TRIPS Agreement and the Emerging In-House R&D Activity of the Indian Pharmaceutical Companies:A Panel Data Analysis of the Firm Level Data

Under the WTO agreement on the Trade Related Aspects of Intellectual Property Rights (TRIPS), India amended its Patent law and recognized Product Patent from 1^st January 2005. The recognition of the product patent is a big challenge for the Indian generic pharmaceutical companies, which has always relied on the imitation of the patent product of the innovative firms for its growth and development. Realizing the increasing importance of R&D among the pharmaceutical companies in the face of the current challenges, this paper examines the evolving R&D scenario in the Indian pharmaceutical sector and also identifies tlie factors that induce the firms to do more of R&D utilizing the panel data of about 288 firms for the time period 1991 to 2005. The empirical findings suggests that the probability of undertaking R&D and also the intensity of R&D is largely influenced by a number of firm specific factors like firm size, age, internal resources, outward orientation of the firms, firm structure, diversification strategies, competitive pressure, ownership pattern and the spillover-effects in the industry.