Good article addressing a touchy but very real situation. Before the term "intelligent property" was coined, in other industries this has been going on for a number of years. When you choose to share "intelligent property" there are risks. At any time once an selected partner, let's say manufacturer for this case, chooses to strike out on their own, now you have the trusted partner seizing an opportunity to create their own market. Yes, they can't infringe upon patent protection, but can have a product that is similar in nature and with less cost. Spent many years in logistics and this has gone on for years.
When the partner opens up a new line of products and goes from the 100% "branded" manufacturer, a new area of competition opens up, and something Pharma has not had to deal with let's say as much compared to some other industries. When you share, some of the overall control gets out of the bag, no 2 ways about it.
When this occurs, sure it creates a bit of unrest as now there's competition on the horizon from a partner. You can find another partner, but that takes time and is not always easy, and in the meantime you have to live with the fact that along with the main product, there's another one out there that more than likely sells for a cheaper price, both coming out of the same place, private labeling and blind shipping documents become the norm to keep the branding identities away from the end consumer so as not to lose sales. You can buy out the manufacturer, or choose other options like going to court if that is the case where a potential patent issue is in question, and we have seen some of this already, or if their sales are strong enough and they are competing to the point of hurting your market, well then it could be time to buy a competitor to strengthen sales.
Pharma has one other issue to work with and that is the FDA, as their products are not in the "free enterprise" areas as would be a new toaster you would purchase for example, a whole lot more at stake here with being in the people and wellness business, thus their business model is a bit more complicated, and yet the end result of desired profits is the same.
How much intellectual property to share is a tough decision, especially when the bells are all ringing in that the cost is about 1/5 in other countries to do what we are doing here. Add on some new personalized medicine breakthroughs and the whole picture can change overnight, many unknowns and variables. IT business is changing much in the same directions with companies, hospitals outsourcing what used to be the standard of keeping in house, but it just doesn't work that way anymore as there are 3rd parties who specialize in integration, data base security, etc. that get the job done better and for less money, now this is the rub here for Pharma, it's not quite that simple and there's much more at stake, but yet to stay in the game you have to figure out how to play it and not put human lives at stake and keep the public's vision of the business positive, hard to do today with all the alerts and transparency of the Pharma business being laid out on the table as more questions and information is becoming available. Pharma is indeed one complicated business today, many unknowns and variables that keep shaking the pot. BD
As the pharmaceutical industry grapples with the double whammy of patent and pipeline challenges, the key question being asked is how do drugmakers adapt? Neil MacAllister, who heads the AVOS Life Sciences consulting firm, tells us the undertaking will not be easy, because he says pharma has less experience than other industries in managing such structural changes. Here is an excerpt of our conversation…
http://www.pharmalot.com/2008/09/managing-pharmas-dilemma-macallister-explains/
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