Pharma woes give lawyers a chance to shine

You only have to glance at an industry going through real structural change to see how hollow are the claims repeatedly made for the 'revolution' hitting the legal services market.

Take the drugs business, which is chronicled in this month's in depth feature, for instance. The market that allowed large Western pharmaceutical companies to sustain heavy investment in research and development (R&D), leading to lucrative, high-margin products, is under intense pressure on a number of fronts.

Perhaps most challenging is the rise of generic drug companies, which produce versions of originator companies' blockbuster drugs. This has undermined the business model of industry leaders like Merck and Novartis. The related globalisation of the drugs market has exacerbated these pressures, with emerging markets increasingly geared to the production of large quantities of low-margin generics.

In addition, patents on many of these lucrative drugs are set to expire in the next five years. Some lawyers focused on the sector forecast that the era of the blockbuster drug is rapidly drawing to a close. It could also be argued that the industry is facing the intractable problem of having got the easy wins in pharmacological terms now behind it, a shift that leaves drug firms, in the words of one partner, striving to tackle "the hard stuff, like cancer".

Other pressures on the sector include the European Commission's high-profile inquiry into the EU's drugs market, which has major competition implications for the industry, and developments in modern medicine that put more emphasis on biologics (drugs derived from human and animal cells).

This latter development has opened a whole new area of legal dispute as it is far less clear the extent to which companies can patent discoveries drawing on nature. While there is no sign yet of the originator v generic dispute ending any time soon – EC figures show such litigation has surged over the last decade – litigators are predicting a new wave of disputes between originator companies attempting to bring competing biologic drugs to market.

With these pressures, large companies have embarked on a wave of takeovers to secure stronger product pipelines and cut R&D costs. There has also been a surge in the number of out-licensing and partnering deals as bluechips cut deals with smaller companies with promising drugs under development.

Much of the underlying issue is supply and demand. In an increasingly globalised drugs market, the dwindling stock of protected intellectual property (IP) is being stretched ever more thinly. For obvious reasons, this represents a fascinating opportunity for lawyers to show the extent to which they can contribute substantive value to clients locked in a struggle to secure vital IP. As it happens, there appear to be similar stakes facing the lawyers working in the media and the internet, which will be next month's focus.

For more, see In depth: Pharmaceuticals