Pharmacy — patent protection

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The cost of R&D

At the earliest stage of drug development, the new chemical entity gets its patent and the patent clock of 20 years starts ticking. At the end of this period the patent runs out. The branded medicine then becomes available generically and anybody can make and sell the molecule. If the R&D process takes 12 years, then only 8 years are left to payback the full development costs and make enough profit to return to R&D to pay for other development candidates.

It is a huge investment and more companies seem unable to afford the large sums involved — one reason behind the current spate of company mergers.