Pfizer's Intellectual Property Rights Battles in China for Viagra

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Case Details:

Case Code : BENV010
Case Length : 22 Pages
Period : 2000-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Pfizer, Inc.
Industry : Pharmaceutical
Countries : China

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"In years past, no one [in China] would even waste time on such legal battles. Factories would rather start production of counterfeited or imitated medicines immediately. But now they will get harsh penalties for doing so."¹

- Gao Jun, a patent lawyer with the Duan and Duan Law Firm (Shanghai), in 2002.

"[...] the Viagra decision [invalidation of Pfizer's patent] was exactly what the holders of IP rights should expect in a country making the transition to full compliance with the WTO agreements."²

- Professor Peter Yu of Michigan State University College of Law, in 2004.

"This decision [uphelding Pfizer's Viagra patent] affirms China's commitment toward an effective patent protection environment and boosts the confidence of the business community in China as an investment location. Pfizer believes that this decision will give businesses that critically depend on intellectual property protection renewed confidence in the value of a Chinese patent."³

- Pfizer Inc., in 2006.

Pfizer Wins Viagra IPR Litigation - China In Transition?

In November 2006, the Bangbu Intermediate People's Court in the Anhui Province of the People's Republic of China (China) sentenced a Chinese man, Xi Yongli (Yongli), to eight years in prison for producing and selling counterfeits of Viagra, a drug for erectile dysfunction⁴ (ED), developed by the world's largest pharmaceutical company, Pfizer Inc. (Pfizer).

In December 2006, a Beijing court upheld Pfizer's Chinese patent for Viagra and ordered two Chinese companies to stop making generic versions of the drug and to pay compensation of 600,000 yuan (US$ 76,726) for infringing on the registered trademark of Pfizer.⁵

Analysts saw these incidents as some of the successes achieved by Pfizer in its efforts to thwart the challenge posed by manufacturers of generic and fake drugs in a country that was known to offer weak intellectual property rights (IPR) protection.

Many also saw these rulings as an indication of China's increasing commitment to provide adequate IPR protection in order to conform to the Trade Related Intellectual-Property Rights (TRIPS)⁶ agreements.

Viagra is a widely popular drug and was considered as a great success story in marketing. It has raked in billions of dollars worldwide for Pfizer. Its success also made Viagra the most counterfeited drug in the world.⁷ However, its performance in China had been far below par. Ever since its launch in China in 2000, sales of Viagra had failed to take off in the world's most populated country. This was despite the fact that China had a huge market for drugs that enhanced sexual performance.

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1] Audra Ang, "Local Firms Seeking to Overturn Patent for Viagra in China,"www.boston.com, December 6, 2002.

2] Jeffrey A Andrews, "Pfizer's Viagra Patent and the Promise of Patent Protection in China,"www.lockeliddell.com, 2006.

3] "China Court Upholds Pfizer's Viagra Patent,"www.cbs5.com, June 5, 2006.

4] Erectile dysfunction is a term coined by Pfizer for male impotence to reduce embarrassment of the patients suffering from the disorder. The word impotence was shrouded in stigma and considered as an emasculating failure, where as erectile dysfunction sounded like a medical condition.

5] "Pfizer Wins Viagra Ruling in China,"www.indiatimes.com, December 28, 2006.

6] TRIPS is an agreement that was drawn by the World Trade Organization (WTO) between 1986 and 1994 so as to ensure IPRs are respected within international trade. In other words, TRIPS ensures that profits from any new product go exclusively to the innovator (patent holder) for the full duration of the patent. The WTO, headquartered at Geneva, Switzerland, is an international, multilateral organization, which sets the rules for the global trading system and resolves disputes between its members. As of December 15, 2005, it had 149 members all of whom are signatories to its 30 agreements. China had joined the WTO in 2001.

7] "China to Handle Pfizer's Lawsuit for Viagra's Patent,"www.au.china-embassy.org, February 17, 2006.