IP and Business: A Tale of Two SMEs
Back in 1874, a Norwegian pharmacist, Morten Nyegaard, founded Nyegaard & Co. with the aim of improving health education. Along the way, he introduced some 900 products from Norway to the rest of Scandinavia and created a pharmaceutical research center to produce new drugs. Today, the privately owned company, renamed Nycomed and based in Roskilde, Denmark, employs 3,300 people (small compared to the 64,000 employed by Astra Zeneca in neighboring Sweden) and operates in 20 European markets, Russia and the CIS. Net sales in 2005 were Euros1,747.5 million (US$2,234.5 million). Its key products include drugs to combat osteoporosis and acid-related gastrointestinal diseases, drugs designed to stimulate wound healing, and an anticoagulant used in cardiology.
Unlike many of its competitors, Nycomed focuses less on creating new products, and more on marketing to expand the reach of its products, including those that it licenses in from other companies. It favors products that can be marketed in multiple countries and with a sales potential of over Euros150 million (US$192 million). Rather than trying to compete across the board with the big pharmaceutical companies, it has chosen to compete in particular markets and with carefully selected products. The strategy is working. The company’s best-selling product, CalciChew, (a combination of calcium and vitamin D3), is the top calcium product in Europe with a 40 percent market share. Pantoloc/Zurcale (for gastro-intestinal diseases), which it licenses from another company, is the number one seller in its class in Austria and number two in the Netherlands and Belgium.
Most of the company’s in-licensing partners are U.S. pharmaceutical companies, unfamiliar with Europe’s complicated markets. "Helping foreign companies bringing their novel products to Europe has proven to be a very good niche," says Aase Helles, head of the Nycomed IP team.
Marketing products successfully also means protecting the company’s associated IP rights in them. In 2003, Nycomed estimated that 46 percent of its turnover came from patent-protected products. Today that figure has risen to between 55 and 60 percent and will continue to rise as all newly introduced products are patented.
Managing IP is complicated and costly with a portfolio consisting of some 510 patents, plus some 800 or so registered trademarks which provide some protection from generic competitors once patents covering the products expire. The company budgets Euros12.3 million (US$15.7 million) per year to file, protect and exploit patents. Litigation is especially expensive. A single action in a single country costs roughly Euros1.5 million (almost US$2 million), and much more for litigation covering several countries and appeals. But Nycomed...
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