Summary
- Pharmaceutical client hoped to monetise a new drug
- Lawyers advised that any patent protection would be narrow
- Client decided against securing a patent
- EverEdge advised wrapping other intangibles on top of the drug
- Client was then able to set high margins, generating $300m in revenue
Client Information
A pharmaceutical company had spent millions researching and developing a novel drug. The firm pushed hard to create something of its own that no one else had.
The Problem
A pharmaceutical company understood that the gold standard for business is monopoly, so it worked hard to protect its new drug with a panoply of copyright, patents and trademarks to generate revenue quickly and recoup some of its R&D investment within the standard IP protection window.
Lawyers advised that the company could patent the drug but warned this protection would be narrow and that competitors would find ways around it to chip away at its market share. Hearing this, the company felt its only viable strategy was to price the drug as cheaply as possible, release it into the market and hope its competitors were running much slower.
The Solution
EverEdge agreed with this legal advice. However, we pointed out that the company had plenty of valuable intangible assets beyond just the unique chemical structure of the drug. There was also the research and testing data, broad industry know-how and an impressive set of regulatory approvals that were tough to attain and created deep customer trust.
By packaging these intangibles together, EverEdge calculated that the result would offer far stronger protection for the new drug and enable the company to charge a higher retail price for it. EverEdge advised that while competitors may be able to copy the new drug, they would be unable to copy all the intangible components when they were strategically connected.
Results & Benefits
The client followed this advice and set an aggressive margin pricing structure which resulted in lifting enterprise revenue from $US50 million to $US350 million over a five-year period. The company substantially recovered all R&D costs and generated enough revenue to fund new research.
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