ISBInsight: What business incident triggered your writing of this case?
Anand Nandkumar: When I came to India in 2007 after completing my PhD, there was a lot of discussion on pharmaceuticals and Intellectual Property Rights (IPR). Around that time, the Swiss pharma company Novartis was denied a patent for the blood cancer drug Glivec in India after their seven-year long litigation to get Indian patent rights.
The Glivec case was a landmark decision by the Indian Supreme Court, which upheld the Indian patent office’s rejection of Novartis’ patent application on the grounds that their drug did not pass the novelty test. Citing an Indian patent law amendment in 2005, Glivec was deemed not patentable because the drug was not substantially different in properties with regard to efficacy compared to the one for which it had been granted US and European patents. Another aspect was price. While Novartis had set the Glivec price at USD 2666 per patient per month, some generic manufacturers had already launched their versions of the drug at USD 177 to 266 per patient per month.
The situation was a topic of hot debate among the press and the public, and a scholarship from a large bio pharmaceutical company funded my research on this topic. My co-author and I wrote a paper on litigation related to this incident, and that’s when we realised there was a bigger story that needed to be told.
What is unique about this case from the perspective of the Indian pharmaceutical industry?
When we talk about the pharmaceutical industry, the US pharmaceutical sector is the most widely spoken about. There is not that much discussion about its Indian counterpart, although in terms of value it happens to be the 12th largest globally. A lot of the demand in healthcare is driven by India, which has a growing population. Increasingly, Multinational Corporations (MNCs) are moving towards this part of the world.
At the same time, the competitive dynamics in this part of the world is quite different and we put together a comprehensive picture of the sector’s competitive landscape. For me, this case is perfect for classroom teaching because it helps students understand how to formulate strategy vis-à-vis Intellectual Property (IP) and global competition.
What are some challenges you faced while writing the case?
We ended up writing a background case, not an analytical case where people have to come up with solutions. However, the protagonist, a large multinational pharmaceutical company that lost a huge case, would not talk to us. We relied on secondary research and had to piece much of the information together from online sources. Fortunately, my co-author had a background not only in microbiology, but in law as well. That really helped us with the complex technical and legal details.
The process of writing this case was cyclical. We were writing this because there was not much information available on the industry, but on the other hand, we did not have much to go on either–– so you can see the dichotomy of the situation.
There is plenty of legal jargon that is used in the case. Did that pose a difficulty in classroom teaching?
I feel that a popular misconception among MBA students is that the only thing that matters in classroom learning is business. I think the ability to distil technical details into economics is incredibly important- unit cost economics, so to speak. If you look at companies like Corning, you will find that the erstwhile CEO, Wendell Weeks, used to take technical classes to keep himself up to date. I always tell my students that it is more about the meaning behind the use of jargon, rather than the jargon itself.
What, according to you, is the most important takeaway from this case?
The greatest learning in this case is to show that there are significant differences in the institutional regimes within markets. As a strategist, one must understand institutional specifics and competitive dynamics before looking at the nation as developing or developed. MNCs are often guilty of trying to impose the strategy they have used in one country on a completely distinct one. It is important for managers and strategists to understand market nuances, and then come up with strategies.
The aim is to expose students to these institutional details and the nuances of competitive dynamics, in this case, of the Indian pharma sector, and make them question how these dynamics affect strategy. To cite a different example, UniLever’s success in India is attributed to their global-local strategy that considers the differences between institutional regimes. The final learning is the process of unpacking and understanding these core differences and nuances and using this knowledge to craft more coherent and effective strategy.
About the Case Authors:
Mridula Anand is Senior Manager- Research at the Srini Raju Centre for IT and the Networked Economy at the Indian School of Business.
Anand Nandkumar is Associate Professor of Strategy and Academic Director for the Centre for Innovation and Entrepreneurship at the Indian School of Business.
About the Writer:
Samriddhi Mukherjee is a Content Associate at the Centre for Learning and Management Practice at the Indian School of Business.
About the Case:
Anand, M., Nandkumar, A., 2015. “Patents and Competitive Dynamics in the Indian Pharma Industry”. Indian School of Business case. Harvard Business Publishing