Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. by Shyama V. Ramani a And Augustin Maria b, Mahesh Ravi c, Preethi Pradhan d, a INRA, TecKnowMetrix, and Hi-Tide. b Ecole des Mines, Paris c Hi-Tide. d U-Berkeley and UPMF/Grenoble The Indian Biotech Segment of the Indian Pharmaceuticals Industry in the post TRIPS world

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Innovation is a cumulative process First Innovator Subsequent Innovator Spillovers Challenge of the IPR system : How to reward both first and subsequent innovators?

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Broad Patent Protection Narrow Patent Protection More incentives for First Innovators More incentives for Subsequent Innovators PRODUCT PATENTS PROCESS PATENTS Impact on “producers of technology”

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. TRIPS = NO more Country specific IPR Homogenization of scope of IPR over all countries Eventually some form of product patents For countries like INDIA, TRIPS= broadening of patent scope Paris Convention 1883 = Country specific IPR Shifting of Incentives from Second innovators to First ones

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. The Indian context PRODUCT PATENT REGIME : Indian Patent and Design Law of 1911 First Crisis = Food Solution = Green Revolution. Second Crisis = Access to health care Access to health = Access to basic medicines. –Sufficient quantities must be available. –Insufficient supply (Multinationals and Public Sector). –Pricing Policy and the “License Raj”.

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Changes in IPR : 1970 For Food and Drugs : Process patents and not product patents. = Narrowing of the IPR system Not viewed as likely to have impact by the multinationals who were the market leaders. Tremendous impact. Indian pharmaceutical developed. Fledgling Indian health care system developed.

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Types of Indian firms in the biopharmaceutical sector Entrants Integrated pharma firms Diagnostic reagents & Vaccine manf. Enzyme manf. IT Firms Dedicated biotech firms Start-ups by ind Start-ups by labs

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Impact of “incentive effect” on former second innovators or developing country firms Import innovations Invest in creation of first innovations Invest in creation of second innovations Or non-patented innovations Join as part of the division of labour chain in innovation creation by developed country firms. For developed countries For developing countries Strategies Available now

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Impact of “incentive effect” on first innovators or developed country firms Strong IPR + Good investment climate; Good Business climate; Access to correct and credible information; Credible dispute settlement institutions Higher Foreign investment; More technology transactions; TRIPSDoes this exist?So will this happen?

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Impact of TRIPS (1/2) Biggest focus : Bio-generics. –Indian firms cannot tackle world market. –Money spinner : Licensing to foreign firms. No incentive effect of TRIPS Active service providers to Western multinationals in the creation of innovations –Part of the international division of labour No incentive effect of TRIPS

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Impact of TRIPS (2/2) New Drug creation. –If for international market patented in USA. –If for local market/tropical diseases not based on rationality of profit/rent/quasi rent maximization. No incentive effect of TRIPS Entry strategies of foreign firms –Subsidiary, Joint venture, license –Main problems are identification of partners (adverse selection) and ensuring commitment (moral hazard) No incentive effect of TRIPS

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Final Choices of Indian firms Import innovations Invest in creation of first innovations Invest in creation of second innovations Or off-patented innovations Join as part of the “division of labour” chain in innovation creation by developed country firms. For developed countries For developing countries 1 st choice 2 nd choice 3 rd choice

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. View of Developed country firms Strong IPR + Good investment climate; Good Business climate; Access to correct and credible information; Credible dispute settlement institutions Higher Foreign investment; More technology transactions; TRIPSHAS TO IMROVESo will this happen? ????? Depends?????

Reperes sur l'innovation en Inde, 3 juin 2004, Shyama V. Ramani. Proposals for Reform A Sachs-type institute at the international level coordinated and financially supported by both developing country and developed country partners Open source literature A non-profit association which collects data and conducts analysis Motivation for Hi-Tide Agency to handle international litigations on tech. transactions