) and, in particular, its aggressive campaign against sub-standard health products have shown a positive impact on reducing the counterfeit drugs trade.

Threats

  • Very weak purchasing power threatens the scope for marketing health products and encourages the proliferation of informal open markets. These informal markets exist in villages and rural communities where they are the only means of access to medicines.
  • Drug price control policy has not yet been articulated by the Federal Government. The current prices of health products in the market are high and most Nigerians cannot afford them.
  • Corruption is widespread in most transactions. If not immediately curbed, it may eventually discourage local manufacturing of health products.
  • Drug counterfeiting constitutes enormous threat. Frost and Sullivan estimates that nearly 17 percent of essential generic drugs and as high as 30 percent of anti-malarial medicines are routinely faked in Nigeria.

 

The Scope and Relevance of Intellectual Property in the Pharmaceutical Industry

We live in a new age. Science, technology, and globalization have changed—and continue to change—the way we live, interact, and conduct businesses. ‘The world is witnessing a paradigm shift and the economy is shifting towards intangibility.’

The value and importance of tangible assets such as stock and real estate have declined, the incredible value surge of intellectual property (IP) has defied the old laws of economics, and basic IP rights such as copyrights, trademarks, trade secrets, and patents now account for almost 80 percent of corporate value.

Intellectual property is now the real deal.

The race to unlock the secrets of human genome, introduce a new chemical entity or an original drug molecule, and bring the next big thing to the market has produced an explosion of scientific knowledge and spurred the development of new technologies that are altering the economics of drug development. But none of this would be possible ‘without the support of intellectual property protection and the research funding made available from commercialization or licensing out of such new chemicals or biological entities.’

Due to its cost structure, time-consuming processes and extreme innovativeness, the pharmaceutical industry beats every other industry in term of the need to acquire and protect intellectual property. From copyright in publications and materials to trademark protection of brands, from manufacturing data used to support regulatory approval to the transfer of technology by publicly funded institutions, IP affects a broad spectrum of business in the pharmaceutical industry.

IP has been recognized as the most valuable resources of any pharmaceutical outlet.

Empirical evidence shows that pharmaceutical research and development process is lengthy, expensive, uncertain, and risky. Even with billions of dollars invested in research and development, few drugs actually make it through clinical trials and stringent regulatory clearances. Industry estimates confirm that developing a new drug and bringing it to the market takes 12-15 years and costs a pharmaceutical company around $3 billion. In addition, out of every 5,000-10,000 compounds that a pharmaceutical company tests, only one will be approved after all the clinical test. Knowing this, no company will like to risk its IP becoming public property without adequate returns.

The stakes are feverishly high.

Without intellectual property, it would be difficult, if not impossible, for any individual or business to invest in or reap any benefits from their inventions—inventors would not be encouraged to invent; investor would not be enticed to make any investment; and the financial prospect of undertaking research and development would be anything but bright. Millions of people who rely on the pharmaceutical industry for life-saving drugs and treatments would suffer. The economy would suffer. Life as we know it would come to an ill and sick end.

 

What types of IP do pharmaceutical companies need to protect?

Patent

A patent provides ‘its owner the exclusive right to prevent others from making, using, offering for sale, selling, or importing the patented invention without the owner’s permission’.

Patents are arguably the most valuable IP rights that any innovative company must possess. This is especially true of the pharmaceutical industry where millions of dollars is spent on clinical researches and processes, pharmaceutical formulations and drug combinations, drug trials and approval. Without patents protection on these sequences, there would be no way to recoup expenses or make profits, since copycats could simply copy or reverse-engineer any discoveries or processes. Patents also attract investors. No one wants to put their money in a venture where there are absolutely no guarantees. I know I wouldn’t.

Again, by patenting IP, pharmaceutical companies can make money from their time, efforts, and investments by monetizing their patents through licensing or sale. In case of an infringement, they can also validly sue and demand compensations.

To be patentable, an innovation must be novel, inventive, and capable of industrial application. Under the Nigerian law, ‘a patent shall expire at the end of the twentieth year from the date of the filing of the relevant patent application’.

Copyright

Copyright grant exclusive rights to the author/owner of an original idea expressed in a fixed form, and as a consequence, prevent anyone from using the protected work without the express permission of the owner. Blueprints, customer files, databases, manuals, and software qualify as works protected under the domain of copyright.

In the copyright case of Mazer v Stein, the US Supreme Court opined that “{T}he economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors… Sacrificial days devoted to creative activities deserve rewards commensurate with the services rendered.”

Under the Nigerian Copyright Act, copyright in the case of a body corporate last for until the 70 years after the end of the year in which the work was first published.

Trademark

A trademark is a sign capable of distinguishing the goods and services produced or provided by one enterprise from those of other enterprises. Basically, it protects the name of a product rather than the idea behind the product.

Although patent is the weapon of choice, a strong pharmaceutical brand strategically places a company in a league of its own, helps it gain worldwide recognition, and brings financial reward in the long term.

Also, ‘pharmaceutical companies acquire trademark protection for {drug names, colours, or shapes} to extend their market monopoly beyond the expiry dates of acquired patents’ When doing this, they should be extremely careful not to make a common name a trade name. ‘For instance, Motrin and Tylenol are both trade names of pharmaceuticals for curing fever. They share the same common name {paracetamol}, but by bearing different trade names, consumers can distinguish between the two.’

Apart from the common function of limiting consumer confusion, pharmaceutical trademarks can also have an indirect influence on improving general public health—strong trademarks not only assist healthcare professionals in limiting common mistakes when forced to choose from among a large number of medical products with similar names, it also increases the ability of consumers to rapidly identify the drug of their choice.

Under the Nigerian law, trademark registration is initially valid for 7 years, and is renewable indefinitely for periods of 14 years.

Trade Secrets

The alternative to obtaining patent protection is to keep the information confidential. Confidential information that gives an enterprise competitive edge is generally referred to as trade secrets. Trade secrets may include such things as chemical compounds, dosage regimens, improved variations, processes, and undisclosed test data.

Disclosure, misappropriation, and unauthorized use of trade secrets are often seriously punished.

To some businesses, trade-secrets protection is preferred to patent because trade secrets last indefinitely, involve no registration cost, and do not require compliance with formalities such as compulsory disclosure to any government agencies. But one big disadvantage of trade secrets in Nigeria is that Nigerians has no trade secrets law, unlike copyrights, patents, and trademarks. The legal effect of this is that trade secrets are only enforceable as contracts against the parties involved only, not the public. The cabal at the Coca-Cola Company has been using this form of IP for decades now.

 

IP Monetization Strategies a Pharmaceutical Company Can Deploy

Once upon a time, Disney bought Marvel Comics for $4 billion based mostly on its copyright-protected comics and movies and trademarked cast of characters. An alliance of technology giants bought Nortel’s patents for $4.5 billion, and Google bought Motorola’s patents for $12.5 billion. Not long ago, a US-based Abbott Laboratories acquired Primal Health Care for $3.7 billion. It is believed that the price was so high because of Primal’s most valuable asset — its IP.

Here’s the point of my narrative—Innovative companies can get so much value from their IP. But monetizing IP requires skillful management. A company can adopt any or a combination of the following methods.

  • Own Use

Innovative pharmaceutical companies all over the world pour millions of dollars into research and development activities to generate intellectual property. The ability to produce a better or a customized product, especially when competitors do not have such an advantage, is one of the key commercial advantages of IP. This enables the owner of the IP asset to sell a higher volume of products, achieve greater profits and maintain customer interest over time. Capitalizing on the ‘first-mover’ advantage is a great way to gain competitive edge, recoup expenses, and make some profits.

 

  • Licensing

Licensing is the sharing (or the “renting”) of IP through a legally binding contract that specifies certain conditions with another company (the licensee) in exchange for the payment of royalties. Strategic licensing is especially good for pharmaceutical companies that intend to make additional income from IP assets that have been transcended by recent developments. Also, where a company has IP assets that have no intrinsic value, it can license them to other companies who may still find those assets extremely useful

  • IP Rights Enforcement

Enforcing IP rights has become a business model on its own. A pharmaceutical company that owns any IP must keep vigilant watch on the market and take swift enforcement action against suspected infringers. 5 May 2014, Samsung was ordered to pay Apple nearly $120 million in damages for infringing on Apple’s patents.

  • Strategic Alliances

Businesses often form alliances to achieve jointly what is difficult to achieve separately. A fledgling pharmaceutical company may forge alliances with big companies and willing investors. This is necessary where the small-sized company does not have the adequate resources and funding to develop or manufacture a new discovery. Old dogs, having realized that patents protection last only for so long and that pursuing the next blockbuster is an overrated adventure, are increasingly looking for new tricks.

  • Sale

A pharmaceutical company that possesses redundant and useless items in their IP portfolio can choose to sell out. This ‘approach may be especially desirable where the company has valuable IP that is currently outside its current commercial focus.’

 

Conclusion

The competitiveness and commercial success of any pharmaceutical firm is tied to more than just an innovative idea—superior IP strategy and management, IP monitoring and valuation, and IP exploitation are all necessary tools. Creating, obtaining, and exploiting IP must become a corporate activity in the same manner as the raising of resources and funding. ‘In today’s exceedingly competitive markets, the use and protection of IP is often the difference between continued success or impending failure of an enterprise in {the} pharmaceutical industry.’

 

 

Ademola Adeyoju is a Graduate Legal Intern at Infusion Lawyers.  Infusion Lawyers is an IP & IT law firm that helps today’s entrepreneurs, startups, and companies protect and exploit their innovations in a knowledge economy.

 

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Meet UGOvations team: the brains behind affordable inverters powering Nigerian homes.

UGOvations wants to power Nigerian homes with quality and affordable inverters. And UGOvations is not scared to start small. Its team of engineers are already designing and manufacturing inverters that will bring light to dark places and power homes and businesses across Nigeria. UGOvations’ inverters are 100% made in Nigeria. This is why it became Infusion Lawyers’ GreenWhiteGreen Initiative flagship beneficiary.

An innovative electronics and engineering business founded by Ugochukwu Godson Ikpeoha, a Nigerian engineer, UGOvations constructs, installs, and services inverters, light/dark automatic switches and remote-control switches/sockets, and printed circuit boards (PCBs). It also designs and implements electronic projects.

UGOvations’ mission is to bridge the technical design, innovation, and technological gaps that exist in Africa combining innovation, and technology together to locally produce electrical and electronic products at international standards and at affordable prices.

Meet UGOvations’ team.

Below are the names, educational background, and work experience of UGOvations’ team:

  • Ugochukwu Godson Ikpeoha

Ugochukwu graduated from the Federal University of Agriculture, Abeokuta, with a Bachelor of Science degree in Physics. He is an innovator and engineer per excellence.

  • Oluwadamilare Kehinde Adebiyi

Oluwadamilare got his Master of Science degree in Electrical & Electronics Engineering from Obafemi Awolowo University, Ile Ife and a Bachelor of Science degree in Physics from the Federal University of Agriculture, Abeokuta. He is skilled in electronics engineering.

  • Toba Ezekiel Bamgbose

Toba is a Packet Core Engineer with Ericsson LM Nigeria working on MTNN O&M Project. He has a Master of Science degree in Physics from University of Lagos and a Bachelor of Science degree in Physics from the Federal University of Agriculture, Abeokuta.

  • Yusuf Adewale Falola

Yusuf obtained a Bachelor of Science degree in Physics from the Federal University of Agriculture, Abeokuta. He is skilled in all electrical installations and fittings.

UGOvations Team needs support to grow its innovations.

With UGOvations’ talented team above, we believe UGOvations has what it takes to grow into a 100% homegrown Nigerian company. Just last month, UGOvations was selected to move to the second stage of YouWiN Connect program. Infusion Lawyers is working closely with UGOvations to ensure it maximizes this YouWin opportunity. 

To fully set up, UGOvations needs support. UGOvations wants to develop new products and commence production. To achieve these, UGOvations needs N14,886,000 ($US37,165). Ugovations, being a Made in Nigeria innovation, sources raw materials locally, thus 100% homegrown innovation. This is what qualified UGOvations for support under GreenWhiteGreen Initiative.

You wish to support UGOvations? We welcome your support. Please click link to contact us.

If you would like to be a partner or sponsor of Infusion Lawyers’ GreenWhiteGreen Initiative, please click here.

 

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Chinua Achebe: Google Doodle for Guru of African Prose

On the day Chinua Achebe would have gotten a cake on his 87th birthday—16 November, the guru of African Prose got a doodle from Google. 
 
Doodles are changes made to the Google logo to celebrate anniversaries, holidays, and the lives of famous people, including artists, inventors, and scientists. Google doodles are basically illustrated logos of Google. 
 
Achebe is best known for his novel, Things Fall Apart, an African novel that has sold over 10 million copies and has been translated into more than 50 languages.
 
The pioneer of modern African prose, Achebe authored many other novels, including Anthills of the Savannah, Arrow of God, A Man of the People, and No Longer at Ease. He also has collections of short stories, children books, essays, and poems to his name. Achebe has been described as the “father of modern African literature”. 
 
Achebe won The Man Booker International Prize in 2007 and the Commonwealth Poetry Prize for his collection Christmas in Biafra, a relevant subject till date.
Chinua Achebe died in March 2013 in the US aged 82. Before his death on 21 March 2013, at 82, Achebe rejected Nigerian national honours twice— first in 2004, and later in 2011.  
The first Google Doodle honoured Burning Man Festival of 1998. Interestingly, doodle was designed by Google Founders, Larry Page and Sergey Brin, to let users know they were out of the office just in case the servers crashed. (Aren’t some of the most brilliant ideas from ordinary, simple things!)
Before you google that doodle, one IP food for thought: Since the Google doodle contains Chinua Achebe’s image, if without permission, does Google’s doodle infringe on Chinua Achebe’s image rights?
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Fintech Industry⸺the Market, the Legal & Regulatory Framework, and Intellectual Property Protection

Introduction

Fintech (Financial Technology) is the new technology and innovation that aims to compete with traditional financial institutions in the delivery of financial services. In other words, Fintech companies leverage on technology to deliver services similar to that offered by conventional financial institutions (e.g. banks), usually with added benefits and ease. Some, examples are ALAT⸺Nigeria’s first digital bank, by Wema Bank⸺and Paylater, an indigenous online-loan provider. Fintech may broadly classify into Fintech startups and established financial institutions that leverage on technology to enhance the scope of their financial services. I’ll be focusing on Fintech startups.

 

Fintech has been applied in disrupting the delivery of asset management, mobile payments, loan transfers and loans. For instance, M-Pesa⸺a Fintech provider based in Kenya⸺allows Kenyans without bank accounts to transfer cash, buy airtime, pay bills, and purchase goods and services without the use of cash. M-Pesa does this by simply transferring a value from one phone to another from a float balance.

 

Though relatively new, Fintech is a high-growth sector. From 2008 to 2014, global investments in Fintech grew from $930 million to $12 billion annually. In other words, the Fintech industry grew by an average of $2 billion each year. According to the Office of the Mayor London, 40% of the London workforce is employed in the Fintech sector. But those are not the only things surprising about the Fintech industry. According to the 2017 Report of the Global Payments Innovation Jury, Africa is the 3rd most lucrative market because of the difficulty encountered by traditional banking institutions in reaching the entire market. Africa is behind Asia and Europe in this regard, but ahead of North America, South America, and Australia. Nigeria’s share of this investment for the past years has exceeded $200 million. The same report anticipates that the Fintech industry would grow to well over $45 billion.

The Fintech industry is growing rapidly and the growth is global, but as would be expected of technology-driven innovations, there are massive opportunities just as there are threats. Let’s use a SWOT (Strength, Weakness, Opportunities, and Threats) analysis to take a closer look at Nigeria’s Fintech industry.

To read the full article on Nigeria’s Fintech industry⸺the Market, the Legal & Regulatory Framework, and Intellectual Property Protection, download PDF.

Got any questions or contributions, keep them coming.

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GreenWhiteGreen Initiative: UGOvations becomes flagship beneficiary.

UGOvations, a wholly indigenous electronics and electrical business that sources its raw materials locally, becomes Infusion Lawyers’ flagship beneficiary of GreenWhiteGreen Initiative.

GreenWhiteGreen Initiative is a new initiative by Infusion Lawyers designed to support homegrown innovators in their early stages.

Under GreenWhiteGreen Initiative, Infusion Lawyers will help promote UGOvations’ innovations to help it secure seed funding.

With GreenWhiteGreen Initiative, beneficiaries like UGOvations enjoy access to general legal advice, promotional assistance targeted at attracting seed funding, protection of their homegrown intellectual property, etc. Infusion Lawyers’ GreenWhiteGreen Initiative is due to fully launch before the end of the year.

UGOvations Engineering is an innovative electronics and engineering business founded by Ugochukwu Godson Ikpeoha. UGOvations brings ingenuity, innovation, and technology together to locally produce electrical and electronic products at international standards and at affordable prices.

UGOvations’ mission is to bridge the technological gap in Nigeria with technical knowledge and unique design. UGOvations’ products promises quality, durability, and affordability.

Construction, installation, and servicing of inverters, light/dark automatic switches and remote-control switches/sockets, printed circuit boards (PCBs), and design and  implementation of electronic projects.

For setup, development of new products, and commencement of production, UGOvations needs N14,886,000 ($US37,165).

UGOvations’ vision is to become a renowned company in innovation and technology.

You wish to support UGOvations? Please click here to contact us

If you would like to be a partner or sponsor of GreenWhiteGreen Initiative, please click here to talk to us.

GreenWhiteGreen Initiativesupporting homegrown innovations
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