Healthcare industry encompasses different significant segments that all simultaneously protect and enhance the lives of people around the world. Along with the rapid development of biotechnologies and its future perspective, healthcare industry, including pharmaceuticals, will be the spheres of core importance for maintaining the well-being of humans. Pharmaceutical industry alone is responsible for providing the essential medicines and, moreover, development of new solutions and drugs for treatment rare diseases and enhance activity of existing medicines. One of the central problems that stands close to the development of pharmaceutical industry is protection of inventions related thereof, and here the theme of intellectual property protection arises.

IP regulation embraces the global importance since it covers the changing environment of technology development and access to knowledge resources. The multi-sided nature of IP in pharmaceuticals evolves over the main view that IP protection favors mostly the interests of companies by the expense of society in terms of easy access to important technologies. For the sphere of pharmaceuticals the issue of IP protection and technologies is exacerbated since the availability of correlated technologies affects people's well-being (Roemer-Mahler, 2013). Debates over nature, importance and influence of IPR on economic growth, performance and innovation seem to evolve around over and over again, especially with concern to sparkling innovation. Types and characteristics of IPR in a particular industry shall be a good indicator for assessment and determination of technological specialization of a country, along with the economic preferences, policy issues, performance of SMEs, etc. (Gould& Gruben, 1996).

Intellectual property rights may be defined in various ways ending on the area of discussion, but the general understanding embodies the presentation of all possible creations of humans (intellectual products). Speaking more in legal terms, IPRs “refers to those legal rules, norms and regulations that prevent the unauthorized use of intellectual products” (Merrill&Elliott, 2004). Each country is supposed to have legislation covering IPRs, but for many countries the terms and norms have been harmonized to balance and improve international cooperation. World Trade Organization, which Russian Federation joined, has an agreement with World Intellectual Property Organization in order to facilitate the exercising of TRIPS agreement and enhance technical cooperation (TRIPS official data, 2016).

Thus, IPRs primarily embed industrial products and artistic products, first of which consist patents, trademarks, industrial designs and geographical indications of source, and the second copyright and related rights (Saha&Bhattacharya, 2011).

Additionally, if IPR is legally recognized, an owner obtains the exclusive rights to implement and use the protected for the granting time: patent grants 20 years in general and always more (for the life) for copyrights (WIPO web-source). Several authors devoted their works to associating IP and its role for economic and scientific development on different levels: Bollen et al. (2005) consider IP as a mediator with direct and indirect impact on the business performance of the organization. Park and Lippoldt (2008) show that intellectual property rights can stimulate local innovation via technology. Cuhna (2010) finds that manipulations with intellectual property rights in developing countries positively effects exports of these countries. Also, in scope of interaction of states strengthening intellectual property rights can spur and maintain international trade. What is more, Nour (2013) argues that IPRs stimulates further appearance and development of technologies. Lorenz and Veer (2012) show that “Intellectual property rights play an essential role in protecting and leveraging intellectual assets and to foster open innovation and partnerships”.

Challenges and importance of intellectual property especially have become a vital subject for research in spheres that precisely involve life-essential activities for enhancing human welfare, like biopharmaceutical industry, that must be provided with effective policies and instruments of governance (Spruson&Ferguson, 2008). Therefore, the questions of IPR, specifically, protection of intellectual property, have developed into highly essential discussions for all participants on the market of life-vital products: for government with regard to problems of regulations and balancing the rights of inventors and citizens, for companies that are interested in economic profits and expansion of businesses, for researchers and doctors that are eager to create significantly important inventions.

All in all, the investigation of means of protection of IPR in pharmaceutical industry in a particular country acquires significant meaning for the general comprehension of a technological development. The topic of the current Master Thesis is Strategies for IPR protection in Russian pharmaceutical industry: evidence from the analysis of patent information. The motivation and importance of the theme firstly could be explained by the raised attention to processes undergoing pharmaceutical industry, and particularly in terms of Russian Federation, since a lot of government incentives and programs regarding the technological development and advancing of Russian pharmaceutical industry have come into force from the mid-2000th. By the exploration and analysis of major means of protection of results of intellectual activity in Russian pharmaceutical industry it might be possible to refer the statements and goals in the government orders with the current situation regarding national inventions and products in Russia. The reasons for the chosen topic, the main research question and aim of this paper are outlined further in next sections.

One part of this Research is to compare the goals and expected results of the governmental Program Pharma 2020, and the reality of inventive potential of the Russian firms, what might be seen via analysis mainly of patented inventions and trademarks, as the most common means of protection in pharmacy (Saha&Bhattacharya, 2011). Through the evaluation of government goals of Programs on technological development the real capacities of firms can be detected and their strategies (or its absence) of IP protection. Firstly, this paper could empirically show if there is a capacity of our firm to become independent (to compete on the one level with foreign companies) on the pharmaceutical market, what is definitely important also in terms of economic development.

“The development of a drug is an enormously expensive process because of the high attrition rate of potential products as they proceed through laboratory, animal, and various human trials, as well as the high costs of trials needed for regulatory approval” (Barton& Ezekiel, 2005). The presence of patents justifies high prices on drugs, and after the expiration of exclusivity rights and competition with generic drugs the market price tends to decrease (US Office of Technology Assessment. Pharmaceutical R&D: Costs, Risks, and Rewards, 1993).

The strategy of firms regarding this situation could also be in maintaining additional prices on the drugs even without patent protection, via labeling generic drugs with brand names. Therefore, this is another path of protection strategy - to be commercially viable on the market registering trademarks on generics (Barton& Ezekiel, 2005).

The significance of research on pharmaceutical industry primarily is hidden in its worldwide importance of resolving people's healthcare problems. From the beginning of 1920s scientists have elaborated on numerous of essential medicines that became an effective source of treatment severe diseases and various types of infections, what saved lives to millions of people. Now scientists have been developing essential medicines for treatment the very important diseases like cancer, diabetes and HIV/AIDS (For a malaria free-world, 2016). Undoubtedly, it is important that inventions in pharmaceutical industry could be developed and enhanced further, what grounds on the effective and strong IP protection of IP.

Specific challenges that may become obstacles for the steady growth of the effectiveness of pharmacy is incurred in its science and business units. From the one hand, new substances occur less in the world, while firms tend to produce drugs that are socially acceptable and most widespread to bring up profits, while the industry lacks development and claims for new innovations (Barton&Ezekiel, 2005).

In particular, the critical sides of pharmaceutical industry reveal in some of its major problems: (1) reimbursement of research costs by patent monopoly that lead to reduction of drugs availability; (2) research priorities recently have shifted from the health necessities to market demand; (3) financial and human resources are unbalanced in research and marketing units; (4) the common underinvestment problems that is centered around shortage in drug and development inputs comparing to profits being made and (Barton&Ezekiel, 2005).

One of the global challenges that authors of pharmacological articles often address to is expensive and complicated process of drug development, firstly due to the “high attrition rate of potential products” (Barton&Ezekiel, 2005): many of initially developed molecules are abandoned after the processes of pre- and clinical trials, then following state registration process, etc. For the pharmaceutical market of the USA, for instance, “only 21% of drugs that begin human testing are finally approved” (Barton&Ezekiel, 2005). Figure 1 below demonstrates the situation of drug development processes.

Figure 1. Process of new drug development

Source: The pharmaceutical Industry and Global Health: IFPMA. Facts and Figures 2014.

The image above reflects that it takes almost 15 years to launch new approved pharmaceutical products on the Market.

The next important initiative for the chosen topic of this research is inefficiency and lack of information regarding the strategies of IPR in pharmaceutical industry, and in development of Russian pharmaceutical market in particular. No deep research was made regarding the patented inventions and trademarks of Russian domestic companies, as well as no extensive work is devoted directly to the IPR protection strategies or mentions the importance of this topic for future pharmaceutical development.

In next paragraphs it is important to overview major challenges that embedded in Russian pharmaceutical industry. Lots of problems are closely interrelated, for example access to vital drugs and competition between companies over the same generic products.

According to several reports on the Russian pharmaceutical industry, participation countries and medicines presented many discussions are devoted to the overwhelming presence of generic medicines and imported drugs (DSM Analytical report, 2014). Original medicines - products that are presented to the Market for the first time, that are protected by patents and other means of protection, while Generic products - products that are produced after the expiration of the exclusive right of the owner, and generic products have gained huge popularity due to the easiness of production (in patent application the information should be thoroughly disclosed, and there is no expenses on the research and development) (Similarities and Differences Between Brand Name and Generic Drugs, 2015).

Also there is such definition as branded generics - drugs that are registered under the certain tradename by a company, usually trademarks are used as second means of protection after patent protection. However, sometimes trademarks are registered even without patent protection. The price for branded generics often lower than for original medicine, but at the same time is higher than for INN products. International Nonproprietary Names mean pharmaceutical substances or active ingredients that are officially recognized and universally unified (Medicines vocabulary, 2016). Further in this research the relation of patented inventions, tradenames and generics are analyzed in order to identify firms' IP strategies.

Rationale for the research, main objectives

One of the challenges for this Research could be reflected by statement from OECD source: “in the Russian Federation there is no accurate data on quantity and a share of original medicines in a total amount of registered medicines as the Rules on keeping the state register of medicines approved by the Resolution of the Government of the Russian Federation doesn't specify the sign of "originality" for medicines”. Therefore, the analysis of patent information will be based almost solely on the new practical experience.

The most other common obstacles that Russian pharmaceutical market faces are: production of former drugs (that usually lost their benefits and effectiveness), and presence counterfeit products (DSM Analytical report, 2014). What is more, manufacturing and sales of pharmaceutical products in Russia is characterized by the high level of governmental supervision, what characterized by occurrence of several obstacles regarding drug registration process or intellectual property protection (Deloitte report, 2014). Figure 2 shows which areas of state regulation, as some responding pharmaceutical companies in Russia think, need state regulatory improvements.

The rationale for patent analysis, used as a key method for purposes of current paper, could be approved by importance of statistical patent indicators measurement. To emphasize, patent information illustrates direct and sometimes obvious R&D outputs (Macdonald, 2004). Patent analysis is useful in determination of the level, quality and quantity of inventiveness in different spheres (Sha et. al., 2013). Proper investigation of patent information by stating clear goals and executing consecutive steps is a key method to draw the level of development of a particular technological sphere. The importance of patent analysis especially is highlighted in such intensive knowledge-consuming industry as pharmaceutical industry (Grabowski, 2015). WIPO Guidance on using patent information also suggests that application of patent data could bring beneficial ideas for business planning, as partnerships, M&A, licensing and so on, and at the same time provides with an important information for policy planning in significant technological domains that relate to healthcare, using the data on main trends and determinants of a particular industry (Informational bulletin of WIPO, n.d.).

Patent analysis is also implemented as a “competitive technology intelligence” (Rodriguez&Paredes, 2015) for detecting potential spheres and directions of innovation development, but in scope of this paper the patent analysis is aimed at determination of intellectual property protection strategies of Russian pharmaceutical firms, by providing some evidence of their level of R&D and innovativeness.

Study Importance and Scope

Current study familiarizes with empirical information (statistical data) on quantitative and qualitative characteristics of IP of several national pharmaceutical firms. By patent information analysis some connections will be made in order to identify some presence of IPR strategies of the mentioned firms. However, it could be a risk to some extent, as data on IP strategies and economic relevance of IP are reasonable to be collected by conducting surveys of top management and law companies' representatives (Grimaldi et al., 2015). The current research is conducted by the evaluation of direct R&D indicators in order to establish possible IP strategies and reveal what is the level of technological capacities of national pharmaceutical industry To investigate on this topic is especially important since the main objective of the Pharma2020 is import substitution and increasing of domestic manufacturing of innovative medicines. What is more, national safety is based on the country's availability to provide for domestic pharmaceutical drugs (from production to sales).

The significance of proposed research is also explained by the underdevelopment of studies about Russian pharmaceutical market in terms of innovation and strategy of product protection (OECD library). IPR in pharmaceuticals is characterized by lack in analytical data on inventions and its protection made by our domestic firms.

Thus, the main Research Question that is under investigation in this Master Thesis is evaluation of patent portfolios of Russian pharmaceutical companies in order to identify strategies for IPR protection. Key objective that supposed to be uncovered is whether there are what inventive capacities of Russian Pharmaceutical companies in terms of development of valuable domestic pharmaceutical medicines. To elaborate, the objective of the study is also determining main methods of composing pharmaceutical portfolios, stating the next Hypothesis:

H1: Patents and trademarks are used for the strategic objectives of a firm in terms of competition and cooperation.

The answer for the question is approached by analysis of patents and trademarks of chosen companies, their number and interrelation, comparing to international firms on Russian market.

For the purposes of current paper under patent information we identify patented inventions and registered trademarks as direct outputs of IP activity.

The structure of the work is presented as follows: firstly, the detailed overview of the Research question and methodology are covered, then the literature review of the previous works and investigations on the similar topic of IP rights and IPR protection in pharmaceutical industry discussed, after that the Practical part begins with Findings on information about Russian pharmaceutical market and its main representatives, with explanation of the share of patents and trademarks of chosen companies. However, the main part is presented as Case studies of 10 Russian firms and analysis of their patent information. The thesis finalizes with discussion of significance of domestic developments and inventions in pharmaceutical industry and conclusion of the results of practical findings, with shortcomings of the study and proposals for further research.

Next paragraph discloses the details and constituents of Research Question and enlightens key motivation and significance of the topic thereof.