post-TRIPS Period Research Articles

The impact of mergers and acquisitions on performance of firms: A pre- and post-TRIPS analysis of India's pharmaceutical industry

This study analyses the impact of mergers and acquisitions on performance of Indian pharmaceutical firms following the implementation of TRIPS in 1995. In order to identify adequately the effect of mergers, we investigate the impact on firm performance of the merged vis-a-vis the non-merged firms in the post-TRIPS period using difference-in-differences and propensity score matching approaches. Our results suggest that firm performance improved in merged firms, following the mergers. We argue that our finding represents the incidence of “positioning” merger (Gorton et al., 2009). Moreover, transfer of technologies and capabilities helped to improve firm performance in merged firms. Our findings have significant policy implications for Asian countries.

Impact of Intellectual Property Rights on Activity of Cross-Border Mergers and Acquisitions

We study the impact of the IPR (intellectual property rights) protection in the target and acquirer countries on the intensity of inbound cross-border M&As (mergers and acquisitions) in the target countries on a sample of 509,216 cross-border and domestic M&As in 64 developed and developing countries over 1985-2017. Our results show that better IPR protection in the target countries has a positive impact on M&A activity for the targets from the emerging and developed markets. We also find an inversed U-shaped relationship between the IPR protection in target countries and cross-border M&A activity at the post-TRIPS period after the global increase in IPR protection. Our results also show that developed acquires make less cross-border M&A deals when IPR protection improves in their own countries. The opposite happens when IPR protection improves in the countries of the emerging acquirers, which acquire the targets from the developed countries. IPR protection in the emerging targets motivates developed acquirers to make more international M&A deals, while the opposite happens when the developed acquirers would like to purchase targets from the developed markets.

The TRIPS Agreement and the Pharmaceutical Industry in India

The World Trade Organization’s (WTO’s) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) calls for the harmonization of intellectual property rights (IPRs) regulations across all WTO member countries. The TRIPS Agreement requires all WTO member countries to adopt and enforce minimum standards of intellectual property. It was assumed that the introduction of pharmaceutical product patents would hamper the Indian pharmaceutical industry’s growth. Contrary to expectations, however, the Indian pharmaceutical industry has been growing in the post-TRIPS period. The TRIPS Agreement changed the research and development (R&D) orientation of Indian pharmaceutical companies, which have increased their R&D investments. Since the TRIPS Agreement was signed, the pharmaceutical global value chain (GVC) has been re-structured and has now expanded to emerging countries like India. Indian pharmaceutical firms have thus been participating in the pharmaceutical GVC in the post-TRIPS period. This participation is conducive to technological upgrading and technology transfers. While operating in the GVC, Indian pharmaceutical firms are upgrading by adopting state-of-the-art technologies. This study explores how the TRIPS Agreement is influencing the Indian pharmaceutical industry and discusses the industry’s growth factors in the post-TRIPS period within the GVC framework. JEL: L21, L24, L26, L65

Knowledge Sources and International Business Activity in a Changing Innovation Ecosystem: A Study of the Indian Pharmaceutical Industry

ABSTRACTThe Indian pharmaceutical industry has experienced rapid growth, becoming the world's largest provider of generic drugs, based on product and process innovation. The industry has undergone dynamic changes in recent decades, operating in a rapidly evolving environment affected by domestic and global policies; a key example of the latter is the TRIPS agreement. Taking an intellectual property perspective, we describe how changes in the innovation ecosystem have affected companies’ strategies related to international activity and accessing knowledge from both internal and external knowledge sources, during the transitional- and post-TRIPS periods (1995–2004 and 2005–2014, respectively). Combining intellectual property arguments with contextual aspects of the innovation ecosystem, we conjecture that, in the post-TRIPS period, externally-sourced knowledge will be more important than internally-sourced knowledge, for Indian pharmaceutical firms’ international business activity.

Intellectual property rights, imitation, and development. The effect on cross-border mergers and acquisitions

ABSTRACTIn this paper, we analyze whether the recent global process of strengthening and harmonization of intellectual property rights (IPRs) affects decisions of cross-border mergers and acquisitions (M&As). We investigate if IPRs have a differential effect across sectors of different technology content and for countries of different development level. Also, we study how imitation abilities of target countries interact with the tightening of IPRs. Using data for the post-TRIPS period (1995–2010), we estimate an extended gravity model to study the bilateral number of M&As, including a measure of the strength of IPRs systems on target countries and a set of control variables usually considered as determinants of M&As. The estimation results verify the gravity structure for M&As and show that IPRs –and enforcement– influence decisions of cross-border M&As in all sectors regardless of their technological content. However, IPRs are more important in countries with high imitation abilities and in sectors of high-technology content. Furthermore, a strengthening of IPRs leads to a larger increase of M&As in developing countries than in developed countries. These results call the attention on the possible implications for least developed economies and challenge the adequacy of a globally harmonized IPRs systems.

Does TRIPS Drive to Productivity Growth in Indian Pharmaceutical Industry

This article endeavours to analyse the inter-firm variations in total factor productivity growth (TFPG) of Indian pharmaceutical industry during the pre-Trade-Related Intellectual Property Rights (TRIPS) and post-TRIPS period by using non-parametric Malmquist productivity index (MPI). For analysis purpose, data for 30 major Indian pharmaceutical firms have been culled out from the various reports of the Centre for Monitoring Indian Economy (CMIE) during the period of 1991–2011. The empirical results reveal that the TFPG of the 30 major Indian pharmaceutical firms recorded to be 0.02 per cent and both the technological progress and efficiency change are equally contributing to the TFPG of the firms during entire study and pre-TRIPS period. It has been observed that TFPG has marginally regressed by 0.04 per cent in the post-TRIPS period and the negative growth of the average TFPG was contributed by technical inefficiency, whereas the positive technological progress helps to cover the impact of inefficiencies on TFPG. However, the growth of efficiency remains negative throughout the study period, which has been contributed both by the scale inefficiency and by the pure inefficiency, whereas the technological progress has a favourable impact on the productivity growth of the industry during the post-TRIPS period. Therefore, it can be inferred that the managerial, technical and scale inefficiencies in Indian pharmaceutical industry should be checked in order to operate at optimal scale and achieve potential productivity growth in the post-TRIPS period.

IPR scenario and factors for promoting IPR culture: a post-TRIPS period analysis of selected pharmaceutical firms in North India

Different shades of World Trade Organization (WTO) agreement on trade-related intellectual property rights (TRIPS) are reflected in the Indian pharmaceutical industry, but small and medium-scale pharmaceutical firms are slowly increasing their product innovation, process innovation and research and development (R&D) intensity. Analysis of variance results highlight a significant difference in performance of sole proprietorship/partnership, private limited and public limited firms vis-à-vis product innovation, process innovation, increased range of goods and services, R&D intensity, new technology adoption and adaptation. Factor analysis results indicated that developing intellectual property rights (IPR), technological measures and marketing practices explained 80.256% of variation. Policy initiative factor is dominating and SMEs are still relying heavily on support from government.

Do Intellectual Property Rights Influence Cross-Border Mergers and Acquisitions?

This paper analyses whether the strengthening of intellectual property rights (IPRs) systems affects decisions of cross-border mergers and acquisitions (M&As), and if their influence is different for developed and developing countries, and across industrial sectors. We estimate an extended gravity model to study bilateral number of M&As using data for the post-TRIPS period (1995-2010) and two different indexes that measure the strength of IPRs systems at the country level. We find that IPRs influence decisions of cross-border M&As in all the sectors of different technological content. Furthermore, a strengthening of IPRs leads to a larger increase of M&As in developing countries than in developed countries. This calls the attention on the possible implications for least developed economies.

Pre TRIPS, Post TRIPS Patent Regime and the Indian Pharmaceutical Industry: An Empirical Study

The legal protection to intellectual property is available in India since British rule. The British law regarding protection of intellectual property was wide and encompassing. The British law provided highest degree of protection to the pharmaceutical industry; however this also led to very high prices of medicines in India. To provide cheap medicine and to promote Indian pharmaceutical Industry, Indian Patent Act (1970) was implemented in India it allowed process patent for pharmaceutical Industry. The law was later amended to fulfill the mandatory requirements of WTO and TRIPS. The changes in law caused paradigm shift in the business of Indian pharmaceutical industry. The present paper is an attempt to find how the change in law has impacted the Indian pharmaceutical industry. The present paper is based on Secondary data taken from annual reports of pharmaceutical Industries Aurbindo, Cipla, Lupin, Ranbaxy, Dabur. The technique of GAP analysis has been used to compare the financial position of Indian pharmaceutical companies in PRE TRIPS period and POST TRIPS period SPSS package has also been used to analyze the data. The results of the study indicate that there is overall improvement in financial position of Indian pharmaceutical companies in POST TRIPS period. The improvement is due to more spending in R&D activities and strengthening of their core competencies. The study provides an insight to the position of Indian pharmaceutical industry in the present legal scenario.

Intellectual Property Rights and International Trade of Agricultural Products

The signing of the agreement on Trade-Related Aspects on Intellectual Property Rights (TRIPS) had led to a process of global harmonization and tightening of intellectual property rights (IPRs) systems. As part of this process, the use of IPRs in agriculture has been increasing in the last decades. This paper studies the effect of intellectual property rights on agricultural trade, for the post-TRIPS period (1995–2011), using a new yearly index of IPRs, for 60 developed and developing countries. We study the effect of stronger IPRs on total trade, bilateral trade, and trade margins using different econometric techniques. We found that the strengthening of IPRs has been having a negative and uneven effect on agricultural trade at different levels of disaggregation. The gravity estimation showed that both the IPRs of the importer and the exporter have negative effects on total bilateral trade and that the probability of creating new bilateral trade links increases with the importer’s IPRs. Finally, we found that stronger IPRs have a negative effect on the intensive margin of trade and a positive impact on the extensive margin. Overall, the evidence shows that agricultural trade related to the developing world has been more negatively affected, which calls the attention to the idea that a common system can equally work for all countries.

Twenty years of TRIPS agreement and access to medicine: a development perspective

The Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS) changed the landscape of international Intellectual Property (IP) regime by setting a common minimum standard for the protection and enforcement of IP. In the context of 20 years of the entry into force of the TRIPS Agreement and completion of 11 years of implementation of product patent protection in many developing countries, this paper examines the challenges faced by developing countries with regard to patent and access to medicines. The paper argues that the Agreement is a classic case of corporate capture of international law making and it spearheaded a new chapter of struggle for access to medicines. It provides a brief survey of experiences of developing countries with regard to access to patented medicines as well as research and development (R&D), foreign direct investment (FDI) and technology transfer in the pharmaceutical sector during the post TRIPS period. It analyses major challenges faced by developing countries in the actual use of TRIPS flexibilities to address access to medicines and thereby meeting the developmental and public health needs. The paper focuses on the need to restructure the TRIPS and TRIPS plus IP regime, which not only prevent access to affordable medicine, but also failed to deliver access to R&D needs of developing countries. It emphasises providing enough policy space for countries to design their patent laws, especially to address product access to medicine, and scrapping of the compulsory product patent protection under the TRIPS Agreement as critical to serve this purpose.

Decomposition of Technical Efficiency and Productivity Growth in Indian Pharmaceutical Industry:A Non-Parametric Analysis

This paper analyzes the technical efficiency and total factor productivity growth of Indian pharmaceutical sector for the period 1991 to 2011, using Data Envelopment Analysis. Cross sectional data for 30 major Indian pharmaceutical firms have been culled out from the reports of Centre for Monitoring Indian Economy, Economic Survey of India and Annual Survey of Industries. The technical efficiency of 30 major Indian Pharmaceutical firms have been calculated at five points of time, whereas the TFP growth has been calculated four periods. Three inputs have been considered, viz., net fixed assets, raw material and total expenses and one output, i.e., net sales. Average performance of the selected firms was suboptimal and the inefficiencies were enlarged in the post-TRIPS period. Decomposition of total factor productivity growth into efficiency change and technological change reveals that productivity growth was positive in the Pre-TRIPS period, but became negative thereafter. Technological change contributed towards the growth of productivity whereas efficiency change restricted the potential productivity growth. There is a need to reduce the managerial, technical and scale inefficiencies and ensure efficient capacity utilization.

Enhancing innovation and intellectual property culture in manufacturing small and medium enterprises

Technological innovation is an important challenge faced by small and medium enterprises (SMEs). This study investigates the factors that influence the growth, performance, and development of intellectual property rights (IPRs) attitude of SMEs in India. The study is an attempt to highlight the extent of Intellectual Property Rights of Indian manufacturing as a whole and a survey analysis has been undertaken for 100 SMEs of manufacturing sector of Punjab in India to understand the level of IPRS by firms in post TRIPS period. Punjab is a progressive state of India with an average growth rate of 10%. Punjab has been ranked as one of the growing states of India. The present study uses growth rates for analyzing the status of IPRs at all India level. It also presents the sector-wise status of patents filed. Manufacturing SMES have been categorized on the basis of use into durable, non durable and essential goods. The results of the study highlight the low level of IPRs in India. Durable industries have filed most of the trademarks. Most of the copyrights and patents have been filed by essential goods. The results of the factors influencing Innovation in SMEs of Punjab manufacturing depict that: increased market share, improved production flexibility, staff employed in R and D, status of trademarks in last ten years and status of copyrights in last ten years and: improved environmental impact or health safety aspect explain 87.6% of the variation. Finally, the study recommends the factors for promoting IPR culture for SMEs of Punjab manufacturing. Factor analysis results highlight that two factors namely; i) Factor analysis results highlight that two factors namely; policy initiatives and organizational factor explain 62.85% of total variation. Key words: Intellectual property rights (IPRs), innovation, small and medium enterprises (SMEs), Punjab manufacturing.

Changing Pragmatics of The Indian Pharmaceutical Industry In The Pre and Post TRIPS Period

The agreement on Trade-Related Aspects of Intellectual Property-Rights (TRIPS) is an international treaty by the world trade organisation (WTO) which sets down minimum standards for most form of intellectual property (IP) regulation within all member countries of the world trade organization. As a result of TRIPS the Pharmaceutical industry has witnessed significant changes. Against this background, the paper tries to study the Post TRIPS Patenting, Exports and R& D Scenario in Pharmaceutical Industry of India. The study uses the primary as well as secondary data to the changes in the pharmaceutical industry in post-TRIPS period. There has been a paradigm shift in the policies and programs governing Indian pharmaceutical industry. The results of the study highlight that the new patent regime has encouraged innovation and greater investment in R&D. Patents are the most efficacious and indispensable tool to secure strategic competitive advantage in the market. The impact of TRIPS compliance is becoming increasingly visible, on the pharmaceutical industry in India. Keywords: Trade-Related Aspects of intellectual property-Rights, General Agreement on Trade and Tariff, World Trade Organisation

Analysis of patenting trends of antifungal drugs in the product patent regime in India

The present study attempts to analyze the patenting activity of antifungal drugs in the pre and post TRIPS period in India. There is a general increase in patent filing in antifungals both by Indian as well as by multinational companies, with greater filing by the latter in the post-TRIPS era. The major filings in the transition and post-TRIPS period have been due to increased product than process patent filings, wherein 75% of the total patent applications in this sector is directed towards product patents and remaining 25% is directed towards process patents. It is observed that Indian academic institutions have been more active than foreign institutions with respect to patent filings in this field.

South-South Cooperation Strategy in Dealing with the Identified Common Challenges in Intellectual Property

This article identifies the major common challenges faced by the developing nation in Intellectual Property in the post-TRIPS period. What further perplexes the developing nations is the persistent drive by the North to push for higher IP rights protection and enforcement. The article calls for a South-South cooperation strategy to deal with identified common challenges and setting a common agenda.