Abstract
German Biotech Sector Grew in 2017
As set out in a report from biotechnologie.de, the latest (2017) iteration of data collected annually on the German biotechnology industry shows that the sector grew strongly in 2017. Turnover in 2017 was 16% over 2016, rising to €4.1 billion (US$4.9 billion), with gains spread across all segments of the industry, including pharmaceutical biotech and industrial biotech. R&D expenditures were modestly up (1.2% overall, but with some segments, like industrial biotech or bioinformatics, investing more heavily in R&D) over the prior year, which should support continued gains in the future. Similarly, biotech companies raised substantially more capital in 2017 (€673 million) versus 2016 (€168 million), also setting the stage for further growth.
As Germany is Europe's largest economy, the strength of the German biotech sector augers well for the continent as a whole.
China Invests Heavily in U.s. Biotechnology Industry
Chinese investment funds pumped US$1.4 billion into United States biotechnology firms in the first calendar quarter (January to March) of 2018. That represents 40% of the total US$3.7 billion raised by the sector during that period of time. China's 2018 investment represents an enormous year-over-year uptick: during the first quarter of 2017, Chinese funds invested only US$125 million—seven percent of the total invested during that period of time, and only around 1/11th of the amount invested first quarter 2018.
The Chinese investment in U.S. biotech is part of the nation's overall strategy of moving its pharmaceutical sector away from a focus on low-cost generics and towards original research and development, as well as the acquisition or creation of valuable intellectual property.
It is possible that the rapid pace of Chinese investment may hit a political speed bump, however: the Trump Administration has been engaging in tariff and trade brinkmanship with China, and has stated that it wants to curb perceived Chinese theft or other abuses of U.S. intellectual property, a goal shared by the U.S. Congress. It remains to be seen what the effect of this will be, but it certainly has the possibility of slowing Chinese investment.
Fortunately, it's not just Chinese investment in U.S. biotech that's up. U.S. biotech start-ups had their best-ever start to a year for biotech financing in first quarter 2018. The average round of financing of US$44 million was the highest since 2008. Even if government action reduces or constrains Chinese investment, there is no indication that it would starve the sector of capital needed for growth.
U.S. Patent And Trademark Office Responds to Indian Public Consultation on India's Patents Act, 1970
India's Patent Office recently held a public consultation on issues related to patent requirements under the Patents Act, 1970. Approximately 65 responses were received as of the writing of this article, including one from the U.S. Patent and Trademark Office (USPTO). The USPTO response urges elimination of the requirement that patentees regularly file what are known as Form 27 statements.
Section 146(2) of the Patents Act requires patent holders to provide information through Form 27 on the extent to which a patented invention has been exploited commercially in India. This information is used by the Controller General of Patents, Designs and Trade Marks to determine whether or not to grant a compulsory license. India is unique in imposing this particular reporting obligation—a number of countries require that patents be exploited or worked, but only India makes reporting this information mandatory.
The USPTO, via its South Asia office, said the following in its response to the consultation: “The U.S. urges India to take the opportunity to significantly improve the ease of doing business, enhance predictability and certainty for innovative industries, align with international best practices, and help achieve National IP Policy, Start-up India and other national initiatives by eliminating the requirement for patentees to regularly file form 27 statements.” The USPTO takes the position that this additional, atypical requirement imposes a burden on patentees, especially as it forces them to do something they don't have to do elsewhere.
Of course, regardless of the merit of the USPTO position, it is possible that its response will backfire: it could be seen as U.S. meddling in India's internal affairs and policies, something that could easily draw reflexive opposition.
Indian Court Ruling Jeopardizes Monsanto Intellectual Property
Also in Indian news: Monsanto recently lost the latest round in its ongoing Indian patent fight over its genetically modified cotton. India's highest court refused to stay a lower-court ruling that prevented agro-biotech giant Monsanto from enforcing its patent and collecting royalties on its B. thuringiensis (Bt) seed varieties.
Monsanto has been collecting royalties from Indian seed companies which produce its genetically modified (GM) cotton seed under license. However, an Indian firm, Nuziveedu Seeds Ltd (NSL), brought a case against Monsanto two years ago, claiming that the company's seeds are not protected by patent in India and that Monsanto is therefore not eligible to demand royalties from Indian seed companies. The real genesis of the conflict is economic and nationalistic, not legal per se: Monsanto's GM seeds have almost completely replaced India's traditional cotton seeds, due to a combination of practical benefits conferred by the GM seeds (e.g., pest resistance) and effective marketing by Monsanto and its subsidiaries. This has made Indian farmers—an important voting demographic in India—dependent on seeds produced under license from a U.S.-based company, and also paying sometimes-hefty royalty fees to a multinational company, a politically unpalatable situation. In response to pressure from farmers, in 2016 India imposed price controls on cotton seeds and cut royalties by 70 percent, which resulted in Monsanto threatening to stop doing business in India. Unimpressed by Monsanto's threat, the Indian government reduced Monsanto's royalties yet further, by another approximately 14%.
Concurrently with the Indian government's reduction in royalties has come the court case, which threatens Monsanto's ability to enforce patents on its seeds at all in India. To date, Monsanto has been losing this case. Pursuant to the most recent ruling, Monsanto has a three-month window to register its Bt seed varieties under the Plant Varieties Act (PVA); this would allow the company to collect a trait fee, but at the cost of losing control over the plant's genetic material, which would become available to Indian companies for development and exploitation.
While India's top court refused to stay enforcement of the lower-court ruling, Monsanto has not yet reached the end of its legal road: another hearing on Monsanto's appeal is set for July 18, 2018.