Biotech: Increased Collaboration. Increased Trade Secret Risk?

Given that biotechnology companies are all competing to treat the same conditions, biotech is one of the market’s most competitive industries. Nevertheless, more and more biotech companies are now becoming open to increased collaboration with other companies. While collaboration is great for innovation, it does come with a certain degree of risk in an industry where competition is so fierce.

The increased level of collaboration between biotech companies largely began as a response to the COVID-19 pandemic. Moving forward, though, it doesn’t seem that collaboration between companies will be limited to combating COVID-19. In fact, the Winter 2021 BDO Biotech Brief reports that 50% of biotech companies plan to collaborate with other companies in the industry in 2021.

The advantages of mutually beneficial collaboration are substantial. Unfortunately, the risks are substantial as well. By collaborating with competing companies, biotech companies are exposing what is perhaps their most valuable asset: trade secrets.

For an example of the risks that collaboration poses to the trade secrets of biotech companies, consider the case of Oakwood Laboratories’ proposed collaboration with Aurobindo. In this instance, Oakwood Laboratories was only exploring a potential collaboration with fellow biotech company Aurobindo in order to develop and manufacture a line of injectable, sustained-release drugs. The potential collaboration eventually fell through. However, Aurobindo gained enough information on Oakwood Laboratories’ technologies in the process that they were able to set up their own research and development program for the drugs that Oakwood Laboratories had spent the past 20 years developing. Now, it will be decided in court whether or not Oakwood Laboratories will be able to claim damages for trade secret misappropriation.

Given that even a proposed collaboration can lead to issues such as this, it’s not difficult to see how an open embrace of collaboration between biotech companies carries a substantial risk to trade secrets. In order to enjoy the benefits of increased collaboration and avoid its potentially disastrous consequences, it will be essential for biotech companies to carefully protect their intellectual property using every strategy and preventive measure possible.