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Life Science Executives Concerned About Intellectual Property Theft

WARREN, NJ, May 4, 2010 - Executives at a large number of life sciences companies are concerned that their firm can be targeted by intellectual property thieves, according to a risk management survey sponsored by the Chubb Group of Insurance Companies, Biotechnology Industry Organization (BIO) and Medical Device Manufacturers Association (MDMA).

Forty-two percent of the executives surveyed indicated that they were most concerned about exposure to intellectual property theft. Thirty percent of respondents identified product recalls, tamperings and lawsuits as major threats. One in five (21%) executives were most concerned about a loss of income due to a property loss at a key supplier or customer.

"Our survey demonstrates that life science companies have a strong understanding of the risks they face, and that they need to take measures necessary to help mitigate those exposures," said Philip Fiscus, senior vice president of Chubb & Son and worldwide life sciences manager for Chubb Commercial Insurance.

"Biotech firms that mitigate their exposures are far more likely to attract the limited number of investment dollars available today," said Jim Greenwood, president and chief executive officer of BIO.

"Solid risk management and insurance programs are vital to the viability and growth of our members," said Mark Leahey, president and chief executive officer of MDMA. 

Fiscus said the theft of a company's intellectual property due to cyber or other crime could mean missed milestones, lost venture capital funding, disrupted clinical trials, and, ultimately, possible substantial financial losses. "Today's intellectual property thieves, especially cyber criminals, are more organized and more precise in the information they target," he said.

The survey also found that 25% of the life science companies imported chemicals or other pharmaceutical raw materials from suppliers outside the United States and Canada. In response to exposure concerns, survey respondents have taken the following actions in addition to existing protocols:

  • implemented new policies and procedures to qualify suppliers (62%);
  • implemented additional testing measures (62%);
  • required foreign suppliers to carry product liability insurance in the United States and/or Canada (51%);
    stopped doing business with certain suppliers (28%); and
  • halted importing certain chemicals or other pharmaceutical materials (20%).

 

"In today's economy, product recall plans are an important component of a life science company's risk management plan.  Some suppliers may be looking for ways to save money, potentially creating quality control issues and an additional financial burden for life science companies," said Fiscus.

Chubb's Life Sciences Risk Management Survey was conducted over the telephone with 500 CEOs, CFOs, controllers and others who make insurance purchasing decisions. 

The Biotechnology Industry Organization represents more than 1,000 biotechnology companies, academic institutions, state biotechnology centers and related organizations in all 50 U.S. states and 33 other nations. BIO members are involved in the research and development of health care, agricultural, industrial and environmental biotechnology products.

The Medical Device Manufacturers Association is a national trade association representing hundreds of innovative small and medium sized medical technology companies. Its member companies seek to promote policies that provide patients and clinicians with timely access to safe and effective products.

The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property and casualty insurance for personal and commercial customers worldwide through 8,500 independent agents and brokers. Chubb's global network includes branches and affiliates throughout North America, Europe, Latin America, Asia and Australia.