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Global Dimensions of Intellectual Property Rights in Science and Technology
companies count on renewed government support ... in strengthening international protection of intellectual property rights." We can illustrate that perhaps even more significantly in the biotech industry.
For example, in 1986 a pharmaceutical product would cost about $94 million and take somewhere between 10 and 20 years before entering the market. Some kind of protection is certainly required before that kind of investment is made. The figure today is $240 million. That number has been challenged by Congress and looked at many ways by the Office of Technology Assessment (OTA); the latest OTA study says that costs may often be that high, although sometimes they may be lower. However, it does not require a lot of arithmetic to figure this out. The pharmaceutical industry in this country alone spends about $10 billion on R&D per year, and about 30 new products—30 new molecular entities—are approved each year. That comes out to be more than $300 million invested for each success.
In fact, there are at most only four or five new therapeutic products approved each year that are important and if you divide by that, you arrive at astronomical figures for important new therapeutics. Also, all this investment is required years before you can enter the market and start to get a return. So this certainly fits the pattern of something that requires protection, and patents look like the way to do it.
In 1986 the average development time of a new pharmaceutical product was 10 years. The interesting thing is that biotechnology has compressed that time. Because of the rational design of these products, their remarkable efficiency and safety profile, and the understanding and cooperation of the U.S. Food and Drug Administration, the average development time is about four to seven years today for biotechnology products, which is a big help. However, it is still a long time and a large investment.
So let us review how biotechnology was commercialized. What happened is not particularly logical, not what anyone would have deduced sitting around a table trying to decide what was going to happen. When a biotech company decided it wanted to launch a product, it had to build a company to launch the product. All the different stages and structures had to be built—the vectors and expression systems, purifications, scale-up, manufacturing, clinical testing, regulatory submissions, and marketing. Surprisingly enough, almost all of these things were in place in major pharmaceutical companies, yet almost every single important invention was done by independent biotechnology companies. That is the fact; that is what we have to deal with. How were they able to do all this, why would they be the first to do it, and was it effective? Is it not terribly inefficient to have to create a company for each new product? That is what was done.
Small, start-up biotechnology companies were responsible for many miracle drugs. For example, Amgen developed erythropoietin, and we now know that 10 milligrams per year, one-fiftieth of an aspirin tablet, will