The weak impact of biotechnology in terms of products in the health sector can be explained by the fact that the pharmaceutical industries operate in a high risk market until recently. The spread of methods of genetic tracking requires the use both of biological testing and the development of automatised equipment and computers for data treatment, a development which hastens the integration of biotechnology, micro-electronics and telecommunications, and tends to pit the traditional pharmaceutical industry in competition against the electronic industries. The development of the first biotechnology products was based on their technical and scientific feasibility, without regard for economic costs or marketing analysis. Times have changed and concerns about profitability are now taking priority in research programs. The paper address the economic regulation.
Current regulations protect intellectual property in order to provide research incentives.
Many biotechnology products are unpatentable because they do not meet the requirements of novelty. Inventors have the alternative of patenting the process, rather than the product, or, in the United States, of obtaining the special status of an orphan drug. Authorities should see to it that the companies who benefit from a monopoly position do not profit in a way that is inefficient for all. However, regulations leading to commercial restrictions may violate international trade rules. The concept of firms as clearly defined entities which compete according to the laws of textbook economics applies less and less to the emerging biotechnology industry.