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Competitive against giants
NYCOMED, DENMARK , is a pharmaceutical company with a history of over 130 years. But its intellectual property strategy is anything but dated. Competing against pharmaceutical giants, Nycomed cannot afford to stumble in protecting its IP.
"We treat our patents like money!"
Recognising that patent management is a key to its success, the company involves a team of internal IP specialists, external patent attorneys and representatives from many of its departments in an annual review of its intellectual property rights. How the company deals with IP problems and how it protects its new products is spelled out in a patent policy approved by the CEO, Håkan Björklund.
Nycomed’s experience shows how a well thought-out and executed IP strategy can keep a relatively small company competitive in a market dominated by much larger competitors. “Our patent strategy today is very much linked to our business strategy,” explains Aase Helles, who leads Nycomed’s intellectual property rights group. “We treat our patents like money.”
Focus on marketing niche
Norwegian pharmacist Morten Nyegaard founded Nyegaard & Co. in 1874 with the aim of improving education for medical professionals and educating the public about health issues. Along the way, he introduced some 900 products from Norway to the rest of Scandinavia and created a pharmaceutical research centre to produce new drugs.
Today, the privately owned company (subsequently renamed Nycomed and based in Roskilde, Denmark) employs 3,300 people and operates in 20 European markets, Russia and CIS. Its key products include drugs that combat osteoporosis and acid-related gastrointestinal diseases, drugs designed to stimulate wound healing and Angiox, a trombin-specific anticoagulant.
Unlike many of its main competitors, Nycomed focuses more on marketing than on creating new products from scratch. This represents a strategy shift from the past. These days its main activities involve marketing and expanding the reach of its own products as well as those that it in-licenses from other companies. Its favoured products are those that can be marketed in multiple countries and with a sales potential of over 150 million. Since 2000, it has completed more than 10 significant in-licensing transactions.
Rather than competing generally with companies such as GlaxoSmithKline, or nearby AstraZeneca of Sweden, it has chosen to compete in particular markets and with particular products. Nycomed has chosen its products wisely. For example, CalciChew (a combination of calcium and vitamin D3), the company’s best-selling product, is the top calcium product in Europe with a 40% market share. Pantoloc/Zurcale, which it licenses from and markets with another company, is the number one seller in its class in Austria and number two in the Netherlands and Belgium. TachoSil, an absorbable haemostatic surgical patch (collagen carrier) coated with human coagulation factors fibrinogen and thrombin. It was developed to assist surgeons in achieving fast and reliable bleeding control and launched through Europe and Japan. Angiox (bivalirudin), which it licenses from a US biotech company, is a thrombin-specific anticoagulant for patients undergoing percutaneous coronary intervention (PCI) and was launched through Europe. Angiox simplifies the treatment and improves patient outcomes.
Most of the company’s in-licensing partners are American. US pharmaceutical companies, Ms Helles explains, often do not understand Europe’s complicated markets, especially clinical and regulatory issues, and also those related to filing, protecting and exploiting patents. “Helping foreign companies bringing their novel products to Europe has proven to be a very good niche,” she says. Nycomed’s net sales in 2005 were 1747.5 million.
Mission statement on patent policy
Successfully marketing products also means protecting the company’s associated IP rights in them. In 2003, the company concluded that 46% of its turnover came from patent-protected products. The company estimates that today between 55% and 60% of its turnover comes from such products. In the future, the percentage will continue to rise as all newly introduced products are patented.
Managing intellectual property is a complicated and costly activity for Nycomed. In June 2005 its patent portfolio consisted of 510 patents divided into 39 patent families. Single products can involve more than a single patent – CalciChew is covered by nine patent families and TachoSil is covered by eight. Nycomed also manages some 800 registered trademarks, which provide some protection from generic competitors once patents covering the products expire.
Protecting patents is costly. The company budgets €2.3 million annually to file, protect and exploit patents. Patent litigation is especially expensive. A single action in a single country costs roughly €500,000. Litigation, however, can often cover many countries and go through a series of appeals. Nycomed considers the money well spent, however. It has yet to lose a single lawsuit.
What often separates strong companies from weak ones is vision and how this is articulated. When it comes to patents, Nycomed has a clear strategy. Its patent policy is in writing and is approved by the company’s CEO. The patent policy serves as a mission statement and guides the company’s decision-making regarding patent strategy. For example, the policy says, “We respect valid rights and do not wilfully infringe such rights.” This reminds employees that the company should not behave too opportunistically when it comes to challenging patents held by other companies. The word “valid” is key here, however. The company may certainly challenge patents they consider invalid.
Only spending on business
The company has a set procedure on patenting new products. The first patents are filed in Denmark, where costs are low and the authorities familiar. Nycomed then has a year to decide whether to expand the reach of the patent. If they choose to do so, Nycomed then typically files patents in all European countries, Russia and CIS, Canada, China, Japan, the US and other selected countries.
Nycomed also protects its products in ways other than patent filing. Sometimes, it simply tries to keep processes secret, although, Ms Helles admits, it is difficult to prevent employees who join competitors from divulging the secrets. At times, the company tries to publish information about processes to put them in the public domain and keep them from being patented. Sometimes this has unexpected consequences, however. A notice in a small local newspaper about the process to make a pain product prompted letters to the editor complaining that Nycomed was teaching children how to make narcotics.
In addition to filing new patents, each year the company reviews the patents owned by both it and its competitors. Patents in its portfolio that are no longer generating revenue are first checked for their out-licensing potential. If there is none, they may be abandoned by the company or assigned to a university. “We are not a company to spend where we don’t have business,” says Ms Helles. Competitors’ patents are scrutinised to ensure they are not infringing the company’s patents and vice versa. The annual patent review may also identify new technologies and ideas that the company might pursue.
Up to 60% of Nycomed’s turnover comes from patent-protected products.
Product facts
Nycomed’s key products address the following therapy areas: osteoporosis (e.g. CalciChew, a combination of calcium and vitamin D3), cardiology (e.g. Angiox, a trombin-specific anticoagulant), pain treatment (e.g. Xefo, a novel NSAID), acid-related gastro-intestinal diseases (e.g. Pantoloc, Zurcal), tissue management (e.g. TachoSil, a surgical patch designed to control bleeding).
Company profile
Nycomed is a pharmaceutical company dedicated to meeting needs in Europe. The company provides hospital products throughout the region and general practitioner and pharmacy medicines in selected markets. New products are sourced through licensing agreements with research companies. Here Nycomed provides late-stage clinical development, registration and marketing
Staff: 3,300
Sales 2004: €747.5 million
Key products: Drugs that combat osteoporosis and acid-related gastrointestinal diseases and stimulate wound healing.
Customers: Hospitals, general practitioners and pharmacies.
Nycomed
Langebjerg 1
4000 Roskilde
Denmark
www.nycomed.com
IP background
Patent protection: 510 patents in 39 patent families.
Patent filing order: Denmark, then in all European countries, Russia and CIS, Canada, China, Japan, the US and other selected countries.
Department: Aase Helles leads an internal team of nine IP specialists. External patent attorneys are also used.
Budget: €2.3 million
Success factors: Clear link between IP and business strategy.
Challenges: Cost of litigation in each country. Translation costs.
Contact
European Patent Office
Erhardtstr. 27, 80469 Munich, Germany
Tel.: +49 89 2399 4636
E-mail: sme@epo.org
www.epo.org
Danish Patent and Trademark Office
Helgeshoej Allé 81, 2630 Taastrup, Denmark
Tel.: +45 43 508000
E-mail: pvs@dkpto.dk
www.dkpto.dk