Biotechnology, meaning the exploitation of biological processes, is an area of rapid growth across the European Union and the last few years has seen many U.S. companies expanding their operations to Europe, in particular to Ireland. The commercial success of the biotechnology sector depends largely on the legal protection available for biotechnological advances. The already evident slowdown in the high tech sector is leading investors to take a closer look at investment opportunities in solid biotechnology shares. The industry is still perceived by many as high-risk, high reward, given that the average pharmaceutical company spends 25% of its research and development budget on biotechnology research. It is exactly for this reason that the biotechnology sector should be aware of all of the legal protections available to it.

The biotechnology sector comprises a wide range of industries:

  • Human and animal health (pharmaceuticals, diagnostics/genetic testing, reproductive technologies, tissue/cell engineering and clinical trial management);
  • Agri-biotech and food/food supplements; and
  • Medical instruments and equipment.

The biotechnology industry has become a world-wide driving force in economic growth and employment. Research and development in the field of medicine raises many new and difficult issues arranging from ethical questions to the role of the law and regulations.

Companies across the spectrum of the medical, biotechnological, pharmaceutical and life science industries need to be kept abreast of legal developments ranging from intellectual property ("IP") management to compliance with the vast amounts of EU and Irish legislation. The primary legal consideration for biotechnology companies is that of IP protection.

IP Management

The principal assets of many biotechnology companies are information and branded products. In order to protect the full commercial potential of these assets it is critical to protect all IP rights from the earliest possible stage.

The types of IP protection available for biotechnology inventions include registrable rights and unregistrable rights. The most important of the registrable rights that give protection to biotechnological inventions are patents. A patent is obtained to grant its owner monopoly protection in an invention for a period of (usually) 20 years. Patent protection is not available for plant or animal varieties or essentially biological processes for the production of plants or animals.

Biotechnology companies should be aware of the availability of supplementary protection certificates (SPCs) which have the affect of extending the 20 year life of a pharmaceutical patent by a period which gives protection for 15 years from the date on which it first received marketing approval in the European Union. The maximum extension allowed over and above the usual 20 year patent is 5 years.

Business Benefits Resulting From IP Awareness

Many benefits result from the early obtaining of advice about the management of IP assets. These include:

  • the ability to take immediate action against infringers;
  • identification of gaps in technology or protection;
  • facilitation of venture capital fund raising based on IP assets;
  • increased licensing opportunities and revenues

The Future

Last year, biotechnology stocks across Europe enjoyed significant growth: there were more than 35 initial public offerings in Europe, up from less than 25 in 1999. Current indications are that this number will grow in 2001. There is a danger, however, that the Irish market is highly fragmented. Company growth may be stalled due to lack of investment and Irish companies will need to be increasingly on the lookout for strategic alliances and acquisitions.

The content of this article is intended to provide a general guide to the subject matter.

Specialist advice should be sought about your specific circumstances.