Biomedical Engineering Reference
In-Depth Information
potential demand for market share of new therapies. While questions
about the costs of drug development and access to markets preoccupy
pharmaceutical companies, factors like local politics, inequalities in
health and the dynamics of knowledge around medical conditions
can play a significant role in how drug companies gain access to
markets. The pharmaceutical example is discussed here to highlight
lessons that might be learnt for the emerging stem cell markets.
The two key parallels between the biotechnology industry and the
pharmaceutical industry are: (1) that the pharmaceutical industry is
highly research intensive and thus patents play an important role in
spurring innovation; and (2) the pharmaceutical industry is heavily
regulated by governments (Scherer, 2000). Included in this too is the
cost of conducting clinical trials and the need for clinical evidence of
safety and efficacy by regulators (Scherer, 2000). Indeed, it is difficult
to distinguish where the differences lie between the two industries in
many ways, because the core issues that structure the innovation
process are almost identical, so many commentators simply do not
make any distinction and tend to lump the pharmaceutical and
biotechnology industries together.
Given the dependence of the pharmaceutical industry on research-
intensive activities, it has been argued that public funding plays an
important role in producing private sector productivity (Cockburn
and Henderson, 2001). Indicators of this include: that public sector
spending equals private sector spending, that publicly funded
scientists have produced the most outputs in relevant fields, and
that, overall, significant improvements in human health since 1940
can be attributed to the success of the pharmaceutical industry
(Cockburn and Henderson, 2001). Importantly, 'the rate of return'
to the public for the high level of public funding has been determined
to be quite significant (Cockburn and Henderson, 2001).
A large incentive for the high levels of private investment in
pharmaceutical development that complement public investment is
the capacity to recoup costs through the patent system. A US study
conducted in the mid-1980s showed that the patent system was
responsible for up to 30 per cent of new inventions in the
pharmaceutical industry (Mansfield, 1986). Overall, this study
confirms that patenting in the pharmaceutical industry is more
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