Big Pharma’s ‘patent cliff’ is a golden opportunity for China

Licensing pacts could help US drugmakers as their patents expire

- JULIANA LIU

Chinese firms can gain from deals struck with Western pharma majors.

(ISTOCKPHOTO)

For pharmaceutical firms, watching lucrative patents on their top-selling drugs expire has long been part of the business cycle.

There’s enormous pressure to find ways of covering the shortfall. For the first time, China has something to offer. Its prolific biotech companies are in the mix as a potent remedy for the upcoming so-called ‘patent cliff’ facing the industry.

A new blockbuster drug can generate tens of billions of dollars a year when it first goes to market. Each therapy typically gets two decades of patent protection. However, when that period is over, competitors are allowed to release generic or biosimilar medicines. It’s great news for patients. But the loss of exclusivity can decimate revenue. Over the next five years, about $314 billion in sales are expected to be affected.

The expected losses will peak in 2028, the year that Merck’s patent expires on its top-selling cancer drug Keytruda. Drug-makers learnt painful lessons from the last revenue cliff, which began around 2010 and lasted about four years. Driven by the loss of patent protection for a number of branded antidepressants, anti-psychotics, and painkillers, it resulted in a period of muted sales growth.