1: IP

IP protection directs much of the development of innovation in biotechnology. In short, biotechnology—especially innovative R&D—depends on strong IP protection. The connection between IP protection and innovation arises from many features of this field: the great time requirements from the start of research until a product reaches the market, the financial costs at all stages, the high risks of failure at many stages of innovative R&D and the relative ease for outside parties to steal a company’s hard work and deny them a return on their R&D investments by reverse-engineering its product and selling it at a price that reflects their reduced financial burden. 

Despite such compelling reasons to develop strong laws in this area, certain countries intentionally maintain weak IP protection to promote the growth of domestic industries. For example, some argue that lax IP can propel a generic-drug industry that could later fuel an innovation-based industry. Others contend that such a strategy merely wastes time, and that IP should be strong from the start. The climb from lax to strong IP, however, makes for a difficult journey. In the end, any strategy that is not based on strong IP protection is likely to discourage domestic investments by foreign firms.

Improving IP, though, does not generate immediate gains. A country with weak IP protection can develop stronger laws, but it takes time for such changes to drive foreign investment that supports innovation. Moreover, suggesting that every country needs strong IP protection might be too aggressive, because it is only useful in an environment where it can be utilized. Even now, some strong nations seem to be telling emerging countries to “do as we say, not as we did,” since every country has been guilty of offering poor or even no IP protection at some point.
The IP index presented here (Park, W.G. 2008. International patent protection: 1960–2005. Research Policy 37(4):761–766) consists of the unweighted sum of five measures: patentable inventions, membership in international treaties, duration of protection, enforcement mechanisms and restrictions (e.g., compulsory licensing).

As the results show, the U.S. holds the top spot in the IP-protection index, but the remaining top-ten countries—Belgium, Canada, Denmark, Finland, France, Ireland, Italy, Japan and The Netherlands—all tie in a close second place. Even Switzerland, in 20th place, comes within about 75 percent of the top spot.

In some cases, the results of this metric provide quantification for anecdotal evidence. For example, the BRIC nations—Brazil, Russia, India and China—often arise in discussions of IP environments that need work. In this index, the BRICs finished 42nd, 40th, 39th and 32nd, respectively. So as the biotech folklore suggests, the BRIC nations do not fare well in comparison to the industry’s leading countries. The rush of many companies to invest in the BRIC nations, however, indicates that low scores for IP do not scare off everyone, perhaps because success in business tends to come to those who find opportunities before they are apparent to others. Moreover, other countries, including Saudi Arabia, Indonesia and Thailand, demonstrate an even greater need to improve IP protection.

As the biotechnology field grows increasing global IP protection will become more crucial than ever. Indeed, as countries new to the innovative side of biotechnology enter the arena, they too will seek IP protection for their products.