A new paper from the Stockholm Network on developing countries and pharmaceutical patents. In a review of the empirical literature, the report finds, among other things:
the strengthening of IPRs will lead to an increase in the share of developing countries in global manufacturing as well as enhance the production of recently invented goods. Empirically, data measuring levels of industrial activity and initial export periods of tradable goods suggest that the expansion of multinational activity more than offsets any decline in the imitative activity of indigenous firms. Analysis of 16 countries that have improved their IP regimes confirms these predictions.
There are also several studies indicating that there is a positive relationship between the rate of innovation and patents in the pharmaceutical industry. The widely cited Mansfield (1986) research, as well as that carried out by Cohen and Levin (1989), Johnson, Cohen and Junker (1999) and Cohen, Nelson and Walsh (2000) confirm the importance of patents for knowledge-based sectors such as pharmaceuticals, chemicals and biotechnology. As will be discussed, new analysis in Latin America confirms the relevance of IPRs for the development of pharmaceuticals in developing countries.
Patents are especially crucial to the innovative R&D mounted by small startup biotechnology firms, which many developing countries are trying to promote. “Indeed they are typically the only assets these firms possess that are sufficiently stable and valuable to attract the large amounts of capital they need to exploit promising research towards new drugs and diagnostics.”
The report concludes that intellectual property rights are very important to the development of medicines all along the product’s life cycle (not very grammatical, sorry):
The specific complexities of pharmaceutical innovation make IPRs essential, not only in the inventive process, but in the complete development of innovation, including the information and education process. It is related to the full value chain of innovation, from research in the lab to the satisfaction of those who may benefit from the new therapy…. It is also a key factor in establishing R&D collaboration among different participants; government, academia and the private sector to cover the many phases of the long and risky R&D process.
The report offers and assessment of ongoing negotiations and developments at WHO, WIPO, and involving TRIPs enforcement and compliance, as well as the issue of “flexibility.”