The 2008 Globelics Academy Ph.D.
School on
“National Innovation Systems and
Economic Development”
2–14 June, 2008, Tampere – Finland
Is Patent Protection an Incentive for
Innovation?
Literature and Case Study of the
Tunisian Pharmaceutical Industry
By
NejlaYACOUB
Ph.D. Thesis Advisors
Pr. Blandine LAPERCHE (ULCO Dunkerque -
France)
Pr. Fayçal MANSOURI (FSEG Tunis – Tunisia)
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Is Patent Protection an Incentive for Innovation?
Literature and Case Study of the Tunisian Pharmaceutical
Industry
Paper prepared for the 2008 Globelics Academy Ph.D. School on
“National Innovation Systems and Economic Development”
2–14 June, 2008, Tampere – Finland
Nejla YACOUB
(*)
Abstract – The end of the twentieth century has shown profound economic
changes, marked by a significant acceleration of technical progress. In this new
economic context, increasing the “innovation” rate has become a main component
of national economic policies to guarantee the survival of both, firms and countries.
This explains the emergence, at the end of the 1980
s
, of the concept of “National
Innovation Systems (NIS)”. In addition, strengthening patent rights seems to be
particularly connected to innovation since patents are considered as the most
convenient tools to protect intellectual property. Nevertheless, the recent wave of
establishing and enhancing patent protection worldwide lifts many controversies
between developed and developing countries, especially about the impacts of
intellectual property rights on innovation. This paper aims at putting the light on these
controversies and studying whether patent enforcement is an incentive for
innovation. The paper is divided into two main parts. First, we are going to skim
through the theoretical and empirical studies that link innovation to patent rights.
Second, we will focus the analysis on the evaluation of the role played by patent
protection in encouraging pharmaceutical innovation in Tunisia.
Key Words: Intellectual Property Rights (IPRs); Patents; Patent Enforcement;
Innovation; Pharmaceuticals; TRIPs
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, Tunisia.
Résumé – La fin du vingtième siècle a enregistré des mutations économiques
profondes marquées par une accélération significative du progrès technique. Dans
ce nouveau contexte économique, l’accroissement du rythme de « l’innovation » est
devenu une composante principale des politiques économiques nationales et ce
dans le but d’assurer la survie non seulement des firmes, mais aussi des pays. Ceci
explique bien l’émergence, à la fin des années 1980, du concept des « Systèmes
Nationaux d’Innovation (SNI) ». Parallèlement, le renforcement des droits de brevets
semble particulièrement lié à l’innovation, dans la mesure où les brevets sont
considérés comme étant l’outil le plus approprié pour la protection de la propriété
intellectuelle. Toutefois, la récente vague mondialement généralisée d’établissement
et de renforcement de la protection des brevets, soulève maintes controverses entre
les pays développés et ceux en développement, notamment à propos des impacts
des droits de la propriété intellectuelle sur l’innovation. L’objectif de ce papier
consiste à mettre en lumière ces controverses et à étudier si le renforcement des
droits de brevets constitue, en effet, une incitation à l’innovation. Dans cette
perspective, le papier s’articule autour de deux principaux axes : dans un premier
temps, nous allons effectuer un survol des principaux travaux théoriques et empiriques
ayant lié l’innovation aux droits de brevets. Dans un second temps, nous allons
(*)
Nejla Yacoub is a Ph.D. Student in economics at the « Université du Littoral Côte d’Opale – Research Unit on Industry
and Innovation (RII)- Dunkerque - FRANCE » and the «Faculté des Sciences Economiques et de Gestion de Tunis -
TUNISIA ». Contact : Yacoub_Nejla@yahoo.com
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Trade Related Intellectual Property Rights.
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focaliser l’analyse sur l’évaluation du rôle joué par la protection des brevets dans
l’incitation à l’innovation pharmaceutique en Tunisie.
Mots clefs : ADPIC
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; Droits de Propriété Intellectuelle (DPI) ; Brevets ; Renforcement
des Brevets ; Innovation ; Secteur Pharmaceutique; Tunisie.
CONTENTS
I- Introduction
3
II- Theoretical Foundations of the Relationship between Patent Protection
and Innovation
4
II.1- National Innovation Systems------------------------------------------------------4
II.2- Theoretical Foundations of Patent Rights ----------------------------------------6
II.3- Advantages and Drawbacks of Patent Protection for Innovation -------------8
II.3.1- Patent Rights as an Incentive for Innovation --------------------------------------- 8
II.3.2- Patent Rights as a Brake to Innovation ----------------------------------------------- 9
II.3.3- The Impact of Patents on Innovation: A Brief Review of Literature---------- 9
III- The Effects of Patent Protection on Pharmaceutical Innovation in Tunisi
a 10
III.1- An Overview on the Tunisian Pharmaceutical Industry -----------------------10
III.2- The Pharmaceutical Innovation Indicators in Tunisia--------------------------13
III.2.1- The Inputs of Pharmaceutical Innovation in Tunisia-----------------------------13
III.2.1.1- The Key Inputs of Innovation: Human Resources---------------------------13
III.2.1.2- Financial Resources------------------------------------------------------------------16
III.2.1.3- An overview on the Tunisian Infrastructure-----------------------------------18
III.2.1.4- The Government’s Incentives for Innovation --------------------------------21
III.2.2- The Throughputs of Pharmaceutical Innovation in Tunisia--------------------21
III.2.3- The Outputs of Pharmaceutical Innovation in Tunisia--------------------------23
III.2.3.1- Growth Trends in Pharmaceutical Publications in Tunisia----------------23
III.2.3.1- Growth Trends in Pharmaceutical Patent Applications in Tunisia-----25
III.3- Patent Protection in Tunisia: Perspectives for the Local Pharmaceutical
Industry ---------------------------------------------------------------------------------28
IV- Concluding Remarks
29
2
Accord sur les Droits de Propriété Intellectuelle qui touchent au Commerce.
3
V- References
30
I- Introduction
The last century has been marked by notable economic transformations, characterized by a general
movement of globalization and an important acceleration of technical progress. In this context, not
only firms but also countries are called or even led to “innovate” in order to respond to the new
imperatives of competition and to the continuous changes in consumers’ requirements. We notice also
the emergence, at the end of the 1980
s
, of the concept of “National Innovation Systems (NIS)”. As
well as the acceleration of the innovation rhythm, intellectual property has shown considerable
changes worldwide, especially during the last two decades and it is now at a dynamic stage of
transformation. Actually, strengthening patent rights seems to be particularly connected to innovation
since patents are considered as the most convenient tools to protect intellectual property.
In fact, since the end of the 1980s, several developing countries such as China, Taiwan and
Argentina, have begun establishing and strengthening their Intellectual Property Rights (IPR) systems,
partially, due to politic and economic pressures exercised by the United States (USA). In this context,
there have been several intellectual property agreements, most of them signed into a free-trade
agreements framework (Smith, 1999), such as the North America Free-Trade Agreement (NAFTA)
which includes measures that make Mexico adopt and respect intellectual property of US and
Canadian firms (Maskus, 1997; Combe & Pfister, 2001). However, the most important fact in the
whole history of the evolution of IPRs remains the signature in 1994, of the Trade-Related Intellectual
Property Rights (TRIPS) agreement which sets up minimum standards of IPRs to be adopted and
respected by all the World Trade Organization (WTO) members
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.
Nevertheless, there are conflicting attitudes toward TRIPS agreement especially between developed
and developing countries. On the one hand, IPRs are supposed to create incentives for innovation. On
the other hand, intellectual property, especially patent protection creates monopolies allowing patent
holders to set high prices and thus, limits access of people in developing and poor countries to
patented technologies. According to the economic literature, it seems obvious that enhancing patent
protection is in favor of innovators from developed countries but does not take into consideration the
interests of poor people in terms of accessibility to some crucial products, such as drugs. The debate
about the TRIPS agreement has in fact become more stretched after the extension of patentability to
pharmaceuticals. The question has, henceforth, carried a social dimension since dealing with public
health.
In this context, for developing countries, such as Tunisia, where almost half of local needs in
medicines are assured by patented imports from the European-Union, pharmaceutical patent
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“The decision by the WTO’s Council for TRIPS extends the transition period for least-developed countries to July 2013.
The transition period was due to expire on January, 1
st
, 2006; eleven years after the TRIPS Agreement came into force.
Due to this extension, least developed countries benefit of an additional transition period by seven years and a half to give
effect to the provisions of the TRIPs agreement” (WTO, 2005).
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enhancement affects significantly access of local patients to treatments and consequently affects
public health. Neither theoretical nor empirical literature does provide a clear and generalized
framework on the impact of patent enhancement on innovation. Moreover, we notice that very few
works have studied the case of the Tunisian economy. Therefore, this paper aims at combining
researches on these two issues by studying the impact of patent protection on incentives for innovation
in Tunisia and targeting the special case of pharmaceuticals. In other words, the purpose of this study
is to bring answers to the following questions:
1- What is the role of patents in the National Innovation System (NIS)?
2- To what extent patent protection is an incentive to innovate?
3- Does the impact of patent protection differ among countries and industries?
4- In the light of patent protection, what are the perspectives for a small developing country
such as Tunisia to guarantee access to patented pharmaceuticals?
5- Does the generic based strategy represent an efficient and satisfactory long-run solution to
build a “healthy” pharmaceutical industry in Tunisia?
To answer these questions, our research is going to be organized in two main parts: First, it seems
imperative to go back to the theoretical foundations of the relationship between IPRs and innovation.
Then, in a context of National Innovation Systems, we are going to skim through the recent theoretical
and empirical literature dealing with the role played by IPRs in creating incentives for innovation.
Second, the focus is going to be on the case of the Tunisian pharmaceutical industry. At this stage,
the paper aims at studying the status of innovation in Tunisia by analyzing the inputs, throughputs and
outputs pharmaceutical innovation indicators.
II- Theoretical Foundations of the Relationship between Patent
Protection and Innovation
Before studying the effects of patent rights on innovation, it seems convenient to linger on some
preliminary concepts such as the notion of National Innovation Systems (II.1). Intellectual property is
very narrowly connected with innovation and constitutes subsequently a main component of the NIS.
That is why it is important to linger as well on the theoretical foundations of IPR (II.2), in order to
provide a better overview of the impact of patent protection on innovation (II.3).
II.1- National Innovation Systems
Schumpeter (1934) defines innovation as a new combination of resources of production. The OECD
(1994) gives a more technical definition and interprets that innovation is the transformation of an idea:
- into a new or an improved product introduced on the market;
- or into a new or an improved operational process used in industry or commerce;
- or into a new approach of a social service
This definition shows that innovation results from much more than the simple investment in R&D. In
fact, it is the “fruit” of a whole set of human activities which put into interaction the market forces.
Functional organizations had to be expected in order to assure this mission. In this context, Lundvall
(1985) has introduced the concept of the Systems of Innovation, lately extended by Freeman (1987)
to “National Innovation Systems”, defined as “The network of institutions in the public and private
sectors whose activities and interactions initiate, import, modify and diffuse new technologies”. Later,
the definition presented by Lundvall (1992) describes national innovation systems as “the elements