Globalisation, migration and knowledge transfer: the reconfiguration of R&D capability in Indian pharmaceutical firms

The Indian pharmaceutical industry represents a successful case of indigenous self-reliant development. Over the last three decades the Indian industry, working under weak patent laws, used reverse engineering skills to develop capabilities in process R&D and generics drug development. With the signing of the TRIPS agreement Indian firms faced a stronger regulatory environment which restricted the application of imitative R&D. This change in regulation accelerated development of innovative R&D capabilities in the Indian pharmaceutical firms. Building on process R&D capabilities Indian firms entered the generics market in advanced regions such as Europe and US. Indian firms started their subsidiaries in Europe and US and acquired firms in these countries. From 1995 Indian pharma firms began investing in the development of capabilities in new drug development and new drug delivery systems R&D. Major Indian firms have filed patents for new chemical entities and signed licensing deals with large MNC pharmaceutical firms. Indian firms hired Indian scientists educated or working overseas in multinational pharmaceutical R&D to acquire capabilities in innovative R&D. These scientists played a key role in development of R&D capabilities in Indian firms by bridging knowledge gaps in pharmaceutical R&D. However transfer of knowledge by hiring scientists is a complex process. For Indian firms differences between working cultures of Indian and western firms and importantly differences between the requirements of Indian firms and the skill sets of returnees have hampered effective diffusion of knowledge. Indian firms have responded to these issues by adopting global R&D management practices.