My interest in knowledge management has always been from the
perspective of knowledge creation. So, I readily agreed to participate in the
CII Knowledge Management Summit this year in a session that focused on this
dimension. Ganesh Natarajan, Sharad Sharma and I were together on a panel to
explore the potential of, and challenges in, the creation of intellectual property
(IP)-based businesses from India.
I began my talk with a historical perspective. For the first
four decades after independence, India tried to build core industrial
capabilities. The focus was on understanding, assimilating and improving on
manufacturing processes. It’s only in the last two decades that we have seen
some momentum building up in the arena of new product development.
IP-based Successes from India: Bajaj, Vigyanlabs, Praj &
NCL
We have several examples of this trend. My favourite one is
of Bajaj Auto. As a scooter maker, Bajaj restricted itself to making cosmetic
changes to the Chetak. But after it entered the much more competitive
motorcycle space, it came up against powerful competitors like Honda (at that
time in the Hero Honda JV). After several unsuccessful attempts to adapt
Kawasaki’s bikes to the Indian market, Bajaj was finally successful when it
developed and launched the Pulsar around 2001. The Pulsar offered power and
style at a reasonable price and operating cost to a new young generation of
bike riders who wanted something more than the efficiency of Hero Honda’s
Splendor. At the heart of the Pulsar’s engine, was Digital Twin Spark Ignition
(DTSi) technology, a patented method of overcoming the traditional trade-off
between power and fuel-efficiency. The DTSi patent itself has been the subject
of litigation over questions of novelty and non-obviousness, but the Bajaj
Pulsar is certainly a landmark in terms of a successful Indian product riding
on IP covered by a patent.
In some of my earlier posts, I wrote about other companies
that are doing a good job of IP-based innovation. Vigyanlabs, winner of the
2013 Nasscom award for technology innovation, has a novel solution to reduce
power consumption in data centers – the core of this is covered by a US patent.
Praj Industries started by developing improved continuous process technologies
for fermentation of cane molasses, but is today doing research at the molecular
level so that it can convert different types of waste into next generation
biofuels. Praj already has patents covering processes to produce ethanol from
lignocellulosic material, and I presume more patent applications will follow.
Our public research institutions have also been successful
in creating core IP that is at the heart of commercial products. To give just
one example, Dr. Sivaram and his team at the National Chemical Laboratory (NCL)
created a microencapsulation technology covered by 6 US patents that is today
being used by Procter & Gamble in their high end Downy fabric softeners for
controlled release of perfume that lasts many days after the clothes have been
washed.
Yet, Challenges Remain…
I recently met Anjan Mukherjee, co-founder of HyCa
Technologies. HyCa has been a pioneer in the development of hydrodynamic
cavitation, a technology that has applications in areas as diverse as treatment
of effluents and ballast water. Anjan and his team have won several awards, and
been invited as guests of different countries. But, commercialization on a big
enough scale has eluded HyCa so far. One of the main reasons for this is the
absence of an effective public procurement system for new technologies. While
in most countries public procurement helps in certifying and establishing
locally-developed technologies, in India the rules of public procurement are loaded
against the purchase of novel technologies developed in India.
The Indian pharmaceutical industry graphically portrays some
of the other challenges in building IP-based product businesses from India.
While the leading Indian pharmaceutical companies were already strong in
process innovation, they invested in new drug development when India decided to
sign the GATT/WTO agreement in the mid-1990s. But, after some early success in
out-licensing molecules at early stages of the drug development process, they
have found the big wins hard to come by. As a result, some of them either sold
out or cut back on new drug development.
Why is
it so tough to develop new drugs out of India? The
combination of large upfront investments, a long gestation period
(trials
and approval can take 10+ years) and uncertain outcomes (a drug can fail in
advanced trials, rendering several years of effort infructuous) make drug
development challenging anywhere. But, in India, this is compounded by the absence of knowledgeable and patient
capital, and a lack of deep expertise in biotechnology and disease mechanisms. Recent curbs on
clinical trials in India have made the trial process more expensive and
cumbersome. Local regulators lack the sophistication and expertise to make a
rigorous assessment of a new drug. IP protection is also an issue with Indian IP laws perceived as being
against new drug development.
Many Challenges are
Ubiquitous
But, in fairness to
the Indian environment, some challenges in IP-based product development exist
everywhere. Even in the US, the assumed Shangri La for new product development.
I often relate the story of Robert Kearns, who invented the first intermittent
windshield wiper. He applied for a patent, and then offered his technology to
the automotive majors. They didn’t license
his technology, but introduced similar products of their own some years later.
Kearns sued Ford and Chrysler, but won a pyrrhic victory – by the time he won
in the courts, he suffered several personal losses. If this David vs. Goliath
battle can play out in the US, one can only imagine the challenges of defending
one’s patents in India.
Apart from the IP
itself, there is the importance of the possession of complementary assets in
getting value out of IP. In many industries including biotech-based Pharma, in
order to make money you need to have a good understanding of the regulatory
process, staying power and resources to complete trials and the ability to
market your product if you want to capture a major part of the value created by
your IP.
Conclusions
India has the
potential to build IP-based, product businesses. We have people
with ideas, in many areas we have people who have gained deep expertise, and
access to funding is improving.
But there are serious
weaknesses as well including the absence of support from public procurement,
regulatory gaps, absence of specialised funders, and shortages of talent, and infrastructure
that can be used on a shared, chargeable basis.
The keys to success include the ability to
stay the course (for a much longer time than in developed markets), internationalization,
and getting the business/commercialization model right. I can’t over-emphasize
the internationalization dimension – other countries can be much more accepting of
new, cutting-edge technologies; you get a large enough market to amortise the
cost of your development; and Indian customers are more positive once you have
proven yourself elsewhere.
[The views expressed here are the personal
views of the author.]
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