Pharmaceutical Mini-academy - 01. The Pharmaceutical Patent Cliffs
Channel: MyTPAGlobal
Date: 30/05/2013

What are the major business, transfer pricing and valuation aspects of 'patent cliffs' in the industry?

Over the past 5 years, an average of 19 NDAs (new drug applications) per year have been approved down from 31 NDAs per year in the 90s. The prevailing trend is mostly attributable to a continuously changing landscape in the pharmaceutical industry, characterized by expiring patents and an increasing pressure innovators witness from the introduction of generics that has been further facilitated with the recent action from President Obama (Patient Protection and Affordable Care Act (Affordable Care Act). Between 2011 and 2014, $98B in branded products are expected to lose patent protection. 

As they approach the edge of the patent cliff, less and less MNEs will have the ideal portfolio of patented drugs, tempting them to adopt a new business model that will allow them to survive after the patent cliff, e.g. M&A, in-licensing, bio-similars and generics.

What will the transfer pricing consequences of a focus shift from 'return on R&D investment/royalty income' to 'cost of goods sold' be? How is it going to be reflected in the operating margin? And how will the shift from 'ethical drugs' to 'generics' affect the level of R&D expenses relative to sales?

Web event host
- Ioanna Ninou, Associate, Transfer Pricing Associates

Guest speakers
- Steef Huibregtse, Founding Partner and CEO, Transfer Pricing Associates
- Yariv Ben-Dov, Founding Partner, Bar-Zvi & Ben-Dov
- William B. Wiederseim, Partner, PharmaBioSource, Inc.

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