The Long March to Innovation: R&D and Competitive Evolution in the Indian Pharmaceutical Industry

TRIPS (1995) has played a major role in shaping the Indian pharmaceutical industry. Conventional theory suggests that strong intellectual property rights (IPR) frameworks should strengthen innovation incentives. Yet, two decades after TRIPS, growth in India’s novel innovation pipeline has stalled. This chapter challenges the assumption that stronger IPR alone would catalyze discovery-based R&D. We utilize trial phase transition data from the Biomedtracker database, finding that the Indian pipeline faces a bottleneck in transitioning clinical trials specifically from Phase 1 to Phase 2, supported by a null result in transitions from Phase 1 to Phase 3, benchmarked against China and the United Kingdom. We argue that this reflects binding constraints in the Indian ecosystem that are likely orthogonal to IPR, accompanied by a within-firm shift toward non-novel programs. We corroborate these arguments through interviews with Indian pharmaceutical industry experts. Our findings should inform thinking about normative IPR in developing economies.