It is almost unanimously accepted that the path economies take to attain high competitiveness—where firms embrace international competition—goes through innovation. To increase competitiveness, this path enables innovators to acclimatise swiftly to perennial gales of technological change. Enterprises that are competitive in open global markets are key drivers in a nation’s competitiveness. Intellectual property rights (IPRs) are critical to incentivising innovation, which, in turn, is key to sustaining economic growth. Scholars have found this statement to hold true based on rigorous empirical testing across a cross-section of countries and time periods.
There is a strong link between innovation, competitiveness and protection of intellectual property. A balanced IP regime will contribute towards building competitive firms. Edler and Nowotny (2015) note that: “Much of European and certainly most of US innovation policy is still and mainly about competitiveness and growth, where the market of ideas and innovation decides which direction knowledge production and innovation will take.” Although there is still a long way to go, India has seen some growth in investment in science and technology, higher education and research. The potential is enormous, but so are the challenges.
China’s rapid growth has led this Asian giant to become the second-largest economy, behind only the US. Earlier this year, the top policymaking bodies in China published an unprecedented policy roadmap for reforming the IP adjudication system. Subsequently, the National People’s Congress of the People’s Republic of China approved a restructuring plan which includes major organisational changes for the State Intellectual Property Office to enhance IP legislation and to boost protection of IP in fields of new technology. This is indeed a golden period for China in technology innovation and economic development. As IP records are broken by China at every turn, the competitiveness of its enterprises and industries is rising steadily.
The Global Competitiveness Index compiled by the World Economic Forum measures national competitiveness—defined as the set of institutions, policies and factors that determine the level of productivity—across 137 economies. In 2017, China climbed one spot from rank 28 to 27, whereas India cropped from its position of rank 39 to 40. China’s success story is built around upgrading scientific capabilities and infrastructure, robust clinical research conditions and framework, stable regulatory system, improved market access, easy financing, and effective IP protections. This is an easy cheat sheet for India to look to improve our competitiveness globally.
When we look at the global biopharmaceutical environment, for instance, the US and Europe have traditionally been the magnets for investment. However, in China, intellectual property and regulatory changes geared towards its biopharmaceutical industry have had fundamental impact on how investors view capital placement. China’s aspiration of becoming a global innovation leader is based on a holistic multi-stakeholder model that involves the scientific community and industry and collectively facilitates a top-down design of reforms involving China Food and Drug Administration (CFDA), National Health and Family Planning Commission (NHFPC), and Ministry of Human Resources and Social Security (MOHRSS) coordinated by its central government. China’s biopharmaceutical industry has got a big boost due to these reforms and its performance has profoundly improved within a short time. India needs to carefully look at these changes—not for replication, but for guidance, and to understand reaction of investors and innovators to such changes. India needs to enhance its attractiveness as a destination for investment by transforming some of the challenges China is facing into opportunities.
China has driven the wave of innovation by establishing three anchor points, along with surge in investment in pharmaceutical industry—linking drugs and patents, patent term restoration and regulatory data protection. Interestingly, a several investments in this sector are being made in advanced fields and technology areas to ensure that China transitions to become an innovation leader from an innovation learner. An example is of the progress in medical AI in all stages—preclinical treatment stage, clinical treatment stage, post treatment and recovery stage. This will not only help in improving quality of China’s healthcare services, but also in increasing medical efficiency to serve patients better. India must also leverage its strengths in low-cost labour supply and size of its market. But, more importantly, we must address factors that are discouraging investors, including cumbersome regulatory environment, strenuous procedures and legal processes.
In the latest Global Innovation Index 2018, India has secured 57th position, with improvements observed in institutions, human capital and research, and market sophistication. But India has lost a lot of ground in infrastructure, business sophistication, and knowledge and technology outputs. Since creation and protection of IP has been the basis for profound technological developments of several industries across the world, a starting point for India would be to strengthen its patent system by removing barriers to entry and enhancing predictability. Policymakers are already carefully assessing successful international best practices, including regulatory data protection and targeted funding to domestic drug regulatory agency for greater efficiency and capacity building.
By Ashish Bharadwaj, Associate Professor, Jindal Global Law School, and Director of JIRICO at Jindal Global University.
(With inputs from Shruti Bhushan)