CC2024/01 Buthelezi, T and Thibane, T. Strategic Patenting and its Impact on Competition: Evidence from the South African Pharmaceutical Sector

This paper has considered the trends in patent applications for pharmaceutical drugs used to treat Diabetes, Tuberculosis (TB) and human immunodeficiency virus (HIV), which are three chronic diseases with high prevalence and cause death in South Africa. The first part of the analysis considered the market structure landscape in terms of patent filings by assessing active and expired patents on molecules that treat the three diseases. The second part of the analysis examined whether there is existence of any form of strategic patent behaviour at molecule level that may potentially have implications on competition. Having broadly analysed the trends and behaviour in patent applications, the implications of this research are two-fold. One, from a policy perspective, the implementation of the TRIPS flexibilities would enable the implementation of a more substantive and rigorous patent system. Under the current South African patent system, the novelty or inventive merit of the invention is not substantively examined. The system fundamentally misses out on protecting patents for a set period only after the examination of the patentability of the invention. To this end, a substantive search and examination patent system will be part of the solution. Two, competition law and enforcement, has a role to play in addressing competition issues arising from strategic patenting conduct by pharmaceutical firms. Specifically, potential abuse of market power can be addressed by the Competition Act, through enforcement interventions against exploitative and exclusionary conduct by firms.