Presentation on Intellectual Property Rights, Innovation and Competitiveness. The talk was delivered at an event organised by NBR and Waseda University.
Unveiling Poonawalla Fincorp’s Phenomenal Performance Under Abhay Bhutada’s L...
The State of Innovation in India
1. IPR In India
Innovation and Competitiveness in India’s context
Dr Amit Kapoor
President and CEO, India Council on Competitiveness
Honorary Chairman, Institute for Competitiveness
2. Is there any link between Innovation and competitiveness?
3. Links between Competitiveness and Innovation
Competitiveness And Innovation Scores for Countries
AUS
BRA
CAN
CHN
FRA
DEU
IND
IDN
ITA
JPN
KOR
MEX
NLD
RUS
SAU
ESP
CHE
TUR
GBR
USA
y = 0.0521x + 2.2919
R² = 0.7988
6.00
5.50
5.00
4.50
4.00
3.50
3.00
2.50
20 25 30 35 40 45 50 55 60 65 70
Global Competitiveness Index Scores on a scale of 1-7 according to
Global Competitiveness Report 2014-15
Global Innovation Scores according to the Global Competitiveness Report 2014 on a scale of
1-100
4. Patents Granted by the USPTO
U.S.
JAPAN
Patents Granted by USPTO (Foreign Country of Origin)
GERMANY KOREA, SOUTH
TAIWAN
FRANCE CANADA
UNITED KINGDOM
CHINA, PEOPLE'S REPUBLIC OF
ITALY
ISRAEL
SWITZERLAND
SWEDEN NETHERLANDS
AUSTRALIA
AUSTRIA
DENMARK
FINLAND
INDIA
BELGIUM
SINGAPORE SPAIN
CHINA, HONG KONG S.A.R.
NORWAY
RUSSIAN FEDERATIONIRELAND
NEW ZEALAND
MALAYSIA
BRAZIL
SOUTH AFRICA
MEXICO
1000000
100000
10000
1000
100
0 5 10 15 20 25 30 35 40
Total Number of Patents filed in 2013 on a log scale
CAGR Growth rate of Patents granted from 2003-2013
5. AP
Patent and GDP Data for States
AR
AS
PB
BR
CG
DL
GA
GJ
HR
HJKP
JH
KA
KL
MP
MH
MN
ML
MZ
NL
OD
RJ
SK
TN
TR
UP
UK
WB
y = 0.0015x - 137.52
R² = 0.7604
10000
1000
100
10
1
1000 10000 100000 1000000 10000000
Number of patent filed in 2012-13 on a logrithmic scale
GDP of the state in Rs Crore in 2012-13 on a logrithmic scale
6. Categorization of States as per the SCR 2014
City-State Economies
North Eastern Economies
Source: Institute for Competitiveness
Innovation Driven Economies (Per capita GDP
Above 1500 USD)
Transition Economies (Per capita GDP 1300 to
1500 USD)
Investment Driven Economies (Per capita GDP
900 to 1300 USD)
Evolving / Changeover Economies (Per capita GDP
700 to 900 USD)
Factor Driven Economies (Per capita GDP less
than 700 USD)
7. Are there any trends observed in IPR activity in India?
15. Trends in GI’s as per CGPDTM
45
44 40
Total Number of GI's
27
148
46
32
37
29
y = 6.8x + 36.2
R² = 0.0431
21 24
30
14
23 21
2008-09 2009-10 2010-11 2011-12 2012-13
160
140
120
100
80
60
40
20
0
Filed 44 40 27 148 24
Examined 21 46 32 37 30
Registered 45 14 29 23 21
16. IP Regime in India
• The Patents Act, 1970 and Patent Amendments 1999, 2002 and 2005
• The Trademarks Act, 1999 and the Trademarks Rules 2002
• The Indian Copyrights Act, 1957
• The Design Act, 2000 and Rules 2001
• The Geographical Indications of Goods (Registration & Protection) Act, 1999 and
2002
17. IP Regime in India
Legislations Concerned Departments
Patents Act, 1970 (amended in 1999, 2002
and 2005)
Department of Industrial Policy & Promotion
Designs Act, 2000 Department of Industrial Policy & Promotion
Trade Marks Act, 1999 (amended in 2010) Department of Industrial Policy & Promotion
Geographical Indications of Goods
Department of Industrial Policy & Promotion
(Registration & Protection) Act, 1999
Copyright is protected through Copyright
Act, 1957, as amended in 2012
Department of Higher Education
Layout of transistors and other circuitry
elements is protected through the Semi-conductor
Integrated Circuits Layout-Design
Act,2000
Department of Information Technology
New varieties of plants are protected through
the Protection of Plant Varieties and Farmers'
Rights Act, 2001
Department of Agriculture and Cooperation
19. Ministry of Commerce and Industry
Department of Industrial Policy and Promotion
Office of the Controller General of Patents Designs and Trademarks
The
Geographical
Indication
Registry at
Chennai
The Patent
office (including
Design) at
Kolkata, Delhi,
Mumbai and
Chennai
The Trademark
Registry at
Kolkata, Delhi,
Mumbai,
Chennai and
Ahmedabad
Patent
Information
System at
Nagpur
Rajiv Gandhi
National
Institute of
Intellectual
Property
Management at
Nagpur
Office Structure of IPR under DIPP
20. Analytical Tools: IPR and innovation in India
• Porter’s Diamond Model
• Porter’s Five forces Model
• Value Chain Analysis
21. The Diamond as applied to India
Context for Firm
Strategy and
Rivalry
Related and
Supporting
Industries
Demand
Conditions
Local rules and incentives that encourage investment
and productivity are decreased:
• Lower salaries due to low end work
• Lower capital investments as mutinational
companies want adequate standards
• Lesser incentive to innovate as knowledge is not
adequately protected
• Competition between companies becomes more
distorted as a there level playing field is not present
• Companies reduce spending on R and D as a they
expects others to invest while they reap the benifits
Sophisticated and demanding local
customers and needs e.g.,
• Strict quality, safety, and
environmental standards are not met as
IPR laws are weaker.
• Greater Imports as companies not able
to meet sophisticated demand
• Government procurement of advanced
technology as no laws in place
Factor
Conditions
Distortion in access to high quality
business inputs especially in
• Information
• Scientific and technological
infrastructure
• ‘Intellectual’ capital is not being
recognized
• In case of no protection this may
result in companies’ having no
incentive to innovate
• IPR rules if they are not adequately present or clear
• Distort incentives to share knowledge
• Adverse impact on innovation at the related and
supporting industry level
• It also results in a reduced network effect in clusters as
different firms in clusters are adamant in sharing their
business knowhow
22. Threat of Substitute Products:
• Low
• People still like the convenience and social
status of owning a vehicle.
• There is tussle between private vehicles and
using public modes of transportation.
• It will take a lot of time before India starts
using integrated mobility platforms
Bargaining Power
of Suppliers:
Medium-high.
• Large number of suppliers for
various API Inputs .
• Suppliers are mostly chemical
units.
• Clusters in the west and
south particularly around
Gujarat and Maharashtra and
Telangana and Andhra
Pradesh.
• Medium- High
• Buyers have rising
disposable incomes due
to growth of the economy
• Buyers have a range of
segments and players to
choose from
• Doctors act as significant
influencers for Buyers
Threat of New Entrants:
Low
• Technology and capital Intensive business
• Pharmaceutical drugs are a necessity
• Huge marketing, sales, branding and
regulation prevents new players from
coming in.
• Know how of Indian conditions is a must
for entry into the business
Rivalry amongst Existing Firms:
High
• Tough Competition (>35 players) among
existing players to capture market.
• For generics the basis of competition is cost
rather than innovation and R&D.
• Value is driven by relationship with doctors as
well as the fact that the drug is branded or
generic
• Disruptive innovation is observed in certain
select cases.
Bargaining Power
of Buyers:
Porter’s 5 forces
23. IP Value chain of MNC’s versus that of an Indian Player
Compo
und
Genera
tion
and
Screeni
ng
Lead
Optimi
zation
and
Develo
pment
Drug
Candid
ate
Precede
nted
Target
Generics
Target
Existing
Drug
Concept
to
Emulat
e
Target
Existin
g Drug
Concep
t to
Emulat
e
New
Concept
Target
Drug Discovery and Development Clinical Trials
Pre
Clinical
testing
Phase I
and
Phase II
Clinical
Trials
Phase
III and
Phase
IV
Clinical
Trials
Phase
III and
Phase
IV
Clinical
Trials
Bio
Equival
ence
Testing
High
Yield
Chemi
stry
Drug
Interm
ediate
s and
Active
Ingredi
ents
Drug
Produ
ct
Manufacturing
Target
Biologi
cal
Pathwa
y
24. Value chain of a generic player and Impact on Society
Inbound
Logistics
(e.g. Incoming
Material Storage,
Data Collection,
Service, Customer
Access)
Source: Michael. E. Porter and Authors Analysis
Firm Infrastructure
(e.g. Financing, Planning, Investor Relations)
Human Resource Management
(e.g. Recruiting, Training, Compensation System)
Procurement
(e.g. Components, Machinery, Advertising, Services)`
Outbound
Logistics
(e.g. Order
Processing,
Warehousing,
Report Preparation)
After-Sales
Service
(e.g. Installation,
Customer Support,
Complaint
Resolution, Repair)
M
a
r
g
i
n
Primary Activities
Value
What buyers
are willing to
pay
• Relationship with universities (-)
• Ethical Research Practices (-)
• Product Safety (+/-)
• Conservation of Raw Materials (-)
• Recycling (+/-)
• Financial Reporting Practices (+/-)
• Governance Practices (+/-)
• Transparency(-)
• Use of Lobbying (-)
• Education and Job Training (+/-)
• Safe Working Conditions (-)
• Diversity and Discrimination (+/-)
• Healthcare and Other Benefits (+/-)
• Compensation Policies (-)
• Procurement Practices (e.g.,
Bribery, child labour,) (+/-)
• Use of Particular Inputs (+)
• Utilization of Natural
Resources (+/-)
• Transportation impacts
(e.g., emissions,
congestions) (+/-)
• Emissions and waste (-)
• Biodiversity and ecological impacts (-)
Energy and water use (+/-)
• Worker safety and labor relations (+/-)
• Hazardous Materials (+/-)
• Packaging use and Disposal (+/-)
• Disposal of
Obsolete
Products
(+/-)
• Handling of
Consumabl
es (-)
• Consumer
Privacy (+/-)
• Marketing and advertising (e.g.,
truthful advertising) (+/-)
• Pricing Practices (+/-)
• Consumer Information (+/-)
• Privacy (+)
Support
Activities Technology Development
(e.g. Product Design, Testing, Process Design, Material Research, Market Research)
This is where most patent
producing multinationals
focus
Operations
(e.g. Assembly,
Component
Fabrication, Branch
Operations)
Marketing
& Sales
(e.g. Sales Force,
Promotion,
Advertising, Proposal
Writing, Web site)
This is where most Indian Generic Manufacturers focus
25. Recent changes in the IPR Regime
• US Trade Representative’s (USTR)’s special 301 Report came out in April 2014 pointing to an Out-of-Cycle
Review.
• PM Modi’s first five-day visit to US started on September 27th, 2014 after which joint statement is issued
to ‘establish an annual high-level Intellectual Property (IP) Working Group with appropriate decision-making
and technical-level meetings as part of the Trade Policy Forum.’
• The Out-of-Cycle Review initiated by US on 14th October 2014.
• Department of Indian Policy and Promotion (DIPP) on 22nd October constituted an IPR Think Tank
(comprising of one chairperson and five other members) to draft the National Intellectual Property Rights
Policy
26. Steps for removing impediments
• Improvement in present IP regime
• Establishment of a special IP Court
• More research on linkages between better IP regime and greater innovation
• State level policy for improving Innovation
• Protection of Trade Secrets
• Dispute resolution through bilateral talks