1. 1 New Delhi 12 May 2011 by D G Shah Secretary General Indian Pharmaceutical Alliance Pharmaceutical Innovation Issues & Challenges RIS and Indian Council of Medical Research

2. 2 IPA: 05/11 Outline of Presentation  Issues - Drivers of Innovation - Innovation Policy  Challenges - Funding - Technology Transfer Pharmaceutical Innovation Issues & Challenges

3. IP Laws are Designed to Provide Exclusive Rights as Incentives for Investment in R & D But In Many Sectors Competition (Absence of Exclusivity) Drives Technological Development Drivers of Innovation There is Inherent Tension Between IPRs & Competition Competition IPA: 05/11

4. IPRs are Designed to Foster Innovation and Sustain Economic Growth But Kill Competition and thereby Restrict Innovation Need for Balancing IPRs & Competition Drivers of Innovation Competition IPA: 05/11

5.  Agricultural Implements  Carts and Wheels  Water Drawing Devices  Arms and Ammunition Drivers of Innovation IPRs are Not Sole Drivers of Innovation Necessity IPA: 05/11

6.  Electricity  Telephone  Jaipur Foot Drivers of Innovation Driven by Commitment, Not IPRs Commitment IPA: 05/11

7. Maximal Innovation Level Source: Swiss Federal Institute of Intellectual Property, October 2006 Minimal Protection Level Optimal Protection Level P I Innovation Policy Beyond a Point, IPRs are Counterproductive Protection (P) vs. Innovation (I) IPA: 05/11

8. Innovation Policy IPR Scenario: USA & Europe 1990-2006 ParticularsUSAEurope Data Exclusivity5 yr8 yr Patent LinkageYesNo Bolar ExceptionYesNo Patent Term17 yr20 yr Europe had Stronger IPR Protection Through Out this Period, But…. EU Experience IPA: 05/11

9. Innovation Policy “Europe has been Losing Ground in Pharmaceutical Innovation”  Centre of Gravity for Research Moved to USA and Asia  Pharmaceutical R & D: 1990: Europe (€ 7.8 Bn) vs USA (€ 5.3 Bn) 2006: Europe (€ 22.5 Bn) vs USA (€ 27.1 Bn)  Similar Trend for Research Sites Between 2001 and 2006: Europe: Shut Down 18 of 22 Sites, Opened Only 2 New Sites USA: Opened 6 Sites (Shut Down 5) Asia: Opened 14 Sites (Shut Down 1) EU Experience IPRs are Not Sole Drivers for Innovation Source : Communication from Commission to the European Parliament – Dec 2008 IPA: 05/11

10. Innovation Policy  Swiftly Adopt proposal to prevent the entry of illegal medicinal products into the legal supply chain (Objective#13)  Prepare by 2012 an intensified exchange of information on illegal distribution channels for counterfeit medicinal products (Objective#14)  Within IMPACT, assist third countries (e.g. Kenya & Uganda) in developing and enforcing legislation against counterfeit medicinal products (Objective#15) Obsession with “Counterfeit” Has Muddled the Thinking Source : Communication from Commission to the European Parliament – Dec 2008 EU Experience IPA: 05/11 Recognizing that “Global” Reorganization is Throwing New Challenges, EC Wrote Prescription for its Pharmaceutical Industry

11. YearRs Cr 2001175 2002293 2003466 2004705 20051,021 20061,247 20071,550 20081,869 20091,791 20101,883 Balancing Short –Term Profitability with Sustainable Long-Term Growth R & D Spend of Indian Generic Industry Funding 11 Source: AceEquity IPA: 05/11

12. 12 Funding R&D Expenditure as % Sales – 1995 to 2010 Year (Apr-Mar) % of Sales IPA Co’s Foreign Co’s 19953.210.77 19963.50.91 19973.00.95 19982.890.88 19993.390.7 20003.020.66 20014.470.72 20024.840.65 20035.620.71 20047.151.1 20058.881.63 200610.522.39 20078.882.67 20088.722.86 20098.623.84 20108.684.01 Three-Fold Growth in R&D by IPA Companies Source : CMIE – Analysis of Indian Pharmaceutical Industry IPA: 05/11

13. 13 Discovery – A Weak Link Discovery Pre - clin ical R& D I/I Ia Clinical Developme nt IIb/III Submi ssion and Appro val Post- market Developme nt Phase IV High throughput Screening Organic Synthesis Trial Management Clinical Data Management Data Analysis/ Publication Chemical Synthesis— Intermediates Safety Surveillance Report Compilation Preclinical Testing Growing Interest/Potential Already in Progress Technology Transfer IPA: 05/11

14. Let the Learning Begin Technology Transfer Discovery Research  Industry to Industry  University to Industry  Research Institute to Industry IPA: 05/11

15. Developed World Should Honour its Obligations Under TRIPS Summing Up  Stronger IPR = More Innovations? Not So Simple  There is No “One-Size-Fits-All” Model  Need to Strike a Balance between IPR and Innovation  Need to Recognize Forces that Promote Innovation Instead of Blindly Linking Innovation to IPR  IPR Should Not Kill Pro-competitive Environment, Both are Needed for Innovation  Need to Provide Funding Support for Promoting Innovation  Need to Assist Technology Transfer for Discovery Research IPA: 05/11 Pharmaceutical Innovation Issues & Challenges

16. 16 THANK YOU dgshah@vision-india.com IPA: 05/11