Advancing Innovation May Advance Latin America's Economies, Part 1/3
Innovations in pharma need framework conditions that adapt to the constantly changing environment and the ever new challenges in terms of innovation and market access. A global and a local issue. How could it be tackled in Latin America?
Patent protection plays a role in innovation
The pharmaceutical industry relies on patent protection to create value which, in turn, ensures continued access to innovative treatments. As an intensive field for research & development, it takes 12-15 years and $1B to develop a single medicine. Such innovative treatments help patients suffering with diseases, including cancer and heart disease, to live longer and healthier lives.
Access to medicines is often discussed in the same breath as the biopharmaceutical industry’s protection of drug patents. This context inherently poses a challenge for policy makers, multinational medicine makers, and patients; especially when considering individual economies, respective policy priorities and sovereign mechanisms for healthcare delivery. Enabling an innovative environment is a key component to ensuring patient access to medicine. By creating a robust innovation ecosystem, patients may have the opportunity to access the latest treatment options.
Can Latin American countries do more to enable the innovation ecosystem via patents?
According to at least a few highly prominent intellectual property resources, as a region, Latin America may be able to do more to enable its innovation ecosystem. For policy-makers, an inconsistent innovation (patent-enabled) framework may hinder economic growth which is, at times, a key success metric (i.e. via job creation and wage growth). We see some of these innovation underpinnings expressed in the Global Innovation Index.
The Global Innovation Index 2017 (GII), depicts a country’s innovation performance relative to GDP alongside a host of other factors. When taking the top 5 Latin American countries based upon GDP, we find that countries scored less than average on “Innovation Efficiency”. In the scope to include all countries in the region, two countries, Costa Rica and Panama, have a solid Innovation Efficiency1 status.
| Country | Total GDP (International $ billions)2 | GDP per capita PPP (International $) | Type of Country | Global Innovation Index Rank (out of 127 countries) | Innovation Efficiency Ratio |
|---|---|---|---|---|---|
| Argentina | 874.07 | 22,553.6 | Upper-middle income | 76 | 0.55 |
| Brazil | 3,141.34 | 15,614.5 | Upper-middle income | 69 | 0.52 |
| Chile | 438.75 | 23,459.6 | High income | 46 | 0.60 |
| Colombia | 688.89 | 13,846.5 | Upper-middle income | 65 | 0.52 |
| Mexico | 2,315.65 | 17,534.4 | Upper-middle income | 58 | 0.61 |
Another resource, the U.S. Trade Representative Special 301 Report, provides some additional context for patent issues. This report, albeit from a U.S. view, provides a comprehensive overview of patent issues, while providing a framework for innovation diplomacy (and patent enforcement). Of the 34 countries listed in the U.S. Trade Representative’s 2017 Special 301 Report, more than several (~40%) are in the region of Latin America. The inherent concern is that patients could miss out on access opportunities and that a reliable patent process is key to developing an ecosystem for innovation to flourish.
Enabling innovation in Latin America
For economies, it may be a chicken-and-egg scenario in terms of enabling innovation: invest in an innovation framework to try and attract business, or encourage businesses that want to have a stake in the economy to adopt and adapt to the current framework. For policy-makers and businesses, regardless of their approach, the GII’s data tables provide some insight into the respective mechanisms necessary to enable innovation. These mechanisms include broader business underpinnings and infrastructure based upon 7 categories (5 categories based on an economy’s inputs, 2 categories based on an economy’s innovation outputs):
- Institutions: which includes factors for political, regulatory, and business environment, respectively
- Human capital & research: which includes factors for education, research and development
- Infrastructure: generally includes IT considerations, and ecological sustainability aspects
- Market sophistication: defined by credit, investment, and aspects related to trade
- Business sophistication: categorized by: knowledge worker capacity, innovation linkages, and knowledge absorption
- Knowledge and technology outputs: knowledge creation, knowledge impact, and knowledge diffusion, respectively
- Creative outputs: intangible assets, creative goods and services, and online creativity
In Part 2, Advancing Innovation May Advance Latin America's Economies, we take a look at the various mechanisms described in The Global Innovation Index 2017, paying special attention to those common supports and resistances, which may help shape the framework for creating more efficient, innovation-friendly ecosystems in Latin America.
Sources:
The Global Innovation Index 2017; https://www.globalinnovationindex.org/gii-2017-report; Last accessed October 2017
The Special 301 Report, April 2017; https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/april/ustr-releases-2017-special-301-report ; Last accessed October 2017
1 The Innovation Efficiency Ratio is the ratio of the Output Sub-Index to the Input Sub- Index. It shows how much innovation output a given country is getting for its inputs.
2 International Monetary Fund (IMF), World Economic Outlook Database (2016 data), April 2017. Last accessed October 2017
