Covid-19 spreads to the global IP market

 In news

Rumour has it…
Nothing whets the appetite for rumour quite like a good germ escape story. And what if that germ, or virus, was ‘owned’ or patented by a super-power? All the required ingredients of conspiracy are in place. Just grind the mill. Disappointingly for some, the facts de-rail such a tall tale. But all is not lost as the truth is far from dull, quite the contrary.

Owning a virus
A virus can be patented. In 2013 Dutch scientists were sent a sample by a Saudi doctor and managed to isolate the MERS virus (related to Covid-19, more deadly and one of the coronavirus family) and patented it. There were howls of protest alleging dark forces at work – whether governmental or pharmaceutical – saying such action would lead to more deaths from the virus. At one point the World Health Organisation (WHO) got involved pledging to investigate.

Strange as it may seem, patenting the MERS virus quite probably achieved the opposite. Patents are a sound tool for quickly fighting disease and are often a positive force. They create the financial incentive for innovation and discovery. As with any other patent, its granting gives the holder a limited time monopoly on their creation. It can be licensed to others in whole or in part and information is shared. Simply put, patenting viruses doesn’t restrict research and often incentivises more, thereby saving lives and not threatening them.

The Dutch scientists didn’t hog the patent for themselves and shared it with other researchers for free. If you understand the virus you are better placed to find a vaccine. It’s all about the vaccine – see later. What about those who haven’t or won’t learn to share? There’s a mechanism for that called the “public interest”, allowing a government to violate a patent or by threatening to do so, leverage cheap production through licensing.

What is the truth with Covid-19?
A patent application from 2015 does exist for one type of coronavirus but not Covid-19. The patent applied for was in respect of a weakened version of an infectious bronchitis virus (IBV) with the intention of developing it into a vaccine against the disease in birds and other animals for profit. Perfectly normal behaviour in the world of biological patents.

The real IP story for Covid-19 is the Chinese attempts, through their drug companies to patent and manufacture a treatment. An American pharmaceutical company, Gilead Science, owns the patent to “remdesivir” a compound used to fight MERS and SARS from the coronavirus family. It is reported the Chinese-based company BrightGene is already mass-producing the active ingredient in remdesivir with the intention of seeking a license from Gilead retrospectively.

On one hand the Chinese have agreed to IP reforms and compliance as phase one of a much-needed trade deal with the US but, on the other, the pressure on the Chinese government to deliver an effective treatment to its people is immense. If remdesivir is found to effectively treat Corvid-19 it seems likely IP rights will be breached to allow the drug to reach the masses. How or if this IP fight between these two giants will be resolved, with so much at stake, is not known.

Means to an end
This brings us to the vaccine market, the real driving-force behind biological patents. The numbers are staggering. The market has grown six-fold in twenty years and is now worth $35b. There are only four big players, British GlaxoSmithKline, French Sonofli and US Merck and Pfizer. Between them they control 85% of the market. An affective oligopoly built through market consolidation. All the above investor-backed companies are reported to have leapt into the race to combat Covid-19. Find a vaccine and the only profit decelerator is supply. In the words of one expert:
“…vaccines are long-lived assets, have high barriers to entry, typically stable/growing pricing, mostly limited competition and no patent cliff”.
Magnetically attractive to the cash-hungry pharmaceutical world.
Like I said – it’s all about the vaccine.
And, in case you’re wondering, the public shouldn’t expect a Covid-19 vaccine to hit the market until early next year.

Murray Fairclough
Development Underwriter
OPUS Underwriting Limited
+44 (0) 203 920 9985

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