Int. J. Biotechnology, Vol. 8, Nos. 1/2, 2006 43

Copyright © 2006 Inderscience Enterprises Ltd.

Biotechnology patenting takes off in developing countries

Uyen Quach, Halla Thorsteinsdóttir,* James Renihan, Archana Bhatt, Zoë Costa von Aesch, Peter A. Singer and Abdallah S. Daar Canadian Program on Genomics and Global Health, Joint Centre for Bioethics, University of Toronto, 88 College Street, Toronto, Ontario, Canada M5G 1L4 E-mail: uyen.quach@utoronto.ca E-mail: halla.thorsteinsdottir@utoronto.ca E-mail: james.renihan@utoronto.ca E-mail: archana.bhatt@utoronto.ca E-mail: zoe.costa-vonaesch@mail.mcgill.ca E-mail: peter.singer@utoronto.ca E-mail: a.daar@utoronto.ca *Corresponding author

Abstract: We investigated the levels and patterns of biotechnology patenting in several developing countries by examining patents registered in the US Patent and Trademark Office (USPTO) database. The results showed, firstly, that developing countries have increased their biotechnology patenting during the period with the leading countries demonstrating inventive strengths in this field. Secondly, whereas in some countries national patenting ownership was high in others it was relatively low, which may limit the ability of the countries to harness their inventions. Thirdly, the research sector has been particularly active in patenting, especially in countries with relatively strong track records in developing biotechnology products, but industrial patenting is still limited in most of the countries studied. Finally, several of the countries we examined have a strong focus on health biotechnology compared to other types of biotechnology in their patenting rates. It remains to be seen if the increased patenting will foster biotechnology innovation.

Keywords: intellectual property; biotechnology; developing countries; Brazil; China; Cuba; Egypt; India; South Africa; South Korea; innovation; technological change; South–South; TRIPS.

Reference to this paper should be made as follows: Quach, U., Thorsteinsdóttir, H., Renihan, J., Bhatt, A., Costa von Aesch, Z., Singer, P.A. and Daar, A.S. (2006) ‘Biotechnology patenting takes off in developing countries’, Int. J. Biotechnology, Vol. 8, Nos. 1/2, pp.43–59.

Biographical notes: Uyen Quach is a PhD student at the University of Toronto, Department of Political Science. She recently held a position as a Researcher for the Program on Globalization and Regional Innovation Systems (PROGRIS) located at the Munk Centre for International Studies, University of

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Toronto. She was involved in a project analysing six life sciences clusters across Canada. Prior to her work at PROGRIS, she was a Research Assistant for the Program on Genomics and Global Health at the Joint Centre for Bioethics. There she participated in the comparative research project studying the health biotechnology innovation systems of seven developing countries. She is a co-author for the nine articles in a recent Nature Biotechnology Insight supplement publishing the findings of this research.

Halla Thorsteinsdóttir is an Assistant Professor in the Department of Public Health Sciences at the University of Toronto and works with the Canadian Program on Genomics and Global Health. She completed her doctoral studies in Science and Technology Policy in 1999 at SPRU – Science and Technology Policy Research, University of Sussex, Britain. Prior to that she completed a Master’s degree in Development Economics from the Norman Paterson School of International Affairs at Carleton University in Ottawa, Canada, as well as a Master’s degree in Psychology from the same university. She has worked in science policy research in Canada, Iceland and Britain.

James Renihan is currently a law student at the University of Toronto. He was a former summer student at the Joint Centre for Bioethics and was involved in the patent data collection for the countries in this study.

Archana Bhatt received her Hon BSc in Human Biology and Bioethics from the University of Toronto. After two summers with the Joint Centre for Bioethics as a summer student, she is currently working as a full-time Research Assistant for the Canadian Program in Genomics and Global Health. She has been involved with the analysis of biotechnology trends of innovation systems in developing countries, assisted with the publishing and dissemination of the Genomics and Global Health report and has collaborated on numerous grant proposals.

Zoë Costa-von Aesch was involved in the production of this paper as a 2004 summer research student at the Joint Centre for Bioethics. Currently, she is in her fourth year at Queen’s University completing her Hon BSc and a thesis project evaluating the informed consent process used by clinical researchers at Queen’s. In the future, she hopes to complete her MSc in Bioethics and aspires to one day be involved in developing policy for the Canadian Ministry of Health or World Health Organization.

Dr. Peter A. Singer is the Sun Life Financial Chair in Bioethics and a Co-Director of the Canadian Program on Genomics and Global Health. He directs the University of Toronto Joint Centre for Bioethics and the World Health Organization (WHO) Collaborating Centre for Bioethics at the University of Toronto. He is a Professor of Medicine at the University of Toronto and University Health Network and a Distinguished Investigator of the Canadian Institutes of Health Research.

Dr. Abdallah S. Daar is a Professor of Public Health Sciences and Surgery at the University of Toronto, where he is also a Co-Director of the Canadian Program on Genomics and Global Health, and a Director of Ethics and Policy at the McLaughlin Centre for Molecular Medicine. He was awarded the 2005 UNESCO Avicenna Prize for the Ethics of Science and he is currently a member of the High Level Africa Biotechnology Panel appointed by the African Union.

Biotechnology patenting takes off in developing countries 45

1 Introduction: The role of patenting in biotechnology

Modern biotechnology is a science-intensive field that is influencing the operations of a number of sectors including pharmaceuticals, food, agriculture, energy, chemicals and the environment (Organization for Economic Cooperation and Development (OECD), 2004a,b). Its potential value is not confined to industrialised countries but biotechnology can also play a critical role in developing countries including improving the health of people in developing countries, increasing yield and sustainability of agriculture, addressing environmental problems and providing industrial alternatives such as new industrial enzymes and biofuels (Daar et al., 2002; FAO, 2002; UNCTAD, 2004). Some developing countries have started to build up capacity in biotechnology and case study research has cast light on the processes and policies that have been important for the development of the sector (Thorsteinsdóttir et al., 2004a,b; UNCTAD, 2004). However, more quantitative research is needed to explore the strengths and characteristics of the biotechnology sectors in developing countries. As patenting is emphasised on biotechnology, an analysis of the patenting patterns of these countries can provide a quantitative approach that supplements the qualitative research in this field.

In OECD countries, biotechnology development has significantly contributed towards an increased rate of patenting (OECD, 2004a,b). Patents play various roles in the biotechnology development. The traditional role of patents is to provide inventors with an opportunity to recoup and profit from their inventions by providing them with a temporary monopoly to commercialise their research findings. The original aim of the patenting system was to discourage ‘trade secrets’ and encourage dissemination of knowledge. Patenting necessarily involves publicising new knowledge, as the description of the patented discoveries is open for all to access. For firms, patenting offers a competitive advantage (OECD, 2004a,b). Within the field of biotechnology, patents are important for new spin-off and start-up enterprises to attract capital investments (Niosi, 2003) and to use as a negotiating tool in joint ventures and alliances (Hirshhorn and Langford, 2001). Even public research organisations are placing more strategic value on patenting (Thomas et al., 1997). However, there is still controversy as to whether patenting provides the ‘oil or the sand in the wheels of innovation’.1 Nevertheless, patenting activities are clearly prevalent in the biotechnology industry, especially in the industrially advanced countries.

There is, however, little published on the patenting of biotechnologies in developing countries. Most issues concerning patenting and developing countries concentrate on the potential problems posed by patenting to access to these new technologies for development needs (UNCTAD, 2002) and threats to biodiversity and indigenous knowledge through ‘biopiracy’ (Timmerman, 2003). While these are valid concerns, this paper focuses on if and how developing countries themselves engage in patenting activities in biotechnology. Drawing attention to their achievements through a patent analysis can underscore some general characteristics of their biotechnology activities, offering more empirical data for a variety of communities including academia, government and business.

In this exploratory paper, we analyse biotechnology patent data from several developing countries. Firstly, we provide a brief outline of the methodology of this study. We then examine the level of biotechnology patents from 1990 to 2003 for each country in this study and compare their performances. Next, we look at the extent to which the

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biotechnology inventors in these countries own their inventions by examining the proportion of domestic patent assignees (who owns the patent) in our data set coming from those countries. To gain an insight into who are the main biotechnology inventors in these countries, we classify the patent assignees in terms of their primary sector affiliation. Finally, we present the percentage of each country’s biotechnology patents that are health related to explore to what extent these countries are focused on health as opposed to other biotechnology applications.

2 Methods

The countries in this analysis (Brazil, China, Cuba, Egypt, India, South Africa and South Korea) represent different regions, population sizes, socio-economic levels and political regimes. Although South Korea is an OECD country, we included it in this study to provide an example of a newly developed country. Each of these countries has demonstrated successes in biotechnology, either in the production of biotechnology knowledge through publications in international, peer-reviewed journals, developing products or meeting the local health needs.2

Searching individual national patent databases would make the international comparison both difficult and analytically dubious. A key limitation in using various sources of patent data is the possibility of inconsistencies. One reason for this is because of the differences in patent laws across countries (see Archambault, 2002). This also raises problems of analysing trends over time (Dernis and Guellec, 2001). The patent data used in this report was obtained solely from the US Patent and Trademark Office (USPTO) database. Also, as the USPTO database contains only granted patents (as opposed to granted patents and patent applications), this avoids the overestimation of successful patenting (Archambault, 2002).

We determined which patents were related to biotechnology by consulting a list of biotechnology International Patent Classification (IPC) codes provided by the OECD. For the search, we mined the data by inventor addresses. We did not search by a first-named inventor but rather, counted all patents with at least one inventor from the country in question. Searching by inventors provides a broader picture of the actors involved in innovative activities in a given country than searching simply by the first-named inventor or the entity that ultimately has property rights over the patent (the assignee) (Dernis and Guellec, 2001). We focused on patents granted between 1990 and 2003 to capture the most current biotechnology trends in each country.

We acknowledge the weaknesses in analysing the USPTO data (as well as using the patent data in general) and recognise that this qualifies the discussion below. For example, despite the benefits of using the USPTO database, developing countries are often involved in technological activities that are not internationally significant but are locally important. Domestic patenting, therefore, may be much higher than in foreign databases such as the USPTO (da Motta e Albuquerque, 2000). Even so, the USA has a dominant status in biotechnology and many countries that seek to internationally exploit their technology strategically seek to patent in the USA (Lall, 2003). Hence, despite the weakness raised above, the USPTO provides us with a consistent and useful benchmark from which to measure the most internationally significant and innovative biotechnology patents for each nation.

Biotechnology patenting takes off in developing countries 47

3 Results and discussions

3.1 Level of biotechnology patenting

We analysed all the patents in biotechnology of the seven countries we focused on for the time period from 1990 to 2003. Figure 1 shows the total number of biotechnology patents from 1992 to 2003 for each country. We decided to present the data in three-year ranges to even out yearly fluctuations and to make trends more easily observable. Overall, South Korea had the greatest number of biotechnology patents in the period studied with 337, followed by India (178), China (98), Brazil (44), Cuba (29), South Africa (29) and finally Egypt (10). All the countries showed some level of biotechnology patenting, although clearly with some considerable discrepancies, by the mid-1990s. South Korea and India, in particular, show a significant increase in patenting in biotechnology over time.

Figure 1 Biotechnology patents granted by USPTO over time (1992–2003)

In South Korea, the government placed emphasis on biotechnology and devised a plan in 1994 to make the country one of the world’s leader in this field (Wong et al., 2004). It is noteworthy that biotechnology patenting in South Korea takes off right away with increased governmental emphasis on this field in the mid-1990s. In India, although biotechnology was prioritised in the early 1980s as a tool to address its development needs and to improve the health of its population (Kumar et al., 2004), biotechnology patenting did not start to take off until in the late 1990s. Since then patenting has increased significantly and in 2003, India had reached the patenting level of South Korea. In China, biotechnology patenting increased more modestly during the period and the steep increase that has taken place in their health biotechnology publications (Thorsteinsdóttir et al., 2004c) is not evident in biotechnology patenting. It will be of interest to see if the private sector development that has started in China will result in a significant increase in biotechnology patenting. From Figure 1, the biotechnology patenting in Brazil, Cuba, South Africa and Egypt is still at very low levels but nevertheless shows an increase during the period studied.

The biotechnology patenting in the countries we study here is still quite modest compared to biotechnology leaders such as the USA (see Cortright and Mayer, 2002). Although the case countries are not patenting at this level, the upward trend for many of them within such a short period is an optimistic sign for the future of biotechnology in these countries.

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To account for the smaller countries in this study, we adjusted the number of patents for population size.3 This is a helpful approach to examine the patenting levels in smaller countries but does not accurately represent the levels of patenting in countries such as China and India that have a large share of the world’s population. Figure 2 shows the biotechnology patents for each country per million inhabitants. Once again, South Korea fares better than the rest of the countries. Cuba does much better than the other developing countries after this adjustment. South Africa does slightly better than Brazil, India and China. Egypt’s status, on the other hand, does not change very much despite taking into account its population reflecting a relatively low biotechnology patenting level in the country.

Figure 2 Number of patents per million inhabitants (1992–2003)

Although they differ greatly in population, these countries share one important similarity that is relevant to intellectual property – membership in the World Trade Organization (WTO). Therefore, all these countries are required to reform their patent systems to be TRIPS compatible. Some have been more successful than others. South Korea has been TRIPS compatible since 2001. India has recently passed an amendment to its patent law to meet these international standards. Even China, a late entrant into the WTO, has twice revised its patent law since the mid-1980s and now protects pharmaceuticals (Zhenzhen et al., 2004). South Africa, Brazil and Egypt continue to struggle with a number of unresolved issues over the strengthening of their patent regimes including reconciling indigenous knowledge and patenting, benefit sharing and balancing public needs with property rights (Abdelgafar et al., 2004; Ferrer et al., 2004; Motari et al., 2004).

With the majority of countries in the world being WTO members (148 as of October 2004), there are growing concerns that the previous means of technological change and growth that many countries have followed will not be as easily available as when patent protection was far more lenient. As Wong et al. argued, South Korea’s biggest challenge is dealing with its previous model of development where technologies were acquired, reverse engineered and produced far more cheaply (Wong et al., 2004). In the context of TRIPS, this well-worn path may not be a viable option for most countries in the future.

Biotechnology patenting takes off in developing countries 49

This represents a potential paradigm shift for developing countries where an active process of technological learning must replace passive technological absorption for innovation. Set within the context of international agreements, intellectual property issues need to be addressed in developing countries pursuing biotechnology endeavours. Beyond the creation of knowledge networks, technology transfers and resource exchanges, there is also a need for innovation and learning at the policy level.

The move towards TRIPS compatibility has undoubtedly increased awareness and emphasis on intellectual property. During the same period, the governments in the countries we are focusing on have targeted biotechnology as a strategic sector and have earmarked funding for biotechnology R&D. Comparatively, South Korea and India have been more aggressive in terms of dedicated R&D funding in biotechnology than the other countries in this study. By 2001, R&D spending for biotechnology reached US $ 250 million or about 8% of the South Korean government’s total R&D budget (Wong, 2004). India’s national government allocated approximately US $ 59 million for biotechnology research for 2003–2004, which is up from US $ 47.9 million for 2002–2003 (Jayaraman, 2003). Both of these countries have also seen an increase in R&D investments by the private sector. R&D budgets for biotechnology in Brazil, South Africa and Egypt, while increasing, are not at the level of South Korea and India. For example, Egypt’s National Strategy for Genetic Engineering and Biotechnology was only approved for about US $ 4 million, as opposed to the US $ 25.7 million originally planned (Abdelgafar et al., 2004). The governments in the countries we focused on have also promoted education in this field and encouraged linkages and knowledge flows between the different actors in their health biotechnology innovation systems. Some of these countries have also devised policies to reverse brain drain of their professionals to industrially advanced countries (Thorsteinsdóttir et al., 2004a).

3.2 National assignees: ownership of biotechnology patents in a country

Aggregate patent data for each country provides a general context to reveal trends within and between these countries. However, what this largely accounts for is ‘inventiveness’ as the tally is based on inventors (Archambault, 2002). What is also required is a count for intellectual property ownership – whether the patents are assigned to a research institution, firm or individual(s) from the country. We examined the extent of patent ownership for each country in this data set. For any patent that was unassigned in each country (i.e. no institution, organisation or individual were identified in the assignee category), we assumed that the inventor(s) jointly owned the patent and therefore, it was counted for each country.4 The extent of patent ownerships provides a general picture of the level of patented knowledge in a country that could potentially be harnessed by their national biotechnology sector.

Figure 3 shows the percentage of patents for each country that has a local individual or organisation as at least one of the assignees for the granted patent. It shows that patent ownership in biotechnology varies from just over 40% in China to almost 100% in Cuba. In China and the other countries with relatively low levels of national assignees (e.g. South Africa and Brazil) the potential to capitalise on their biotechnology inventions is still fairly limited. Apart from China, countries with relatively high patenting levels, such as South Korea and India, show a relatively high proportion of patenting ownership and thereby reflect a larger potential to capitalise on their inventions.

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Figure 3 Percentage of total patents assigned nationally (1990–2003)

3.3 Sectoral breakdown of national assignees: what domestic sector owns the most patents?

We examined which sectors are the most active in biotechnology patenting and own the intellectual property in each country. We used the data on assigned biotechnology patents and classified the patents into categories based on the affiliations of the assignees. We used four broad categories: research institutions, industry, shared between research institutions and industry and others. Under the research institute category, we included patents granted solely to organisations that are focused on biotechnology research as opposed to commercialisation activities. They include public and private research institutes, universities and hospitals. Under the industry category, we included patents solely owned by an entity with key activities in commercialisation. This largely accounts for firms. The shared between research institutes and industry group takes into account patents that are co-assigned between a domestic firm and a local research organisation. The ‘others’ category include patents that had no patent assignee identified or were assigned to an individual.5

Figure 4 shows that biotechnology patents are predominantly owned by institutions in the research category in Cuba and India. All the patents owned by Cubans belonged to research institutes and over 80% of the Indian patents belonged to assignees that were affiliated with institutions classified as research. For Brazil, China and Egypt, the patenting ownership by assignees affiliated with research institutes is somewhat lower, around 50%. Comparing these results to the USA shows that the increase in patenting by research institutes and universities is a common trend, suggesting the valuable source of patentable knowledge from research institutes and universities both in the developed and developing world context (see OECD, 2003).

Notably, the Council of Scientific and Industrial Research (CSIR) has taken on a leadership role over Intellectual Property (IP) issues in India since the mid-1990s under the direction of Director General R.A. Mashelkar. For example, in 1995, only one of the eight biotechnology patents with at least one Indian inventor was assigned to the CSIR. However, this increased steadily throughout the years and in the year 2003 it owned 31 of the 48 granted biotechnology patents (with one shared with the CSIR and another Indian research body). Not only has the CSIR been a strong player in patenting in the USPTO, but also it has been successful in challenging the USPTO over patents granted that used India’s traditional knowledge (see Gupta and Balasubrahmanyam (1998) for

Biotechnology patenting takes off in developing countries 51

more details). Some of the other countries in this study also show specific institutions playing a leading role in their biotechnology patenting. Of the ten biotechnology-related patents, Egyptian inventors were involved in for 1990–2003, half of them were co-assigned with the Agricultural Genetic Engineering Research Institute in Egypt.

Figure 4 Sectoral breakdown of patents assigned to nationals, 1990-2003

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On the other hand, patents assigned to domestic firms were less prominent in the data. South Korea’s industry sector dominates with 167 patents assigned to its industry. In 1990, only one firm was assigned a patent but by 2003, this grew to 42. South Africa showed a relatively high rate of industrial assignees in its patenting with almost half of its biotechnology patents assigned to industry. Brazil was in third place in terms of industry patenting with 29% of its patents assigned to industry. Despite the growing number of biotechnology-related firms in these developing countries,6 the biotechnology industry sector for the majority of these countries is not as large or well developed as industrially advanced nations and this partly explains this relatively weak showing (Thorsteinsdóttir et al., 2004a,b).

Furthermore, one reason for the low level of patenting by industry may be the fact that all of these countries have had lenient patent regimes in the past. This has undoubtedly affected the level of biotechnology patenting by their private sectors. In India, for example, lack of resources for R&D and low technological development led the government to pass a patent law in 1970 that encouraged process patenting as opposed to a novel product development (Saha et al., 2004). This enabled its local pharmaceutical industry to participate in reverse engineering, successfully build up strong capacities in cost-effective process innovations, and target generic drug manufacturing (Lanjouw and Cockburn, 2001). As a result, it now has one of the most advanced and competitive pharmaceutical industries in the developing world (Lall, 2003). These pharmaceutical firms are now using these existing competencies to venture into biotechnology and pharmaceutical firms such as Biocon India Ltd., Panacea Biotec Ltd. and Cadila Pharmaceuticals Ltd. are now represented in the industry patent data for India.

In the seven countries examined here, research partnerships between industry and research institutions have been a growing trend. Patents shared between industry and research actors reflect collaborations between these groups, but are not necessarily a very accurate measurement of all their collaborations. The patent data does not, for example, take into account collaboration reflected in licensing between research institutions and firms.7 Therefore, the data presented below for patents shared between research–industry actors are to provide a more textured view of patenting trends rather than a clear indicator of domestic collaboration. South Korea leads in total number of patents shared between research and industry (12) followed by Brazil (4), Egypt (2) then India (1). China, Cuba and South Africa have no shared patents between national industry and research actors. In Cuba public research institutes are the industrial actors in the biotechnology sector and therefore domestic linkages cannot be measured by co-patenting between research institutions and industry in Cuba.

3.4 Focus on health biotechnology patenting

Most of the countries in this study are struggling with what is known as the double burden of disease, that is, a high prevalence of communicable and non-communicable diseases. These developing countries have a high rate of infectious diseases affecting their population. For example, South Africa has a high proportion of HIV/AIDS infections in its population (UNAIDS and WHO, 2003). Egypt’s population has a substantial infection rate of hepatitis C (WHO, 2002b). India has approximately one-third of the global burden of tuberculosis cases (WHO, 2003b). Other countries face regionally specific diseases such as Chagas disease, found only in Latin American

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countries such as Brazil. Cuba, despite its strong emphasis on public health, experienced a serious meningitis B outbreak in the late 1970s.

These countries are also facing an emergent epidemiological trend of non-communicable diseases common in industrially advanced nations. China and India have a higher burden of cardiovascular disease than all industrialised nations combined (WHO, 2002a). Brazil is currently ranked at number eight in the world for the highest rate of diabetes in its population (International Diabetes Foundation, WHO, 2004). According to the WHO, more than half of all cancer cases occur in the developing world (WHO, 2003a).

All of these countries have received explicit government support targeting the development of biotechnology.8 More specifically, the application of biotechnology to meet local health needs is a common theme in policy formulations for the majority of these countries and is apparent in the activities of both its public and private sectors (Thorsteinsdóttir, 2004a). To assess the emphasis on health biotechnology in the countries we studied, we examined each patent in this data set to determine whether it was health related or not. Two individuals assessed each patent independently by reading the title, background and projected uses of the patent. To qualify as health related, a patent needed to have a direct application to the promotion of human health. An example of a health-related patent was Patent No. 6423529, “Composition useful for the early diagnosis of visceral leishmaniasis and a process for preparing the same”. The patent claims to have a diagnostic application for visceral leishmaniasis. If there was any disagreements or ambiguity with regard to the classification of a patent, a third independent examiner reviewed the patent and made the final decision.

Table 1 presents the proportion of health-related patents for each country. Such a comparison illustrates the great emphasis Cuba places on health biotechnology (82.7%). India and China also emphasised health biotechnology with 74.1% of India’s biotechnology patents being health related and 69.3% of China’s. Brazil and South Korea have a somewhat lesser focus on health biotechnology than the countries discussed above with just over half of their biotechnology patents being health related. Egypt’s biotechnology sector is not particularly focused on health with only a quarter of their biotechnology patents being health related. Egypt’s lower proportion of health-related biotechnology patents may be partly explained due to its relative strength in agricultural biotechnology. However, there is evidence that its agricultural developments are spilling over into health-related biotechnology research. For example, Egyptian scientists in 2004 genetically engineered maize plants to produce a protein used to make hepatitis B vaccines. It is the hope this will lead an edible vaccine for the disease (Sawahel, 2004).

Looking at the rate of scientific knowledge production in relation to patenting gives an idea of the level of focused research translated into patentable knowledge. We determined the ratio of health biotechnology patents to health biotechnology publications for each of these countries to see whether this research focus in health biotechnology is being translated into health biotechnology patents for 1991–2002 (see Figure 5).

Here, we can see that Cuba performs the best out of all the countries in this analysis. The ratio of health biotechnology papers to health biotechnology patents is 9:1. South Korea and India follow closely behind with ratios of about 12:1 and 17:1, respectively. China (almost 30:1) and South Africa (almost 48:1) have a more modest outcome and follow behind these three. Brazil and Egypt’s ratios are much lower (almost 70:1 and 80:1, respectively). In the case of Egypt, the number of publications and patents in this

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field is too low to draw any conclusion from this ratio. In the case of Brazil, it may indicate that the strength the country possesses in scientific publications in this field is not being harnessed by patenting.

Table 1 Proportion of health-related biotechnology patents (1990–2003)

Country Biotech patents Health biotech patents Percentage of Health biotech/biotech patents

Cuba 29 27 82.7

India 178 132 74.1

China 98 68 69.3

Brazil 44 24 61.3

South Korea 337 198 58.7

South Africa 29 14 51.7

Egypt 12 3 25.0

Figure 5 Ratio of health BT papers for every one health BT patent (1991–2002)

4 Conclusions

Firstly, this analysis demonstrates, that there is evidence of growth in biotechnology patenting in developing countries. All the countries we studied have increased their levels of patenting in biotechnology during the last decade. South Korea is clearly a strong leader out of the group with patenting activities growing at an impressive rate since the mid-1990s. India has also demonstrated an exceptionally steep increase in the biotechnology patenting during the latter part of the period studied and in recent years

Biotechnology patenting takes off in developing countries 55

has reached South Korea’s patenting levels. When accounting for population size, Cuba and South Korea emerge as the leaders. This clearly demonstrates that developing countries are building up capacity in the biotechnology field. Their capacity is not only limited to reverse engineered biotechnology products and processes developed elsewhere, but also extends to the development of new inventions. For this study, we specially chose countries that have exhibited some successes in this sector. We, therefore, cannot generalise our finding and state that developing countries in general are increasing their capacity to develop new inventions in the field of biotechnology. The countries we studied have all placed a strategic focus on building up capacity in biotechnology with governments setting up programmes and allocating funding to support biotechnology research. These investments are paying off in terms of increased levels of inventions in the field and it will be of interest to see if they can sustain these levels of patenting and start to develop new products and processes based on this knowledge.

Secondly, the main finding of this study is that the level of patenting ownership is very uneven in the countries we studied. Cuba has the highest level of national assignees with almost all of their inventions assigned to their nationals. This puts Cuba in a relatively strong position to capitalise on their inventions. On the other end of the spectrum is China with only just over 40% of their inventions having national assignees. Other countries such as Brazil and South Africa also have a relatively low level of national assignees. This indicates that these countries may have more problems in capitalising on their inventions, as they have to negotiate the harnessing of this knowledge with their foreign collaborators. South Korea and India, both have the high levels of biotechnology patenting, but also have relatively high levels of patenting ownership, which bodes well for their biotechnology sectors.

Thirdly, the main finding demonstrates that the research sector has been particularly active in patenting in several of the countries we focused on. This is in particular true for both Cuba and India where most of the national assignees are affiliated with institutions involved in biotechnology research. They can be from public research institutes, universities and hospitals. In both countries it is the public research institutes that have, however, been the most active participants in the biotechnology patenting. In light of the strong role of public research institutions in these countries it is of interest to note that the health biotechnology sectors in both countries have been relatively successful in developing biotechnology products for their populations (Kumar et al., 2004; Thorsteinsdóttir et al., 2004c). Looking at their inventors’ addresses also indicates that both countries have been successful in promoting linkages to facilitate knowledge flows between their institutions. India’s inventor addresses reflect its vast networks of actors and institutions, particularly of the CSIR’s. In the early 1990s, the Cuban government promoted closer ties with universities, research institutes and hospitals in its West Havana Scientific Pole. Its strong linkages have in fact been a key factor to its successes (Thorsteinsdóttir et al., 2004c).

A few of the countries we studied had a relatively high industrial rate of biotechnology patenting. That was the case for South Korea with 64% of their patents affiliated solely with industrial organisations. South Africa and Brazil also had a relatively high patenting rate by their industrial organisations. In the other countries we studied, patenting by their industrial sectors was relatively small. All these countries are members of the WTO and have been making their patenting laws TRIPS compatible. It will be of interest to observe if their revised patenting laws will encourage innovation and more active biotechnology patenting in their industrial sectors.

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Fourthly, the main result showed that several of the countries we examined have a relatively strong focus on health biotechnology compared to other types of biotechnology in their patenting rates. In general, the health biotechnology patents as a proportion of biotechnology patents are the most predominant in Cuba, India and China. These countries, together with South Korea, are the most productive in terms of translating scientific knowledge into technological outputs as seen in the ratios between health biotechnology publications and patents. India’s national government, through the Department of Biotechnology (DBT), the Indian Council of Medical Research and the CSIR has shown prioritisation of national health needs through its R&D funding. From a cursory examination of the Indian patents in the USPTO, we can see that many of the patents appear to be relevant to Indian health needs including cholera, tuberculosis, cancer, visceral leishmaniasis and anti viral/fungal compositions. In Cuba, its focus on health in biotechnology has been a part of Cuba’s commitment towards forwarding its goals for a well-educated and healthy population. The meningitis B outbreak in the late- 1970s was an impetus to use modern biotechnology to develop the world’s first meningitis B vaccine. Looking at its patents in the USPTO, Cuba has been granted patents relevant to its health needs including dengue fever, meningitis B and cancer.

Finally, this analysis indicates that developing countries have become active participants in biotechnology with increasing levels of patenting observed for all countries. Some of the countries studied show inventive strengths in this field by a high increase in patenting rates. However, the innovative influences of this increase in patenting rates remains to be seen and it is still premature to judge if increased emphasis on biotechnology patenting will be followed by increase biotechnology innovation in these countries. It is possible that what we are observing is mainly a reflection of increasing global patenting accompanied by the TRIPS agreement. The biotechnology patenting in the USA by developing countries may not necessarily result in increased innovation and thereby will not constitute the best use of their limited resources. Applying and paying the yearly fee for US patents is costly for developing countries. Furthermore, it is likely that a large proportion of patented inventions will never be developed and commercialised. If the biotechnology patents of developing countries will not lead to other competitive advantages for their biotechnology sectors such as attracting venture capital funding or to be a negotiating tool in establishing joint ventures and alliances, etc., then their increased patenting may not give developing countries good returns on their investments.

On the other hand, faced with the TRIPS agreement developing countries may not have a choice and will have to patent internationally to protect their inventions from being exploited by others. Many developing countries also possess valuable indigenous knowledge and biodiversity that they need to protect from being harnessed by foreign organisations without any benefits accruing to developing countries. Developing countries have much to gain by sharing their policy responses to patenting issues (as well as other issues of innovation) with each other. For example, the CSIR’s successful appeal against the USPTO’s granting of a patent based on Indian traditional knowledge (Gupta and Balasubrahmanyam, 1998) has resulted in its initiative to create a digital database of Indian traditional knowledge to curtail further instances of foreign patenting on its traditional knowledge. They are now assisting countries such as South Africa that are also facing issues of protecting their indigenous knowledge. Egypt is obtaining Chinese expertise in developing high-technology incubators. Their choice in turning to China as opposed to the USA was largely due to the different scale and

Biotechnology patenting takes off in developing countries 57

management styles in China that were more relevant to the Egyptian context (Abdelgafar, 2004). India, Brazil and China have also been involved in joint policy forums. These involve policy makers from the ministries of finance, planning, education, science and technology and information infrastructure as well as representatives from the private sector, academia, think tanks, media and non-governmental organisations to exchange ideas and experiences on how to formulate policies that would facilitate efforts in transitioning to a knowledge economy (OECD, 2001).

Spurred on by new incentives including increased awareness of shared challenges in international trade and technological and developmental needs, South–South cooperation is becoming an attractive and complementary aspect of international linkages. This represents an opportunity for countries such as India and Cuba, as well as the other countries in this study, to take an important and much needed initiative to be leaders in biotechnology in the developing world by sharing their experiences and policy responses to these new but common challenges in intellectual property, technological change and economic development. Future research is needed to examine if South–South collaboration is playing an increasing role in health biotechnology and how it best can promote capacity building in this field in countries that so far have not embarked on health biotechnology development. If successful it can promote lessons on South–South collaboration that will help more developing countries to become active in health biotechnology and to avoid further rift in science-intensive development between the developing countries.

Acknowledgements

We gratefully acknowledge the valuable input of Brigitte van Beuzekom, OECD to this work. The Canadian Program on Genomics and Global Health is primarily supported by Genome Canada through the Ontario Genomics Institute and the Ontario Research and Development Challenge Fund. Matching partners are listed at http://www.geneticsethics.net. PAS is supported by a Canadian Institutes of Health Research Distinguished Investigator award. ASD is supported by the McLaughlin Centre for Molecular Medicine.

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Notes 1For example, there are fears that patenting can in fact hinder innovation by limiting research

because of the trend in patenting upstream research. See Heller and Eisenberg (1998) and Jaffe and Lerner (2004).

2For more details on these successes, see Thorsteinsdóttir (2004a,b). 3Cuba is the smallest country within this group with just over 11 million in its population. South

Korea and South Africa are next with just under 50 million. Egypt has over 70 million. Brazil has a population of over 100 million and China and India are over 1 billion.

4The total breakdown of unassigned patents for each country is as follows: Brazil (0), China (12), Cuba (0), Egypt (0), India (13), South Africa (3) and South Korea (23).

5The total breakdown for the other category for each country (1990–2003) is: Brazil: 0, China: 15, Cuba: 0, Egypt: 0, India: 13, South Africa: 3 and South Korea: 37.

6For example, South Korea, as the leader in this group has approximately 450–600 bio-firms. In South Africa, where its population size is similar to South Korea’s, it is estimated that there are about 106 biotechnology firms with about half with biotechnology as its main activity. By 2001, Brazil had approximately 350 biotechnology-related firms.

7For example, Thomas et al. argued that the low rate of patenting of human DNA sequences by large multinationals may be due to strategic alliances for exclusive licensing, rather than ownership of the patent per se. See Thomas et al. (1997).

8These include Egypt’s National Strategy for Genetic Engineering and Biotechnology, 1995; South Africa’s National Biotechnology Strategy, 2001 and Cuba’s Biological Front, 1981.