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Introduction
This white paper focuses on the treaty on biodiversity which was written in October 2010 in Nagoya, Japan. The paper highlights how the Nagoya Protocol is expected to affect the pharmaceutical industry in the future. It also highlights the potential impact of the protocol on the procurement strategies of pharmaceutical companies from biodiversity-rich countries.
The clauses on benet sharing between parties are vague in the 1992 Convention on Biological Diversity. No legally binding clause was included in this treaty.
Demand for a legally binding protocol from developing nations and biodiverse rich nations
To eliminate biopiracy
Drug makers have to disclose the origin of genetic resources during patent applications. The benet and sharing model is applicable for all plant and animal resources that can be used in the development of drugs.
Formation of a strategic plan that strives to conserve biological diversity until the year 2020.
Creation of a protocol on the equitable sharing of the benefits that arise from the use of genetic resources.
Ensure benefit sharing when Establish a more genetic resources stable and singular are provided by focal point to aid the host country organizations in to the sourcing accessing genetic organization. resources.
2002:World Summit on Sustainable Development and practices 2000:WIPO Intergovernmental Committee on Intellectual Property and Genetic Resources,Traditional Knowledge, and Folklore 2001: Doha Declaration Commitment on sustainable practices used by multi lateral trading systems
2010: Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from Their Utilization Sharing of Benefits Arising from Their Utilization
1994:TRIPS Agreement harmonized national systems with regard to intellectual property rights. Time
Type of Benefit
Monetary Benefits: Monetary benefits are a percentage of the revenue earned from the sales of a final product derived from the genetic resource collected by the user from the provider. These benefits also include the lump sum amount initially paid to gain access to the material.
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Non-monetary Benefits: Non-monetary benefits include benefits arising from the process of research and development, such as capacity building and technology transfer through infrastructure, expertise and know-how building, and training through joint research. Process benefits that arise from the sustainable use of genetic resources also fall under non-monetary benefits.
High biodiversity
Medium biodiversity
Low biodiversity
The following biodiversity-rich countries are likely to gain the most from the Nagoya Protocol. Latin America Brazil Colombia Ecuador Mexico Peru Venezuela Asia Philippines Indonesia Malaysia India China Africa Madagascar Democratic Republic of Congo South Africa Australia & Oceania Australia Papua New Guinea
In 2010, just over 100 natural product based molecules were in clinical trials, a 30% drop compared to 2000 levels. Approximately 80% of pharmaceutical drugs were derived from natural product origins in 1990; by 2005, however, this figure fell to around 50%. In 2010, the natural products mix in the pharmaceutical industry was estimated to be 40%. Currently, 62% of cancer drugs approved by the US Food and Drug Administration come from, or are modelled based on, natural products. For example, Taxol is used to treat breast and ovarian cancer.
Pharmaceutical Drugs Natural Products vs. Synthetic Products
40%
80%
Before 1990s
2002-2005
2010
1% 14% Natural Derived from a Natural Source Biological 50% 26% Synthetic Others 9% 54%
4%
5% Natural 23% Derived from a Natural Source Biological Synthetic 14% Others
17%
Cancer Anti-infective
11%
3% Plants
8%
11% 48%
9%
27%
In 2010, more than 40% of all the new chemical entities Implementation Issues: were obtained from natural sources. Plants are the major Presently, there are no coherent biodiversity indicators source for drugs of natural origin in the clinical phase. that can be used to measure the corporate impact on Nearly 48% of drugs in the clinical phase are derived biodiversity. from plants. It is difficult to measure the performance of small- to Drugs currently in the pipeline that are derived from mid-sized companies with regard to ecosystems usage. natural sources are mostly cancer and anti-infective The corporate sector has not yet embarked on the medicines. These two therapeutic areas account for 56% large scale incorporation of sustainable biodiversity of all drugs of natural origin in clinical trials. practices.
The Nagoya Protocol, especially the Access and Benefit Sharing clause, calls for systems to be put in place. These systems are expected to drive the costs incurred by pharmaceutical companies during the drug discovery phase. The Nagoya Protocol could have an adverse impact on the pharmaceutical industry. Many companies feel that the Access and Benefit Sharing clause will increase product development costs and complicate the drug discovery phase. According to the protocol, organizations will have to pay a significant amount of their revenue and royalties to indigenous communities and host countries for the drug they develop from genetic resources. The revised patent system will also add to the cost of drug development. Due to the rules and regulations laid down by the Nagoya Protocol, organizations would have to execute joint patents with the communities from whom they source resources. For multiple ownership cases, the patenting policy is even more obscure.
BENEFIT SHARING The user of the genetic resource has to abide by the MAT and conditions. The user party has to establish and maintain appropriate communication with all stakeholders at different levels. All communities and indigenous people have to be involved in the research. The user must provide all appropriate information and document it according to PIC/MAT and conditions. It must also ensure compliance with PIC/MAT and other expectations, including benefit sharing. The user must ensure timely provision of benefits according to the schedule outlined in the PIC/MAT contract. Compliance with ABS standards is necessary for many companies to secure finance, certify products, and access markets, as well as to be recognized for ethical and sustainable practices. The user must verify with stakeholders that obligations and expectations are met. A breach of regulations can lead to fines or the loss of future concessionary rights.
Parties Tropical Botanic Garden and Research Institute (TRGRI) and the Kani tribe in India
Impact
A mutual agreement was made between the two parties The model failed due to: for the cultivation of Trichopus zeylanicus, which Unrelenting bureaucracy contains anti-fatigue and energetic properties. Policy vacuum ABS Specifications: Lack of appropriate legal 2% license fee to be paid to TBGRI by the phyto obligations between the medical company. parties. Benefits to be equally distributed between the Kani tribe and TBGRI. The remainder of the license fee will be put into the Kani tribes trust fund (Kerala Kani Samudaya Kshema Trust). The parties agreed to conduct research on Hoodia gordonii, traditionally used by the San tribe as an antiappetizer. ABS Specifications: The San tribe will receive 8% of all milestone payments CSIR receives from Phytopharma. CSIR will receive 6% of all royalties once the drug is commercially developed by Phytopharma. The San trust will receive USD 75,000 as an initial benefit-sharing payment.
1996 to 2008
The arrangement failed because: The drugs side effects were dangerous. Unilever lost more than 20 million in four years doing research on Hoodia. There was a huge rise in drug prices due to the hype created for the development of the drug. This arrangement was successful because: KWS acted as the national focal point for Kenya. By going through KWS, Novozymes successfully conducted the agreement. Prior informed consent was obtained from KWS, which represented the Kenyan government. The microbial discoveries were done by KWS researchers trained by Novozymes employees.
The Kenya Wildlife Service (KWS), The International Centre for Insect Physiology and Ecology (ICIPE), and Novozymes and Diversa (Verenium) Corporation
2007
This deal was made for a period of five years for the cultivation of the enzyme Pulpzyme, which is developed by the microorganisms protected by KWS. ABS Specifications: Royalties will be paid to KWS. The royalties paid will be in the range of 0.5-10%. Novozymes will transfer technology and provide training to Kenyan students throughout the agreement period. All intellectual property rights and patents are to be co-owned by both parties. Benefits will be equally shared by ICIPE and KWS.
Conclusion
Time Period
Royalties
Another major challenge pharmaceutical companies will face in the future is patent rights. Companies are likely to The effect of the Nagoya Protocol will take 2-4 years to be incur costs with regard to royalties as companies might felt as the protocol cannot be implemented retroactively. have to pay 2-10% to the community that possess the Increase in Costs during the Drug Development genetic material. Stage Types of ABS The costs incurred by drug companies, especially during Companies prefer to provide technology transfer and the drug development phase, will increase due to the advanced training rather than monetary benefits when Access and Benefit Sharing clause. adopting ABS. Corruption The implementation of ABS in countries like India, Indonesia, and Brazil might lead to difficulties in procuring biological material for R&D operations as corruption and red-tapism are already major concerns in these nations. Biodiversity Indicators & Bioprospecting As companies implement biodiversity indicators, which would limit the use of biodiversity, organizations will have to restrict their supply chain and production processes to adhere to the protocol. The Nagoya Protocol could facilitate bioprospecting as the governments that own the resource can provide companies with clear guidelines for bioprospecting.
More complications to patent the nal drug due to multiple players and numerous stages.
Increase in production costs due to excess costs incurred during the procurement of resources.
R&D
Increase in the cost of sourcing genetic resources
Patenting
Sharing the royalties of patents for the nal drug would increase costs.
Production
Lack of uniformity among various countries over ABS arrangements.
Source: RiS.org, Food and Agricultural Organization of the United Nations, business-biodiversity.eu, Union for Ethical Bio Trade, cbd.int
Author: Kurian Kurien | Senior Research Analyst Aloke Das | Research Analyst
Disclaimer: Strictly no photocopying or redistribution is allowed without prior written consent from Beroe Inc. The information contained in this publication was derived from carefully selected sources. Any opinions expressed reflect the current judgment of the author and are subject to change without notice. Beroe Inc accepts no responsibility for any liability arising from use of this document or its contents.
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