Pharmaceutical patent expropriation and technology strategy: strategic options to compulsory licensing

Developing country governments in Sub-Saharan Africa, South America and Southeast Asia, have legislated the controversial business practices of compulsory licensing and parallel importing of HIV/AIDS drug therapies - allowing for the domestic manufacture or foreign importing of HIV/AIDS generic drug therapies without the consent of the patent holding pharmaceutical industry companies. This article provides a descriptive overview of the economic structure of the global pharmaceutical industry and reviews exceptions (compulsory licensing/parallel importing) to the World Trade Organization's Trade-Related Aspects of Intellectual Property RightsAgreement on intellectual property rights protection. The article also explains the generic technology strategy of the global pharmaceutical industry, with special emphasis placed on the proprietary sector of the pharmaceutical industry. The author offers an analysis of alternative strategic options, including (1) foregoing patenting in developing countries; (2) companies negotiating prices with governments of developing countries; and (3) establishing out-licensing agreements, to be considered in lieu of government-mandated patent expropriation.