India’s Domestic Pharmaceutical Firms and Their Contribution to National Innovation System-building

Domestic pharmaceutical firms continue to operate under the influence of the strategy of global integration of the pharmaceutical industry and healthcare. The link between domestic firms and public sector research organisations is the weakest link in the domestic pharmaceutical industry due to misguided policies in competence-building and innovation system-building after India accepted the Trade-Related Aspects of Intellectual Property Rights Agreement in 1995. The government should rethink its strategies to get domestic firms to contribute to system-building activities and prioritise investment into the upgrading of processes of learning and building competence.

The authors gratefully acknowledge the comments and suggestions given by the anonymous referee.

After India accepted the Trade-Related Aspects of Intellectual Property Rights (TRIps) Agreement in 1995 to remain structurally and systemically competitive, the domestic pharmaceutical industry needed to catch up with the advanced pharmaceutical countries in the development of in-house competencies and innovation system-building activities. Public and private investments were simultaneously required to be pursued for the creation of new knowledge or drug discovery, development of new processes, new formulations and dosage forms, new drug delivery systems and process intensification to technologically upgrade the domestic pharmaceutical firms and the national pharmaceutical innovation system. Contributions to innovation system-building activity also needed to focus on manufacturing excellence to remain viable and competitive in domestic and export markets simultaneously. Domestic pharmaceutical firms had to export to not only the markets of Russia, Africa, Asia and Latin America but also the highly regulated markets of the United States (US) and the European Union (EU), wherein they had to comply with the barriers raised in the form of regulatory and intellectual property requirements. In order to meet these requirements, their in-house research and development (R&D) efforts had to be geared up to file patents for non-infringing processes and formulations.

A highly liberalised regime of market access was emergent in the pharmaceutical sector since the domestic market had been opened up to allow the entry of foreign firms. Domestic pharmaceutical firms’ access to domestic markets was threatened due to the acceptance of product patents at home in several therapeutic areas. Funding support from the government for the implementation of collaborative R&D, to catalyse the active participation of domestic pharmaceutical firms in the development of new drugs for local health needs, was necessary. Context-specific steps to tackle the identified challenges were needed at the level of policymaking, institution-building, and system development for transformative change. Policymakers and domestic industry were required to act in a coordinated manner towards the development of supply- as well demand-side mechanisms to upgrade the national innovation system to meet all the identified requirements of public health and innovation.