India is significantly behind China when it comes to filing patents. China applied for nearly eight times as many intellectual property right patents as India last year. Those numbers break down to 6089 from China and 766 from India, according to the World Intellectual Property Organization (WIPO) January report, "Global Economic Slowdown Impacts 2008 International Patent Filings." Compare these with the United States' 53,521 applications in 2008, Japan's 28,744, or Germany's 18,428. But there is a silver lining for innovation in India. Among developing nations, WIPO reports that India ranks third place when it comes to patents, behind the Republic of Korea (7908), and China. WIPO notes that most countries filed fewer patents in 2008 than in previous years, with the global economic downturn as the likely primary culprit.

"Historically, patent filings tend to dip during periods of economic difficulty simply because fewer resources are available for investment in the innovation cycle," said WIPO Director-General Francis Gurry in the report. "Once the economic cycle improves, patenting activity also tends to recover."

Domestic patents on the decline

One explanation, says Director-General of the Council of Scientific and Industrial Research (CSIR) Samir Brahmachari, may have to do with government support. The Chinese government, for example, supports its pharmaceutical industry and has a large budget for scientific development. (CSIR is India's premier research organization and one of the largest patent applicants in India.) In India, the percentage of the fiscal budget earmarked for scientific development is comparatively low, he says.

Brahmachari also alludes to the fact that unlike other developed nations, large Indian drug companies are not spending huge amounts on research and development (R&D), which he states, is a matter of great concern. But neither India nor China is producing all its patent applications within its borders. In both countries combined, 63% of all patents were granted to non-residents, compared with only 49% in the US, 9% in Japan, and 22% in Germany. In India, foreign applicants filed approximately 80% of the patents.

Some argue inventors from other countries see India and China as huge potential markets, while other analysts have a different view. "The number of patents being filed doesn't really indicate the level of R&D in a country," cautions D.G. Shah of the Indian Pharmaceutical Alliance, a professional organization. "Patents are being used as an instrument of pre-emptive attack, to prevent others from copying the source of the innovation, thus bestowing an advantage that others cannot emulate."

Shah noted that most multinational pharmaceutical companies file a large number of patents in India. Examples include Pfizer's (New York) patent for its HIV/AIDS drug "Celzentry" (maraviroc) and Sanofi Aventis' (Paris) patent for the antiobesity drug "Acomplia" (rimonabant). Bristol Myers-Squibb (New York) also holds a patent for its cancer treatment drug "Naxavar" (dasatinib) in India.

"They blanket-bomb both process and product patents," says Shah. "In some cases, for each step of a process patent, particularly in the case of a biotech drug, thousands of patents could be filed to prevent anyone else from doing any work.''

Blockbusters out of reach

Multinational firms make no secret of their dissatisfaction with India's patent regime. One indication is their reluctance to bring their blockbuster drugs (defined as drugs yielding more than $1 billion in revenue) to India. AstraZeneca's (London) cholesterol-lowering drug "Crestor" (rosuvastatin calcium), Johnson & Johnson's antibiotic "Levaquin" (levofloxacin), and Pfizer's cholesterol-lowering "Lipitor" (atorvastatin) are some original drugs that have yet to be launched in India. In 2007, India had access to only about 30% of the 105 global blockbusters, much lower than other emerging markets such as Mexico, Turkey, China, Korea, Russia, and Brazil with access to more than 60% of blockbusters, according to some patent experts.

Innovator drugs ahead

Mumbai-based patent attorney G.G. Nair adds that India has historically been "exremely antipatent and antiprotection," but insists that R&D is not an issue and that funding in the country is, in fact, on the rise. Between 1995 and 2004, the Indian pharmaceutical industry increased its R&D spending more than six-fold, with consistent year-over-year increases. The company with the highest R&D/sales ratio continues to be Hyderabad's Dr. Reddy's Laboratories, at 12.3%. Mumbai-based Sun Pharmaceutical Industries (at 11.4%) and Glenmark Pharmaceuticals (at 9.7%) also have a higher proportionate investment in R&D compared with sales.

The R&D/sales ratio of the top Indian companies compares reasonably well internationally, given that the top 10 Big Pharma companies have a ratio of approximately 13–15%. The amount of varied collaborations in India may have something to do with this trend.

Partnerships with multinational companies, the Bill & Melinda Gates Foundation, other international nonprofit organizations, and with both Indian and foreign academic institutions have risen over the past five years. As a result, more money is being pumped into domestic R&D.

New government initiatives such as the Small Business Innovation Research Initiative of the Department of Biotechnology in New Delhi are also designed to support industrial R&D. All of these steps bode well for the R&D of Indian companies in the years to come.

Conclusion

While the world's most innovative companies are going to great lengths to guard their trade secrets by filing for patents in developing nations and yet, keeping their blockbuster treatments out, India is taking steps to raise the stakes domestically. There are several barriers that Indian companies still need to break through if they want to become global intellectual property leaders, but slowly and surely, they are getting there. After all, India is keen to turn knowledge into wealth.

A. Nair is a freelance writer based in Mumbai.