On October 26, the second page of People’s Daily published a report titled “Intellectual Property Is the Confidence for Sustained R&D Investment,” presenting a macro dataline: In the first three quarters, China’s investment in intellectual property products grew by 9.3% year-on-year, accounting for 2.4 percentage points of total investment compared to the same period last year.

Against the backdrop of overall investment pressure, this growth rate points to a more concrete judgment: intellectual property is being repriced from corporate legal costs to core assets. Biomedicine is the most typical example of observing this change. This industry has long R&D cycles and high capital consumption. Whether intellectual property investment can match the pace of clinical development directly determines whether R&D investment can be converted into commercial returns.

This report uses Chengdu Haichuang Pharmaceutical as a sample to present the complete structure of intellectual property investment in a biopharmaceutical company.

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1. Haichuang Pharmaceutical’s ledger: Where the money is spent, and what has it been exchanged for

Haichuang Pharmaceutical has applied for over 300 patent cooperation treaties and Chinese invention patents, with more than 130 granted. Supporting this figure are three ongoing annual expenses: patent database usage fees, patent application fees, and rights maintenance fees.

These three sums of money have completely different natures and corresponding commercial significance.

(1) Database usage fees are considered “information costs.”

Grasping global patent trends before project initiation and during R&D is the starting point for IP work. If you don’t know what others have done, every action you take could be infringement. Many companies place FTO searches only after pipeline advancement to clinical stages, only to find that core patents are occupied by others, leading to either paying high licensing fees or overturning and redoing them. Haichuang Pharmaceutical’s earlier positioning means that intellectual property information has entered the project screening stage rather than remediation afterward.

(2) Patent application fees are “confirmation costs.”

Turning technical solutions into legal rights, turning discoveries in a lab into legally recognized assets. A patent application is not simply about filling out forms; the way claims are drafted directly determines the scope of protection. If the writing is too broad, it is easy for reviewers to reject it for “lack of documentation support”; If it’s narrow, competitors can change a few amino acids or adjust a parameter to avoid it. Haichuang Pharmaceutical’s conversion rate of over 300 applications and more than 130 authorizations is the result of the intellectual property team’s ongoing investment in writing quality and review response.

(3) The rights maintenance fee is the “holding cost.”

Annual contributions are made to maintain patent validity. This amount may seem small, but it’s the easiest budget item to be cut. Many companies are willing to spend the first two payments but hesitate about maintenance fees, resulting in core patents becoming invalid due to arrears, and all initial rights confirmation investments are wiped out. Haichuang Pharmaceutical’s choice is to invest sustainedly. General Manager Chen Yuanwei’s judgment is straightforward: “Intellectual property is the confidence to continue investing in R&D. ”

But more important than “how much money was spent” is: what did this money get in?

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2. Patent extension does not bring legal protection, but rather space for clinical decision-making

The patent for the innovative drug compound launched by Haichuang Pharmaceutical last year is valid until 2032, and according to relevant regulations, it can be extended for up to five years. Chief Medical Officer Lee Sik Ming called this delay the “anchor of the sea.”

This metaphor needs to be broken down. Legally, patent extension only extends the term of exclusivity, but in business decision-making, it addresses a more practical issue: do companies dare to allocate clinical resources to earlier indications?

Pushing a tumor drug from late-stage to frontline, from single therapy to combination therapy requires years and hundreds of millions of yuan in investment. If a core patent expires midway through development, subsequent expansion of indications loses the guarantee of commercial returns—you spend three years and hundreds of millions of yuan pushing the indication to the forefront, but the patent only has two years left, the input-output ratio can’t be calculated, and the project has no choice but to be abandoned.

HaiChuang Pharmaceutical’s clinical strategy adjustment—expanding from advanced patients to high-risk biochemical relapse patients—was able to advance on the premise that the patent protection period covered the entire development pathway. Patent extensions offer not additional legal protection, but rather a space to match the pace of clinical development with the commercial return cycle. Without this space, companies can only choose short, fast development paths, abandoning indications with longer cycles but potentially higher clinical value.

From a broader perspective, this is also why the drug patent term compensation system is so important for innovative drug companies. It compensates not for the time delayed by patent offices during examination, but for the patent protection period consumed during clinical trials and approvals. For an innovative drug with a clinical development cycle of eight to ten years, without this compensation, the actual market exclusivity period may be just over ten years, and subsequent indication development lacks commercial logic support.

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3. Intellectual Property Team—From backend support to R&D milestones

Matching the ongoing funding investment is the actual involvement of the IP team in the R&D process. Haichuang Pharmaceutical employs patent agents and intellectual property legal staff, deeply embedded in the R&D pipeline. This embedding is not just a nominal act, but falls into three specific actions, each corresponding to a key node in the R&D process.

First milestone: Before launching a new project, conduct a Full Freedom to Implement (FTO) patent search. Screening existing global patents to avoid infringement risks. The significance of this step is that IP assessment has entered the project screening stage. A technical solution is scientifically feasible, but if there is already a dense global patent layout and avoidance costs are too high, the project should be rejected or adjusted at the initiation stage. Placing the FTO before project approval means the IP team has the substantive right to participate with a “one-vote veto,” rather than cooperating with forms afterward.

The second step: Before releasing new drug clinical data, evaluate public content to prevent key technology leaks. Publishing clinical data is a necessary part of academic dissemination, but public disclosure undermines the novelty of technical solutions and leads to subsequent patent applications being rejected. The IP team needs to step in at this point to determine which data must be disclosed to support publication and which details need to be preserved to maintain patent novelty. This is a task that requires both legal judgment and scientific understanding, and it directly reflects the deep involvement of the IP team in R&D.

Third node: Regularly monitor competitor patent trends and promptly raise oppositions to maintain patent stability. Patent authorization does not mean peace of mind. Competitors may invalidate core patents, or they may form a surrounding encirclement around your patent layout. Regular monitoring and proactive opposition are key moves for patent portfolios to shift from “static assets” to “dynamic defense systems.”

These three actions share one thing in common: they all occur at critical R&D nodes, not remedial after the fact. This means the IP team doesn’t wait until R&D is completed to write patents, but instead gets involved early in project initiation, data disclosure, and competitor monitoring. The number of patents only shows how much money a company spends, but at what point the IP team intervenes determines whether the money is spent where it matters most.

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4. Vigilance: Investment is growing, but conversion remains a weak link

In the expert commentary issued on the same page by People’s Daily, Shao Zhenhua from West China Hospital of Sichuan University pointed out: The number of patents in the pharmaceutical field is growing rapidly, but high-quality commercialization remains a shortcoming. Some projects have issues such as late patent layout, insufficient system of claim protection, and disconnection from product development; Investment in the capital market is highly differentiated, with widespread neglect of the long-term sustained investment required for key intermediate links such as clinical validation, compliant registration, and pilot industrialization.

This statement highlights the structural issues behind the 9.3% growth rate. Investment is growing, but where and whether it is effective is more important than the growth rate itself.

(1) Late patent layout means companies only begin considering intellectual property protection after R&D reaches a certain stage. At this point, the technical solution may have already been publicly published or disclosed at academic conferences, and the novelty has been lost. More commonly, competitors have already filed patent applications for similar schemes before you, and your subsequent applications can only be rejected or granted within a very narrow scope.

(2) Insufficient system of claim protection, meaning the nodes covered by the patent portfolio are incomplete. A single compound patent can protect the molecule itself, but if there are no supporting patents for crystal form, process, formulation, or indication, once the compound patent expires, generic drug companies can enter the market rapidly. A complete patent pool should be a multi-layer relay structure, with each layer covering a node competitors must go through.

(3) Disconnection from product development means IP work is not embedded in the R&D process. The IP team only writes applications after the technical solution is finalized, does not participate in project approval decisions, does not interfere in data disclosure schedules, and does not monitor competitor product trends. Such intellectual property investments, no matter how large, are merely “paper assets” and cannot become real bargaining chips in BD negotiations and financing valuations.

Shao Zhenhua suggests that intellectual property investment should focus more on early, small, long-term, and hard technology, so that pharmaceutical intellectual property grows from a “paper asset” into a productive force. The implicit premise of this suggestion is that a considerable portion of intellectual property investment has not yet completed the transformation from “paper” to “productivity.” Rapid investment growth does not necessarily mean high conversion efficiency. Treating the number of patent certificates as a KPI for IP work, without questioning whether these patents cover key nodes in the core pipeline, withstand ineffective challenges, or can be utilized in commercialization, results in greater investment and greater waste.

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5. Evaluating the Effectiveness Standards of “Intellectual Property Investment” from Haichuang Pharmaceutical

The case of Haichuang Pharmaceutical provides a framework for judgment that can be referenced. Whether its intellectual property input is effective does not depend on the number of over 300 applications themselves, but on three more specific criteria.

First, whether the patent covers key nodes in the core pipeline. Haichuang Pharmaceutical’s patent extension is called the “anchor” because it directly supports the decision to expand clinical indications. If the patent layout is disconnected from the clinical development path, no matter how many patents there are, they cannot answer the question of “dare to push forward?”

Second, whether the IP team has substantial participation rights at key R&D nodes. FTO search before project approval, data evaluation before publication, and competitor monitoring during daily R&D—these three actions determine whether the IP team is a participant in the R&D process or an observer. Patents written by bystanders often only protect the “form” of the technical solution, without safeguarding the “core” of commercial value.

Third, whether the patent portfolio can withstand invalid challenges and design avoidance. Authorization does not equal stability. A patent granted during examination may be completely invalidated during the invalidation process; A patent with broad claims may be limited by the court in infringement litigation on the grounds of “unclear scope of protection.” The effectiveness of IP investment must ultimately be tested in invalidity procedures and infringement litigation.

These three criteria illustrate the issue even more than the 9.3% investment growth rate. Investment is growing, indicating that the company is spending money; But whether the money is worth it depends on whether each patent is placed where it belongs—protecting key nodes in the core pipeline, covering necessary steps in commercialization, and being used as leverage in BD negotiations and financing valuations.

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6. Conclusion

From “intellectual property” to “assets,” People’s Daily concludes with “Patient Investment, Waiting for the Blossoms to Bloom.” But the prerequisite for flowers to bloom is that the seeds are planted in the right place. For biopharmaceutical companies advancing pipelines, a 9.3% investment growth rate indicates the industry is spending money. But the real question to answer may not be “whether to invest in intellectual property,” but whether every investment in intellectual property is placed at critical points that can influence R&D decisions and commercial returns. The number of patent certificates can be counted, and the IP team’s budget can be budgeted, but whether patents can withstand individual scrutiny during BD due diligence, whether they can be separately priced in financing valuation, and whether clinical decisions support the judgment of “daring to push forward”—these are the true meaning of “from IP to assets.”

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