Editor’s note: The following article originates from coverage of the BioBay Investor Forum 2008, presented by ChinaBio® on August 27/28 in Suzhou. It was hosted by BioBay, the life science park in Suzhou. The article is reprinted with permission from Interfax China. Interfax China pharma news is located at www.interfax.cn/news/pharma.

Chinese pharmaceutical companies, motivated by the premium placed on globally patented technologies by potential investors, are scrambling to apply for intellectual property protection in global markets, industry insiders told Interfax on Sept. 2.

"Compared to the situation a decade ago, it should be obvious that Chinese pharmaceutical companies are much more aware of the importance of patents to protect their technologies, domestically and even globally, and also of the importance of not infringing on others' [patents]," said Woody Wu, an investment manager with Mingly China Growth Fund, a private equity fund that targets the pharmaceutical industry for investment.

In 2006, the World Intellectual Property Organization received 3,190 international patent applications from Chinese companies, representing growth of 56.8 percent year-on-year.

"When you start to talk to people about your technology, either for investment or to license out the technology, investors want to know how broad a territory scope your patent will have for your technology," said Zoe Wang, partner of Perkins Coie LLP, at the BioBay Investor Forum 2008 held in Suzhou on Aug. 28.

"For products with global potential, investors will check out whether the manufacturer's competitors have applied for the same patent in overseas markets. If not, holding global patents on technology will become a big factor in influencing the decision to invest in a company," said Kevin Xie, partner in China Renaissance.

However, while the importance of patents may seem obvious to some, for many Chinese companies, patent law is a newfangled concept, and according to Wang, there is still a certain amount of distrust of patents and the intellectual property protection they can offer, especially given the application costs.

"Patents expire after 20 years, therefore, some [Chinese] companies would prefer to keep the technology secret rather than applying for a patent," Wang said. "However, by taking this approach, [these companies] open themselves up to the possibility that others could create similar a technology and patent it, which would then exclude the earlier developer from using the product they developed."

Wang was keen to emphasize that more companies may be getting to grips with patent law in China, but it is only exceptional companies that are familiar with patent application processes and requirements in different countries, citing as an example the United States' "first-to-invent" emphasis compared to the "first-to-file" approach to patents in Europe and China.

Nevertheless, for Wang, patent protection is a key step that Chinese pharmaceutical companies need to take, both for their overseas development and to improve their chances of securing better investment.

"Patent protection is territory-based. If you only have a patent in China, the value of your technology may be significantly reduced," Wang said. "And then by that time, it could be too late for you to file applications in other countries."


Disclosure: none.