Good Use of IP Trading
Abraham Chan Promotes TCM Modernization

"Without intellectual property (IP) trading, our Company would not have the results of today," said Abraham Chan, who, as chairman of the PuraPharm Group, has in recent years been acquiring scientific research achievements of universities and advanced production technologies in traditional Chinese medicine (TCM) production through IP trading, thereby succeeded in enhancing the market competitiveness of the group and in broadening business prospects. The fact that PuraPharm has become one of the fastest growing TCM manufacturers in Hong Kong is the best example of how IP trading can be used to promote business.

IP trading refers to the buying and selling as well as transfer of IP under terms and conditions agreed by the two parties. The most common types of IP trading are the acquisition and licensing of patents, copyrights and trademarks. In recent years a growing number of companies are expanding their business through IP trading, so much so that it is now a trump card for upgrading and transforming companies.

Nowadays carrying out one’s own R&D is getting out of fashion because it is not cost effective. After calculating cost effectiveness, quite a number of large pharmaceutical manufacturers have also found that it is more practical to acquire new technologies through IP trading than to develop such technologies in-house. Currently many pharmaceutical companies are saying that they would only be interested in starting negotiations with universities on the drugs they have developed if these drugs have already gone through two phases of clinical tests, ensuring that the research projects in question are sufficiently mature."

Founded in 1998, the PuraPharm Group has been active in investing in the research and production of modernised TCM. So far it is the only Hong Kong company granted licence by the State Food and Drug Administration (SFDA) and is one of only six manufacturers in China allowed to produce and sell TCM prescription granules. Its tour de force is the series of instant dissolving TCM prescription granules marketed under the brand name of "Nong’s". Developed in-house, the Nong’s is by far the TCM brand most widely adopted by Hong Kong hospitals and accounts for more than 70% of the Hong Kong market. In recent years PuraPharm has been active in the commercialisation of university research achievements acquired through IP trading and has subsequently launched a range of health supplements such as PuraGold and Oncozac. In particular, the ONCO-Z* medicinal yunzhi (Coriolus versicolor, a mushroom) extract (the ingredient of Oncozac), has been certified by United States Pharmacopeia and is the world's first TCM ingredient so certified.

It is not widely known that Mr. Chan, who has engaged in the TCM industry for more than 20 years, studied civil engineering as an undergraduate. When it comes to the manufacturing processes and medicinal properties of TCM, however, he not only knows the subject inside out, but is also business minded. In as early as 1998, or in the early days when PuraPharm was founded, he had already started making use of IP trading to commercialise university research achievements and generate business opportunities. "In that year we started providing Hong Kong Baptist University with research funds and carried out DNA fingerprinting of lingzhi products with their Institute of Advancement of Chinese Medicine. Later we bought out the patent so obtained and launched PuraGold, a widely popular health supplement containing the essence of six species of lingzhi. This turned out to be a major step in the development of the company."

He continued, "Drugs are hi-tech products with upstream, midstream and downstream processes, so no one company can have all the specialists required. For example, a manufacturer is hard put to cater to upstream basic research, so we will cooperate with several universities in carrying out R&D or develop new products through IP trading. This not only puts university research achievements into good uses, but helps reduce a company’s R&D spending and time and is definitely a direction Hong Kong companies should take."

Afterwards PuraPharm repeated the same strategy and acquire a yunzhi patent developed by the Chinese University of Hong Kong (CUHK). Then it spent five more years in carrying out joint studies with CUHK before introducing "Oncozac Medicinal Yunzhi" which has been proven effective in enhancing body immunity. Oncozac has since become a popular yunzhi product in Hong Kong and is one of the main income sources of PuraPharm.

Mr. Chan revealed that PuraPharm is now providing CUHK and the University of Hong Kong with research funds in order to upgrade Oncozac from a health supplement to a medicine. "IP is of vital importance to the pharmaceutical industry; without IP, our Company would not have the results of today," he said.

Currently PuraPharm owns more than 100 trademarks and some 30 technology patents and invests as much as HK$3 to 5 million in patents and trademarks every year. The modern TCM production facility it has set up independently in Nanning, Guangxi Province not only meets Chinese Good Manufacturing Practice (GMP) standards but has also achieved Australia’s Therapeutic Goods Administration (TGA) certification—the toughest of its kind internationally. Its pharmaceutical testing centre is also ISO 17025 certified and accredited under the China National Accreditation Service for Conformity Assessment (CNAS) scheme. The TCM diagnosis and dispensary systems it owns have been adopted by the Hospital Authority of Hong Kong for many years. Mr. Chan stressed that, in addition to ensuring the possession of manufacturing patents, making good use of IP trading to protect production technologies and commercial secrets is equally important to a pharmaceutical company.

As a "buyer" in IP, Mr. Chan thinks that Hong Kong has a substantial edge in developing into an IP trading platform. "As the mainland TCM market is huge and annual growth in the sales of TCM is exceeding 20%, the centre of the TCM market will definitely shift to the mainland in future. Since Hong Kong is the two-way channel connecting mainland companies and the global market, the demand for related services in IP trading will becoming increasingly great. The fact that Hong Kong has sufficient numbers of professional IP lawyers and specialist consultants is an additional favourable condition for the development of IP trading."

Worth mentioning is that IP trading is not only conducive to the enhancement of product quality in PuraPharm. It is also driving the further modernisation of TCM. Said Mr. Chan, "All the time I have the wish to develop software and programmes related to TCM theories. Destiny has it that a few years back I came to know a computer doctoral candidate from the Polytechnic University who is deeply interested in TCM and was pursuing related pharmacological studies. So I started cooperating with him while also sponsored another top computer student to pursue doctoral studies. I also encouraged them to set up their own firm to develop a data-mining software which can analyse medicine properties and patient data and study responses to TCM and western medicines." The patent of the software, originally filed by the Polytechnic University, was later bought out by PuraPharm.