Re-developing knowledge creation capability: Innovating in Indian pharmaceutical industry under the TRIPS regime

Abstract

The transition to a new technology, market or regulatory regime can be difficult for any organisation to manage. Technological and institutional change has proven to be a big cause for the failure of established firms and many examples exist of such failures. The Trade Related intellectual property rights agreement (TRIPs), as part of The World Trade Organization (WTO) agreement, represents such an institutional change for knowledge based industries from developing countries. As a result of the TRIPs agreement all of the WTO member countries will move from no or partial patent protection to fully fledged patent protection. This represents a radical break with the past in which developing countries typically had only weak levels of patent protection. Against this backdrop, the research examines the learning processes involved in the development of innovative R&D capabilities within the context of the Indian pharmaceutical industry, in response to the strengthening of patent law. In the last decade much research has addressed the process of dynamic learning within firms, however this has predominantly focused on firms from advanced countries. Previous research on developing countries mainly focused on building the minimum knowledge base essential for production and innovation activity. In recent years limited research has begun to explore dynamic learning in firms from developing countries. However, there still remains a scarcity of research which examines firm-level learning processes central to the development of advanced level capabilities. This research addresses this deficiency by applying the conceptual understanding developed within advanced countries to a developing countries context. This is operationalised through a set of research activities which investigate firm-level learning, knowledge creation and innovative capability within the context of the Indian pharmaceutical industry. The substantive conclusions are that the development of new capabilities involves the removal of redundant capabilities, coupled with the acquisition of new knowledge. The findings also indicate that Indian firms are hiring Indian scientists educated or working overseas in multinational pharmaceutical R&D and collaborating with Indian and overseas research institutes and universities to acquire capabilities in innovative R&D. Furthermore, inter-firm differences in learning processes suggest that at a firm level, learning is neither linear nor automatic and requires a deliberate strategy. The thesis also provides important insights into knowledge creation capabilities that have significant implications with respect to innovative activity for firms from other developing countries