Dynamics of appropriability regime and open innovation in the Indian pharmaceutical sector: an exploratory analysis

Appropriability regime in India has undergone a major change in 2005 legalizing product patent protection. Using empirical data from 50 semi-structured interviews with key players in the Indian pharmaceutical sector, we show that a strong appropriability regime favors outbound innovation but restrains inbound innovation in pharmaceutical innovation. We find three appropriability related issues which act as barriers to inbound open innovation - a) preference by public institution researchers to disseminate research results through publications b) poor infrastructure support and c) patent ownership issues. We find that low patenting trends in public institutions inhibits researchers to engage with firms for research collaborations and gives rise to paradox of disclosure. In contrast, the proclivity of firms to appropriate and enhance commercial potential for outbound innovation rather than engage in inbound sourcing of knowledge, for secrecy purposes, leads to paradox of openness. These two paradoxes inhibit open innovation between science and the industry.