The improving legal environment for intellectual property protection in China will boost the country's fledgling drug industry and help in the discovery of new medicines, according to a senior official of the State Intellectual Property Office (SIPO).

Existing IPR laws and regulations on pharmaceuticals cover patents, trademarks, administrative protection, traditional Chinese medicine, commercial confidentiality, new variety of plants as well as patent linkage and a database, says Zhang Qingkui, a SIPO division chief who oversees approvals related with chemical innovation.

The revised Drug Registration Regulation (DRR), which came into effect on October 1, 2007, has tightened the approval of new drugs and made the drug registration and approval process transparent.

"It offers a good chance for pharmaceutical firms that are dedicated in developing new drugs to further enhance their competitive strength," says Zhang, who is also a member of the national leaders' team for research and development of new medicines.

"Chinese companies should raise their awareness that patents are vital to win the markets domestically and globally."

Some revisions to the regulation will also encourage innovator companies to apply patents, he says.

For example, Clause 12 of the regulation previously prescribed that parties concerned could resolve conflicts by themselves through mediation or seek resolutions from the patent administration or court when disputes arise after the application for drug registration is accepted.

Now the clause has been changed to "when the patent disputes arise while the application of drug registration is proceeding."

Pharmaceutical firms are advised to develop skills to better protect themselves from patent violations.

"The firms cannot publicize their innovations before applying for a patent. They need to make patent searches in advance and give preliminary appraisal for the possibility of getting the authorization," Zhang says.

The firms that have applied the patent for the first time could be conservative and selectively disclose some general technical solutions. Before the expiration they could apply for an innovation patent to extend the protection period for the core technologies.

Chinese pharmaceutical firms have long neglected the importance of patents. The system is largely to blame, given its administrative separation of new drug registration and patent application.

Figures show that 60 percent of Chinese pharmaceutical firms never applied patents while some 70 percent do not have their exclusive products or trademarks, according to a report by Chinese Traditional Medicine Press.

The high-end drug market in China has been controlled by transnational pharmaceutical firms due to the low innovation capability of local firms. Nearly 5,000 domestic pharmaceutical firms currently exist, heavily relying on raw materials and low-cost generic drugs while competing in low-end markets.

Some companies that invested in a new drug without making a patent search subsequently suffered great losses when the drug turned out to be registered already, the report said.

Zhang suggests Chinese firms set up a special department to oversee IPR and legal affairs and sign confidentiality agreements with employees.

While increasing funds and talent to develop new drugs, he says SIPO has approved an efficient way to study foreign patents that are going to expire and make good use of them for unpatented drugs.

Eli Lilly & Co, a global pharmaceutical company that has long operated in the Chinese market, expresses its appreciation for China's IPR protection efforts, as well as some concerns.

"We welcome that the SFDA (State Food and Drug Administration) has embraced the guiding principles of drug registration of fairness, equality and transparency in new DRR," says Lawrence T Welch, Eli Lilly's assistant general patent counsel, in a written statement to Business Weekly. "We hope for continued dialog and improvements here.The industry appreciates the fact that China has allowed for public comments on the draft amendments to the patent law and we trust that our comments will be seriously considered."

The Patent Law is on the third revision and is expected to be passed next year.

"The Chinese IPR protection system has improved rapidly during the past 5 years but still has some room to improve. Local Chinese companies are also growing fast, but real research and development needs to be more creative and innovative while respecting other's intellectual property rights," Welch says.

"Greater certainty of patent enforcement, through fair and transparent procedures, is the most important factor in improving the likelihood of investment in China."

Because the pharmaceutical industry is a high investment and high-risk industry, protection should be provided to innovators, Welch adds.

"Once the innovator spends 10 years and a billion dollars proving that a particular compound, at a particular dose, will treat or prevent a disease in a particular kind of patent, a generic company could easily make and sell that compound unless some protection is provided to the innovator," he says.

"Good IPR laws encourage innovation and investment."

(China Daily 11/05/2007 page9)

2013-07-17