Home > Topics > Innovation and IP Management: A Contextual Overview > Building Product Innovation Capability in Health > Editor's Summary, Implications and Best Practices

Much has been published about innovation, but little attention has been paid to innovation in the pharmaceutical industry in developing countries. In the last few years, the Rockefeller Foundation has supported a program to study health-related innovation in developing countries. This chapter summarizes some of the study’s conclusions.

There are six interconnected components of innovation:

1. R&D in the public and private sectors;
2. The ability to manufacture new health technology products to high standards;
3. A national distribution system in both the public and private sectors;
4. International distribution systems (such as international organizations like UNICEF), global funds, and international trade;
5. IP management systems; and
6. Regulatory systems for drugs and vaccines.

Creating innovation capabilities in developing countries often relies less on the creation of IP systems and more on the creation of markets and support for R&D.

Broadly speaking, the evolution of IP rights in developing countries goes through three basic stages:

1. In the early stage of development, little intellectual property is generated domestically and, due to poor IP rights protection, few foreign firms are interested in bringing their technologies to these countries.
2. The country’s innovative capabilities improve, but due to poor IP rights protection, there is limited foreign investment in technology.
3. When domestic firms are able to generate their own intellectual property, they demand more effective IP protection. With more effective IP protection, foreign investment in technology increases.

The pharmaceutical industry in developing countries tends to go through four stages:

1. Establishing the foundation: patents are granted to domestic inventors, but there is no interest from foreign inventors.
2. Capacity building: domestic inventors start to file more patents.
3. Maturation: there is an advanced IP-protection system but it suffers from certain problems, such as inadequate enforcement.
4. Developed: there is a sophisticated system of IP management in place that operates according to the requirements of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

As the above lists suggest, technological and IP capacities tend to develop in tandem. However, this erstwhile measured pace of natural “coevolution” is no longer likely with TRIPS requirements in effect, which state that signatory countries’ pharmaceutical industries must rapidly progress from either stage one (“establishing the foundation”) or stage two (“capacity building” to stage three (“maturation). It remains to be seen whether this mandatory accelerated development will hinder or help pharmaceutical industries in the long run.

This chapter considers the impact of TRIPS on the development of Korea’s pharmaceutical industry. Korea was able to implement a wide range of initiatives—including an upgrade of its IP regulatory systems—that benefited its pharmaceutical industries. Korea’s success was likely largely achieved because it aligned IP systems with those of developed countries. It seems that TRIPS compliance will improve biotechnological capabilities in developing countries.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Governments can nurture and influence innovation by enacting appropriate policies, enforcing rules and regulations, as well as providing funding and other incentives to innovators.
• IP management systems are an important, but they are only one of six critical factors that determine a country or institution’s ability to innovate. Building the pharmaceutical or biotechnological sector will require coordinated and comprehensive efforts across disciplines, institutions, and industries.
• It is very important to have an effective regulatory system that oversees the biotechnology, health, and agriculture industries.
• Countries can only increase their innovation capabilities if they pay attention to each of the six components of innovation.
• The development of biotechnological or pharmaceutical capabilities in less-developed countries will probably not be negatively impacted by the implementation of TRIPS provisions and may be positively impacted by them. Arguments that TRIPS is not in the best interest of developing countries seem premature at best.

For Senior Management (university president, R&D manager, etc)

• It is good to have a general framework for innovation before developing and planning individual technology innovation initiatives.
• Studies show that the most effective organizations are those with the most dynamic networks, and those that reach out the most to other actors. They build collaborative partnerships or exchange information at the national, regional, and international levels.

For Scientists

• Basic research is the very foundation of innovation. Research leads to discovery; discovery fosters invention; invention creates innovation; and innovation builds technologies that will benefit society.

For Technology Transfer Officers

• Intellectual property is an integral to all six components of innovation: 1) R&D in the public and private sectors; 2) the ability to manufacture new health technology products to high standards; 3) a national distribution system in both the public and private sectors; 4) international distribution systems; 5) intellectual-property management systems; 6) regulatory systems for drugs and vaccines.
• Remember to secure IP rights at each phase of the innovation process, as appropriate.
• By building IP capacity in your institution, you will support all phases of innovation and development. Your office should raise IP awareness, build IP capacity, and create opportunities for professional networking.