Brazilian Legal Infrastructure for further developing the Biotechnology/Innovation

Industry

Edson Beas Rodrigues Jr.

Buenos Aires, September 29, 2006

Relevant Legal Texts

• Industrial Property Code as of 1996

• Outcome: Expansion of the scope of patentability – more stringent standards of protection.

• Theoretical beneficiaries: Biotech. and Pharma industry

INPI patentability guidelines on the biotech. and pharmaceutical fields: further expansion of the scope of patentability established by the Industrial Property Code

Brazilian patentability guideline -> similar to the USPTO/EPO guidelines

Impacts of the Legal Framework

Depletion of the Scientific Commons in Brazil

After the 10th anniversary of the Industrial Property Code, Should we

celebrate?

Brazilian Biotech. Industry: Facts and Figures

AGE OF BIOTECH FIRMS

1 to 3 years – start ups after 2000 = 3 (13%)

3 to7 years – New companies (after 96 – before 99 = 6 (26,1%)

7 years and more – Mature companies= 14 (untill 1996) = 60.9%

Source: FINEP 2003

The Myth of more R&D and Foreign Direct Investment in R&D

ORIGIN OF CAPITAL AND R&D BIOTECH INVESTMENTS

Origin of Capital R&D Biotech Investments %

Foreign Yes 25%

No 75%

BrazilianYes 82%

No 18%

source: DPP FINEP (2003) Derengowski

BIOTECHNOLOGY PATENTS IN BRAZIL

0

100

200

300

400

500

600

700

1 2 3 4 5 6 7 8 9 10 11 12

Year (1990 to 2000)

Nu

mb

er

of

pa

ten

t a

pp

lica

tio

ns

0

10

20

30

40

50

60

70

1 2 3 4 5 6 7 8 9 10 11 12

Year (1990 to 2000)

Nu

mb

er

of

pa

ten

t a

pp

lica

tio

ns

OS

GENOMIC PATENTS IN BRAZIL

LEADER FIRMS IN PATENT RACE BY ORIGIN AND APPLICATION

Company Number Patents Origin Specific Application Application Field

Aventis 42 US/Germ/Fr New Plants / Medicaments Pharmaceutics Agricultural

Ajinomoto 38 Japan Fermenting ProcessEnzimes

Food

Degussa 32 Germ Chem Synt. and Fermenting Process;Enzimes

Chemistry Clinical and Pharmaceutical

Du Pont 26 USA Plants - Drugs Pharmaceutical Biologic Material

Grupo NOVO 24 DK Enzymes Chemistry Biologic Material

Basft 22 USA/Germ Novas Plants Enzymes/ Medicament

Agricultural/ Chemical/ Pharmaceutical

Monsanto + Delkab 18 +1= 19 USA New Plants Agricultural

Procter Gamble 17 USA Detergents in general Chemistry/Hygiene and Biologic Material

Pfizer + Pharmacia 16+3=19 USA Hormones and drus(human and animal)

Pharmaceutical

Hoffman-La Roche 13 US/EU Drugs(human and animal)/ reagents

Pharmaceutical Veterinarian Chemistry

Nestle 12 Switzerland New Plants Food

Corixa 11 USA Medicaments Pharmaceutical

Akzo-Nobel 11 EU Drugs for Humans ‘n Animals Pharmaceutical Veterinarian

89

4238

3226 24 22

18 17 1613 12 11 11 10

0

10

20

30

40

50

60

70

80

90

100

Unive

rsid

ades

Avent

is

Ajinom

oto

Co. In

c

Degus

sa h

uels

Aktie

nges

ellsc

haft

E I Du

Pont d

e Nem

ours

And

Com

pany

Novoz

ymes

A/S

Basf A

ktie

nges

ellsc

haft

Mon

sant

o

The P

roct

er G

ambl

e Com

pany

Pfizer

Pro

duct

s In

c

F Hof

fman

La

Roche

AG

Socite

Des

Pro

duits

Nes

tle S

.A

Corixa

Cor

pora

tion

Akzo

Nobel

N.V

Synge

na

nu

me

ro d

e p

ate

nte

s

BIGGEST BIOTECH PATENT CLAIMERS IN BRAZIL (1998-2001)

Despite strong Governmental investments,Stringent standards of patentability, the Brazilian biotech.

Industry is struggling to emerge .

But there are exceptions: BIOMINAS, CIATEC, etc.

2004 – shift in innovation policy

Innovation Act – similar to the US Bayh Dole Act

Innovation became a byword of IP entitlements

Foundations of the Innovation Act

Foundations of the Innovation Act

• Strategic alliances between public research organizations (Universities) and Companies

Important:

90% of all scientists and qualified human resources are in the public University

Foundations

• Universities and Public Research Centres have the legal obligation of setting up Offices of Transfer of Technology

• Possible drawback: the draining of Public Resources. (R. Nelson and the US Bayh-Dole Act.)

FOUNDATIONS

• Scientists involved in the projects are entitled to co-own of innovations and to receive from 5% to 33% of the royalties arising from the commercialization of the innovations

• Private and Public enterprises based in Brazil are entitled to use the premises and laboratories of public universities and public research centers

• Scientists are allowed to leave Universities and work in the private sector

Conclusions – Brazilian case study

• Strong IP standards do not necessarily generate more R&D and innovation (J.Lerner)

• The stronger the IP standards are, the heavier will be the transactions costs

• Innovation Act may be a good stimulus, but it doesn´t tackle the challenge of developing products for the neglected needs of the South. Who are the real stakeholders of Innovation policies?

• Need for independent IP policies in developing countries