Surviving patent expiration: strategies for marketing pharmaceutical products
| Pages | 305-314 |
| DOI | https://doi.org/10.1108/10610429710179471 |
| Date | 01 October 1997 |
| Published date | 01 October 1997 |
| Author | Madhu Agrawal,Nimish Thakkar |
| Subject Matter | Marketing |
Introduction
Since Tagamet – an anti-ulcer drug – lost patent protection in August 1994,
its annual prescription sales in the USA slipped to about $300 million, from
$600 million in 1993 (New York Times, 1995). A drug on patent expiration
can lose market share by 35 percent in one year and by as much as 50
percent within two years (USITC, 1991). Companies losing market
exclusivity over popular patent protected products look for ways to avoid the
loss in market share because of the generic versions of the product that flood
the market immediately after expiration of patent.
In this paper, first, an overview to the history of drug patents is introduced.
Second, the strategies commonly adopted by companies with products
facing patent expiration are discussed.
Drug patent protection – history and background
The history of the modern patent legislation can be traced to the seventeenth
and eighteenth centuries. At this time, pharmaceutical proprietaries or
“nostrums” were made on a large scale in some monasteries in Italy, France,
and Germany. Some of these nostrums were so highly regarded that the
rulers bought the formulas from their inventors and published them for the
benefit of their people. The most famous example of such a transaction is the
sale of the formula for a decoction of cinchona bark by an Englishman by
name of Talbor to Louis XIV of France in 1680 for an undisclosed high
price (Thompson, 1929, p. 233). Frederick the Great of Prussia (1775) gave
the inventor of a nostrum against tapeworm not only an immunity but also a
noble title (Schelenz, 1904, p. 579). Such remedies, cleverly promoted into
high esteem, came to represent large enterprise and high monetary value.
Purveyed with an air of mystery, and often actually secret in composition,
they pretended to represent some unique virtue or invention. This
circumstance gave such drugs a role in bringing about legal rights that
formed the basis of modern patent legislation. England was the first country
to establish governmental regulation in lieu of princely arbitrariness. A
statute of King James I (1624) declared all monopolies that were grievous to
the subjects of the realm to be void, except privileges for the
sole working or making of any manner of new manufacture within the realm to
the true and first inventor of such manufacture, which others at the time of
making such letters patent or grants should not use, so they be not contrary to law
nor mischievous to the state by raising of the prices of commodities at home or
hurt of trade or generally inconvenient (Encyclopedia Britannica, 1910, p. 903).
On these words rests the modern legal concept of patents for inventions. In
the American colonies, the British monarch or his governors granted letters
– patent of the old type for exclusive privilege (land, trading companies,
manufacture), but this practice was never more than casual. The Colonies
had no concept of patenting inventions on a systematic basis and thereby
Surviving patent expiration:
strategies for marketing
pharmaceutical products
Madhu Agrawal and Nimish Thakkar
An executive summary
for managers and
executives can be found
at the end of this article
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5, 1997 pp. 305-314 © MCB UNIVERSITY PRESS, 1061-0421 305
Modern patent
legislation
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