Protecting Intellectual Property in Pharma

Nick Safo, Community Pharmacy, Dental, and Pharmaceuticals Lead | Average Read Time: 6 minutes

The pharmaceutical industry faces losses estimated at £156 billion annually to counterfeit medicines and intellectual property (IP) theft globally. For UK pharmaceutical companies, which face development costs of £2 billion per drug, intellectual property protection is an existential necessity.

In pharma, IP encompasses drug formulas, clinical trial data, manufacturing processes, and trade secrets that can take a decade or more to develop. When protection fails, the consequences cascade: competitive advantage evaporates, patient safety is compromised, and the financial foundation for future innovation crumbles. For UK organisations, where pharmaceutical R&D investment has underperformed against international rivals since 2018, protecting existing IP assets has never been more critical.

Why Pharma IP Demands Special Care

Pharmaceutical companies face unique challenges in a highly competitive global market. The average drug requires 10-15 years of development and costs between £780 million to £2.3 billion before reaching patients. This investment only generates returns if IP remains protected throughout the product lifecycle.

The UK's position is particularly vulnerable. While UK businesses invested £50 billion in R&D across all sectors in 2023, with pharmaceuticals accounting for over 17% of this total, foreign direct investment in UK life sciences fell by 58% between 2017 and 2023. Any IP breach that undermines investor confidence could accelerate this decline.

1 . Value and risk are colossal

Pharmaceutical companies invest heavily in R&D - clinical trials, regulatory compliance, specialised manufacturing etc. That investment only pays out if IP is protected. As highlighted by industry analysts, drug formulas and proprietary processes are “exceptionally exposed to bad actors”. With so much at stake, even a single data breach or leak can wipe out years of work overnight.

2 . Threats come from many directions - external, internal, and supply-chain wide

• Cyber-attacks aimed at stealing research, regulatory data or manufacturing know-how are increasingly common.

• Counterfeit drugs remain a persistent menace. Illicit manufacturers and distributors exploit weaknesses in global supply chains to flood the market with fake or sub-standard medicines.

• Even trusted vendors, contract manufacturers, or logistics partners can become unwitting entry points for IP theft (especially when their security posture is weak).

3 . Legal protection alone is not enough

Patents, trademarks, and other IP protections are only as good as your ability to enforce them. Enforcement - especially across international borders or complex supply chains - can be costly, slow, and legally fraught. Additionally, some firms use tactics like “patent thickets” or follow-on patents to extend exclusivity - a move that may preserve market share, but draws scrutiny and can limit long-term innovation.

Given these challenges, a proactive, comprehensive approach is essential; one that blends legal protections, technological defences, operational best practices, and tight vendor control.

Common Gaps in Pharma IP Protection

Even with mechanisms in place, many pharma companies find themselves exposed due to:

• Fragmented cybersecurity: Legacy systems, varied infrastructure across manufacturing, R&D, clinical and vendor environments often leave blind spots open for attackers.

• Weak third-party governance: Vendors, contractors and logistics providers may lack adequate security standards or oversight. Once they are part of your ecosystem, any vulnerability on their side is a risk on your side.

• Insufficient traceability and brand protection: Counterfeiters exploit gaps in tracking and serialisation. Without end-to-end visibility from the production line to the pharmacy shelf, fakes can slip through.

• Underestimating insider threats: Disgruntled employees, contractors or unwitting staff are often at the root of leaks or unauthorised disclosures.

• Regulatory or compliance-driven blindspots: Rapid digitalisation, cloud adoption, or moving data across borders can introduce vulnerabilities if oversight, encryption, logging or monitoring are not consistently applied.

Building a Strong Defence: Best-Practice Strategies

Here’s how pharma organisations can better protect IP, avoid costly leaks or counterfeit infiltration, and safeguard their competitive edge:

• Adopt a “Zero-Trust” mindset

New research shows that implementing a “zero trust architecture” (where access is continuously verified, least-privilege is enforced, and every transaction is logged) greatly enhances security across the pharmaceutical supply chain. This helps ensure that even if one part of the network is compromised, lateral movement and full-scale breach become far harder.

• Secure and monitor the supply chain end-to-end

Use serialisation, track-and-trace, tamper-evident packaging or even cryptographic and anti-counterfeit systems (e.g. secure QR-code or smart-policy approaches) to enable full visibility - from manufacturing to distribution to pharmacy shelf. Regular audits, tight vendor contracts, and continuous vendor security assessments are essential. 

• Harden digital infrastructure and enforce strong access control

Patch and upgrade legacy systems. Use modern cloud-native security architectures where possible. Employ encryption, multifactor authentication, intrusion detection or prevention, and network segmentation. Limit data access only to those who absolutely need it, and log everything - especially around IP, trial data, manufacturing formulas, and research archives.

• Embed IP protection in business strategy, not just legal paperwork

IP protections remain worthless if not enforced. Companies have to treat IP management and security as an ongoing business risk instead of a one-time checkbox. This means investing in cyber resilience, vendor governance, compliance audits, continuous monitoring, incident response, and disaster recovery.

• Train staff and build awareness

Many breaches result from human error. Ongoing, mandatory training in cybersecurity hygiene, data handling, supplier onboarding and incident response reduces this risk significantly. 

Why This Matters

Patient safety and public health: Counterfeit or compromised medicines can harm patients, undermine trust in the healthcare system, and fuel drug resistance. The WHO estimates that substandard and falsified medicines cost health systems £23.9 billion annually while contributing to millions of preventable deaths globally. 

Sustaining innovation and investment: If IP cannot be protected reliably, pharma companies may reduce investment in R&D, limiting future breakthroughs. With UK pharmaceutical R&D investment falling by nearly £100 million in recent years and tumbling from second to seventh place globally for life sciences foreign direct investment, protecting existing IP assets is crucial to reversing this trend. 

Regulatory and reputational risk: Data breaches and counterfeit flows can lead to fines, recalls, litigation, and irreparable damage to brand and public trust. Healthcare data breaches are not cheap (at an average cost of £7.6 million), and are the highest of any industry for 14 consecutive years. 

Closing the Gap: What UK Industry Needs to Do Now

Pharma organisations must shift from reactive or fragmented security to a holistic, resilient strategy. That means:

• Embrace zero-trust and cloud-native security with continuous verification and monitoring

• Treat supply-chain integrity and vendor risk as core to IP protection through rigorous assessment and oversight 

• Enforce comprehensive access control and logging across all systems touching sensitive IP, learning from recent high-profile breaches

• Combine legal, technical, and operational safeguards in an integrated defence strategy

• Make IP protection and cyber-resilience a board-level priority with regular executive reporting - essential as the UK seeks to restore its position as a global life sciences leader

The UK pharmaceutical sector faces unprecedented threats to its intellectual property at a time when investment is declining, and global competition is intensifying. Protecting that IP isn't just about preserving competitive advantage, it's about ensuring patient safety, maintaining public trust, restoring investor confidence, and sustaining the innovation that brings life-saving medicines to market.Essentially, protect your IP as if your future depends on it - because it does.

Building the Network Resilience Pharma Needs

At Cloud Gateway, we work closely with organisations across the pharmaceutical and broader healthcare sectors, and we see first-hand the pressures they face. Protecting IP is about ensuring every connection, system, and data flow across the estate is resilient, compliant and tightly controlled. That’s where our approach makes a difference.

Our platform gives pharma organisations a secure, scalable way to modernise their infrastructure while keeping complete visibility over what’s happening across their network. We provide controlled connectivity to cloud platforms, third-party partners, research collaborators and NHS services, all underpinned by strong segmentation and zero-trust principles. This makes it significantly harder for threats to move laterally, helps safeguard sensitive R&D and manufacturing data, and improves auditability - without slowing teams down.

We also understand the realities of legacy systems, regulatory demands, and multi-vendor environments. Our solutions are built to integrate with them rather than replace everything at once. That means pharma organisations can strengthen their security posture incrementally - closing gaps, tightening supply-chain connections, and building towards a more resilient architecture.

In a period where the sector is under pressure to innovate quickly while managing escalating security risks, we’re here to help pharma organisations maintain control, protect their IP, and build a secure foundation for the future. Find out how.