Prsentation PowerPoint

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TRIPPING OVER TRIPS ? Implications for the
Biotech Segment of the Indian Pharmaceuticals
Industry
by Shyama V. Ramania And Mahesh Ravib, Preethi
Pradhanc , Augustin Mariad a INRA and Hi-Tide. b
Hi-Tide. c U-Berkeley and UPMF/Grenoble d Ecole
des Mines, Paris

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Innovation is a cumulative process
First Innovator
Subsequent Innovator
Spillovers
Challenge of the IPR system How to reward both
first and subsequent innovators?
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Impact on producers of technology
PRODUCTPATENTS
Broad Patent Protection
More incentives for First Innovators
PROCESSPATENTS
Narrow Patent Protection
More incentives for Subsequent Innovators
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Paris Convention 1883 Country specific IPR
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
Shifting of Incentives from Second innovators to
First ones
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Impact of Incentive Effect on innovation
producersCreates forces leading to decrease in
prices
Supply curve before TRIPS
price
Supply curve after TRIPS
Final Market price
Initial Market price
Demand curve
q2
q1
quantity
Increase in appropriation rates from RD can
lead to a greater supply of innovations. This
will lower prices of innovations. As a
consequence producers of consumption goods can
offer goods at lower prices.
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Impact of Access Effect on innovation
usersCreates forces leading to increase in
prices
LICENSE VALUE
Supply curve after TRIPS
Price
Supply curve before TRIPS
Final Market price
Initial Market price
Demand curve
q1
q2
Quantity
Transition from Free access to Market access
of innovations will lead to producers passing on
their license fees to consumers resulting in
higher prices and lower quantities being sold. So
supply curve shifts upwards, to the left.
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The final impact on prices and quantities sold
will depend on whether

• The upward shift in the supply curve due to the
  (negative) access effect,

is greater than or less than,

• The downward shift in the supply curve due to the
  (positive) incentive effect.

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The Indian context

• PRODUCT PATENT REGIME 1947-1970
• 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.

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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.

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In the post-TRIPS world
Lets look at the incentive effect
Inferences from interviews
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Impact of incentive effect on former second
innovators or developing country firms
Strategies Available now
Import innovations
Invest in creation of first innovations
Invest in creation of second innovations Or non-pa
tented innovations
For developed countries
Join as part of the division of labour chain in
innovation creation by developed country firms.
For developing countries
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Impact of incentive effect on first innovators
or developed country firms

• Good investment climate
• Good Business climate
• Access to correct and credible information
• Credible dispute settlement institutions

• Higher Foreign investment
• More technology transactions

Strong IPR
TRIPS
Does this exist?
So will this happen?
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Final Choices of Indian firms
Import innovations
3rd choice
1st choice
2nd choice
Invest in creation of first innovations
Invest in creation of second innovations Or off-pa
tented innovations
For developed countries
Join as part of the division of labour chain in
innovation creation by developed country firms.
For developing countries
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View of Developed country firms

• Good investment climate
• Good Business climate
• Access to correct and credible information
• Credible dispute settlement institutions

• Higher Foreign investment
• More technology transactions

Strong IPR
TRIPS
HAS TO IMROVE
So will this happen? ????? Depends?????
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Proposals for Reform
Agency to handle international litigations on
tech. transactions

• Open source literature
• (not possible since Thompsen took over ISI)
• A non-profit agency which collects data and
  charges only for analysis of data
• Motivation for Hi-Tide

A Sachs-type institute at the international level
coordinated and financially supported by both
developing country and developed country partners