India’s Minister of Commerce & Industry, Suresh Prabhu, recently remarked that the Indian pharmaceutical industry should focus on future opportunities in healthcare, both within and outside the country. He also stated that India has become the pharma hub of the world, helping many countries with affordable medicines and vaccines.
It is time for us to progress from manufacturing to innovation and an important requirement is a robust intellectual property rights (IPR) system, India has improved its ranking in the U.S. Chamber’s international IP Index, to 44 out of 50 countries this year, which represents a significant positive change.
However, if we are to continue this upward trajectory, much more work will be required to strengthen India’s evolving IPR regime. A great deal needs to be done to ensure that global innovations reach, and benefit, Indian patients. Prime Minister Narendra Modi has been trying to position India as an investment destination, with the help of flagship initiatives such as ‘Make in India’ and ‘Startup India’, but we also have the potential to become an innovation hub and a robust IPR system can help us realise that potential.
An uncomfortable reality is that India’s patent productivity is considerably low compared to that of countries such as Japan, USA, South Korea, and China. At present, the number of patents being filed in India is 17 to a million people. This is partly the result of a relatively weak IPR regime. Things are further complicated due to an under-staffed office of the Controller General of Patents, Design and Trademarks (CGPDT), resulting in long delays in approving or rejecting applications for registration of patents and other intellectual property. That runs counter to the objective of promoting innovation in the country.
Following the passage of India’s Patents Act 2005, patent applications have certainly increased, but the necessary infrastructure to process them remains inadequate. According to the latest Economic Survey, this has led to a backlog of over 200,000 pending applications. To deal with the backlog, CGPDT recently hired an additional 459 patent examiners, after amending rules on 16 May, 2016, to get rid of procedural inconsistencies in the processing of patent applications. While this is an improvement move, more is needed to streamline the process of patent registration.
Given the speed with which a technology can become obsolete, the inordinate delay in processing patent applications deters investment in R&D and in turn, impedes innovation in the country. No surprise then that R&D spending in India, as a percentage of GDP, is 0.7 percent, compared to the US (2.8 percent), China (2.1 percent) Israel (4.3 percent) and South Korea (4.2 percent), and that spending by India’s private sector is a meagre 0.3 percent of GDP.
Indian patients deserve access to the best in medical treatment, medical devices, and medicines – this can only become possible when we are allowed access to global innovation, alongside encouraging homegrown innovation. At present, pharmaceutical companies are making persistent efforts to develop life-saving and life-improving drugs and we need this research to continue.
Cutting edge research is likely to bring about substantial improvement in people’s lives, by giving precedence to health and longevity. For instance, currently, over 170 medicines are being developed by American bio-pharmaceutical researchers, for Type 1 and Type 2 diabetes and related disorders. Considering India is increasingly being termed as the diabetes hub of the world – the country can’t remain indifferent if it wants to bring down the threat of diabetes. Such innovations require huge upfront capital investment, and a commensurate risk-weighted reward programme for risk takers. Regulators need to keep this in mind. A feeble IPR regime in India meant that from 2010 to 2014, only seven drugs out of 50 new drugs to treat cancer were made available to Indian patients. Along with a lax IPR regime, we have also resorted to other short-sighted regulations such as excessive price-caps on medicines and medical devices. These actions, though well-intentioned, dis-incentivise investment in risky R&D.
Bridging the gap in innovation is the need of the hour for the Indian healthcare ecosystem and for the government to ultimately achieve its long-term goal of Universal Healthcare Access. In this regard, the announcement of the new IPR policy in 2016 was certainly a step in the right direction and we have already seen an increased focus on expanding awareness, imparting training and strengthening enforcement.
However, as a country we need to adopt more meaningful reforms to incentivise domestic innovation and improve access to global innovation. This will also go a long way toward bolstering India’s global competitiveness, by bringing in increased foreign direct investment (FDI). There is a direct linkage between strong IPR and increased FDI inflows, particularly in countries that have ‘technical absorptive capacities in place but where the risk of imitation is high’. Thus, India while retaining the flexibility provided by WTO’s TRIPS to make healthcare affordable, must strike a balance between the need for innovation, and affordability in healthcare.
(The writer is the Group Chief Economist at Raymond Limited, specialising in policy research & advocacy/consumer rights)