Paper short abstract:

Does India's experience in the last two decades suggest a re-thinking about the relationship between patents, R&D and innovation in developing countries? Does import trade regime matter for a more developed industry? What does India's experience in biotechnology products and APIs suggest?

Paper long abstract:

The business environment of the pharmaceutical industry has changed dramatically in India since the 1990s especially with respect to patent regime and import trade regime.

The abolition of product patents in pharmaceuticals in 1972 was a major factor behind the rise and growth of the industry led by Indian private sector. What has been the impact of the re-introduction of product patents in pharmaceuticals in 1995? Like the MNCs, Indian companies are operating in different parts of the world not only as exporters but also as investors in manufacturing and marketing operations. Again like the their western counterparts, Indian companies have also started investing in R&D for the development of new drugs. But overall did the change in the patent regime benefit Indian companies? Are Indian generic companies mature enough to take advantage of stronger patent protection? Does India's experience in the last two decades suggest a re-thinking about the relationship between patents, R&D and innovation in developing countries?

Second issue relates to import liberalization. India's success as an exporter of cost effective chemical based pharmaceutical formulation products has obscured the negative impact that import liberalization had on biotechnology products and many active pharmaceutical ingredients and intermediates. The second part of the paper will analyse the implications of such an import dependence on sustainable growth of the industry. It will argue that even a more developed industry such as pharmaceuticals in a developing country such as India require active government intervention to promote the growth of industry.