Emerging Markets: Setting a New Agenda - Pharmaceutical Executive


Emerging Markets: Setting a New Agenda

Pharmaceutical Executive

PE: Do we need more innovation in the global system of intellectual property rights? If so, what are the most important elements of reform? How do we ensure that the system continues to provide economic and social benefits to all?

The TRIPS Agreement has important provisions for fair play in technology transfer from which the developing world should benefit. The more affluent signatories—including the U.S. and the EU countries—simply need to follow them.

Article 7 of the Agreement states, "The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and ecnomic welfare, and to a balance of rights and obligations." Furthermore, Article 8.2 states, "appropriate measures, provided they are consistent with the provisions of the Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology."

Facilitating the access of the "have not" countries to technologies required by them constitutes one of the key elements in accelerating the pace of their economic and social development. Such access is generally the result of licenses and technology transfer agreements. The fact of the matter is that the prospective technology-seekers in developing countries face serious difficulties in securing this transfer. In fact, there are concrete examples to show that technology transfers to the third world have not taken place when they were needed most. The 1990 Montreal Protocol on Substances that Deplete the Ozone Layer ran into conflicts over commitments to ensure fair and favorable access for developing countries to chlorofluorocarbon (CFC) substitutes protected by IP rights. The 1992 Convention on Biological Diversity aims to ensure fair and equitable use of genetic resources partly through technology cooperation, but its technological provisions have received little attention. The TRIPS Agreement itself calls for technology transfer to the least developed countries, yet that provision has scarcely been translated into action.

The transfer and dissemination needs of the developing countries have to be seen from the point of view of the capacity of those in need of accessing the technologies, particularly where the cost of technology may be prohibitive due to economies of scale and other reasons. In such cases, in order to implement the related provisions of the TRIPS Agreement, commercially viable mechanisms will have to be found.

PE: What excites you about the promise of India as a key emerging economy of tomorrow? Where do you see your country in the year 2020?

If India's real GDP continues to grow at more than 8 percent annually, it will become a true middle-income country by 2020. And if it steps up that growth rate by one to two percent, it will emerge within a generation into the ranks of the truly affluent. The promise is there to become the second biggest economy after the U.S., surpassing China. But there are several "ifs" in this scenario—these include, among others, the pace of India's reforms.

In terms of our positioning among the emerging economies, we need to understand what a strong player India can be in attaining a leadership position in providing `value for many' products and services.

In fact, 'value for many' products and services will no longer be motivated by concerns about fulfilling the obligation of corporate social responsibility. To the contrary, 'value for many' should be seen as a business opportunity with the potential to spawn new industries able to generate significant employment and profits for India. Most of the growth in consumer spending is expected to come from people in emerging markets, who have a much lower spending capacity than traditional middle-class consumers in developed countries. The fastest-growing consumer class in the emerging markets of Asia consists of people spending just $2 to $4 a day, according to the Asian Development Bank. This market can be served only by innovations around the 'value for many' concept.

Indian companies are well positioned to take advantage of this opportunity. They have direct access to the world's second-largest emerging market, in which a huge low-income group is poised to enter the middle class. By 2030, the share of the total population in the emerging middle class, those earning $4 to $20 a day, will triple, to 49 percent, or 725 million people—exceeding for the first time the number of those earning under $4 a day. An explosion of consumer demand, spread across a range of low- and middle-income segments, will allow Indian businesses to experiment with different scaling strategies, making the cost of pursuing value for many business models much lower for firms in India than for competitors in other emerging markets.

PE: What do you anticipate as the next steps in your work—are there new areas of interest that you wish to influence in your remaining years?

Suddenly the vocabulary of innovation is a global one—and it is changing around the world. Terms like "frugal science," "reverse innovation," "nonovation," "indovation," and "Gandhian innovation" are emerging. I described "Gandhian Engineering" as getting "more from less for more and more people, not just for more and more profit." This new paradigm has popularly been called, in an abridged form, multi-level marketing (MLM). Essentially, what MLM means is not just doing well (making profits) or doing good (the social good) but doing well and doing good (social business). The idea of MLM has caught on. The World Economic Forum annual meeting in Delhi in November 2010 had a half a day session on MLM, and I was pleased to see the CEOs of some multinational companies speaking in support of MLM.

What I intend to do for the remainder of my career is to champion MLM, spread the message of 'value for many,' make "inclusive innovation" a key element of national innovation systems, and generate more funding for it. I was very happy when the Indian government recently announced that it was creating a new Indian Inclusive Innovation Fund, whose resources may grow to $1 billion in the next few years.


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