The Dynamics of Pharmaceutical Patenting in India: Evidence from USPTO Data

Abstract

This article analyses the impact of the implementation of the ‘Agreement on Trade-Related Aspects of Intellectual Property Rights’ (TRIPS) on various segments of the Indian pharmaceutical industry. In particular, it focuses on the conditions under which a strong patent system can create benefits for a developing country's pharmaceutical industry. The theoretical analysis suggests that the greater the technological capabilities of the Indian pharmaceutical industry the greater are its chances to benefit from the introduction of stronger intellectual property rights (IPRs). The evidence presented paints a generally positive picture of the state of the Indian pharmaceutical industry, with the existence of strong and growing technological competencies that can be used as a platform for further expansion. These conclusions are dependent on India's worldwide success in the industry and cannot be automatically applied to other developing countries, especially if their pharmaceutical industry is not strong at the moment of the transition to a stronger IPR regime.

Notes

1. J. O. Lanjouw & I. M. Cockburn, New pills for poor people? Empirical evidence after GATT, World Development, 29(2), 2001, pp. 265–289, p. 268.

2. W. Greene, The emergence of India's pharmaceutical industry and implications for the U.S. generic drug market, Office of Economics Working Papers No. 2007-05-A, U.S. International Trade Commission, May 2007.

3. S. Chaudhuri, The gap between successful innovation and access to its benefits: Indian pharmaceuticals, European Journal of Development Research, 19(1), 2007, pp. 49–65; Lanjouw & Cockburn, op. cit., Ref. 1.

4. A. B. Jaffe & M. Trajtemberg, Patents, Citations, and Innovations: A Window on the Knowledge Economy (Cambridge, MA, MIT Press, 2002).

5. F. M. Scherer & S. Weisburst, Pharmaceutical patent protection in Italy, International Review of Industrial Property and Copyright Law, 24(6), 1995, pp. 1009–1024 [reprinted in F. M. Scherer, Patents: Economics, Policy and Measurement (Aldershot, Edward Elgar, 2005), ch 6].

6. This analysis is formulated in terms of individual consumers while much of the demand for drugs is due to public health systems. Although public health organizations might redistribute wealth, this does not change the results of the model qualitatively: higher drugs prices and less quantity of drugs produced mean that the health service will be able to buy less drugs for its citizens with a loss of welfare. This is especially true in under-funded health systems in developing countries that are often starved of resources.

7. F. M. Scherer, The political economy of patent policy reform in the United States, Mossavar–Rahmani Center for Business & Government (M-RCBG) Programs' Working Papers, John F. Kennedy School of Government, Harvard University, 2006.

8. Scherer & Weisburst, op. cit., Ref. 6.

9. Ibid.

10. R. Aoki & T. Saiki, Implication of product patents—lessons from Japan, Report for the Commission on Intellectual Property, Innovation and Public Health (CIPIH), World Health Organization, 2005.

11. Greene, op. cit., Ref. 2.

12. S. Chaudhuri, R&D for development for neglected diseases. How can India contribute, Report for the Commission on Property Rights, Innovation and Public Health (CIPIH), World Health Organization, 2005, p. 21.

13. Pharmabiz, Indian pharma Inc on the move, Thursday 28 September 2006, based on a KPMG-CII study, at http://www.pharmabiz.com/article/detnews.asp?articleid=35366&sectionid=50 (accessed 12 January 2007).

14. ASSOCHAM, White Paper on Indian pharma industry: quest for global leadership, in collaboration with Cygnus Research, 14 November 2006, New Delhi.

15. Chaudhuri, op. cit., Ref. 3.

16. Pharmabiz, op. cit., Ref. 14.

17. ASSOCHAM, op. cit., Ref. 14.

18. H. Thorsteinsdóttir, A. S. Daar, P. A. Singer, É. Archambault & S. Arunachalam, Health biotechnology publishing takes-off in developing countries, International Journal of Biotechnology, 8(1–2), 2006, pp. 23–42.

19. U. Quach, H. Thorsteinsdóttir, J. Renihan, A. Bhatt, Z. Costa von Aesch, P. A. Singer & A. S. Daar, Biotechnology patenting takes off in developing countries, International Journal of Biotechnology, 8(1–2), 2006, pp. 43–59.

20. Full explanatory notes are available at the URL: http://www.uspto.gov/go/taf/clsstca/explan.htm (accessed 4 February 2007).

21. It is also possible to attribute patents to a country in two other ways. One is to assign a patent to a country when any of the inventors listed on the patent are resident in a country. This, however, generates double-counting and creates problems with the interpretation of the specialization indices used in the analysis. The other way is to assign a fraction of a patent to the country of each inventor.

22. The definition of pharmaceutical patents used by the PTMB falls between that used by Scherer and Weisburst, who only used class 514, and the USPC-SIC concordance, which includes other classes in addition to 424 and 514.

23. Utility patents are the general category of patents in the USA and account for most US patents. Other types of patents include design, plant and reissued patents. A utility patent is a patent issued for inventions that perform useful functions.

24. Thorsteinsdóttir et al., op. cit., Ref. 19.

25. Quach et al., op. cit., Ref. 20.

26. For an in-depth discussion of the index, see D. Archibugi & M. Pianta, The Technological Specialization of Advanced Countries (Dordrecht, Kluwer Academic, 1992); J. Cantwell, Technological Innovation and Multinational Corporations (Oxford, Basil Blackwell, 1989).

27. Scherer & Weisburst, op. cit., Ref. 6.

28. For a discussion of this measurement issue, see Archibugi & Pianta, op. cit., Ref. 27.

29. Quach et al., op. cit., Ref. 20.

30. F. M. Scherer, Patents: Economics, Policy and Measurement (Aldershot, Elgar, 2005).

31. Jaffe & Trajtemberg, op. cit., Ref. 5.

32. For an early application of the indicator of technological opportunities based the percentage of patents in fast-growing fields, see V. Meliciani & R. Simonetti, Specialization in areas of strong technological opportunity and economic growth, in: G. Eliasson, C. Green & C. McCann (Eds), Microfoundations of Economic Growth: A Schumpeterian Perspective (Ann Arbor, MI, University of Michigan Press, 1998).

33. R. Simonetti, Technological change, in: S. Himmelweit, R. Simonetti & A. Trigg (Eds) Microeconomics: Neoclassical and Institutional Perspectives (London, Thomson Learning, 2001).

34. BCG, Harnessing the power of India: rising to the productivity challenge in biopharma R&D, BCG Focus, The Boston Consulting Group, May 2006.