Introduction

Catching-up requires the Indian pharmaceutical industry to catch up in the creation of knowledge for drug discovery and process innovations (Jiasu, Lin and Sha, 2016). During the post-TRIPS (Trade Related Intellectual Property Rights) era, in January 2000, India's policymakers laid down explicitly for the first time a policy for the promotion of drug discovery and development efforts. It was with the announcement of this policy that India's policymakers declared their ambition of not only developing contemporary therapeutics to help reduce the rates of morbidity and mortality for the country, but also of becoming a significant global player on the strength of domestic firms’ investments in drug discovery research and development (R&D).

In India, the process of creation and accumulation of firm-specific advantages by domestic firms began under the new patent regime with the passing of FERA regulations and the New Drug Policy 1978 to reduce activities of multinational corporations (MNCs) in the sector. Although the pioneering domestic pharmaceutical firms took some time to export to the highly regulated markets of the US and Europe, but what is really important is that the route taken was one of developing in-house capabilities for generic manufacturing and R&D with the help of the capabilities of the public-sector industry and R&D institutions in place in India. The entry of domestic firms into the US market started when Ranbaxy developed an alternative process for manufacturing Eli Lilly's patented drug Cefaclor. The American company sensed that it would lose its markets to Ranbaxy's low-cost substitute in countries that did not recognize product patents. To make the best of a bad situation, Eli Lilly offered a manufacturing contract to Ranbaxy for producing 7 ACCA, intermediate for Cefaclor. In 1993, Ranbaxy laboratories signed a contract manufacturing agreement with Eli Lilly (Pradhan, 2006).

This chapter examines the contribution of domestic pharmaceutical firms to the drug discovery efforts undertaken after the implementation of the TRIPS Agreement in India. It assesses their contribution towards system-building activities. The policy impact is tracked in terms of the progress made in the strengthening of in-house capabilities and the development of system-wide links and relations for the creation of knowledge for drug discovery.