TRIPS (1995) has played a major role in shaping the Indian pharmaceutical industry.
Conventional theory suggests that strong intellectual property rights (IPR) frameworks should
strengthen innovation incentives. Yet, two decades after TRIPS, growth in India’s novel
innovation pipeline has stalled. This chapter challenges the assumption that stronger IPR alone
would catalyze discovery-based R&D. We utilize trial phase transition data from the
Biomedtracker database, finding that the Indian pipeline faces a bottleneck in transitioning
clinical trials specifically from Phase 1 to Phase 2, supported by a null result in transitions from
Phase 1 to Phase 3, benchmarked against China and the United Kingdom. We argue that this
reflects binding constraints in the Indian ecosystem that are likely orthogonal to IPR,
accompanied by a within-firm shift towards non-novel programs. We corroborate these
arguments through interviews with Indian pharmaceutical industry experts. Our findings should
inform thinking about normative IPR in developing economies.
Pharmaceutical and medical device innovators must simultaneously manage long, uncertain
regulatory pathways and patent prosecution processes to ensure their inventions have a chance at
entering the market. However, the relationship between the timing of patent prosecution
decisions and subsequent innovation outcomes has not yet been examined in these contexts.
Here, we decompose pendency at the Australian patent office into applicant-controlled delay,
backlog, and examination scrutiny, relating each to follow-on innovation, commercialization,
and child applications in the pharmaceutical and medical device sectors. Applicant delays are the
most predictive component for positive innovation outcomes in both sectors, especially for their
respective commercialization pathways. For high-regulatory-risk devices, in particular, we find
that an additional year of applicant delay is associated with roughly double the odds of
commercialization, highlighting the need to consider patent pendency as a composite measure to
study the interaction of patent office policy and applicant strategy during prosecution.
Supplementary Protection Certificates (SPCs) restore patent driven effective exclusivity of
pharmaceutical products, yet their eligibility rules have shifted repeatedly through the evolution
of Court of Justice of the European Union (CJEU) case laws. This chapter examines how the
Medeva judgment—a turning point in SPC jurisprudence and its claims-based test translated into
examination outcomes, using the universe of SPC decisions issued by the German Patent and
Trade Mark Office (DPMA). We classify examiner documents to identify which applications
raised Medeva-type eligibility concerns and which CJEU cases examiners invoked. We
document that combination products and large-molecule drugs face systematically higher
adverse SPC decisions, and these shifted after Medeva, and that the eligibility concerns and
CJEU citations are associated with such outcomes. The results show how a single line of
jurisprudence “protected by a basic patent” reshaped the exclusivity available to pharmaceutical
originators across the European Union.
Patents let pharmaceutical firms price new therapeutics largely free from competitive
constraint. Outside the U.S., value-based pricing (VBP) ties market access and price to
evidence of therapeutic benefit or cost-effectiveness after regulatory approval. This chapter
examines what VBP does to pharmaceutical market value: how much the owner can capture,
which R&D directions get funded, and whether an unfavorable decision destroys or merely
delays value realization. We compare structurally different VBP models: Germany's added
health benefit system and England's cost-effectiveness threshold. We test their effect on
market value using stock market reactions to reimbursement decisions for publicly listed
firms, 2000–2025. Neither favorable nor unfavorable VBP decisions move stock prices in
either country: investors do not treat them as new information about firm value. The null
result implies how much VBP threatens the incentive to innovate, and how firms and
policymakers should weigh reimbursement risk against patent-driven return expectations.
This chapter examines how pharmaceutical pricing regimes shape innovation incentives
and patient access. Drawing on theoretical and empirical research, it develops a
comparative framework linking pricing policies in the United States, Europe, and Japan
to firm behavior: R&D investment, clinical development strategies, launch timing, and
market participation. FDA approvals by applicant origin show a widening gap between
the United States and both Europe and Japan, while clinical trial registrations show a
similar divergence between the United States and Europe, most pronounced in early-stage
development; the gap with Japan narrows. The literature reviewed here links these
patterns to the effects of pricing regulation on firms’ expected returns, though research
capacity, public funding, and access to capital may also contribute, and the aggregate
evidence cannot fully disentangle these influences. It concludes by considering pricing
policy within the broader innovation ecosystem, the international distribution of
innovation financing, and the potential to improve affordability through insurance design
rather than lower manufacturer prices.
China has rapidly emerged as a major source of global biopharmaceutical innovation, raising questions about what has driven its rise and what it means for Europe. Drawing on industry interviews and data on licensing, drug development, R&D, and scientific research, we identify several factors underlying this revolution. These include growing scientific and entrepreneurial capabilities; scale, agglomeration, and speed in the drug development ecosystem; and deep integration with the global pharmaceutical industry. State intervention also contributed to biopharmaceutical development in China, particularly through reforms to clinical trial governance and regulatory standards; financing and reimbursement policies also played a role. The contribution of domestic intellectual property reform is less clear. For Europe, policy should distinguish concentrated manufacturing dependencies from engagement with China’s growing innovation and drug development capabilities. Europe can build supply chain resilience and strengthen its own biopharmaceutical capabilities while remaining open to Chinese innovation.
We investigate how fiscal incentives affect innovation by exploiting the 2017 US reform that halved
the Orphan Drug Tax Credit. We analyze orphan drug designations using a multiple-intervention
interrupted time-series model that accounts for changes in orphan drug policies across
pharmaceutical markets. We examine heterogeneous responses according to sponsors’ ability to
benefit from the incentive, proxied by whether they had obtained at least one product approval from
the Food and Drug Administration in the previous ten years. The results indicate that tax credits
stimulate orphan drug research. The reform significantly reduced orphan drug innovation, with
heterogenous effects across sponsors. The decline was concentrated among sponsors with at least
one previously approved product, whose designations decreased progressively after 2017.
Consistently, the probability that a designation was filed by such a sponsor fell significantly. These
findings suggest that reduced tax-credit generosity lowered investment in orphan drug and altered
the composition of sponsors undertaking research.
Although existing intellectual-property frameworks do not exclude AI-assisted inventions, they were designed around human-centered concepts. As AI becomes integral to drug discovery, these standards risk generating legal uncertainty that could undermine effective patent protection. This article identifies three key challenges: the strict requirement of human inventorship, which sits uneasily with increasingly autonomous AI contributions; the evolving standard of sufficiency of disclosure for complex, data-driven inventions; and the potential recalibration of inventive step as AI tools become routine features of pharmaceutical research. Drawing on patent office guidelines, emerging case law, policy instruments, academic literature and current industry practice, the article argues that while the existing framework can accommodate AI-assisted drug discovery, clearer guidance is needed to preserve innovation incentives and support competitive market entry.
Since 1991, the United States has criticized China for inadequate intellectual property (IP) protection for pharmaceutical innovation. Western countries have pursued various forms of pressure to encourage reform, including tariff threats, World Trade Organization (WTO) accession commitments, and free-trade agreements (FTAs).1 These pressures were also central to the January 15, 2020, U.S.–China Phase One Agreement,2 which sought to address longstanding concerns over Chinese IP practices, using tariff-based sanctions as external pressure. Less attention has been paid to the interaction of external pressure with China’s domestic industrial policy objectives and other forms of engagement, including government-to-government technical negotiations and private Track II dialogues. These interacting influences over the past 35 years provide a basis for tracing pharmaceutical IP reforms in China. The evidence rarely establishes that aggressive external pressure alone produced successful outcomes, or that reforms could have succeeded contrary to China’s articulated domestic priorities. Rather, external pressure appears most effective when aligned with China’s domestic needs and accompanied by sustained engagement through complementary channels.
Europe’s health and life-science innovation policy is being reshaped by geopolitical tensions,
recurrent supply-chain disruptions, technological change and intensified competition for
manufacturing, resources, data infrastructure, translational capacity and talent. This paper
conceptualizes strategic health sovereignty as a governance approach that preserves
scientific openness and strategic cooperation while building capabilities and reducing
structural vulnerabilities in critical medicines and health technologies. Drawing on recent
European Union (EU) initiatives, this paper examines how Europe can strengthen
competitiveness, product adoption and access by better aligning three policy levers: (1)
incentives and protections, (2) simplified regulatory frameworks, and (3) increased focus on
technology transfer and scale-up capacity. Emphasizing the urgent need for improvements in
the European innovation ecosystem, this paper stresses the importance of better integrated
innovation pipelines. It further stresses that a competitive European health and life-science
innovation ecosystem needs a visionary investment culture, which in turn requires predictable
incentives, regulation and translation mechanisms.
Over the past ten years, China has undertaken significant regulatory changes that have fundamentally altered its pharmaceutical sector. Key measures include the 2015 “Opinions on the Reform of Review and Approval Process for Drugs and Medical Devices,” which streamlined evaluation procedures, cut application backlogs, and stimulated innovative research. This was followed by the amended 2020 “Provisions for Drug Registration,” which established faster pathways such as priority review, conditional approval, and breakthrough therapy designations. Collectively, these reforms have revitalized the pharmaceutical environment, accelerating R&D timelines, attracting greater investment into biopharmaceutical innovation, and boosting the international presence of locally developed treatments. As a result, China is shifting from its previous role as a producer of generic medicines to a rising global hub for pharmaceutical innovation, with its homegrown research gaining growing recognition worldwide.
Global value chains (GVCs) have become increasingly prevalent in international trade and investment. GVCs influence not only where pharmaceuticals are produced but also how knowledge and know-how diffuse across borders. This chapter analyzes how patent protection and other relevant IP factors affect firm organization in pharmaceutical GVCs, particularly the choice between vertical integration and outsourcing. Building on recent theories of sequential production, the chapter argues that IP affects both the scale of international technology transfer and the mode through which it occurs, with implications for developing countries’ participation in higher value-added activities.
The chapter then provides a retrospective analysis of the TRIPS waiver debate during the COVID-19 pandemic. It evaluates whether the adopted, limited waiver – or a broader one – would have overcome supply-chain disruptions and bottlenecks or improved access to platform technologies and the underlying know-how. It also explores ways in which the international patent system could have worked to enhance manufacturing and distribution. The chapter concludes with some lessons for future preparedness, including improving GVC flexibility and building absorptive capacity in the developing world.
The United States globally leads in developing new, innovative drugs. American taxpayers and private payors also pay far more for patented drugs than foreign counterparts do. The Trump Administration is seeking to require pharmaceutical firms to lower US drug prices while it threatens sanctions against foreign countries unless they pay more for US-produced drugs. Drug price controls, however, would undermine innovation, thereby harming both drug producers and consumers. Fortunately, political economy considerations incentivize foreign governments to lift patented drug prices when agreements support their domestic industrial policies and life sciences ambitions. Replacing coercive price-fixing and regulatory friction with reciprocal trade and regulatory synergy would foster a robust, equitable innovation ecosystem that sustainably finances future medical cures. The 2025 US-UK agreement on pharmaceutical pricing demonstrates the achievability of such agreements. This paper outlines frameworks for future agreements aimed at increasing foreign contributions to pharmaceutical innovation and applies them to the European Union (EU).
The European biopharmaceutical industry is shifting from the integrated
“blockbuster” model toward a more distributed ecosystem: large incumbents remain the
industrial backbone, while small, research-intensive firms generate an increasing share of
novel science. Using a panel of 225 EU pharmaceutical and biotechnology firms observed
from 2003 to 2024, this chapter combines firm-level financial and patent data with country-
level measures of venture finance and property-rights protection. It makes three findings.
First, the rise of small firms within the European biopharmaceutical industry is a structural
trend. Second, patenting is associated with higher sales for small firms, but not large
incumbents. Third, these returns emerge only after several years and are stronger where
growth capital is deeper and property-rights institutions more robust. As the sector relies
more on SMEs to originate innovation, patent accessibility, effective protection, scale-up
finance and IP enforcement become central to the competitiveness of Europe’s life-sciences.