Impact of R and D Intensity, Patents and Regulatory Filings on Export Intensity of Indian Pharmaceutical Industry

Abstract:

R and D is necessary for growth of hi-tech sectors like pharmaceuticals and is aimed at boosting innovation. Innovation brings new products that could earn revenues to further boost R and D. Indian pharmaceutical industry earns nearly sixty percent of its revenues from exports and is a leader in global generics market with largest share of ANDA and DMF filings. Significant increase in patenting activity is also observed post India’s accession to TRIPS agreement in 1995 and subsequent introduction of product patent regime in 2005. This study aims at establishing a causal relationship amongst R and D intensity, patents, regulatory filings and export intensity. Also, the impact of these variables on export intensity of Indian pharmaceutical sector has been studied by fitting them into an econometric model. Results of the econometric analysis suggested that the current year R and D intensity had a positive and significant impact on pharmaceutical export intensity and that the lagged year regulatory filings had a positive and significant impact on export intensity of Indian pharmaceutical industry. Study concluded that creation of state-of-the-art R and D facilities and manufacturing plants (complying with US and EU norms) was aimed at developing and exporting generic drugs to regulated markets of US and Europe and Indian pharmaceutical industry had not committed enough financial resources on developing new patented products for global markets.

Key words: Indian pharmaceutical industry, R and D intensity, Export intensity, Innovation and export intensity, Patents.