"Earlier in 2018, the central government announced that China will go ahead with patent linkage and data protection. We do not yet know the full details, but this is undeniably a turning point for the pharmaceutical industry in China."
Finnegan first opened its offices in Shanghai in 2008. How has the pharmaceuticals industry evolved as a key client from then until now?
We are a small team here in Shanghai and our primary focus is to help Chinese companies protect and enforce their IP in the U.S., and we also help our foreign clients do patent litigation in China working with Chinese counsels. We work across several technical areas, including chemical, pharma, biotech, mechanical and electrical, and about 40% of our attorneys are specialized in the pharmaceutical area. Because the patent value in pharmaceuticals is so critical, this was an interesting field for us when we first arrived in China in 2008. Initially we found very few companies that were demonstrating a drive towards innovation; most were focused on generics, particularly small molecule generics, which we do not represent. However, in the past 10 years we have encountered more and more innovative pharmaceutical companies, not just in small molecules, but also in the biotechnology area, which has brought on growth in our client base.
The firm is consistently ranked as a top tier IP specialist law firm in the U.S. As a firm dedicated exclusively to the task of IP protection, what are the range of services you offer and how do these activities contribute to the innovation process in China?
Pharmaceutical companies invest so much into the quality of their work, and we aim to ensure that our clients secure patents with high quality. We help clients draft patent applications, which is basic but a key and important task to help them protect their valuable assets. We also provide opinions on patentability, non-infringement, and freedom to operate, which are very helpful for our innovative pharmaceutical clients because they need this knowledge to attract investment and to minimize risks. When evaluating the assets, large pharma normally conduct due diligence and that is something we help our clients to defend. We want big pharma to see our clients not only have the technology but also strong patents.
What reforms in terms of patent protection have you seen as most impactful on behalf of the Chinese government?
People have long been lobbying the CFDA for patent linkage and data protection in China. Earlier in 2018, the central government announced that China will go ahead with patent linkage and data protection. We do not yet know the full details, but this is undeniably a turning point for the pharmaceutical industry in China because that link between the approval process and the CFDA with the patent protection will give innovative pharma companies additional protection in addition to pure patent protection. This whole system has been pretty well developed in the U.S. and while we do not yet know the rules, we imagine it could be similar and the end goal is the same in that the government wishes to promote innovation within the industry.
IP plays a huge role in laying the groundwork for innovation to occur, but what else do you see as driving innovation?
Looking at China 5-10 years ago, it was dominated by the generics market and there was only a small number of innovators. However, even companies traditionally focused on generics have ramped up their research efforts, either in-house or through their subsidiaries. This is due in part to the Chinese government’s investments, and not just in terms of providing funding to research institutes. Generous funding has been specifically allocated to companies looking to apply for international patents. Some companies have abused the opportunity. The government subsequently realized this was not a sustainable model to achieve their goal of inspiring greater innovation because, although the number of patent applications increased, the quality of these applications did not correspond.
As a returnee to China working within the life sciences, what is driving your return and how are you assisting in developing a better life for wider Chinese society?
As returnees, we grew up here and have a love for this country. China provided a great opportunity for us to come back and contribute to the overall innovation by bringing in fresh perspectives and talents. The market needs people that have the expertise to help make this country a better place for everyone, especially in the pharmaceuticals industry. BayHelix is a club for executives in the life sciences area, and these individuals are brought together by a belief that pharmaceuticals belongs to the world, and the Chinese people should also enjoy the benefits that advancements in medicine have afforded patients in every part of the globe.
China is projected to be the largest pharmaceutical industry by 2020. What is Finnegan’s expectation for the country and what gaps can be better addressed as it makes this transition?
Overall, we are optimistic about the future of the pharmaceutical industry in China as long as the leadership continues to be strong and to serve the people. If there is no political disruption, China will become a very strong market that will continue to attract innovative pharmaceutical players around the world. And the country needs this because of the needs of its patient population. As a patent attorney, we hope that the protection and enforcement system here in China also meets international standards so that whoever comes here will feel comfortable with their investment. Our experience in the U.S. regarding patent law and patent linkage will allow us to help clients to protect their valuable assets in IP in China, minimize the IP risks, effectively defend their IP rights, and appreciate the regulatory scheme and the interplay between the CFDA and the patent office.