1 New Delhi 12 May 2011 by D G Shah Secretary General Indian Pharmaceutical Alliance Pharmaceutical Innovation Issues & Challenges RIS and Indian Council of Medical Research

2 IPA: 05/11 Outline of Presentation  Issues - Drivers of Innovation - Innovation Policy  Challenges - Funding - Technology Transfer Pharmaceutical Innovation Issues & Challenges

IP Laws are Designed to Provide Exclusive Rights as Incentives for Investment in R & D But In Many Sectors Competition (Absence of Exclusivity) Drives Technological Development Drivers of Innovation There is Inherent Tension Between IPRs & Competition Competition IPA: 05/11

IPRs are Designed to Foster Innovation and Sustain Economic Growth But Kill Competition and thereby Restrict Innovation Need for Balancing IPRs & Competition Drivers of Innovation Competition IPA: 05/11

 Agricultural Implements  Carts and Wheels  Water Drawing Devices  Arms and Ammunition Drivers of Innovation IPRs are Not Sole Drivers of Innovation Necessity IPA: 05/11

 Electricity  Telephone  Jaipur Foot Drivers of Innovation Driven by Commitment, Not IPRs Commitment IPA: 05/11

Maximal Innovation Level Source: Swiss Federal Institute of Intellectual Property, October 2006 Minimal Protection Level Optimal Protection Level P I Innovation Policy Beyond a Point, IPRs are Counterproductive Protection (P) vs. Innovation (I) IPA: 05/11

Innovation Policy IPR Scenario: USA & Europe ParticularsUSAEurope Data Exclusivity5 yr8 yr Patent LinkageYesNo Bolar ExceptionYesNo Patent Term17 yr20 yr Europe had Stronger IPR Protection Through Out this Period, But…. EU Experience IPA: 05/11

Innovation Policy “Europe has been Losing Ground in Pharmaceutical Innovation”  Centre of Gravity for Research Moved to USA and Asia  Pharmaceutical R & D: 1990: Europe (€ 7.8 Bn) vs USA (€ 5.3 Bn) 2006: Europe (€ 22.5 Bn) vs USA (€ 27.1 Bn)  Similar Trend for Research Sites Between 2001 and 2006: Europe: Shut Down 18 of 22 Sites, Opened Only 2 New Sites USA: Opened 6 Sites (Shut Down 5) Asia: Opened 14 Sites (Shut Down 1) EU Experience IPRs are Not Sole Drivers for Innovation Source : Communication from Commission to the European Parliament – Dec 2008 IPA: 05/11

Innovation Policy  Swiftly Adopt proposal to prevent the entry of illegal medicinal products into the legal supply chain (Objective#13)  Prepare by 2012 an intensified exchange of information on illegal distribution channels for counterfeit medicinal products (Objective#14)  Within IMPACT, assist third countries (e.g. Kenya & Uganda) in developing and enforcing legislation against counterfeit medicinal products (Objective#15) Obsession with “Counterfeit” Has Muddled the Thinking Source : Communication from Commission to the European Parliament – Dec 2008 EU Experience IPA: 05/11 Recognizing that “Global” Reorganization is Throwing New Challenges, EC Wrote Prescription for its Pharmaceutical Industry

YearRs Cr , , , , , ,883 Balancing Short –Term Profitability with Sustainable Long-Term Growth R & D Spend of Indian Generic Industry Funding 11 Source: AceEquity IPA: 05/11

12 Funding R&D Expenditure as % Sales – 1995 to 2010 Year (Apr-Mar) % of Sales IPA Co’s Foreign Co’s Three-Fold Growth in R&D by IPA Companies Source : CMIE – Analysis of Indian Pharmaceutical Industry IPA: 05/11

13 Discovery – A Weak Link Discovery Pre - clin ical R& D I/I Ia Clinical Developme nt IIb/III Submi ssion and Appro val Post- market Developme nt Phase IV High throughput Screening Organic Synthesis Trial Management Clinical Data Management Data Analysis/ Publication Chemical Synthesis— Intermediates Safety Surveillance Report Compilation Preclinical Testing Growing Interest/Potential Already in Progress Technology Transfer IPA: 05/11

Let the Learning Begin Technology Transfer Discovery Research  Industry to Industry  University to Industry  Research Institute to Industry IPA: 05/11

Developed World Should Honour its Obligations Under TRIPS Summing Up  Stronger IPR = More Innovations? Not So Simple  There is No “One-Size-Fits-All” Model  Need to Strike a Balance between IPR and Innovation  Need to Recognize Forces that Promote Innovation Instead of Blindly Linking Innovation to IPR  IPR Should Not Kill Pro-competitive Environment, Both are Needed for Innovation  Need to Provide Funding Support for Promoting Innovation  Need to Assist Technology Transfer for Discovery Research IPA: 05/11 Pharmaceutical Innovation Issues & Challenges

16 THANK YOU IPA: 05/11