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Pharmaceutical exports and patents in India – a systems approach

Sucharita Bhattacharyya (Department of Commerce, Barasat College, Sodepur, India)
Bibek Ray Chaudhuri (Department of Economics, Indian Institute of Foreign Trade, New Delhi, India)
Susmita Chatterjee (Department of Economics, Maharaja Manindra Chandra College, Kolkata, India, and)
Debashis Chakraborty (Department of Economics, Indian Institute of Foreign Trade, New Delhi, India)

Indian Growth and Development Review

ISSN: 1753-8254

Article publication date: 6 May 2024

Issue publication date: 6 November 2024

65

Abstract

Purpose

The Indian pharmaceutical industry currently faces multiple challenges, including rising costs and slowing export growth, which in turn have limited its ability to expand presence in global canvas. Given the nature of sectoral dynamics, a pharmaceutical firm must undertake huge investments in R&D to introduce product innovation, in turn enhancing market share and sustaining profit streams. The development of novel medicines, confirmed by the granting of patent rights, provides a pharma company edge over its competitors. In addition, presence of innovator firms within the industry invigorates the sectoral value chain and raises efficiency. Hence, it is important to analyze whether granting patent rights enhances the exports of pharmaceutical products in the Indian context.

Design/methodology/approach

The current study explored this question using a simultaneous-equation framework. Specifically, the authors use the methods developed by Davidson and MacKinnon (1993) and Greene (2003) to obtain heteroscedasticity-consistent estimates. The time-series properties of the data were further probed, and robust estimates were used to test the theory. Methods developed by Baltagi (1981) have been used further to refine the authors’ estimations.

Findings

After controlling for relevant variables, it is observed that granting of patents caused a significantly positive impact on pharmaceutical exports. Furthermore, the change in the patent administration regime had a significant impact on patent fillings, which further impacted their exportability. Compared to patents granted patents filed had a higher impact on pharmaceutical exports.

Originality/value

This study attempts to apply the framework developed by Goldstein and Khan (1978) with necessary modifications to suit the context of a developing country. The application of the 3SLS method to estimate the export supply equation for pharmaceutical products is a novel approach to the research question in general and to the Indian context in particular. System autocorrelation and heteroscedasticity tests were performed to refine the results further.

Keywords

Acknowledgements

Funding: Not applicable.

Conflicts of interest/competing interests: Not applicable.

Availability of data and material: Available upon request.

Code availability: Not applicable.

Authors’ contributions: This manuscript is available upon request.

Funding statement: This study was not supported by a grant from any organization.

Ethical compliance: All procedures performed in this study involving human participants were in accordance with the ethical standards of the institutional and/or national research committee and with the 1964 Helsinki Declaration and its later amendments or comparable ethical standards.

Citation

Bhattacharyya, S., Chaudhuri, B.R., Chatterjee, S. and Chakraborty, D. (2024), "Pharmaceutical exports and patents in India – a systems approach", Indian Growth and Development Review, Vol. 17 No. 3, pp. 341-360. https://doi.org/10.1108/IGDR-11-2022-0128

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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