Business planning

Published online: 25 July 2006, doi:10.1038/bioent910

The promise of the East: India and China as R&D options

*Simon Goodall is at The Boston Consulting Group, 355 South Grand Avenue, Suite 3200, 32nd Floor, Los Angeles, California 90071.

**Bart Janssens is at The Boston Consulting Group, 14th Floor, Nariman Bhavan, 227 Nariman Point, Mumbai 400.021, India.

***Kim Wagner is at The Boston Consulting Group, 430 Park Avenue, New York, New York 10022.

John Wong is at The Boston Consulting Group, 34th Floor Shell Tower, Times Square, Causeway Bay, Hong Kong China.

Wendy Woods and Michael Yeh are at The Boston Consulting Group, Exchange Place, 31st Floor, Boston, Massachusetts 02109. yeh.michael@bcg.com

IP developments in India and China

Among executives contemplating offshoring, IP protection remains a key concern, especially for discovery work. The main IP laws in both India and China are new and relatively untested, so caution is appropriate.

After major changes in India's IP laws in April 2005 that shifted from process to product protection, India now appears to have a reassuringly tough set of IP standards. Strong trade secret laws and the new Contract Act, based closely on IP statutes in the UK, protect a company against risks related to information leakage or employee switching. In addition, they allow companies to pursue litigation in Western courts against Indian companies for IP breaches. Another source of comfort is the presence of R.A. Mashelkar, director general of the Council for Scientific and Industrial Research. Mashelkar is a leading proponent of biotech partnerships and a global authority on IP protection in developing nations, serving as vice chair of the Commission on Intellectual Property Rights, Innovation and Public Health for the World Health Organization (Geneva). Although India's new IP laws have appeared to work well in other industries, such as business process outsourcing, which handle sensitive company data, it remains to be seen if they will work as well for biotech and for biological products. After all, the Indian pharma industry as a whole does have a tradition of patent challenges and deep reverse-engineering skills.

China too has a strong set of IP protection laws in place, though perhaps not quite as strong as India's overall, and perhaps not quite as strong for biologicals as for chemical molecules. Enforcement has been an ongoing issue, and the judicial protection of IP still has to prove itself. But since its accession to the World Trade Organization in 2001, the country has been subject to the Agreement of Trade-Related Aspects of Intellectual Property Rights, so the government is under pressure to enforce international standards. Its previous efforts to change underlying attitudes toward IP protection were not unqualified successes: the patent process remains awkward, Chinese courts continue to struggle with IP cases and protection is not always applied equally across domestic and foreign parties.

M.Y.