India spends about 1% of its GDP on R&D whereas Japan and USA spends as much as 3% of their GDP. Indian industry’s contribution to R&D is 15% of the total national R&D outlay. It is more than 70% in South Korea, Japan or USA.

 Although India boasts about being the third largest scientific manpower in the world, our share in world patents is inconsequential. Our share of patents filed in the US is 1/1000 of those filed by Germany or Japan. Over seventy percent of the patents filed in India are of foreign origin.

 The economic success of a nation can be measured in terms of the number of patents it generates. In 1991, Japan was the leading foreign country to file US patents for 17th year in a row. Their share of US patents was almost double than those received by US companies. This was truly a pointer to the economic power of Japan as it was in the nineties that they started posing serious challenge to American industry.

 For nearly fifty years after India’s independence, our economic policies were dictated by political considerations more than any thing else. The Indian industry was the greatest beneficiary of such policies since it was guaranteed the formidably huge domestic market with no threat of competition from overseas. All this has changed now and it was inevitable. India has signed the General Agreement on Trade and Tariff (GATT) in December 1994. The World Trade Organization (WTO) has therefore imposed the basic obligation of protection of Intellectual Property Rights (IPR) on India. Product patents are to be provided by 2005 and process patents are extended from the existing 5-7 years to 20 years from AD 2000. The industry reacted to these policies with desperate cries ‘for level playing fields’. Such cries have died down now with the realization that India is not in a position to go back on these commitments to the World Bodies. The only option left before the industry now is to innovate or perish. Whether the Indian industry will rise up to the occasion and seize the day is a matter of debate, but there is little alternative before them.

 The Japanese story of economic success can be directly linked to their strong patent regime almost identical to that of the US. Realizing that innovation is the key to economic prosperity and success, the Japanese laid a strong emphasis on protection of intellectual property rights just as the US. We had a different perception. Till 1970, we allowed product patents, but with the introduction of a new Patent Act in 1970, we did not allow product patents to be filed. The greatest beneficiary of this legislation was the pharmaceutical industry. The Act allowed the Pharma industry to manufacture and market many life-saving drugs in the Indian market at affordable prices within a short period of their introduction by multinational giants in Europe or USA. Table 1 list some drugs and their introduction in foreign and Indian markets.

Table 1. Year of introduction of some drugs abroad and in India.

There is no denial of the fact that the Indian consumer greatly benefited by this new policy because the Indian Pharma industry was able to bring into the market such drugs at very affordable prices, often at one third or ore fourth or some times even one tenth of their international price. This is however, no longer possible. 

 The pharmaceutical industry in India is a major industrial base contributing substantially to the gross national product. A survey conducted by Pharma Pulse in January 1996 indicated that top 65 companies have a turnover of Rs 46.3 billion (roughly $1.0 billion) while the majority of manufacturers have only an annual turnover of Rs. 4 million. There are too many manufacturing units, cottage and large ones amounting to around 20,000  and too many irrational formulations amounting to 60,000 in the Indian market. The pharmaceutical industry in India has been concentrating on the manufacture of bulk drugs and formulations indigenously and has emerged as a major producer of bulk drugs at a competitive price. Around 65% of the bulk drugs and 98% percent of the formulations are made indigenously. But is the R&D picture in the pharmaceutical industry bright yet? It is rather gloomy with less than 2% of the sales channeled into research. This unpleasant situation is very disturbing considering the fact that the pharmaceutical industry is a backbone industry in the country. There are a few silver lines in the horizon however, the Dr. Reddy’s Laboratories being the prime example. The company and the country can take pride in the fact that it is the first Indian Pharma company to be listed in the New York Stock Exchange recently. 

 The pharmaceutical industry has to take the IPR as a challenge if it has to accomplish its goals. They need to invest not less than 10% of their sales in R&D for any meaningful research. In Dr. Anji Reddy’s estimate, under Indian conditions, it will require about Rs. 10 crore to discover a new drug, although some other estimates put it at Rs.100 to 150 crore which I think is rather exaggerated figures. Not many Indian Pharma companies appear to be ready for the challenge. There is nevertheless an urgent need to do this since product patents are going to be imposed by AD 2005. The industry is also oblivious of the potential benefits of investing in R&D for inventing controlled release dosage forms of existing drugs. Additional patent protection can be gained and with one tenth of the cost of developing a new drug, a controlled release dosage form can be developed with many benefits. Figure 1 shows the world market for Controlled Drug Delivery products. 
 

 Alza is the leader in Oral controlled delivery technology with its OROS osmotic delivery systems. OROS has made Procardia XL, the once-a-day version of nifedipine, the calcium channel blocker, one of the most successful cardiovascular drugs with annual sales in the US alone to the tune of $1.1 billion in 1995. This is the more than the total annual turnover of the Indian Pharma industry as a whole!!