The innovation of agrochemicals: regulation and patent protection

Abstract

The focus of this paper is the dynamics of product innovation in the agrochemicals industry. Innovative activity is influenced by the interaction of three main factors - the regulatory hurdles associated with registering new products; the patenting system which defines a period of exclusivity during which an innovating company can appropriate the benefits of its new product; and the competitive structure of the agrochemicals market. The possibility of generic competition — production of off-patent active ingredients (AIs) by companies without a strong research base - is a key issue. It is in the interest of research-based companies to raise their profitability by fighting generic competition through patenting strategy (including pressing for extended patent term), regulatory strategy and marketing strategy (product differentiation). However, these strategies also have profound implications for the magnitude and orientation of innovative activity. This paper describes the results of a research project which involved a series of interviews which included R&D managers, regulatory affairs managers and intellectual property managers of research based agrochemicals companies as well as generic manufacturers, formulators, trades associations and regulators. The paper assesses the problem of maintaining the innovation of safer and environmentally superior agrochemicals against a background of generic competition and the possibility of a longer-term shift to a biotechnology paradigm.