Life Sciences; How The Ever-Changing Legal Landscape Could Effect You

The Growing Biotech Space

In recent decades, technical advances have made our biotechnology industry a major field with impacts on all aspects of life. With a deeper understanding of human genetics from industry advancements and technical improvements, in 2024 the sector continues to produce life-saving drugs and treatments for patients all around the world. In fact, according to research, the Global Precision Medicine Market was estimated at USD 78.58 Billion in 2021 and is forecasted to reach around USD 189.64 Billion by 2030. More specifically, according to BioSpace, the global Cell and Gene Therapy Manufacturing Market was estimated at USD 9.95 billion in 2023, and it is anticipated to reach around USD 106.03 billion within the next 10 years with a growth rate of 26.7%.

Increasing purchasing power in global developing economies, ageing populations and increased interest surrounding health have left the life science sector growing at a steady rate.  The past few years has witnessed an overall increase in the number of life sciences business operating globally, and therefore the growing sector has also brought along many developments in the patent legal space.

The Reoccurring Issues and the Challenges Facing the Industry

Despite the significant growth of new companies and evolving products across the market, there seems to be reoccurring issues around legalities and securing patents for businesses of all sizes throughout the sector. Especially for the growing biotech industry which thrives on innovation, creativity, and newly discovered treatments and solutions, life science patents are pivotal in providing legal protection; restricting others from making, using, selling, or importing patented interventions.

Whilst any invention can be eligible for a patent, the patentability of biological materials can be a source of controversy due to the challenge of demonstrating whether the product is new rather than merely a natural one. Additionally, some businesses struggle to prove inventions are completely fresh and have never been discovered before.

Ethical issues have also become apparent within the industry. The issue of ownership and control over genetic material has become a prominent ethical consideration in terms of biotech patenting. The reasoning being genetic material and resources can install barriers to further research and impede the sharing of knowledge and advancements in the field.

More seriously, the impact of patents on access to general healthcare has also become a prominent ethical concern. With patents granting exclusivity to life science companies enabling them to set high prices against other more accessible treatments, securing such control over inventions has become highly competitive. However, at the same time, this has provided life science companies with eligible patents more control over the market; therefore, striking another barrier in access to treatments, particularly in developing companies or for those without sufficient financial resources. Balancing the need for innovation with affordable access to medications is becoming a reoccurring issue for the life science industry.

The legal aspect of such product protection has also been seen to bring along its own challenges. Globally, legal challenges in the biotech industry can often extent to litigation, infringement disputes and challenges to patent validity. Furthermore, other legal issues are not uncommon for companies of all sizes. As the sector continues to evolve, the judiciary plays an increasingly significant role in shaping the future of biotech laws.

The Value of Patent Protection

For businesses within the life science space, patents not only enhance company value, but also allow competing companies to learn from one another’s exclusive discoveries. Moreover, for lots of businesses, patented goods provide great incentives for innovation which encourages life science companies to invest heavily in research and development. For the biotech industry, this is especially important as all new drugs, therapies, and treatments rely on thorough R&D.

It is also worth highlighting the pressing value of patents for start-up businesses along with other small and medium-sized enterprises. Nowadays, patents can help smaller businesses grow at a faster rate and increase their overall market share as they offer businesses freedom to operate without theft of innovations from larger and more dominant rivals.

Battle Between NanoString and 10x Genomics

In 2023, a large case arose in the US involving a battle between two American Biotechnology companies regarding infringement concerns. 10x Genomics; a leader in single cell and spatial biology, accused NanoString of patent infringement against the GeoMx products sold by NanoString Technologies. In awarding $31 million in damages, the jury found that NanoString’s GeoMx Digital Spatial Profiler and associated instruments, reagents and services for RNA and protein detection infringe all seven asserted patents licensed to 10x Genomics.

Towards the end of 2023, Chief Legal Officer at 10x Genomics, Eric Whitaker said:

“In the last six months, three separate courts have found that NanoString’s CosMx and GeoMx products infringe nine separate 10x patents. We are thankful for the jury’s careful attention to the extensive evidence presented in this case and their diligence in recognizing 10x’s decade-long investment in innovation.”

After losing a patent infringement lawsuit last year that ended with an order to pay out $31 million in damages, it was announced in February 2024 that NanoString had filed for Chapter 11 bankruptcy.

Discuss non-compete laws In the US

Talks of Non-Compete Bans are also arising. The U.S Federal Trade Commission’s establishing non-compete agreements as an unfair competitive practice is scheduled to take effect on August 21. This ruling affects most employees, including knowledge workers in the life science and biopharma industries.

Essentially, the agreements see contracts between employers and employees that prohibits the employee from competing with the business directly or indirectly.

In the United States, the legal status of non-compete agreements is a matter of state jurisdiction. States vary widely in their enforcement and recognition of non-compete agreements, and many state legislatures have updated legislation related to non-compete agreements.

 On May 7^th 2024, the Federal Trade Commission announced the ban of all non-compete agreements, and the trend is forecasted to persist. Without such agreements, there will be increased competition, however startups may find it easier to bring in specialized talent from more dominating firms who were previously restricted by non-compete laws. Moreover, the ban should provide industry experts with freedom and enable them to utilise their specialised knowledge to further better themselves and the science around them. Despite this being a positive for individuals within the sector, larger companies may struggle in retaining talented employees.

On the other hand, for the biotech industry which thrives on innovation and exchanging ideas, the ban of non-compete laws could encourage further innovation and collaboration between groups of biotechnology companies.

Illumina Vs Grail

Illumina; a global genomics company which develops, manufacturers and commercialises next generation sequencing.

Grail; a global genomics company developing blood-based cancer tests based on genomic sequencing and data science.

In 2020, Illumina announced that it had reached an agreement with grail for an acquisition worth $7.1billion. Illumina completed the deal just under a year later, bringing Grail back under its ownership, yet only three years after the initial agreement, Illumina was forced to act and divest the business.

In 2022, the Commission prohibited the acquisition of GRAIL by Illumina over concerns that it would have stifled innovation and reduced choice in the emerging market for blood-based early cancer detection tests.

In light of the divestment plan, conditions were set out imposing restorative measures on both companies. Specifically, Grail’s independence from Illumina would be restored to the same level enjoyed by Grail before the acquisition and ensures that Grail will be able to operate as a competitive business like it was before the acquisition.

A Change in Approach for the Future of Biotechnology Companies in the US

It is certainly worth highlighting the negative implications of non-compete laws on large companies within the life science space. Surprisingly, the FTC announcement has left dominating biotech companies with a rather weak legal basis. Instead, the implications proposed by FTC are in general favour of the everyday person. The new laws in the US may disrupt the market and see larger companies lose their competitive advantage with the free movement of employees. Additionally, the most talented experts may not be glued to the biggest rival firms.