The existential threat of IP theft

Posted by Kevin Kennedy on Apr 19, 2017 5:41:26 PM

Confusion reigns on the origin of the term "bullseye." Some say it started when English archers showed off their accuracy by shooting arrows through the empty eye socket of a bull skull. Others contend it was a reference to a blemish in the center of a glass window pane.

stolen_innovation-tn.jpgRegardless of its origin, what is crystal clear today is the bright bullseye painted on the intellectual property and trade secrets of a select set of industries, including medical device manufacturers and pharmaceuticals. China has set aggressive market share targets for its state-owned enterprises in 10 advanced manufacturing industries as part of the "Made in China 2025" initiative.

History tells us that these targets matter. Remember solar and renewables? Sustained Chinese government investments and subsidies combined with a bit of IP theft led to a dominant share in the market – a share north of $70 billion today. U.S., Japanese, and German companies were left as bit players. If they were left at all.

IP and trade secrets are the engine of growth in medical devices and pharmaceuticals. For 10 years, the medical technology sector has led all other fields in the number of patent applications in Europe. And in pharmaceuticals, the typical new drug takes 10 years and costs $2.5 billion in R&D – which is why pharmaceutical firms spend north of 20% of revenue on R&D.

The technical hurdles for any major new entrant are high.

Motivation, capability, history: No.1 perpetrator of cyber IP theft

The Commission on the Theft of American Intellectual Property estimates that China is responsible for 50-80% of international IP theft, and is the No. 1 perpetrator of cyber attacks designed to steal IP (96% of cyber IP theft according to one study). These attacks have been in support of Chinese industrial policy, largely targeting strategic emerging industries that China has identified in five-year plans.

"Made in China 2025" targets sectors where technology is even more critical than in the past. Chinese firms have filed only 1% of the medical tech patents in the last 10 years, compared with nearly 90% coming from the U.S., Europe, and Japan. That’s a lot of ground to make up organically, so it seems near-certain that “borrowing” technology from leading companies will be a key piece of the program.

The bullseye is clearly painted.

Would you know if they were in your network right now?

The stakes are high. IP theft leads to competitive products – with most of the development cost eliminated – which leads to eroding market share. It doesn’t take an advanced math degree to see that this could easily cause billions in lost revenue for a top medical device manufacturer or pharmaceutical company.

Yet, consider this eye-opening Nuix survey of pen testers: 88% of survey respondents indicate that they achieve initial compromise within 12 hours. Perimeter security will not stop a good and motivated attacker. And, once inside, roughly two-thirds report that they are rarely, if ever, detected and stopped.

If you’re chartered with protecting valuable IP, the question is: If they were in your network right now, would you even know?

Vectra helps you to confidently answer "Yes." And to stop any attacks before your trade secrets are gone. All without requiring you to hire an army of threat hunters.

Don’t believe it? Try it.

To learn more about how Vectra can help medical device manufacturers protect their intellectual property, download the solution brief

Topics: Ransomware, cyber security, Cyberattacks, cyber defense, intellectual property

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