Dissertation - The Effect of Change in the Patent Regime on the Pharmaceutical Sector and Welfare: A Case Study (original) (raw)

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Abstract

Master's Dissertation on how the change in the patent regime changed the Pharmaceutical Industry and eventually affected the Welfare aspect of India. it deals in the economics of Inventions and Innovations and traces how the two happen and how distributive strategies for Drugs are built based on Inventions and Innovations occur.

Figures (10)

Source: (Kiran & Mishra, 2009) (typographical error where 2002 has been printed as 2001) The decadal growth rate for most firms spans from 2% to close to 3%, with one being below 2%

Source: (Kiran & Mishra, 2009) (typographical error where 2002 has been printed as 2001) The decadal growth rate for most firms spans from 2% to close to 3%, with one being below 2%

A careful scrutiny of the table above shows a nominal rise in the research and development expenditure in all firms through all years except for between 2001 and 2002 where all the firms saw a considerable jump, of the order of around 100% to even above 150% over 2001 in expenditure for research and development. There could be various explanations to this phenomenon where such a massive jump in expenditure has been witnessed. One explanation could be the onset of the Doha Rounds and the implementation of the Mail Box and the Exclusive Marketing Rights features which allowed the firms to foresee the next 5 years where they could pump in funds for research and development and reap benefits though exclusive marketing rights that would allow them to exclusively market their products within the country without having to compete with other producers. The other reason, which could be closely linked to the previous one is the fact that the developing nations that were signatory to TRIPs and WTO after the Uruguay Rounds were given a period of 10 years, also known as the transition period to bring their patent regulations in line with the global (or the western) standards. With the onset of Doha Rounds which had good news for most of the developing nations and made patents a safe bet for them and the imminent introduction of the product patent regime in 2005 motivated all these firms made a calculated move to reap the early benefits of this structural change. This Exclusive Marketing Rights features which allowed the firms to foresee the next 5 years where

A careful scrutiny of the table above shows a nominal rise in the research and development expenditure in all firms through all years except for between 2001 and 2002 where all the firms saw a considerable jump, of the order of around 100% to even above 150% over 2001 in expenditure for research and development. There could be various explanations to this phenomenon where such a massive jump in expenditure has been witnessed. One explanation could be the onset of the Doha Rounds and the implementation of the Mail Box and the Exclusive Marketing Rights features which allowed the firms to foresee the next 5 years where they could pump in funds for research and development and reap benefits though exclusive marketing rights that would allow them to exclusively market their products within the country without having to compete with other producers. The other reason, which could be closely linked to the previous one is the fact that the developing nations that were signatory to TRIPs and WTO after the Uruguay Rounds were given a period of 10 years, also known as the transition period to bring their patent regulations in line with the global (or the western) standards. With the onset of Doha Rounds which had good news for most of the developing nations and made patents a safe bet for them and the imminent introduction of the product patent regime in 2005 motivated all these firms made a calculated move to reap the early benefits of this structural change. This Exclusive Marketing Rights features which allowed the firms to foresee the next 5 years where

Table 4: Patents Granted to Leading Firms during the transition period up till 2006 could be seen in the way patent were awarded in the 10 years period spanning from after the Uruguay Rounds and the 2005 Patents Act amendment.

Table 4: Patents Granted to Leading Firms during the transition period up till 2006 could be seen in the way patent were awarded in the 10 years period spanning from after the Uruguay Rounds and the 2005 Patents Act amendment.

Chart 1: FDI Inflow in the Drugs and Pharmaceutical Industry (USD mil)

Chart 1: FDI Inflow in the Drugs and Pharmaceutical Industry (USD mil)

Chart 2: Export of Drugs and Pharmaceuticals from India (Source: (GOI, 2012)) een eon ee enn nse ne ee pene en ee eee ee noe nn nen gE nnn nn ee I A pS ISI EE investment from multinationals. It is however important to see how the foreign trade of the Indian pharmaceutical industry has fared over the years to give a closure to this analysis. India is a major exporter of formulations and bulk drugs across the globe with the major chunk of exports going to the U.S., Germany, Russia, the U.K., and China. The growth of Indian exports was of around 451.4 billion USD at 16.5% over a period of 10 years from 2002 to 2012 (GOI, 2012).

Chart 2: Export of Drugs and Pharmaceuticals from India (Source: (GOI, 2012)) een eon ee enn nse ne ee pene en ee eee ee noe nn nen gE nnn nn ee I A pS ISI EE investment from multinationals. It is however important to see how the foreign trade of the Indian pharmaceutical industry has fared over the years to give a closure to this analysis. India is a major exporter of formulations and bulk drugs across the globe with the major chunk of exports going to the U.S., Germany, Russia, the U.K., and China. The growth of Indian exports was of around 451.4 billion USD at 16.5% over a period of 10 years from 2002 to 2012 (GOI, 2012).

Chart 3: Import of Drugs and Pharmaceuticals into India

Chart 3: Import of Drugs and Pharmaceuticals into India

chronic diseases which have long term engagement with the drugs prescribed for them. These are molecules. Moreover these firms are concentrating wholly on the development of therapies for revealed the fact that Indian firms are not participating in innovation and development of newer

chronic diseases which have long term engagement with the drugs prescribed for them. These are molecules. Moreover these firms are concentrating wholly on the development of therapies for revealed the fact that Indian firms are not participating in innovation and development of newer

Indian Patent Policy and Publich Health : implications from the Japanese Experience

2006

The introduction of pharmaceutical product patents in India and other developing countries is expected to have a significant effect on public health and local pharmaceutical industries. This paper draws implications from the historical experience of Japan when it introduced product patents in 1976. In Japan, narrow patents and promotion of cross-licensing were effective tools to keep drug prices in check

The effects of patent-law changes on innovation: The case of India's pharmaceutical industry (G.T. Haley & U.C.V. Haley)

Technological Forecasting & Social Change, 2012

Recent patent-law changes in India's pharmaceutical industry provide opportunities to study changes of institutional and regulatory environments on innovation and social welfare in low-income markets. From 1972 to 2004 under its process-patent regime, India's pharmaceutical industry grew to become the world's fourth largest. Indian companies were becoming globally competitive in generics and clinical testing, and moving into product R&D. Researchers have debated the effects of India's new product-patent laws' effects on these trends. The authors cover the domestic characteristics and global competitiveness of India's pharmaceutical industry. They contrast data (from 2001 to 2004) on patents in India's process-patent regime with preliminary data (from 2005 to 2008) on patents in the country's new product-patent regime. They argue that Indian pharmaceutical companies have changed their decision-making in response to changed patent laws by moving from process to product research. However, the preliminary results indicate that these changes may have hurt domestic innovation. They conclude with strategic implications for the Indian pharmaceutical industry and highlight the need for research and public policy to establish optimal social returns from product-patent regimes.

The Influence of TRIPS Compliant Patent Laws on Indian Pharmaceutical Industry

The first legislation in India relating to patents was the Act VI of 1856. The Indian Patents and Design Act, 1911 (Act II of 1911) replaced all the previous Acts. The Act brought patent administration under the management of Controller of Patents for the first time. After Independence, it was felt that the Indian Patents & Designs Act, 1911 was not fulfilling its objective. Various committees were constituted to recommend, framing a patent law which can fulfill the requirement of Indian Industry and people. The Indian Patent Act of 1970 was enacted to achieve the above objectives. The major provisions of the act, provided for process, not the product patents in food, medicines, chemicals with a term of 14 years and 5-7 for chemicals and drugs. The Act enabled Indian citizens to access cheapest medicines in the world and paved a way for exponential growth of Indian Pharmaceutical Industry. TRIPS agreement, which is one of the important results of the Uruguay Round, mandated strong patent protection, especially for pharmaceutical products, thereby allowing the patenting of NCEs, compounds and processes. India is thereby required to meet the minimum standards under the TRIPS Agreement in relation to patents and the pharmaceutical industry. India's patent legislation must now include provisions for availability of patents for both pharmaceutical products and processes inventions. The present paper examines the impact of change in Indian Patent law on Pharmaceutical Industry.

The Wto Deal on Cheap Drugs: A Critique

The Journal of World Intellectual Property, 2005

In 2005, India amended its Patents Act, 1970 to introduce TRIPS compliant product patent regime. Generally speaking, law and policy makers in India during the time of the amendment were confronted with two major concerns viz. the future of the Indian pharmaceutical industry and access to affordable medicines in India and other developing countries. To address these concerns India along with many other developing countries attempted to incorporate TRIPS flexibilities in their domestic law. However, the success of the TRIPS flexibilities in addressing the question of access to affordable medicines mainly depends on three factors: a) the incorporation of flexibilities in the domestic law; b) the manufacturing capability of a country; and c) the political will to use the public interest safeguards provided in the domestic law. There are only a few countries like India, which satisfy the above-mentioned conditions to a certain extent. This article examines whether these premises hold true after five years into the implementation of the TRIPS compliant patent system in India. In this context the paper identifies and analyzes the legal, policy and institutional challenges that India is currently facing in the implementation of TRIPS flexibilities. It also identifies the main legal, policy and institutional disconnect in the implementation of TRIPS flexibilities in India. It argues that to effectively use TRIPS flexibilities to address access to affordable medicines require changes in three areas viz. law, policy and institutions. It clearly shows that mere incorporation of TRIPS flexibilities in the domestic legislation alone is not enough and the domestic legislation needs to be complemented with policy and institutional framework.

The Indian Pharmaceutical Industry : The Empirical Study

This paper aims at accessing the growth of Indian pharmaceutical industry, after the process of economic liberation in India and more particularly after the change in patent laws in India. In the process patent regime era Indian pharmaceutical companies were able to supply the cheapest generic drugs in the world but the advantage of process patent laws is not available to the industry after 1'st January 2005. The pharmaceutical industry has to evolve to confront the current situation and if possible new avenues for growth have to be explored. The objective of present study is to predict the prospects of Indian pharmaceutical industry.

With the help of a foreign ally: biopharmaceutical innovation in India after TRIPS

Health Policy and Planning, 2014

This article investigates the implications of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which reached full-fledged implementation in 2005, for the patenting activity of Indian biopharmaceutical companies. The Indian biopharmaceutical industry is well-known for its generic producers, whose business models capitalize on the opportunity to reverse engineer patented compounds and produce them at low costs through process innovation. By strengthening intellectual property rights, TRIPS determined a major regulative change, which presents the characteristics of an institutional shock. The examination of the patenting and alliance activity of 123 Indian biopharmaceutical firms between 1999 and 2009 reveals two important insights. First, the innovation outcome of Indian biopharmaceuticals has sharply increased during the transition to TRIPS-compliant regulation, suggesting that Indian companies have been capable and willing to transit from an imitation-based to an innovation-based business model. Second, those biopharmaceutical firms holding cross-border alliances to foreign partners have proved significantly more successful at enhancing their innovative capability. This research delivers a multifold contribution to the policy debate surrounding the enforcement of TRIPS in emerging economies. First, it suggests that such regulatory change may have encouraged biopharmaceutical innovation in India, despite the sceptical voices who did not foresee any benefits because of inherent inertia of the industry. Second, by arguing and testing the advantages of foreign partnerships, this research highlights that the much feared return of pharmaceutical foreign companies to India could instead favour adaptation to institutional change. Implications for Indian public health are particularly critical. The impact of TRIPS on drug pricing and on the capability—and willingness—of Indian biopharmaceuticals to invest in local health conditions are two crucial points of discussion.

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