Chinese Medicine: Patent Dilemma under the "Imitation" System

Published:

2014-10-06


As the third year after joining the WTO, some people call this year the beginning of the "post WTO transition period". After the running in period of the first two years, the deep-seated problems in China's integration with the world are gradually emerging, among which intellectual property rights have gradually become the inevitable focus.  
Just this year, the Viagra dispute between the multinational pharmaceutical giant Pfizer and more than 10 domestic pharmaceutical enterprises, in the eyes of industry insiders, is a landmark event that the intellectual property bottleneck that has plagued China's pharmaceutical industry for many years has begun to emerge. In fact, it is an intellectual property war.
It is understood that Pfizer has gone through a 10-year research process to invent Viagra. Since its listing in the United States in March 1998, Pfizer has been sold in 112 countries worldwide with a prescription amount of 30 million dollars. As early as 1994, Pfizer applied for intellectual property protection in China for a period of 20 years. If Pfizer wins the patent dispute, it means that before 2014, Chinese pharmaceutical factories can only watch Viagra use sildenafil citrate which is not difficult to synthesize. More than ten domestic pharmaceutical enterprises that have invested huge human, material and financial resources in the same research will face significant losses, and the domestic market share of about 200 billion yuan will also give way.    
This possible outcome is just one of the bitter fruits of the fact that Chinese pharmaceutical enterprises have been used to copying other countries' drugs for decades, lacking motivation for innovation and indifferent concept of intellectual property protection.  
The biggest characteristics of the pharmaceutical industry are the high dependence of the industry on patents and the high monopoly of developed countries of patented drugs. Intellectual property protection is particularly important. After China's accession to the WTO, it has achieved international standards in the field of pharmaceutical intellectual property rights. According to the relevant agreements of WTO, China will implement the provisions on intellectual property protection for more than 100 member countries. According to the relevant provisions of intellectual property protection, the developer has the right to claim compensation of 400 million to 1 billion US dollars for copying a new drug during the patent period. If it buys out the production license of a patented new drug, it also needs to pay 5 million to 6 million US dollars.  
However, a document provided by the Ministry of Health shows that the number of medical patent applications, invention patents and patent level are low in China's pharmaceutical industry; However, foreign countries have applied for more and more pharmaceutical patents in China, especially invention patents. At present, 80% of the more than 10000 drug patents in China are owned by foreign research institutions and enterprises, and more than 90% of them are invention patents.  
Obviously, China's pharmaceutical enterprises, which take the imitation of new drugs as the means of development, are facing a double dilemma brought about by intellectual property rights: independent development of new drugs, facing many problems such as funding and scientific research; However, the road of copying drugs whose patent period has expired abroad is full of fierce competition and low profits. In the face of intellectual property rights, China's pharmaceutical industry is facing a severe test.
Patent Unconsciousness under the "Imitation" System
The lack of impetus and pressure for innovation in Chinese pharmaceutical enterprises is the main reason for the current situation.  
For a long time, under the highly centralized planning system, Chinese pharmaceutical enterprises are unable to arrange production independently and lack the necessary market awareness. Although the long-term imitation method has saved a lot of funds for developing new products, the imitation system of "more, faster, better and cheaper" formed by the enterprise has stifled the innovation ability of the enterprise.  
At present, there are not many enterprises that can carry out high-tech development and research in China. Even if they can carry out high-tech development and research, their capabilities are relatively weak. Some enterprises have insufficient understanding of the importance of enterprise research and development, or rely too much on imitation, or too much on introduction, lacking the ability of secondary development. The data shows that 97% of the chemical drugs produced by Chinese enterprises are imitations.  
It is under this system that patent unconsciousness is a common problem in Chinese pharmaceutical enterprises.  
Many enterprises prefer to spend huge manpower, material resources and funds to promote their products, not hesitate to invest huge amounts of money to use various media for advertising, but do not want to invest in scientific research and intellectual property protection. For example, in the field of traditional Chinese medicine, patent applications mainly come from individual applications, while few applications from enterprises. For another example, at the Canton Fair in 2002 and 2003 after China's accession to the WTO, the intellectual property management authorities still investigated and dealt with 120 and 127 cases of suspected patent infringement and 25 and 23 cases of suspected trademark infringement respectively, an increase compared with that before China's accession to the WTO.
However, due to the management system, incentive mechanism and other reasons, Chinese universities and scientific research institutions, which are shouldering the heavy task of scientific research, generally pay more attention to papers than patents in their research projects funded by the state. Although the administrative departments of governments at all levels have taken measures such as issuing patent application indicators, this trend has not fundamentally changed. In fact, published papers are limited to basic research; For scientific research achievements with industrialization prospects, if we only publish papers first rather than apply for patents, it will cause the loss of intellectual property rights, which is equivalent to giving away the scientific research achievements obtained from national investment to others.  
Due to the lack of patent legal knowledge and the influence of passive protection in the past and the traditional concept of traditional Chinese medicine ancestral recipes, many pharmaceutical enterprises are reluctant to apply for patents because they are afraid of disclosing their technical secrets after disclosure, and prefer to protect their intellectual property rights in a confidential way. However, because drugs are related to public health and the public has the right to know about the drugs they take or use, it is difficult to keep confidential because they need to disclose their prescriptions and processes when applying for drug production licenses and meet the safety, effectiveness, quality control and other standards of drug registration and approval; In addition, even if confidentiality measures are taken, once others spontaneously develop and successfully apply for patent protection, although the confidentiality manufacturer has the right of first use, it can only produce and use within the original scope, and cannot permit others to produce and expand the production scope again, which restricts the development of the confidential technology and related enterprises.    
At the same time, China's original ability to create new drugs is not strong, and only a few innovative achievements have not been protected in time due to weak patent awareness.  
Among them, the following two examples are the most typical and most criticized in the industry:
First, the new antimalarial drug artemisinin was successfully developed by Chinese medical scientists and technicians in the 1970s after more than ten years of hard research. The drug is a major invention in the medical field of China, and it is also the only new chemical drug recognized by the world in the medical field of China. However, because we did not have the necessary conditions for intellectual property protection at that time, when the research paper on artemisinin was published, foreign enterprises immediately carried out some structural transformation and applied for patents, which led to the transformation of inventions originally made in China into foreign patents, causing China to suffer an export loss of 200 to 300 million dollars each year for this item alone.  
Second, the invention of two-step fermentation technology for vitamin C preparation in China. This is an internationally advanced invention. However, due to the lack of awareness of intellectual property protection, a foreign enterprise that would have spent 5 million dollars to buy this preparation technology left without saying goodbye when it learned that it had not applied for a patent, and only spent dozens of yuan to buy the paper back. A few years later, vitamin C produced with this low-cost technology abroad was sold in large quantities internationally, causing great losses to China's vitamin C export enterprises.  
While the patent awareness is weak, there is a situation of sudden patent application in the pharmaceutical industry, which also reflects the current impetuosity of the industry. For example, in the field of human genetics, a company in the south applied for more than 3700 patents in a year around 2000, but then suddenly stopped; For another example, in the nano field, in recent years, the same person has successively applied for nearly 1000 patents; For another example, after the SARS epidemic last year, people in the medical field also applied for patents for anti SARS drugs.    
The insiders pointed out that quite a few of the above-mentioned patent applications submitted by surprise did not carry out any scientific experiments, and they were only a very immature preliminary idea, which had not been tested by experiments, and could not meet the minimum requirement of "the specification should give a clear and complete description of the invention or utility model technology, which is subject to the realization by the technicians in the technical field" stipulated by the Patent Law, Therefore, effective patent protection cannot be obtained finally. In addition, due to the limitation of the first application system, this kind of insufficiently publicized defect cannot be remedied by supplementing experimental data after the application date. As a result, some invention ideas have been disclosed in vain, which may be "married for others", but can not replace the pursuit of "fame and wealth".    
The field of traditional Chinese medicine is the field with the highest proportion of patent applications in all technical fields in China, which has been maintained at about 96% before 1997, which shows that China has a great advantage in the research of traditional Chinese medicine. However, few Chinese herbal medicines applied for patent protection abroad, and the number of patents applied abroad before China's accession to the WTO only accounted for 0.35% of the number of domestic applications. Even after China's accession to the WTO, the patent awareness of the Chinese medicine industry has generally improved. In 2002, the proportion of patent applications from abroad to domestic applications was only 0.6%, lower than the average of 2.4% in all technical fields.  
In sharp contrast, in order to occupy China's domestic market and fully enjoy the national treatment promised by China after its accession to the WTO, foreign enterprises, especially transnational pharmaceutical enterprises, have increasingly used PCT patent cooperation treaties and other means to enter China's patent applications, and even extended their tentacles to the field of traditional Chinese medicine, where domestic applications have always been dominant.  
Can Pharmaceutical Enterprises Rebuild Patent Innovation System
China's patent system started late. In the field of medicine, the patent law before 1993 only protected the pharmaceutical production process, while excluding pharmaceutical substances and varieties from patent protection. In addition, the patent awareness is weak, and the importance and training of patent professionals are not enough, resulting in a serious shortage of patent talents in the medical field in China. There are few professionals such as patent agents or patent lawyers in pharmaceutical enterprises, and there are few specialized patent management agencies.  
However, most of the pharmaceutical enterprises in some developed countries have set up special patent offices, and patent work is usually undertaken by patent agents and patent lawyers. For example, Merck, a famous American pharmaceutical company, has an intellectual property department, a large number of patent lawyers and dozens of patent agents; Pfizer has a patent law department, including dozens of patent lawyers. Their functions include patent information research, discovery and creation, patent application, patent dispute handling, patent license trade, etc. In China, there are few professionals in this field, and few enterprises have set up these departments.  
For a long time, the research and development of medicine in China has mainly focused on imitation, and the funds for new drug innovation are seriously insufficient. The pharmaceutical industry is called high-tech industry, which has the basic characteristics of high-tech industry, such as high knowledge and technology density, high capital density, high added value, good social benefits, high risk, rapid growth, and short product life cycle. At present, it costs 800 million to 1 billion dollars to develop a new chemical drug. For every 10 new drugs on the market, only 3 of them are profitable, and only one of them is profitable. Moreover, it often takes more than 10 years from drug screening to the final product listing. The annual investment in new drug R&D by large foreign multinational companies basically accounts for 15% - 20% of sales. China's pharmaceutical enterprises usually only have 1%, and it is impossible to guarantee that 1% of the funds will be used for specific purposes, sacrificing the connotative expansion and reproduction of the pharmaceutical industry. For example, the North China Pharmaceutical Factory, which has a great influence in the pharmaceutical industry in China, has only tens of millions of yuan of research and development costs a year.  
Behind the lack of R&D funds is the lack of risk investment mechanism in China's pharmaceutical industry. For a long time, China's investment in R&D, especially in the early stage, is dominated by the state, lacking the support of venture capital funds. Because there is no venture capital, some enterprises have no capital to commercialize them even if they have good technology; Even if there are good products, there is no financial means to make them constantly updated.  
On the one hand, scientific research funds are very scarce, on the other hand, precious scientific research funds have not produced maximum benefits. Some of the scientific research achievements obtained by concentrating a large number of human, material and financial resources are shelved or disappear on their own, resulting in a long-term situation of high input and low output. At present, China's high-tech commercialization rate is 25%, and the industrialization rate is only 7%.  
The relevant price authorities adopt a "one size fits all" policy on drug profit margins, but there is also a big drawback - it not only keeps the prices of ordinary drugs that do not need to be researched and developed artificially high, but also cannot guarantee the normal profits of innovative drugs, and cannot effectively encourage enterprises to invest in innovation.  
Even in the field of imitation, what China lacks is smart imitation. In fact, independent intellectual property rights can also be generated in the process of imitation. Japan is constantly updating and improving the imported technology, so that many dependent patents (dependent patents) with Japanese characteristics have been derived around foreign basic patents, known as "nibbling policy". Through wise introduction and clever imitation, Japan has not only successfully promoted rapid economic growth, but also made itself one of the world's recognized patent powers. The huge number of patents that Japan has accumulated has in turn laid a solid foundation for Japan to become a world economic power. Chinese pharmaceutical enterprises should learn from the experience of Japan. In the process of imitation, they should integrate their own advantages and obtain independent intellectual property rights in the process of re creation. They should stand on the shoulders of giants, not on the shoulders of giants.
All kinds of signs indicate that after the large-scale entry of international pharmaceutical giants into China, they are now shifting from industrial investment to R&D investment in China. On July 1 this year, Novo Nordisk's China R&D Center, which plays a leading role in the world's treatment of diabetes, was completed in Zhongguancun Life Science Park. At the same time, Roche, another multinational pharmaceutical company headquartered in Basel, Switzerland, has also set up a research and development center in Zhangjiang High tech Park, Pudong, Shanghai.  
According to the analysis of experts in the industry, multinational pharmaceutical companies have targeted China's "high-quality and inexpensive" scientific research talents, strong scientific research foundation in some fields and rich and unique disease resources. Multinational companies set up R&D institutions in China mainly to save costs, because the remuneration of researchers of the same level recruited in China is much lower than those recruited abroad, and the clinical costs in China are also much lower.  
China has not made good use of its technological R&D advantages and is being coveted by international pharmaceutical enterprises.  
On the occasion of the third anniversary of China's accession to the WTO, some media issued the statement "Did China's intellectual property really become a world public hazard?" There are signs that the international community has begun to "liquidate" China's intellectual property issues, and an intellectual property storm is about to start. Against this backdrop, the difficulties faced by China's pharmaceutical industry will be more difficult, and it will usher in a life and death test.

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