Know-How Protection in Pharmaceutical Companies

Four years have passed since the first proposal of the strategic plan Made in China 2025 (MiC 2025). Although China is toning down the public media coverage and official statements regarding the MiC 2025, the plan is still running. Its goals focus on high-tech areas, including the pharmaceutical industry. The MiC 2025 plan sets ambitious goals and promotes detailed objectives to support indigenous innovation. It aims to increase the amount of China’s drugs registered in developed countries with 10-20 chemical medicines, 3-5 Chinese traditional medicines and 5-10 innovative medicines approved by the FDA/EU by 2025. The goal is also to convert more than 90% of patent-protected critical medicines into generics by 2020 and to mass-produce 20-30 innovative medicines by 2025. The sector will focus on medicines for critical diseases, chemical drugs with new targets and mechanisms of action, CAR-T development as well as generics for expiring patented drugs.

In recent years, China has invested significant resources in Made in China 2025, and the size and capabilities of Chinese biopharmaceutical companies are growing rapidly. MiC 2025 promotes the development of key biopharmaceutical clusters that integrate R&D capabilities, regulatory agencies and biopharma companies to create an ecosystem that accelerates innovation and clinical trials. China has already become an international leader in some market segments such as CAR-T in terms of the number of patient treatments in R&D and clinical trials.

The ambitious goals of MiC 2025 are understandable as China is struggling with a growing demand for high quality medicines. It has increased due to lifestyle changes and increase in cases of cancer, diabetes and cardiovascular diseases. The biggest problem is that China does not yet have its own large and modern pharmaceutical industry. Chinese manufacturers produce either generic drugs or drugs of inferior quality. Therefore, some Chinese companies resort to simpler, often unfair methods such as know-how theft. The violation of intellectual property rights in the pharmaceutical industry usually takes place in two ways. The first method is hacking the IT networks of pharmaceutical companies abroad. The other common method is to obtain know-how through interns, students or scientists in Western companies.

This February, the San Francisco District Court issued an injunction against four defendants. They are accused of transferring critical know-how in drug manufacturing from Roche’s American subsidiary Genentech to the Taiwan-based company JHL Biotech. In another case, a Chinese scientist, who worked at the Friedrich Miescher Institute (FMI) in Basel until 2014, and his sister had stolen critical drug development know-how. The conclusion: against the background of the Chinese innovation offensive, Western pharmaceutical companies should invest efforts into protection of their know-how and trade secrets.

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