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India needs more than increased patent filings to become an innovation powerhouse

A report from UK-based patent and trademark attorney firm Withers & Rogers indicates that Indian pharmaceutical companies have significantly increased their patent filing activity over the past few years, to the point that they are overtaking many of their European counterparts in terms of patent applications. However, the report’s compilers also question whether this boom in Indian patenting reflects greater innovation in the country’s life sciences sector.

According to The Pharma Letter, Withers & Rogers found that Indian pharmaceutical companies filed 450 patent applications in 2011 (the latest year for which data is available) compared to 160 applications in 2001, amounting to a year-on-year increase in domestic pharmaceutical patent filings of around 12% over the 12 year period.

The Pharma Letter further reports that “the number of first filings by pharmaceutical companies in the UK, Germany, France and at the European Patent Office [has] declined sharply since 2007 (from around 8,300 in 2007 to under 5,000 in 2011)”.

However, the Withers & Rogers research estimated that while 35% of applications filed by European life sciences companies over the last 12 years covered novel pharmaceutical compounds, less than 15% of the applications filed by their Indian equivalents pertained to potential new drugs. Instead, much of the growth in patenting by Indian pharmaceutical companies is accounted for by increased filings in areas such manufacturing processes, new formulations and crystalline forms relating to existing drugs.

India has led the world in terms of production of generic medicines for some time, but its life sciences companies face a huge challenge in making the step up to become originators of new drugs. The country’s government wants it to become a global centre of end-to-end drug discovery and innovation by 2020; while GV Prasad – CEO of major Indian pharmaceutical company Dr Reddy’s Laboratories – has called on his country’s pharmaceutical industry to increase the percentage of revenues spent on R&D in order to shift its emphasis from generic production to innovation in terms of novel compounds.

The Indian government has also indicated that it is keen to see an increase in domestic patent filings across all industry sectors and technology areas. The World Intellectual Property Organisation’s (WIPO) IP Indicators report for 2013 revealed that of the 43,663 patents applications made in India in 2012-2013, only 22% were filed by domestic entities. “[Domestic filings need] to be increased by encouraging research and development in India… Our target is to double the number of patents filed by Indian applicants in the next few years," E M Sudarsana Natchiappan, minister of state at India’s Ministry of Commerce and Industry, was reported as saying in response to the WIPO figures by the Indian Express.

China has already faced the conundrum of how to progress from being ‘the world’s factory’ to becoming a highly innovative, knowledge-based economy in its own right. To this end, the Chinese government introduced a raft of incentives to try to encourage local companies to file more patents. But in many cases these incentives are now being scaled back as the country’s economic planners realise that a focus on quantity can have a detrimental effect on quality, and that patents are not – on their own, at least – an indicator of innovation.

Rather than going down the route of growing domestic patent applications through incentives, the Indian government would do better to create and nurture a setting in which innovation can thrive. That is more likely to lead to higher quality patent applications that cover valuable, disruptive technologies, which in turn are far more likely to attract significant investment into the country’s businesses. One of the first steps towards enabling such conditions would be to address what looks to many outside of India as a business environment that is hostile towards IP and IP ownership. After all, if the world’s largest pharmaceutical companies are beginning to struggle to see value in obtaining and maintaining patents in India, then they have little reason to invest in innovation in the country. Without that investment, it is going to be even more of a challenge for India’s life sciences companies – as well as its businesses operating in other sectors – to become innovation leaders.

Jack Ellis
IAM Magazine
14 January 2014

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