Research and Development, Patenting and Performance:Evidence from Indian Pharmaceutical Industry

Abstract

The Indian pharmaceutical industry (IPI) has been largely influenced by the changes in the patent regimesin India. This paper, besides reviewing the evolution of IPI, studies the trends of research and development(R&D) and patenting of pharmaceutical firms and identifies the determinants of R&D. It examines theinterdependence between R&D and patenting, and firms’ overall performance. Secondary data analysis indicatesthat the product patent regime has impacted the R&D intensity of IPI firms. The analysis of primary datacollected from 64 pharmaceutical firms identifies three distinct clusters of firms of IPI. The firms’ performance,measured by the rate of capital employed by the three groups of firms, indicates that superior R&D and a largenumber of patent filings need not necessarily imply a better performance. The paper adds to the extantliterature on IPI by bringing forth implications which are important for formulating appropriate action plans toenable pharmaceutical firms to efficiently employ their resources in the product patent era.

http://dx.doi.org/10.14429/djlit.32.3.2379