End uses dominate supplement patent landscape
sector can be measured by patent portfolio analysis, say authors of
a new paper that identifies the strongest patent-holders in the
market and it dominated by application-based patents.
The paper sets out to show how systematic selection and evaluation of patent information can help companies assess business opportunities. It was co-authored by authored by European patent attorney Bernd Fabry, who also lectures in intellectual property management at the Otto Beisheim Graduate Business School in Germany (WHU); Holger Ernst, professor of business administration at WHU; and Martin Köster, search manager at Cognis.
"It is a fact that a large part of this information is available for free and virtually waiting to be pieced together like a jigsaw puzzle," they wrote in World Patent Information (28 (2006) 215-225).
In order to illustrate their argument, they took as an example the dietary supplements market - an exercise that shed light on the global patent landscape and led to the identification of Nestle and Abbott Laboratories as the dominant companies, whose patents should be considered as part of any analysis of business opportunities.
They found that the number of patent application for dietary supplements has risen sharply since 1994, when the annual figure was below 500. Since then, there has been an annual increase of at least 20 per cent.
"Just a first glance on the dynamics makes it clear that we are dealing with a very active and attractive field," they said.
Although the search showed up around 10,500 documents, less than 100 companies have made more than 10 applications. This, they said, shows that the market is "extremely fragmented".
Interestingly, they noted that the patent landscape is dominated by companies that deliver directly to the end user figure in the top ten; this, they said, shows that the segment - if it can be evaluated due to strong fragmentation - is predominantly application driven.
The researchers looked at patent activity over the period 1991 to 2003, and were not surprised to find that Nestle and Unilever, both companies "well-known to the non-expert" featured in the top ten (first and seventh places respectively) within the market segment 'Health Nutrition'.
More surprising was the presence of three Russian research institutes in the top ten: The Food Conserve Research Institute, University of Kuban, and the Conserve and Fruit Drying Institute.
Ten Japanese companies also appeared in the top 20, including Ajinomoto in third place.
However the researchers did not look only at patent quantity to ascertain companies' innovative power, but at quality as well. Quality was determined according to rate of granted patents, international scope, technological scope, and citation frequency in examination proceedings weighted over time.
They found that Nestle's position was the result of activity from 1997 to 1999, with a drop-off after that point.
Conversely, Russian activity increased after 2000, but patent quality was low since they were restricted to Russia. Moreover in Japan there is a tendency to make 10 or more patent applications out of one single invention.
"Companies with a higher patent quality but a lower patent activity (high potentials) prove to be more successful on the market than those that focus on mass instead of class (activists)."
Moreover, the researchers calculated patent strength, as the product of activity and quality.
While Nestle remained in the number one spot, Abbott came in second place, compensating for a low number of patents with "outstanding patent quality"
"In practice, this means that a supplier of dietary supplements or their components would basically need to take into account the protective rights of these two companies," concluded the authors.
