[Commons-Law] Imitate or die
Via: "Prashant Iyengar"
http://www.financialexpress.com/printer/news/240737/
Imitate or die
Posted online: Sunday , November 18, 2007 at 2358 hrs
China makes computers, but imports most of its chips. India makes
drugs, but copies almost all of the compounds; it writes software, but
rarely owns the result. The bolder claims made for all three
industries thus have a similar, hollow ring. They have flourished, but
mostly on the back of other countries' technology. "We are not at the
stage of Intel Inside," admits Arvind Atignal of Clinigene, a
clinical-research firm, drawing his own analogy between desktops and
drugs. "We are the keyboard, screens and peripherals."
How much does this matter? Joseph Xie of SMIC, the Chinese chipmaker,
spent seven years working inside Intel. Its strategy, he says, was
simple: "get there first; make most of the money; let the second guy
get the change." That is certainly one way to run a technology firm.
But competing in that race is expensive and exhausting. Few of Intel's
rivals still try to keep up with it, nanometre by nanometre.
Countries of China's and India's heft and ambition cherish the idea of
pushing back the limits of technology. But that push is risky, costly,
frustrating work. Although China and India could devote their
considerable intellectual resources to solving the problems faced by
economies on the technological frontier, why cross that bridge until
you reach it? Seen in this light, India's generic drugmakers are
models not laggards. They invest in just enough know-how to exploit
the rest of the world's discoveries. Thanks to them, Indians enjoy
some of the world's cheapest medicines.
Under the WTO's Trade-Related Intellectual Property Rights agreement
(TRIPS), India has ceded the right to free-ride on foreign advances.
It now grants 20 years of patent protection to inventions hatched
after 1995. In return, it hopes tighter laws will inspire Indians to
new exploits in innovation, and reassure foreigners wary of inventing
or making original products in the country.
The tougher laws may yet succeed. A recent study by Bruce Abramson of
the World Bank expresses high hopes. A 'patent chic' is already
detectable in the country, he reports. He has even heard of Indian
farmers calling lawyers in the hope of patenting their prize
vegetables. But, as yet, the new regime has not proved its worth. Over
17,000 patent applications were filed in India in 2004-05, almost 40%
more than the year before. But only 3,500 were by Indians. Of the 49
most prolific filers in the past decade, 44 are either foreign
companies or subsidiaries. Of the five Indian firms, all are either
government-sponsored institutes or generic-drug companies, which did
fine before TRIPS.
The new regime will be costly to run, if India takes it seriously. But
the larger cost lies in the opportunities for unabashed imitation that
India has now forgone. These lost opportunities might be quite big.
Had Indian firms been prevented from copying fluoroquinolones, for
example, the Indian public would have been worse off by the equivalent
of $255million a year, reckons a study of the antibiotics market by
Shubham Chaudhuri of the World Bank, Pinelopi Goldberg of Yale and
Panle Jia of the Massachusetts Institute of Technology.
India could resolve not to invent another thing, and still prosper
mightily. It does not even have to catch up with the world. As noted
earlier, it has much to gain merely by catching up with itself. A
report by the World Bank ("Unleashing India's Innovation") cast its
eye over thousands of Indian enterprises—makers of drugs, foods, car
parts and textiles, as well as metal-bashers and garment-weavers. In
each industry, it found a thick clump of unproductive companies
operating far behind the industry's vanguard. In garment-making, for
example, the bank found a few highly productive companies, in which
the value-added per worker was over Rs 6,00,000 in 2004. But in over
60% of the industry, that figure was less than Rs 1,00,000. Even
ignoring the very best firms, the bank still found a leading group in
each industry that was about five times as productive as the average
firm. It calculates that India's national output could be 4.8 times
bigger than it is if only enterprises were 'to absorb and use the
knowledge that already exists in the economy'.
Learning new tricks is not the only way to thrive. China may have
stopped inventing things (clocks, compasses, gunpowder and so on)
after the 15th century. But it did not stop growing. The empire found
fresh farmland to till, using the same old techniques, and new markets
to exploit, selling the same old goods. Likewise, today's China still
enjoys a lot of scope for 'extensive' growth—doing more with more—as
well as 'intensive' growth—doing more with less.
"China is very much a top-line country," says Max von Zedtwitz of
Tsinghua University in Beijing. Although outlays on R&D are
increasing, many people still appreciate size over sophistication. In
the scramble to grow, a company that sets aside precious resources for
research can be at a disadvantage. By the time its investment pays
off, the firm's rivals might be twice as big. "They will acquire you,"
says Max von Zedtwitz.
Technological pursuits have opportunity costs. Other, perhaps more
lucrative, uses can always be found for the resources so expended.
That is why no firm in China is betting billions on a risky search for
the next blockbuster drug. "If I had even a hundredth of that kind of
money," says Hai Mi of WuXi PharmaTech, a pharmaceutical firm in
Shanghai, "I'd rather open a restaurant."
—(c) The Economist Newspaper Limited 2007
http://www.financialexpress.com/printer/news/240737/
Imitate or die
Posted online: Sunday , November 18, 2007 at 2358 hrs
China makes computers, but imports most of its chips. India makes
drugs, but copies almost all of the compounds; it writes software, but
rarely owns the result. The bolder claims made for all three
industries thus have a similar, hollow ring. They have flourished, but
mostly on the back of other countries' technology. "We are not at the
stage of Intel Inside," admits Arvind Atignal of Clinigene, a
clinical-research firm, drawing his own analogy between desktops and
drugs. "We are the keyboard, screens and peripherals."
How much does this matter? Joseph Xie of SMIC, the Chinese chipmaker,
spent seven years working inside Intel. Its strategy, he says, was
simple: "get there first; make most of the money; let the second guy
get the change." That is certainly one way to run a technology firm.
But competing in that race is expensive and exhausting. Few of Intel's
rivals still try to keep up with it, nanometre by nanometre.
Countries of China's and India's heft and ambition cherish the idea of
pushing back the limits of technology. But that push is risky, costly,
frustrating work. Although China and India could devote their
considerable intellectual resources to solving the problems faced by
economies on the technological frontier, why cross that bridge until
you reach it? Seen in this light, India's generic drugmakers are
models not laggards. They invest in just enough know-how to exploit
the rest of the world's discoveries. Thanks to them, Indians enjoy
some of the world's cheapest medicines.
Under the WTO's Trade-Related Intellectual Property Rights agreement
(TRIPS), India has ceded the right to free-ride on foreign advances.
It now grants 20 years of patent protection to inventions hatched
after 1995. In return, it hopes tighter laws will inspire Indians to
new exploits in innovation, and reassure foreigners wary of inventing
or making original products in the country.
The tougher laws may yet succeed. A recent study by Bruce Abramson of
the World Bank expresses high hopes. A 'patent chic' is already
detectable in the country, he reports. He has even heard of Indian
farmers calling lawyers in the hope of patenting their prize
vegetables. But, as yet, the new regime has not proved its worth. Over
17,000 patent applications were filed in India in 2004-05, almost 40%
more than the year before. But only 3,500 were by Indians. Of the 49
most prolific filers in the past decade, 44 are either foreign
companies or subsidiaries. Of the five Indian firms, all are either
government-sponsored institutes or generic-drug companies, which did
fine before TRIPS.
The new regime will be costly to run, if India takes it seriously. But
the larger cost lies in the opportunities for unabashed imitation that
India has now forgone. These lost opportunities might be quite big.
Had Indian firms been prevented from copying fluoroquinolones, for
example, the Indian public would have been worse off by the equivalent
of $255million a year, reckons a study of the antibiotics market by
Shubham Chaudhuri of the World Bank, Pinelopi Goldberg of Yale and
Panle Jia of the Massachusetts Institute of Technology.
India could resolve not to invent another thing, and still prosper
mightily. It does not even have to catch up with the world. As noted
earlier, it has much to gain merely by catching up with itself. A
report by the World Bank ("Unleashing India's Innovation") cast its
eye over thousands of Indian enterprises—makers of drugs, foods, car
parts and textiles, as well as metal-bashers and garment-weavers. In
each industry, it found a thick clump of unproductive companies
operating far behind the industry's vanguard. In garment-making, for
example, the bank found a few highly productive companies, in which
the value-added per worker was over Rs 6,00,000 in 2004. But in over
60% of the industry, that figure was less than Rs 1,00,000. Even
ignoring the very best firms, the bank still found a leading group in
each industry that was about five times as productive as the average
firm. It calculates that India's national output could be 4.8 times
bigger than it is if only enterprises were 'to absorb and use the
knowledge that already exists in the economy'.
Learning new tricks is not the only way to thrive. China may have
stopped inventing things (clocks, compasses, gunpowder and so on)
after the 15th century. But it did not stop growing. The empire found
fresh farmland to till, using the same old techniques, and new markets
to exploit, selling the same old goods. Likewise, today's China still
enjoys a lot of scope for 'extensive' growth—doing more with more—as
well as 'intensive' growth—doing more with less.
"China is very much a top-line country," says Max von Zedtwitz of
Tsinghua University in Beijing. Although outlays on R&D are
increasing, many people still appreciate size over sophistication. In
the scramble to grow, a company that sets aside precious resources for
research can be at a disadvantage. By the time its investment pays
off, the firm's rivals might be twice as big. "They will acquire you,"
says Max von Zedtwitz.
Technological pursuits have opportunity costs. Other, perhaps more
lucrative, uses can always be found for the resources so expended.
That is why no firm in China is betting billions on a risky search for
the next blockbuster drug. "If I had even a hundredth of that kind of
money," says Hai Mi of WuXi PharmaTech, a pharmaceutical firm in
Shanghai, "I'd rather open a restaurant."
—(c) The Economist Newspaper Limited 2007
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