Offshoring pharmaceutical patent translation tasks to Mexico: Avoiding patent

department budget cuts and improving the overall bottom line.

Patent costs can be divided into four areas: 1) fees paid to national patent offices; 2)
costs for agents; 3) translation costs. When filing for intellectual property protection in
countries whose official language is different from the language in which the
application was prepared, this cost can be high, especially in the case of pharmaceutical,
biotechnology, or other highly technical patent applications; and 4 ) maintenance costs
for applications and patents.

In this article we focus on a translation strategy to reduce the costs of pharmaceutical

patents. Their extensive and complex content, together with the large number of
countries where the invention will be patented, makes these a particularly expensive
class of patents.

In the international public arena, policies are being drafted to reduce the number of
official languages. For example, in Europe, where there are more than 15 official
languages, translation of application into English is sufficient, with only the claims
requiring translation into French and/or German; this significantly reduces the
translation costs, and therefore the cost of the patents.

In addition, many multinational corporations have opted for a cost-reduction strategy

through delocalization, assigning all or most of the work of patent translation and/or
filing for a particular region (Latin America) to a single regional intellectual property
firm, or supporting itself using a translation agency to obtain a Spanish translation of the
same invention in order to patent it in the various countries of the region designated by
the applicants, retaining traditional local partners—whose services may be too costly—
only for resolving the technical aspects of the substantive examination. Note that this
system does not affect existing jobs in the U.S. or in Europe. The Center for
Information Development Management (CIDM) confirms that delocalization and
translation services do not affect the country’s economy and says that translation
offshoring is better if handled by people working in their mother tongue and their native
culture. “Translation/delocalization is an excellent candidate for offshoring, as it creates
no loss of jobs in the United States or Europe.” 1 A note on translation agencies is that in
most cases, they assign translation jobs to freelancers, which leads to poor patent
translation quality, since they are not being proofread by a patent attorney who is a
native of the designated country. This may make it difficult for examiners to understand
the invention. Or else, if industrial property expert partners are contracted, these
agencies raise the price of the translation for IP owners, as they become resellers of the
work performed in the offshoring country.

There are several options in terms of filing for companies that want to reduce patent
translation costs. The most obvious option, and one that is becoming much more
common, is filing the patent only in countries where the filing language is English. That
means that filing in the United States, Canada, India, Australia, Israel, and the EPO
(even though claims must be translated into French and German) will reach several
important markets without incurring translation costs for each. Certainly, this strategy
significantly reduces the total cost of patent filing; however, also means that your
1
William Hackos, Jr., PhD, “Why Do Offshore Outsourcing?” CIDM e-newsletter, February 2004.
invention or your customers will not be protected in several major world economies and
economic blocs, such as Brazil, China, Japan, Russia, Latin America, and the Gulf
States, to name a few.

Another option to reduce patent translation costs is to concentrate on regional blocs,

where one translation will cover several countries. For example, translating your patent
into Arabic will allow you to submit it to the GCC (Gulf Cooperation Council), which
includes Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates. The same Arabic
translation (with minor modifications) can also be used for filing in Egypt. Likewise,
Latin America, with a single language and cultures of common origin, is a regional bloc
where the translation of an invention may be used to patent the invention in all countries
of the bloc at once (depending on the classification of countries by PCT or Paris
Convention). In almost all of Latin America except Brazil, the official language is
Spanish (excluding Haiti and Netherlands Antilles). Translating patents by regional
blocks helps reduce translation costs and the total cost of the patent, and helps make the
administrative process for the invention in several countries go more quickly, which
means a competitive advantage for pharmaceutical companies in the technological race
against manufacturers of generics.

To a large extent, the increasing use of generics is due to the sluggishness of the
pharmaceutical patent granting procedure in local patent offices. In Latin America, the
average time to obtain a pharmaceutical patent is between 3 and 5 years. And in
countries like Mexico, only 12% of patents reach the market in the form of drugs. One
of the most effective ways to counter the use of generics is to speed up the granting of
patents. Handling translation by blocks, like a "production line,” reduces the time it
takes to complete the same translation by 1, 2, or 10 different times in several countries
who share the same official language.

In addition to the considerable savings in translation costs, placing the translation task
immediately following the task of drafting the patent is advantageous in that once the
patent applications are translated into Spanish, they can be administered and processed
immediately in the various local patent offices throughout Latin America (and even in
Spain, as is explained below), and can thus keep up pace in the invention race that is so
crucial in the international patent system.

The international economic situation is not encouraging for pharmaceuticals, according

to Murray Aitken2, senior vice president of Perspectives in Health Care for IMS Health;
“the global state of the economy is leading to greater use of generics that what has been
in the past". Americans have little cash, and revaluation of the dollar has hurt overseas
sales. These factors prompted a decrease in pharmaceutical sales of about US$70,000
million in 2009. Sales of prescription drugs in the United States will fall by some 2%,
equivalent to about US$6,000 million. This would mark the first drop over the 47 years
that IMS has collected data. The firm notes that drugs with more than US$24,000
million in annual sales are about to lose patent protection this year. To withstand the
crisis, says Aitken, drug manufacturers should focus on building sales in developing
countries such as China, India, Brazil, and Mexico, which contribute over half of the
sector's growth worldwide. In Mexico, health spending amounts to 7% of gross
domestic product, and, together with Brazil, this nation accounts for 85% of Latin
2
Pettypiece, Shannon. “Genéricos golpean a las farmacéuticas”. cnnexpansion.com June 21, 2009. CNN
Expansión. < http://www.cnnexpansion.com/expansion/2009/06/09/bajan-las-dosis >
America’s pharmaceutical market, with an estimated total value of US$30,000 million.
Health needs, a growing middle class, and the low presence of sophisticated drugs in the
country are features that Mexico offers for foreign investment in this area, since many
pharmaceutical companies base their growth on sophisticated drug distribution in the
countries known as "phar-mergent markets” such as Russia, China, Brazil, India,
Turkey, South Korea, and Mexico. Mexico has an opportunity for 14% annual growth
in the use of medications, and its health infrastructure is the most developed among the
states of the region, with an estimated annual growth of 12% to 15%, compared to
single-digit rates in developed countries. Certain medium-sized multinationals who
recently entered into operations in Mexico have reported sales of more than US$140
million in their first year of operation, exceeding the Brazilian market in this area.

Another regional advantage of Mexico for pharmaceutical companies concerns the

translation of pharmaceutical patent applications and documents, which—as noted—is
key to reducing total costs for patents. Of the four largest economies in Latin America,
Mexico's is the second largest, behind Brazil and ahead of Chile and Argentina. Among
them Mexico is the only Spanish-speaking country that is a member of the PCT, and
therefore the majority of PCT patents that are translated into Spanish are translated here
in Mexico. This is not irrelevant if we consider that it is Mexican translators who are the
first ones to handle the task of translating the bulk of new pharmaceutical inventions
from the U.S. and/or Europe and which are subsequently validated in the rest of Latin
America. Mexican translators end up "baptizing" new technical terms from inventions
into Spanish, working in collaboration with and under the supervision of external patent
attorneys, partners, inventors and consultants for almost 20 years since the Law on the
Promotion and Protection of Industrial Property entered into force in 1991 (amended in
1994). This law granted broad protection to pharmaceutical inventions in Mexico
(which at an international level has the longest patent duration known). A proof of this
feedback between Mexican translators and inventors is the constant receipt of
translations made in South America for their proofreading in Mexico, whether it is to
adapt them or to update them to Spanish patent jargon. Mexican translators almost
always note that translations made in South America are outdated, and their wording
has not been refined using other research and technical documents or scientific
publications and, above all, using translation memories for patent translation prepared
by patent translators throughout all these years of work.

Under the Industrial Property Act, the Mexican Institute of Industrial Property does not
require patent translations to be certified (as is the case in Argentina). Fees for
translations made by Mexican translators are the most competitive in the region, since
they do not require special certification for their work, and because they are capable of
offering valid translations for the other countries in the region, e.g., Mexican
translations can indeed be submitted in Argentina through an Argentine correspondent,
or even in Spain through a Spanish correspondent, by means of conversion. Translations
in Latin American Spanish may also be converted to European Spanish. Although there
are important differences in grammar and vocabulary between Europe and Latin
America, a translation using Mexican Spanish can be reviewed and used in Latin
America, and likewise in Spain (and vice versa). The localization fee for the translation
is only a fraction of the cost of commissioning a full new translation.

The bottom line: If you are filing and translating patent applications for Latin America,
Spain, Brazil, and Portugal, you can substantially reduce your translation costs by
asking whether your IP firm is able to offer a customized set of patent solutions that
includes 1) an in-house translation department and an international network of partners
that includes 2) translation agencies, 3) certified expert translators and 4) partnerships
with industrial property consultants who are able to certify and validate a Mexican
translation in other Latin American countries and Spain at no additional costs beyond
the price of a single translation into Spanish, and even obtaining a discounted rate for
the translation of patent documents into Brazilian Portuguese through this same network
of contacts.

For these reasons, it is worthwhile to consider Mexico as geographically strategic within

the region of Latin America, with proven experience in providing patent translations, as
a means to reduce translation costs and hence the cost of patent applications in Latin
America as a whole, as well as to expedite the process of patenting inventions in the
pharmaceutical industry, which is overflowing with various requirements, procedures,
and regulations that must be navigated before being able to launch a pharmaceutical
product on the market. We know that some of our customers estimate savings of over
US$700,000 a year in their reports using this system for the tasks of translating and
filing of patent applications—relying on the same firm for the task of translation for the
entire region and turning to their traditional local partners only to resolve problems
arising from the patentability review. By saving on patent translation and filings, these
companies have been able to avoid additional budget cuts in their patent departments
and to improve their overall bottom line.