Intellectual property protection, regulation and innovation in developing economies: the case of the Indian pharmaceutical industry

Abstract

Historically, nations have modified their IP policies to support their development agenda. With the advent of TRIPS, the ability of countries to choose between different IP policy options has reduced considerably but some flexibility remains. Countries have tried to utilize this flexibility for their advantage but in certain respects the choices are difficult. In recent years, certain elements of the new IP regime in India have been vigorously debated in the context of the TRIPS mandated IP policy changes. Given the complex interface between economic development and IP regimes, a variety of arguments have been deployed to argue in favour or against these elements. The paper argues that an evaluation of the IP regime and regulation in developing countries needs to be done in the context of how they facilitate capability building especially through participation of domestic firms in global R&D and production networks. Opportunities for domestic firms to participate in global networks depend on a variety of inter-related factors like emerging technology regimes, changes in global industrial structures, strategies followed by MNCs and capabilities and strategies of domestic firms with respect to innovation. Consequently, the fine-tuning of the IP regime would require an understanding of these developments as well, often in the context of a specific sector. The paper uses this broad heuristic framework to analyze emerging IP policy needs for the Indian pharmaceutical sector and the role of other types of regulation. In the process it also provides some insights on how developing countries with decent technological capabilities can exploit regulatory flexibilities available in the post-TRIPS scenario.