Much has been written about the importance of intellectual property (IP) to global organisations, with several well-publicised copyright disputes among consumer brands in recent years. But what about SMEs – there are 5.9m in the UK alone – and specifically, what about life sciences businesses? What can IP do for them?
To mark World IP Day 2023, we’ve invited Lucy Trueman, Partner and Head of Medical Sector at Barker Brettell, to discuss why IP should be at the core of a life sciences SME’s strategy and how IP can work harder for you.
The shape of the market
There are currently around 6,330 businesses within the UK’s life sciences industry, employing some 268,000 people and generating more then £88bn in turnover (2020 UK Government figures). Employment, turnover and number of businesses are all on the rise, and in the wake of both Covid-19 and Brexit, there is significant opportunity for this growth trajectory to continue.
Growth and investment
Statistically, SMEs who have filed at least one patent, trade mark or design right demonstrates 21% more growth than those businesses that do not, and 10 per cent of those are more likely to become a High Growth Firm (HGF). These already impressive figures increase to 33 per cent if the business ‘bundles’ a combination of patent, trade mark or design rights.
However, these numbers simply demonstrate the effect of IP: how does this translate on a day-to-day level?
Market share
The purpose of IP is to prevent or slow potential imitation, allowing the inventor time to secure a bridgehead in the marketplace, position the price of the product and create market share. By creating this ‘breathing space’, a business has an opportunity to recoup research and development (R&D) costs and create an environment which encourages innovation.
Getting noticed
Patents, and indeed pending patent applications, raise a company’s profile in the market and enhance its reputation as trailblazing and innovative. Should a SME want to proactively approach a larger enterprise, having a patent application adds kudos – making the larger player more receptive to the approach, and thus opening doors and expanding the business network for the SME.
An innovative business is an attractive proposition to other companies wanting to start a conversation with like-minded enterprises who may already be in the position to work together or on future research projects. IP helps plant the seed that a company is a leader with unique technical knowledge.
Attracting investment
An IP portfolio lends confidence to investors that the target company can fend off competitors and projected sales figures will not be unexpectedly undermined. This makes the decision to invest much easier and, as already mentioned, private equity houses know that businesses which already hold a portfolio are an attractive prospect. Experience has shown that a portfolio of around ten patents which are used by a business, rather than one or 50, is an ideal target.
Tax benefits
There are two tax benefits related to innovation and R&D.
The first is R&D tax credits. This is a scheme which, in some instances, covers patents. An accountant will talk you through the process as it works on a case-by case-basis, but in some instances the costs relating to the development of a technological advance can be eligible. The benefit can be considerable to an SME working on tight margins.
Patent Box tax relief is another reason for patenting. It is possible to reduce corporation tax on income from patented products to 10%. This is obviously good for profits and shareholders. Once again, the process can be complicated, but many of Barker Brettell clients successfully use the Patent Box scheme.
Want to find out more?
PHTA residents will benefit from easy access to Barker Brettell specialists through our dedicated business support offering. Barker Brettell is passionate about helping life sciences SMEs capture the innovation they have created and reap the financial benefits they are entitled to. If you would like to discuss any of the issues raised in this article, please do not hesitate to contact the author, Lucy Trueman.
