IP tips for the pharmaceutical market in South-East Asia (SEA) - Part 1

1.Overview of the pharmaceutical market in SEA: potential and challenges

Over the last three decades, the world has witnessed an incredible transformation in economic growth in SEA. As a result of such rapid economic growth, living standards within SEA have been improved, and more resources have been allocated to public health. This has led to the development of healthcare facilities and the pharmaceutical industry, which includes the discovery, development, production, and sale of pharmaceutical products.[1]

In the context of high-price competition among developed markets, many pharmaceutical companies, including European Union (EU) small and medium enterprises (SMEs), are focusing their attention on the SEA market. In 2022, EU countries exported a large quantity of chemicals to this region, of which pharmaceutical products were worth EUR nine billion.[2]

The SEA pharmaceutical manufacturing industry is expected to grow by 12.8% annually over 2021-2027, with a total addressable market cap of EUR 135.07 billion.[3]

In such a fertile market, besides competing against pharmaceutical giants from the United States, Japan, and Europe, EU SMEs often face IP-related risks and challenges such as:

·infringement of drug-related assets (trademarks, labels, and packages);

·ingredients of a pharmaceutical product being tampered with;

·recipe of a drug being stolen or leaked;

·falsified medical products with lower prices and quality (harming the reputation of your business and the health of your customers);

·parallel imports, i.e. where goods are imported into and sold in one market without the trademark owner’s consent in that market (this will be discussed in the second part of this article).

The best way to overcome or mitigate such risks is to build an effective IP strategy, which consists of understanding which of your IP rights (IPR) may be protected, monitoring your rights and competitors, and knowing how to take enforcement measures against infringement and bad faith behaviour. In this article, we will help you navigate through the pharmaceutical industry from an IP perspective.

2.Which IPR can be protected?

If you plan to expand your activities to SEA, IP should be a key factor,[4] and it is important to review your IP assets in line with your company’s R&D processes. Defining an IP strategy takes time; thus, it is important to start early. Pharmaceutical companies should consider protecting different types of IPR, such as patents, trademarks, trade secrets, industrial designs, and copyright.

In SEA, most countries follow the first-to-file system,[5] and IPR registration will constitute a ground to enforce your rights (more details are shared in the second part of this article). In the following section, we will focus on the protection of three major types of IPR: trademarks, patents, and trade secrets. Besides this non-exhaustive list, we invite you to browse our website for further information about other IPR.

Trademarks

A pharmaceutical trademark (trademark related to the pharmaceutical industry) is a significant IPR as it helps customers distinguish your company’s product from those of other companies. Given the sensitivity of pharmaceutical products and people’s natural tendency to remain loyal to specific brands, it is crucial to avoid creating confusion between trademarks in the same market. Such misleading behaviour may have a serious impact on consumers’ health conditions.[6] Besides complying with the requirements of International Nonproprietary Names (which is the identification of pharmaceutical substances or active pharmaceutical ingredients), your pharmaceutical product needs a distinctive trademark under which it will be sold in each potential market.

When choosing a trademark, make sure it is not identical or confusingly similar to other existing rights (trademarks, company names, domain names, etc.). You want to avoid your customers buying the wrong product because of a similar pronunciation in the name of the product. It is, therefore, recommended to perform a trademark search before naming your pharmaceutical product. The aim is to minimise the risk of having your trademark application refused protection (in some countries, IP offices can cite existing prior rights, thus blocking your trademark registration) and avoid infringing on third party’s rights. Although it is common within the pharmaceutical industry to name a product with the same suffix, you should avoid creating a direct link with the product’s generic name.[7]

Besides this, pharmaceutical products must go through a thorough assessment to get approval from each country’s health authority and comply with existing local requirements. Usually, trademark registration and official approval to commercialise a pharmaceutical product are highly related procedures. Register your trademark in SEA countries whenever you intend to enter this new market, either by filing a national trademark application directly before a local IP office or using the international trademark registration procedure via the ‘Madrid system’ (more information available in our corresponding guide).

Patents

A pharmaceutical patent (patent related to the pharmaceutical industry) gives you the exclusive right to exploit a new drug’s economic potential during a fixed period, generally 20 years in SEA. However, some countries may grant an extension of patent protection under certain limited circumstances. For example, in Singapore, such an extension may be granted if there is an unreasonable delay in granting the patent from the registrar or in issuing marketing approval for a product from the local health authority.[8] Unlike Singapore, Vietnam will not extend patent protection for the same delays but will simply grant the patent owner financial compensation (corresponding to a fee waiver).

A pharmaceutical patent may be obtained for drug formulations or technology to produce a drug if the following requirements are met: ‘novelty’, ‘inventive step’, and ‘industrial applicability’. Similar to the European approach on patentable subject matters, in SEA, “the methods of medical treatment are ineligible for patent protection”.[9] Regarding novelty, the disclosure of your invention will most likely destroy this requirement, meaning that it may not be protected. Thus, remember to obtain patent protection for your invention as soon as it is ready or within the relevant ‘grace period’ (6-12 months from the disclosure, during which time the patent novelty requirement is preserved). Regarding the inventive step, should you have an invention lacking this requirement, you may consider protecting it via a simple patent, and the protection will last 10 years. In SEA, this alternative only exists in Cambodia, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. More information about patents is available in our corresponding guide.

For SEA, you may file a patent application directly in each country or through the PCT route with the possibility to claim the priority date of your first-filed application (if any) within 12 months from its filing date. As of today, Myanmar is the only country in SEA that is not a contracting party to the PCT (see more details in our PCT guide). To shorten the lengthy examination and registration processes in the region, ‘Acceleration Programs’ (Global Patent Prosecution Highway (GPPH) and ASEAN Patent Examination Co-operation (ASPEC)) may be utilised.

Trade secrets

Trade secrets are a crucial IPR to consider, especially in the pharmaceutical industry, where you may need to protect special assets (list of active substances, processes, and know-how). Protecting trade secrets is a great alternative to patent protection as it does not imply the publication of any valuable business information and is cost-efficient. Usually, this IPR is not recommended to protect a drug’s composition since this piece of information may be found through research and scientific experiments. Instead, trade secrets will be effective to protect the methods for producing a drug,[10] such as a special condition or certain time limit for the ingredient to transform into a finished product.

As long as you keep confidential any piece of commercial information that may provide your company with a competitive edge, your trade secrets will be safe. Although SEA countries do not require formal registration to protect trade secrets, SMEs should put in place confidentiality and secrecy mechanisms to prevent valuable information from being publicly disclosed. Protecting a trade secret would usually imply taking any appropriate measures such as legal protection (Non-Disclosure Agreements, specific clauses in labour contracts, and agreements with third parties), physical barriers (using safe and restricted access zones, security agents, and cameras), and technical barriers (robust IT system and cybersecurity and restricted access networks). More information about trade secrets is available in our corresponding guide.

In conclusion, the pharmaceutical industry in SEA is a rapidly growing market that presents potential for EU SMEs. Nevertheless, SMEs should be cautious about various IP-related risks and challenges. By comprehensively understanding the different types of IPR that can be protected in SEA and taking appropriate measures to protect them, SMEs can mitigate these risks and ensure the success of their business in the region. In addition, it is equally vital for SMEs to protect their IPR with enforcement measures. Customs and necessary actions against the parallel import of pharmaceuticals can play a valuable role in enforcing your IPR in SEA. This will be discussed further in the second part of this article.

For confidential, jargon-free, first-line IP advice, plus trainings, materials, and online resources about SEA, visit our website at www.sea-iphelpdesk.eu or send your IP-related questions to expert@sea-iphelpdes.eu. You will receive a reply within three working days.

[1]https://www.britannica.com/technology/pharmaceutical-industry

[2]https://webgate.ec.europa.eu/isdb_results/factsheets/region/details_asean-association-of-south-east-asian-nations_en.pdf

[3]https://www.businesswire.com/news/home/20210406005690/en/ASEAN-Pharmaceutical-Manufacturing-Market-2017-2027-by-Formulation-and-Country---ResearchAndMarkets.com

[4]https://intellectual-property-helpdesk.ec.europa.eu/news-events/news/intellectual-property-ip-key-expanding-or-within-south-east-asia-sea-2022-09-28_en

[5] First-to-file system means that the first person to file an industrial property right application in Vietnam will own that right once the application is granted, regardless of whether another party was the first to use such a right.

[6]https://sagaciousresearch.com/blog/the-need-for-trademark-in-pharmaceutical-industry/

[7]https://www.mewburn.com/news-insights/naming-pharmaceuticals-considerations-for-choosing-clearing-and-registering-pharmaceutical-brand-names

[8] Singapore Patents Act, section 36A.

[9]https://legalwiseseminars.com.au/insights/patents-series-part-5-patenting-pharmaceuticals-in-key-south-east-asia-markets/

[10]https://www.aseanbriefing.com/news/ip-protection-philippines-pharmaceutical-industry/