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Abstract
Developing countries have traditionally been regarded as users of technology developed abroad. During the 1980s and 1990s this approach to meeting domestic healthcare needs faced new barriers to consumption and use that resulted from the high cost of drugs and the emergence of new international trade, investment and intellectual property rules. Attention was thus drawn to the possibility of building (bio)pharmaceutical innovation systems at home. By examining the experiences of India, Cuba, Iran, Taiwan, Egypt and Nigeria, this paper identifies a multiplicity of pathways for doing so. Because innovation is embedded in both a policy and institutional context, country‐specific triggers and drivers of innovation processes have been important. None the less, some commonalities do appear. Among the more notable triggers were the existence of healthcare crises and earlier incentives that had focused the attention of critical actors on domestic healthcare problems and stimulated a conscious effort by firms to master technology. The interactivity among four types of policies—those strengthening the knowledge base, stimulating capacity building, opening space for local firms and creating incentives for innovation were important in shaping the way these triggers were perceived and in driving the subsequent innovation process.
Acknowledgements
The author wishes to thank the three anonymous readers whose thoughtful comments have contributed to enriching this paper.
Notes
1. It might, however, create opportunities for researchers that reduce incentives to go or stay abroad (brain drain).
2. The concept of an ‘original equipment manufacturer’ is borrowed from the electronics and automobile industries, where developing country firms began to supply parts and components and later finished products for sale under the brand name of the contracting party, generally a multinational firm in the North.
3. Policies and their absence are both critical factors in providing incentives and/or disincentives for learning and innovation. For examples from other countries and sectors, see Mytelka (Citation1978, Citation1998).
4. Although process patents were in place, countries such as Argentina, Brazil and India deliberately adopted patent policies, such as the monitoring of licensing fees and the elimination of product patents to stimulate local technological capability building through reverse engineering, notably in the pharmaceutical industry. See Vaitsos (Citation1973), Mytelka (Citation1978), Chudnovsky (Citation1979) and Corea and Mytelka (Citation1981).
5. Among the new tendencies in development thinking, Johnson and Lundvall single out the work of Amartya Sen which shifts the focus from resource endowments to capabilities that support “the expansion of the substantive freedoms that people enjoy”; yet,even then, “… learning and innovation capabilities generally do not seem to be included” (Johnson and Lundvall, Citation2003: 18–19).
6. See, for example, the brief discussion of Iran, Egypt and Taiwan in section 3.
7. The Soviet Union and India were exemplars in this respect.
8. The Commission on Macroeconomics and Health in its report to the WHO recently took such a linear perspective when it wrote: “Viewing technological innovation as a process going from basic science to final‐product testing, public financing should cover much of the initial stages while patent production should provide incentives for the later stages of the process.” (Sachs, Citation2001: 77.)
9. This section is based on case studies undertaken within the context of three projects at the United Nations University Institute for New Technologies (UNU‐INTECH) over the past several years. See UNU‐INTECH/NABDA (Citation2004), UNCTAD (Citation2005) and UNU‐INTECH (2003).
10. Successful organizations in the research sector from an ‘innovation’ perspective are those whose research outputs are taken up by users.
11. The term was developed with reference to the strategies of a small number of developing countries in Asia in the consumer electronics industry.
12. Time and space do not permit a discussion of the nature of this demand which in Ghana and India, in particular, included the development of indigenous medicine, thus providing additional incentives for researchers to focus on domestic healthcare problems at the same time as it strengthened the provision of higher quality traditional medical care through this pathway to a larger number of people.
13. Much of the evidence for this comes from state‐owned enterprises in the former Soviet Union and there are, to the best of my knowledge, no studies of ‘successful’ innovators in countries with a command‐economy, although there might well have been some. Despite the initiation of some reforms, a research trip to Cuba in 1997/98 showed that this organizational form remained very much intact.
14. This occurred in Egypt (Abdelgafar, Citation2002) and in other developing countries (Mytelka, Citation1978).
15. Initially the interferon project was based on extraction from blood leukocytes but this required a large supply of blood. The team thus began working on other means to produce Interferon namely by recombinant techniques. This was achieved in 1983.
16. Also of interest in the Cuban case is the way in which a continuous process of innovation and of cross organizational collaboration was taking place over the 1990s. This differs, for example, from the one‐time process of collaboration and innovation that took place in Sialkot (Pakistan) in response to a crisis generated by a ban on imports of surgical instruments into the United States on quality grounds. While upgrading in the industry took place in this instance, the organizational and technological innovations that took place did not become institutionalized in local habits and practices. See Mytelka and Farinelli (Citation2003).
17. The ownership share of foreign multinationals (MNCs) in the pharmaceutical sector, for example, fell from some 80–90% in 1970 to 39% 1993 and the share of the top ten Indian‐owned firms in the domestic market (24.9) rivalled that of the top ten foreign‐owned firms (23%) by 1992 (Acharya, Citation1999: 89–91).
18. One of the results of the Uruguay round of trade negotiations that led to the creation of the World Trade Organization (WTO) was the agreement on Trade Related aspects of Intellectual Property (TRIPS), which obliged all member countries to enact into domestic legislation and enforce new patenting rules that included the extension of patent lives from 12 to 20 years and the obligation to legislate both process and product patents. Trade sanctions could result from the failure to enact and enforce TRIPS rules.
19. Ranbaxy Laboratories, India's largest pharmaceutical firm, followed a similar trajectory (UNCTAD/UNDP, Citation2002: 29–40; Ramani, Citation2001).
20. The product, GRASTIM, is a recombinant protein used in chemotherapy‐induced neutropenia and in bone marrow transplants (Reddy, Citation2003a).
21. Countries that have built a strong science base, created public‐sector research institutes and, in some instances, state‐owned pharmaceutical firms, but have relied on licensing for production and introduced few policies to stimulate innovation processes and have thus developed few new products or processes locally, include, among others, Brazil, Argentina, Mexico and South Africa (Galhardi, Citation1994; South Africa, Citation2003).
22. Prior to 1993 clinical trials were not required for drug approval in Taiwan if they had been approved elsewhere. Since then drugs that are launched in Taiwan must go through clinical tests to determine the drug's effect on Chinese ethnic groups.
23. The Industrial Technology Research Institute (ITRI), its Biomedical Engineering Center (BMEC) which initiated a biochip project in 1998 and the creation of Phalanx Biotechnology Group, Inc., its spin‐off company in 2003 illustrate the speed with which this new linkage is generating commercial results (www.itri.org).
24. The research for this case study was undertaken in 2003–2005 by Lynn K. Mytelka, Banji Oyelaran‐Oyeyinka and Padmashree Gehl Sampath.
25. In Cuba this was true of all healthcare‐related public‐sector research bodies. In Nigeria, it was less universal within the healthcare sector, but it was also found in other science‐intensive activities, as the creation of a Natural Resource Research Centre also located within the Ministry of Science and Technology and the attention it pays to resolving local problems through the use of natural resources found in Nigeria and its successes in doing so illustrate.
26. PMG‐MAN was inaugurated in 1983 with 20 founding members. Its membership in 2003 was over 130.
27. See also the work of Dr. Sofowora who founded the Centre for Research on Traditional Medicine at IFE. Many of his students were leaders in focusing on local problems/needs in the (bio)pharmaceutical sector.
