Open Innovation in the Pharmaceutical Sector
Open Innovation is an emerging trend, and some well-known companies have already had success in the use of Open Innovation, such as Procter and Gamble, Eli Lilly, Awridian, GSK, and Pfizer. Therefore, if companies implement Open Innovation successfully, they will have fewer operations costs, create an effective innovation pipeline, and obtain valuable patents. To acquire these benefits, they should reorganize their company culture and move towards a well-executed Open Innovation model.
Pharmaceutical companies rely heavily on patent systems to protect their inventions, but patents are considered the strongest type of monopoly. It completely controls the use of a product, especially its price.
Conversely, Open Innovation suggests a continuous flow of information, ideas, and technologies between stakeholders from different organizations all over the world. Given that Intellectual Property Rights such as patents are generally set up to exclude or safeguard information, how do they work together?
Allowing patents to be public domain can speed up the development of technology and products. That’s why it is important for pharmaceutical companies to tap into information that universities, institutes, and other companies can offer, by exchanging patents.
Of course, these companies won’t share their most valuable information. They will share information, although disadvantageous to them at the time, that could be developed further. And with their progress, they will ultimately benefit from the new knowledge and technology created by the other organizations of collaborators.
Patent protection through bilateral and multilateral agreements such as TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) and TPPA (Trans-Pacific Partnership Agreement) are essential to the functioning of the pharmaceutical industry and the protection of its medical products. However, it is important that these companies progress with the constantly developing socioeconomic and healthcare environments instead of only looking at the business side of these agreements.
There are also organizations that bring businesses together to invalidate low-quality patents and cross-license portfolios, such as Unified Patent, the Open Innovation Network and LOT Network. In this way, companies gain access to technologies that can help them, allowing them to focus on the growth of their business without fear of patent.
An outward-facing model
Intellectual property is Open Innovation’s currency and can be traded in order to acquire new knowledge. This way companies can have instant access to knowledge that enhances internal competencies and speeds up the development process.
Therefore, the implementation of an Open Innovation model is transforming the entire industry because it enables the creation of reasonably priced medicines and transparency for drugs that are secure and more effective, also delivering medicine to patients much faster. It is an outward-facing model that will increase productivity.
Open Source is also a great model for sharing information, collaborating, and challenging ideas from several angles. An example of open source in the pharmaceutical industry is open-source drug discovery, which supports collaborative research. Open access research is a great way to build partnerships, creating joint collaboration, and further research.
Open Innovation Strategies
Within the pharmaceutical sector, many organizations that take part in Open Innovation, including international organizations, state authorities, and individual initiatives. This means that all the data and ideas are shared, no patents applied. There are many different strategies used in OI.
Here is a list of Open Innovation strategies used so far in the pharmaceutical sector:
- Minority equity investments
- Joint ventures
- Purchase of technical and scientific services
- Non-equity alliances
- Licensing out
- Spinning out of new ventures
- Supply of technical and scientific services
- Corporate venturing investments
- Mergers and acquisition (M&A)
- Research funding
- Outsourcing & Purchase of technical and scientific services
- Minority equity investment
What are the benefits?
Patents can be used to protect yourself against competitors, but can also be used in collaboration as leverage in negotiations with third parties in order to accelerate development. The main idea of Open Innovation is to allow everyone to benefit from new ideas and technologies. There are many advantages to the use of Open Innovation in the pharmaceutical sector:
- Speed and accelerated time-to-market
- Cost reduction
- Improvement in development and innovation
- Access to a wide network of specialists and knowledge
- Disclosure of positive and negative data
- Decrease in uncalled for duplication of research worldwide
- Increased competitive status
In order to reap the benefits of Open innovation and these strategies is to align Open Innovation projects with your business strategy. Another aspect to consider is the importance of the “downstream” component, which must not be neglected.
Nowadays, those who are implementing Open Innovation and making changes are academics, NGOs, and public research institutions. However, pharmaceutical companies are starting to move towards this new model in order to enhance research in new fields of science and increase overall knowledge, which in turn facilitates an advancement and acceleration of the development of innovative drugs.
Open innovation doesn’t rule out patents because companies can use it to develop an idea and then patent it. Therefore, it is important for pharmaceutical companies to use Open Innovation strategies based on the company’s overall objective and adjust to the changing realities of this sector in order to succeed.