A REPORT ON

“ANALYZING THE IPR STRATEGIES AND ITS CHALLENGES IN

PHARMACEUTICAL INDUSTRY”

SUBMITTED BY

CHINMAY JOSHI

MBA (MARKETING)

UNDER THE GUIDANCE OF

MR. SANJAY BHALE

IIMP-MBA

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (MBA) MARKETING 2015-16 OF UNIVERSITY
OF PUNE AT

INDIRA INSTITUTE OF MANAGEMENT, PUNE

 College Certificate

This is to certify that the dissertation entitled “ANALYZING THE IPR

STRATEGIES AND ITS CHALLENGES IN PHARMACEUTICAL INDUSTRY” is a
research work carried out by Mr. CHINMAY PRADIP JOSHI student of MBA
marketing, at Indira Institute Of Management, 2014-16, in partial fulfillment
of requirements for the award of degree of Master of Business Administration.
He has been sincere in his work and we wish him success in his future
endeavors.

Prof. Mr. Sanjay Bhale Dr. Pandit Mali

Internal Guide Director
Indira institute of Indira institute of
Management Management
 CHAPTER I

TITLE:

Analyzing the IPR strategies and its challenges in pharmaceutical industry

BACKGROUND OF THE STUDY:

In current information society, the management of innovation is seen as a key factor to the
survival of the organizations that function in high global competition and fast technological
advances. The market competition to- day encompasses not only the excellence in the
performance or the technical efficiency, but also the capacity of developing systematic
processes through the production and application of knowledge.
In the pharmaceutical field, in special, the companies recognize that the available
technologies and the pieces of knowledge may come from the internal and external
organization limits. The absorptive capacity is fundamentally important for the creation of
new medicines. From this perspective, as much the internal actors as the external can
influence the investments of the company in R & D, pushing the limits of the combination
opportunities and competences previously disconnected.
To promote the continuous science progress, the governments authorize, for a limited
period of time, the exclusive right for the creator in the form of patent con- cession.
However, on the one hand, there is the increase of the pattern that the right of intellectual
property provides an incentive for the production of new knowledge through heavy
investments in R & D, on the other hand, the legislation in force makes that the patent
expiration does not coincide necessarily with the loss of market exclusivity. Although it is
necessary for any company to recoup the costs of an innovation, it does not happen only
during the period of the patent effect. The costs are often recovered after the patent expires
if the market strategies of the pharmaceutical industry are well planned.
Also, the knowledge disseminated by the patent allows the “invention around of” or
“invention among patents”, when the strategic benefit is not given to the production of
knowledge anymore, but to the adoption and dissemination of the knowledge produced in
other companies. In this case, generic versions or incremental innovations can be
introduced in the Market by rival companies, which undermines substantially the market
share of the medicine in the registered brand.
There are innumerous ways for the pharmaceutical companies holders of patents to extend
the market monopoly privileges besides the period determined by law and processes that
are usually called “evergreening” or “term of the patent restoration”. The majority of these
strategies are in compliance with the legislation ruling, although sometimes they weaken
the competitiveness of the market. In order to prolong the profits, the industry tries to
extend the validity of the patent, tries to guarantee new therapeutics indications for the
product, tries the medicine’s own drug and, finally, tries to in- crease the portfolio of new
products through the processes of merging and acquisition. Meanwhile, in an attempt to
obtain part of an extremely profitable market, the rival companies launch innovations for
the original product, or try to anticipate the commercialization of generics.
The current work has its goal to describe, through examples, the diverse strategies used by
the pharmaceutical industry in the preservation of its legit rights and from the imperatives
of the intellectual property’s system. This work is divided into three parts besides this
introductory phase. The following describes the methodology of the work and the
development theoretical-documental that contemplate the management model of
innovation in the pharmaceutical industry and the six strategies used on the market
protected by intellectual property’s rights. The final part approaches the political and social
considerations of these strategies.

LIST OF TOP 5 PHARMACEUTICAL COMPANIES IN WORLD:

1. JOHNSON & JOHNSON

Number one on the list of top pharmaceutical companies is no real surprise. Johnson &
Johnson is a household name, largely thanks to its consumer healthcare division although it
is a real powerhouse across a range of industries from medical devices to pharmaceutical
and consumer goods. Johnson & Johnson has over 182 marketed drugs, with market
leaders in hepititis C, arthritis, HIV/AIDS and digestive conditions.
 2. NOVARTIS
Novartis heads the list of Switzerland's largest pharmaceutical companies and specialises
in the development of biological therapies. The company, which consists of specialist
divisions for prescription pharmaceuticals, eye care and generics and biosimilars, has a
combined workforce of more than 100,000 employees, with operations in more than 140
countries worldwide. Its current top grossing pharmaceutical drugs include Gleevec for
cancer and Gilenya for multiple sclerosis.

3. ROCHE
Swiss pharmaceutical and biotechnology company Roche is well known for its innovative
range of diagnostic solutions and medicines. Its best selling drugs include cancer
treatments MebThera, Avastin, Herceptin and Xeloda. Roche is a front runner in
personalised medicines and was one of the first companies to bring targeted treatments to
patients.

4. PFIZER
Pfizer develops and produces medicines and vaccines for a wide range of therapeutic areas
including oncology, cardiology and immunology. Vaccine sales are comfortably keeping
Pfizer among the world's biggest pharmaceutical companies, although generic medicines
are now beginning to take their toll on some of their blockbusters, including Celebrex,
Liptor and Viagra. However, Pfizer recently acquired leading sterile injectables company
Hospira in a $17 billion (£11 billion) deal, which gives them access to a large portfolio of
generics and biosimilar producs.

5. SANOFI
French pharmaceutical company Sanofi specialises in prescription and over the counter
(OTC) medicines in seven major therapeutic areas: cardiovascular, central nervous system,
diabetes, internal medicine, oncology, thrombosis and vaccines. Diabetes blockbuster
Lantus remains the source of much of the company's turnover, supported by vaccines and
multiple sclerosis therapies at its biotech unit Genzyme, and antihistamine Allegra in
Sanofi's consumer health division. At the beginning of February 2015, the Sanofi's R&D
pipeline contained 43 projects (excluding Life Cycle Management) and vaccine candidates
in clinical development of which 14 are in phase 3 or have been submitted to the regulatory
authorities for approval.

LIST OF TOP 5 PHARMACEUTICAL COMPANIES IN INDIA:

1. SUN PHARMACEUTICAL INDUSTRIES LTD.

Among all pharmaceutical companies in India, Sun Pharmaceutical Industries Limited is the
leader. Established in the year 1983 by Dilip Shanghvi, Sun Pharmaceuticals operates in
more than 150 countries across the world.
In the year 2014, Sun Pharmaceuticals acquired Ranbaxy Laboratories Limited and became
the largest pharmaceutical company in India and the fifth largest pharmaceutical company
in the world.
Sun Pharmaceuticals has manufacturing units in many countries, that include India, USA,
South Africa, Canada, Ireland, Malaysia and Mexico. It also has Research and Development
(R&D) centres in India, USA, Israel and Canada.
The company offers various quality pharmaceutical products for different domains and
some of the area are Diabetology, Neurology, Cardiology, Gastroenterology and
Orthopedics.

2. LUPIN
Lupin is another leading pharmaceutical company and stand at second in the list of top 10
best pharma companies in India 2016. Incorporated in the year 1968, Lupin is one of the
fastest growing and best pharmaceutical companies in India.
The company produces more than 5,500 pharmaceutical products of premier quality. Some
of the therapeutic areas, of which the company offer products are Neurology, Cardiology,
Diabetology and Orthopedics.
 3. DR. REDDY’S LABORATORIES
With a market capitalization of Rs 63,779 Crore, Dr. Reddy’s Laboratories is the next
pharmaceutical company in this list. Founded in the year 1984, Dr. Reddy’s Laboratories
within a few decades has emerged as a leading pharmaceutical company in India.
The company produces more than 200 pharmaceutical products and operates in more than
20 countries across the globe. Dermatology, Cardiology, Gastroenterology and Pediatrics
are some of the therapeutic areas, of which the company offers pharmaceutical products.

4. CIPLA
4th position on this list is occupied by Cipla, a leading pharmaceutical company
incorporated in the year 1935 and presently has operations in more than 150 countries.
Headquartered in Mumbai, Cipla is a swiftly growing pharma company and employ more
than 20,000 people.
Cipla produces more than 2,000 products and owns more than 30 manufacturing plants in
different parts of the country.
Some of the areas, of which Cipla offer products include Cardiology, Neurology, Nephrology
and Diabetology.

5. AUROBINDO PHARMA LIMITED

Aurobindo Pharma Limited is ranked fifth in the list of top 10 best pharma companies in
India 2016. Incorporated in the year 1986, Aurobindo Pharma Limited started operations
in India in 1988-99 with the establishment of the first manufacturing unit in Pondicherry.
Aurobindo is a big pharmaceutical company with 6 manufacturing units in India and
operations in more than 120 countries in the world. Neurology, Nephrology, Cardiology
and Gastroenterology are some of the therapeutic areas, of which the company provide
products.
 CHAPTER II
LITERATURE REVIEW:
Intellectual property is all about human creativities. Intellectual property rights are
considered as reward for creative and skillful work in execution of ideas. In other manner,
industrial property and intellectual property are closely associated sometimes ago and IP
was considered as industrial property. Traditionally a number of intellectual property
rights such as, trademarks and industrial designs were collectively known as industrial
property. Finally we can define that the intellectual property is a “product of mind”. It is
similar to any property consisting of moveable or immoveable things wherein the
proprietor or owner may use his/her property as he/she wishes and nobody else can
lawfully uses his property without his/her permission. The different kinds of intellectual
property rights could be categorized as 1. Copyright, 2. Trademark, 3. Geographical
indications, 4. Industrial designs, 5. Semiconductor chips and integrated circuits, 6. Patents
and 7. Trade secrets.

IMPACT OF RIGHTS ON HEALTH SECTOR:

In India because of low level income of the people, most people prefer for the local
medications like ayurveda etc., and also the prices of medicines were raised too high so the
common people can’t afford to buy the modern medicines and antibiotics.
Moreover, many of the new medical researchers are targeting developed countries with
promising profits for medicines for lifestyle diseases whereas developing countries are still
in need of basic health care except three sectors i.e., food processing, pharmaceutical and
agrochemicals. The Indian patent act allows product patent only. Only in these three
sectors process patent is allowed, as on today. India has only process patent regime with
relation to pharmaceuticals product.
PATENTS:
The term patent can be defined as “a monopoly right conferred to the inventor who has
invented a new product or process through his/her intellectual efforts capable of industrial
application.
These are granted on the basis of certain requirements they are novelty, inventive step,
industrial application and written description. It gives full rights to use or exploit the
invention to the owner. The assignee only enjoys the rights. if the owner can assign or
license the invention to the assignee. The inventor needs to disclose the invention in
written form with description in order to obtain exclusive monopoly over the invention for
a specific duration. If the patent expires the invention is considered to be as public domain
and anyone can use it. All inventions are not patentable; certain inventions have been
prohibited from the purview of patents though satisfy all the requirements of patenting.
Inventions, which are against public order and morality, are generally not patentable
Patent law - a branch of law, which regulates the issue and maintenance of exclusive
monopoly over inventions it, intends to strike a balance between the promotion of
technological innovation and dissemination of its fruits. The Paris convention on IP states
that the first international attempt to protect inventions postulates for the protection of
novel inventions through patents in order to encourage scientific and technological
development. Then the TRIPs agreement mandates patent protection for all inventions in
all fields of technology.

IPR AND INDIAN PHARMACEUTICAL INDUSTRIES:

After the GATT changed into WTO, most of the developed countries were awakened to
protect their products. Initially most of the world leading pharmaceutical industries built a
separate cell for IPR and regulated very well. So the profit of the companies were increased
and IP played a major role in controlling the counterfeit and copycat drugs. But in India
that time only pharma companies were plan to set their IP cell some of the companies in
India established the IPR cell in the year 1995. Majority of the companies started IPR cell
after 2000 in India. By the end of year 2004, majority of companies started a separate
department to look after the issues related to patents. It can be safely presumed that the
patents that are granted to Indian pharma companies or applied by these companies are
for either new processes or new drug delivery systems.

IPR STRATAGIES FOLLOWED BY PHARMACEUTICAL COMPANIES:

1. Evergreening strategy in pharmaceutical industry:
So many number of strategies have been followed by the innovator companies to extend
the term of patent, like methods of treatment, mechanism of action, packaging, derivatives,
isomeric forms, delivery profiles, dosing regimen, dosing range, dosing route,
combinations, screening methods, biological targets and field of use. These strategies
involve skilled addition of patents to the product by the innovator companies that force the
generic manufacturer to maintain forbearance for all the patents to expire and applying for
marketing authorization bearing the risks of litigation and associated penalties and delays.
The innovator companies in the name of life-cycle management maximize revenues from
their so called evergreen products and also choke their generic competition at the outset of
product life-cycles. Even though strict strategies are followed still most of these companies
represent misuse of pharmaceutical patents and regulations governing authorization.
Ever greening strategies that have been usually followed by the pharmaceutical industries
involve:
a) redundant extensions and creation of next generation drugs which result insuperfluous
variation to a product and then patenting it as a new application.
b) prescription to OTC switch.
c) exclusive partnerships with cream of generic players in the market prior to patent expiry
thus significantly enhancing the brand value and interim earning royalties on the product.
d) defensive pricing strategies practice wherein the innovator companies decrease the
price of the product in line with the generic players for healthy competition and e)
establishment of subsidiary units by respective innovator companies in generic domain
before the advent of rival generic players.
 2. Delay or Limit the Generic Competition:
Generic medicines are bioequivalent to the brand prod- ucts, in other words, they are
chemically identical and generate the same therapeutics action. The generic medi- cines are
available by the competition only after they receive the approval of bioequivalence by the
competent organ and the expiration of the original patent. They re- late to the low risk of
development of pharmaceutical products (Figure 1).

Figure1: Development of medicine based on risk

Delaying the introduction of a generic product in one day could mean millions of dollars in
profits for a pharmaceutical brand monopoly holder. On average, a patent-off generates a
loss of US$2.6 mil- lion a day. This way, the main strategic approach of the patent holders
companies includes practices to delay or limit the generics competition in a specific market.
The generics industry, on the other hand, seeks deficiency on medicine patents of brand
such as mistakes, false statements, omissions or inconsistency, in order to truncate the life
of the patent and anticipate the access to a potential profit market.
The delay of the generics entrance on the market after the patent expiration can occur for
many reasons. First of all, there is a necessary time for the medicine to get an approval
from the regulating organ. Second, the entrance of generics can be staggered due to the
uncertainly around the market opportunities, the real time of the patent validity and the
reaction of the marketing from the patent holder company, mainly through the reduction of
price of the original brands. The delay in the diffusion of generics can also occur because
many buyers remain reluctant to adopt a new product until there is enough evidence about
the security and quality for the exchange. Although less frequent, this strategy of
defamation is still explored in markets sensitive to the perceived quality.
In 2011, in Brazil, according to the National Health Surveillance Agency, before the
expiration of the Viagra’s patent there were already five register registration requests to
produce generic medication. By the end of 2013, the pharmaceutical industry of generics
will be able to launch products that treat cancer (everolimus, rituximab, imatinibe,
capecitabina), migraine (almotrip- tano), psychological distress (ziprasidona), malaria (ato-
vaquona), ulvers (famotidine, aprepitante) and trans- plants (sirolimus).

3. Preventive Launching of a Generic

The model of business of the multinational pharmaceutical companies is highly dependent
of the protection of the patent and the rigidity of the rights of intellectual protection. The
big pharmaceutical companies are constantly treated by the entrance of generic versions of
their medicines, making the price of the product increase one fifth of the original price. In
order to fight the loss of receipts, a pharmaceutical company tries to prolong the cycle of
life of its drug as much as possible. An alternative is the introduction of its own generic,
what is called “authorized generic”. The authorized generic is launched in the same they as
the first competitor generic. The titular plan of the patent is to change its profits of short
term to net gain in long term.
The rational basis for the authorized generic strategy is illustrated on Figure 2. The area
OABD represents the profit obtained by the brand company during the period of protection
of the patent. When the patent expires, the profits drop drastically until reduced to zero
(DCZ). However, if the company plans on introducing a new generic of its medicine before
the patent expiration (time Y, point X), the profits of the company on long term will be
represented as area OAWXZ. This way, if the receipts with the protected patent of YWBD
are estimated to be lower than the receipts of generic YXZ, the company of brand will
introduce a generic form of the drug. The strategy of generic substitution allows the patent
holder to increase the total profits and to dissuade the generic manufactures to join a
specific market.

Figure 2: Evaluation of merits relating to Generics introduction

It’s worth highlighting that the fabrication and disclosure of the authorized generic can be
done by the original patent holder company or by an outsourced organization. The patent
holder company preserves its market power for the high margin medicines and avoids the
duplication of costs, especially those associated with the manufacturing, marketing and
distribution of a generic brand. The generic manufacturers, on the other hand reduce the
excess of productive capacity when commercializing a medicine that holds pharmaceutical
market guaranteed.
In order to fight this competition in the Brazilian market, in April of 2010, Pfizer set an
agreement with the national Eurofarma. Also in 2010, Pfizer bought 40% of the national
laboratory Teuto, with the possibility to acquire the full control of the company starting in
2014. Since September from 2010, Teuto started com- mercializing generic versions of
Viagra® and Lipitor®. Besides Pfizer, the French laboratory Sanofi-Aventis also entered in
the generic market for the acquisition of the national company Medley, process that
happened in 2010.
 4. Supergenerics Strategy
In the decade of 2000, some scientific works started to report a strategic change in the
pharmaceutical industry related to the “barrier for generic products”. Against to the
commodities generics, which are copies of the original drugs, the new strategy covers the
production of supergenerics. These are different from the original product relating to the
formula or to the method of administration and, many times, related to the effectiveness.
The supergenerics offer a price alternative of high value for the generics because the
products are eligible for the protection of the patent and three years of exclusivity of the
market in the United States. As such, the supergenetics represent better therapeutics
entities of fast development, less risks (Figure 1) and, mainly, profitable for the
pharmaceutical companies.
Examples of supergenetics involve inhaled versions of capreomicina to treat tuberculosis;
nifedipina with slow liberation that reduces the side effects of dizziness, flushing, headache,
and edema; fluvastatina that reduces the risk of myopathy and predinisona modified, that
reduces the morning stiffness for patients with rheumatoid arthritis. The performed in an
generic to make it a supergeneric can also be performed in original drugs in order to
increase the cycle of useful life, strategies really used by the pharmaceutical industry
holder of intellectual property, as described below.

5. Stratification of Innovation
The pharmaceutical companies perform the stratification of their innovations to guarantee
a new patenting from a basis product. The goal is submit many patents for the new drug
with the purpose of extend its market monopoly and to protect it in many ways against the
production of generic medicines. This process is called stockpiling, in another words, the
companies store protection for their products when patenting many attributes of a single
innovation and obtain the extension of the exclusivity term for each new patent submitted
Through this strategy, the patent holders companies also take advantage of the consumer
confidence on the original product brand to “patent a patent” and to continue the
innovations. This way, before the original product’s patent expire, the company presents a
version supposedly better of the medicine in order to generate a patients commutation.
When most of the consumers have already replaced on product by other, the entrance of
generic medicines doesn’t generate meaningful loss of market.
Many innovations of successor drugs are, in practice, more superficial than the radicals.
They depend more on detail accumulation than big technological findings and offer low or
none advantage about the original medicine. In a general way, it could be aid that a new life
cycle of the product can be initiated by the development of a new therapeutics indication,
through the administration or use conditions. Other possible types of secondary patents
are: 1) composition patents, 2) patents of new polymorphs, 3) patents of new formulas, 4)
patents of synthesis, 5) patents for new therapeutics regimen, 6 patents of metabolites or
pro-drugs and 7) patents for stereoisomers.
Examples of the use of stereoisomers for new patenting are the amoxicillin in 1980
(antibacterial drug), isoflurane and desflurane in 1992 (inhaled anesthetics), ibuprofen in
1976 (non-steroidal anti-inflammatory), fluoxetine in 1997 (anti-depressive), and
omeprazole in 1998 (against hearthburn). An example of the “metabolite defense” evolves
omeprazole in the decade of 1990. A generic version of Prilosec® (omeprazol, medicine for
heartburn) was only provided on the market in 2002 despite the expiration of the primary
patent anticipated for 2001.
In relation to the patents for new therapeutics regimes, it could be mentioned sildenafil
(Viagra®), approved by FDA in July 3rd, 2005 for the adjunct treatment of pulmonary
hypertension. Pfizer Laboratory continues with diverse studies using the active principle of
sildenafil, it can be to achieve a new therapeutics indication or to an approval of a new
pharmacological presentation. Extending the expiration date of a patent through the
stratification of the innovation, the innovator company blocks the introduction of generic
medicines and extends its exclusivity and profits in the pharmaceutical market.

6. Incremental Innovation:
In a world where innovations are duplicated quickly, the patenting process is a relatively
effective answer to the vulnerability inherent to the product information. The patent
doesn’t guarantee full protection to the innovation because itself already reveals the
information that, on the other hand, could be protected by a confidentiality agreement. In
this contest, the rival companies can use the successor drug strategy to create their own
version of innovation, and to enter a new market demonstrably profitable and expandable.
Besides this, the companies producing incremental findings use the advantage of lower
costs and risks in relation to the original research.
The most known Family of incremental innovations is estantinas, medicines used to reduce
the cholesterol level. Estatinas are used to prevent ischemic heart diseases and brain
vascular diseases, and they are responsible for the biggest pharmaceutical market in
history. The development of estatinas started in 1973 and the first product of this class was
launched on the market in 1987 by the name of Mevacor® (lovastatine) by Merck Sharp &
Dohme. In 1991 Pravacol® (pravastatine) by Bristol-Myers Squibb and Zocor®
(sinvastatina) by Merk arrived. In 1991, Lípitor® (atorvastatina) by Pfizer was launched
and in 2000 Crestor® (rosuvastatina) by AstraZeneca [1]. Currently all estatatinas are
already offered as a generic medicine. With the present patent there is only a new class of
medicine that has a centered action in the bowel, exetimibe.
Other pharmaceutical Market that should be pointed out in relation to the incremental
innovation is the segment related to the male sexual impotence. In the decade of 1990
researches of Pfizer Laboratory showed that the inhibition of the phosphodiesterase
enzyme 5 (PDE-5) increased the volume of blood in the penis. Until now, besides Viagra®,
three other inhibiting substances of PDE-5 received the approval of FDA for the male sexual
impotence, Levitra® (vardanafil) by Bayer and Cialis® (tadalafil) by Eli Lilly in 2003 and
Stendra® (avanafil) by Vivus Laboratory in 2012. Recently, though still without
international expression and without license by FDA, it was launched three other
incremental innovations for the erectile dysfunction: Zydena® (udenafil) by Dong A
Farmacêutica Co. Ltda approved in Corea and in the Russian Federation [30], Helleva®
(lodenafil) by Cristália Laboratory, approved in Brazil in October of 2007 and o Mvix®
(mirodenafil) recently licensed in South Korea. Among the diverse PDE-5 inhibitors, the
scientific works published until now don’t support differences in the effectiveness profile
and security between the prod-ucts. The incremental innovation must prove superiority to
the original model or the pharmaceutical company must invest big resources in marketing
so the product be- came commercially well succeed.
 7. Merges and Acquisitions between Pharmaceutical Companies
The pharmaceutical industry has been becoming ex- tremely concentrated on the past 15
years due to the high taxes of merges and acquisitions (R & D) from the past two decades.
Many of the big pharmaceutical companies are today the result of some big merges,
including the transnationals processes. Many scientific words demonstrate the existence of
mergers waves on the pharmaceutical sector, but there isn’t a consensus about the
determinants of the process. In the neoclassic explanation, the merges waves happen as an
answer to regulatory, economics or technological industrial shocks that require relocation
of capital assets on a large scale. In general, the reasons usually used are: the existence of
scale economy in R & D, sales, and marketing, reach of global competitiveness, pipeline and
products enrichment acquisition of new technologies and expansion of corporative control.
In the 21st century, in special, the mergers and acquisitions were intensified due to the
scarcity of pipeline, creation stagnation of new drugs and patent expiration of high sales
products. According to IBM Business Consulting Service, between 2002 and 2007, the
patents of 35 blockbusters expired generating a billing loss of US$73 billion for the
pharmaceutical companies and the loss of more than 200.000 jobs in the past 5 years. On
this occasion, Pfizer became the biggest pharmaceutical company in the world by using a
notable sequence of acquisitions. These results, however, didn’t show strength, instead,
they are deriving from a threat: the patent expiration of some medicines of high sales, such
as Lipitor® and Viagra®. Using this same strategy, in 2009, Pfizer bought Wyeth and
created a new structure of 71 billion dollars on annual sales and the reduction of
operational costs of 4 billion dollars. Besides Pfizer, other big companies of the
pharmaceutical sector such as GlaxoSmithKline, AstraZeneca, Sanofi-Aventis and MSD are
result of the union of companies that kept their last names in the same time as they add
others.
PATIENTS AND THE FUTURE OF INDIAN PHARMACUTICAL INDUSTRY:
The absence of product patent protection for pharmaceuticals and agrochemicals led many
multinationals to limit their portfolios to patent expired Prodcts or a few selected patented
products. This resulted in an erosion of their market share because local manufacturers
introduced the most advanced medicines through reverse engineering. Foreign firms were
required to pay royalties for international drugs, while Indian companies could access the
newest molecules from all over the world and reformulate them for sale in the domestic
market. Thus, this resulted in the systematic weakening of patent rights for pharmaceutical
products in India and led to the exodus of several international research-based
pharmaceutical firms. The obligations imposed on India under the TRIPS Agreement are
going to have a significant impact on India’s successful bulk and formulation-oriented
pharmaceutical industry. Indian companies will have to compete with the multinationals
by focusing on drug development and thereby producing their own patented products.
Alternatively, Indian companies could focus on producing patented drugs under license
from foreign companies or concentrate on generating revenues from producing generic
drugs. Currently, conflicting views exist within the Indian drug companies with regard to
India’s transition into the product patent regime. Some of the existing pharmaceutical
companies believe that product patents will pave the way for innovation in India, while
others hold the view that the high cost of R&D will stifle the growth of the Indian
pharmaceutical industry. The key to survival for Indian pharmaceutical companies would
be the exponential growth of R&D expenditure. Indian companies need product patent
protection to encourage research in developing inexpensive drugs that suit the Indian
disease profile. “Already the larger firms are increasing their total R&D expenditure as a
percentage of sales and they are beginning to move in the direction of new molecule
discovery rather then concentrating solely on development research. While some firms
may not make the transition, signs thus far suggest that a number of Indian firms will
successfully weather the transition and come out as more innovative companies.”
In addition, the advent of product patents is bound to be a boost for multinational
companies that have previously been reluctant to invest in India in the absence of product
patent protection, and it will increase competition in the domestic market.
PATENTING AND PHARMA RESEARCH COST:
Pharmaceutical organizations pour resources into R&D of various molecules for the benefit
of mankind. The development of a pharmaceutical goes through a series of permutations
and combinations resulting in uncertainties which could be many and substantial.
Maximizing the certainty that a research-based manufacturer can obtain enforce, defend,
and make full, legitimate use of IP rights is essential to maintain the cycle of innovation for
the benefit of public health. In the absence of strong IP rights at each stage of the
innovation cycle, promise of pharmaceutical innovation could be lost.
Pharmaceutical products often rely on substantial amounts of upfront investment and
technical knowledge and for the resources involved, companies eventually secure patents
for every product they develop. The pharmaceutical companies screen large number of
molecules and out of the thousand potential drugs screened, only 4-5 reach clinical trials
stage form, of which finally one is approved for marketing. It costs on an average around
800 million dollars to develop and test a new drug before it is approved for use. In the case
of pharmaceutical companies, monopolies over the fruits of their R&D efforts are vehicles
through which they could recoup huge investments. The costs of research done on
screening out the molecule and taking into clinical trial stage are recovered through
appropriate pricing mechanisms from the patients who receive the patented drugs.
Providing market exclusivity to an inventor through patent protection can encourage the
initial outlay of resources needed to develop the products.
Capital investment by the innovator companies in the development of new molecules
which have reached the stage of marketing also encourage the challenge to invest more in
further research, development and refinement of related innovations to expand and
improve therapies and cures.
Moreover due to innovation in providing products of medicinal importance, patent
protection on the same creates a platform wherein generic companies compete with
research oriented innovator companies following the expiration of IP rights. After the
patent on a drug expires, any pharmaceutical company can manufacture and sell that drug.
Since the drug has already been tested and approved, the cost of simply manufacturing the
drug will be a fraction of the original cost of testing and developing that particular drug. e.g.
Lamictal is an anticonvulsant medication (active ingredient: lamotrigine) sold by
GlaxoSmithKline (GSK) for use in the treatment of epilepsy in adults and children. Lamictal
is indicated as adjunctive therapy for partial seizures, generalized seizures of Lennox-
Gastaut syndrome, and primary generalized tonicclonic seizures in adults and pediatric
patients. Lamictal is indicated for conversion to monotherapy in adults with partial
seizures who are receiving treatment with carbamazepine, phenytoin, Phenobarbital,
primidone, or valproate as the single AED. GSK had applied the patent for the active
ingredient in 1980 which expired in many countries in 2000. Lamictal is marketed as
chewable/dispersible tablets which may be swallowed, chewed or dispersed in water or
diluted fruit juice (swallowing the resulting liquid dispersion). GSK also applied for a patent
in 1992 for the chewable/dispersible tablet formulation of lamotrigine which will expire in
most of the countries in 2012. The chewable tablets have the advantage of providing ease
of use and compliance to patients. An earlier patent claiming lamotrigine as the active
ingredient had already expired in many European countries. This provided the scope of use
of the particular patent in European territories. It could be comprehended that any generic
manufacturer could make the formulation and compete with the innovator product. Several
such generic products are being sold, and it depends on the market that has the option to
choose between the original GSK product and a generic version.
 CHAPTER III
PROBLEM STATEMENT:

The effect of IPRs implementation on countries' economy is varied from country to country,
furthermore; its effect varies from industry to industry within the same country. Few
researches have been carried out studies to investigate the effect of IPRs on economy, and
very few studies have been conducted to explore the impact of Pharmaceutical industry.
So, This study is designed to investigate the effect of IPRs on pharmaceutical organizaions'
business performance.
 Is there a direct impact of Innovation and Creation variable on Pharmaceutical
Organizations’ business performance?
 Is there a direct impact of Research and Development variable on Pharmaceutical
Organizations’ business performance?
 Is there a direct impact of Intellectual Assets variable on Pharmaceutical
Organizations’ business performance?
 CHAPTER IV
OBJECTIVES:

 The main purpose of this study is to explore the effect of IPRs elements (innovation
& creation, research & development and intellectual assets) on Pharmaceutical
Organizations' Business Performance.
 Also to study the major IPR strategies used by pharmaceutical companies.
 More specifically, this study intends to answer the following question: Is there a
direct impact of IPRs on Pharmaceutical Organization’s business performance?
 The main objective of this research is to provide sound recommendations about
performance measurement within IPRs context by identifying and defining the main
attributes of quality and productivity of IPRs, i.e. to point out critical factors of IPRs
and find suitable ways for measuring and managing them.
 CHAPTER V
SCOPE OF THE PROJECT:
 The current study presents the necessary components of IPRs. It partially focuses on
managerial norms, and partially on social norms.
 A better understanding of the effect of IPRs elements on the Pharmaceutical
Organizations’ business performance draws conclusions that can be beneficial not
only for Pharmaceutical Organizations, but also to other organizations, institutions
and policy makers.
 The content also may be of an interest to academic studies related to the reporting
and decision making concerning IPRs. This study could present an important
cornerstone that facilitates cross-disciplinary dialogue and hopefully establishes a
research field of IPRs.
 CHAPTER VI

RESEARCH METHODOLOGY

The first step is to formulate a research design. This means planning a strategy of
conducting research. It is a detailed plan of how the goals of research will be achieved.
Research design is exploratory, descriptive and/or experimental in nature. It is
helping the investigator in providing answers to various kinds of social/economic
questions. After collecting and analysis of the data, the researcher has to accomplish the
task of drawing inferences. Only through interpretation researcher can expose
relations and processes that underlie his findings and ultimately conclusions.
Interpretation refers to the task of drawing inferences from the collected facts after an
analytical study.

It is a search for broader meaning and research findings. It is the device through which
factors that seem to explain what has been observed by researcher in the course can be
better understood and provides theoretical conception which serve as a guide for
further researches. It is essential because it will lead towards findings of the study and
proper effective conclusions of the study.

In the present study, researcher has followed Descriptive research. Descriptive

research is usually a fact finding approach generalizing a cross - sectional study of present
situation. The major goal of descriptive research is to describe events, phenomenon and
situations on the basis of observation and other sources.

Survey Method:

The survey method is the technique of gathering data by asking questions from people
who are thought to have the desired information. Every effort should be made to state the
objectives in specific terms.

Surveys are conducted in case of descriptive research studies with the help of
questionnaire techniques in most appropriate manner. Survey type of research
studies usually have larger sample. It is concerned with conditions or relationships that
exists, opinion that are held, processes that are going on effects that are evident or
trends that are developing. Thus in surveys variables that exist or have already occurred
are selected and observed. It is the example of field research.
Data Collection:

Data collection means to a purposive gathering of information relevant to the

subject matter of the study from the units under research.

Primary data are empirical observations gathered by the researcher or his associates
for the first time for any research and used by them in statistical analysis. There are
several methods of collecting primary data particularly in descriptive researches.

 Telephone enquiries
 Postal/mail questionnaire
 Personal interviewing
 Panel research
 Special survey techniques.

Telephonic inquiries and mailing questionnaires are the best’s method for
gathering quickly needed information at the cheapest way.

Questionnaire:

The questionnaire has a list of questions to be asked and spaces in which the
respondents record the answer. It is either printed or typed in definite order on a form or
set of forms. Each question is worded exactly as it is to be asked; also the questions are
listed in an established sequence.

Generally it is mailed to respondents who are expected to reply in the space

provided in itself or may be approached personally to explain the purpose and meaning of
questions in the questionnaire, they are conducted by enumerators. Often questionnaire is
considered as heart of a survey operation hence should be drafted carefully. Hence
structured questionnaire ensures easy quantifications.

In present study, the required data was collected through Sample survey using
structured questionnaire. Since ‘Customer`s inclination towards Online marketing’ is the
core focus of the study, a structured & closed ended questionnaire was prepared for
customers only. (covering various demographic parameters).

The questionnaire incorporated questions related to customers’ preference for online

marketing and other traditional mediums for getting awareness on various brands and
making purchase decision.

Though questionnaire is an economic tool for data collection, non-response or incomplete

response is high in this case. However, proper follow up was taken to overcome this
barrier by making sure that each questionnaire is completely filled.
Secondary data is the data collected by others in the past and used by others. It may be
either being published or unpublished data. It includes the following:

1. Various publications of central, state and local governments.

2. Various publications of foreign governments or international bodies.

3. Technical and trade journals

4. Books, magazines, and new paper.

5. Reports prepared by research scholars, university economists etc.

6. Reports publications of various associations connected with

business and industry, bank, university, economists etc.

Sources of unpublished data are mainly diaries, letters, unpublished biographies;

autobiographies etc. before using secondary sources the researcher must ensure
reliability sustainability and adequacy of data.

In present study, researcher has used published and unpublished sources of secondary
data.

Secondary data was collected to provide the dissertation with necessary theoretical back
up. Information related to IMC, online marketing & its implication etc. was collected
through various secondary sources such as research journals, reference books, business
magazines and content sharing websites.

Data analysis tools for research :

To analyze data collected through structured questionnaire researcher used statistical

software SPSS 17.0 and Ms-Excel Add-In Data Analysis. Statistical tools used for the
analysis are Mean, Median & mode, Standard deviation
The research methodology applied for this project is as follows:

• Define the problem and its objectives

• Identify the problem

• Determine the information needed

• Determine the sources of information

• Decide research methods

• Tabulate, Analyze and interpret the data

• Prepare research report

• Follow-up the study

 CHAPTER VII

RECOMMENDATIONS & SUGGESTION:

Pharmaceutical Industries have great potentials for future performance improvement. In
the light of research results, the following recommendations can be suggested: First, the
research results can help managers establish distinctive strategic positions. Building
competitive strategies for managing IPRs is important, therefore, organizations should
adopt IPRs strategy.
Second, the optimal procedure for Pharmaceutical Organizations is to focus on all three
components of IPRs in order to increase Pharmaceutical Organizations’ business
performance, since they enhance each other.
Third, managers should design systems and set up appropriate programs for monitoring
and managing IPRs and related databases. Then, they should develop standards for IPRs,
including measurements, indices, benchmarks, policies and programs.
Fourth, improve the relationships with universities and other academic institutions, to get
the maximum benefit from the basic research. Finally, consider global strategic options for
alliances, licensing, agreements and joint ventures.
 CHAPTER VIII
CONCLUSION:
With the increasing share of knowledge-intensive products in international trade and the
inclusion Of IPRs have become an important trade issue. International policies toward
protecting IPRs have seen profound changes over the past two decades.

Academics, scholars, practitioners and decision makers are divided into two groups: First
group claim that there is a positive effect of IPRs implementation on innovation, technology
transfer, foreign direct investment (FDI), growth and organizations business performance.
While, second group are against the IPRs implementation and justify why they are so.

Some scholars and practitioners support IPRs protection implementation such as: Lesser
advocated that IPRs strength index is positively and significantly associated with both
imports and FDI.

 Strengthening IPRs can be an effective means of inducing additional inward FDI. IP

as an intermediary has direct and indirect influence on organization's business
performance.
 IPRs can directly stimulate local innovation as well as indirectly by stimulating the
transfer of technologies that foster local innovation.
 The acquisition of IPRs in developing countries is found to have a significantly
positive impact on developing country exports.
 IPRs protection, standards and regulations are important institutional factors
affecting innovation at the firm level.
 Theoretically, strengthening IPRs can have positive effect on international trade.
 IPRs play a positive role in attracting technology.
 IPRs play a key role to protect and leverage intellectual assets and to open
innovation and to facilitate collaborative partnerships.
 The main purpose of IPRs is to encourage innovation by granting innovators a
temporary monopoly over their innovations.
 IPRs are important source of comparative advantage.
 REFERENCES

 Breitwieser, A. and Foster, N. (2012). Intellectual Property Rights, Innovation and

Technology Transfer: A Survey, University of Vienna. Vienna Institute for
International, Economic Studies. MPRA Paper No. 36094, Online at
http://mpra.ub.uni-muenchen.de/36094/
 Hassan, E., Yaqub, O., and Diepeveen, S. (2010). Intellectual Property and Developing
Countries: A Review of the Literature. Published by the RAND Corporation,
Cambridge CB4 1YG, United Kingdom. www.rand.org.
 Fink, C. and Maskus, K.E. (2005). Why We Study Intellectual Property Rights and
What We Have Learned. A Co-publication of the World Bank and Oxford University
Press. New York, NY 10016, pp. 1-15.