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The effect of Intellectual Property Rights on domestic innovation in the pharmaceutical sector

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  • Simona Gamba

Abstract

This paper analyses the causal effect of Intellectual Property Rights (IPR) protecting pharmaceutical products and processes on pharmaceutical domestic innovation in a panel of 74 countries. The identification strategy exploits the different timing across these countries of two homogeneous sets of IPR reforms. Domestic innovation is measured as citation-weighted domestic patent applications filed at the European Patent Office (EPO): the highly skewed distribution of the dependent variable, and the high number of zero observations, are taken into account by using count data models. In particular, a Zero Inflated Negative Binomial model is adopted to take into consideration the choice not to patent at the EPO. Results show that patent protection stimulates innovation, although the effect is not long-lasting. Developing countries profit significantly less than developed ones from the protection, benefiting from an effect that is roughly one half the one for developed countries.

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  • Simona Gamba, 2016. "The effect of Intellectual Property Rights on domestic innovation in the pharmaceutical sector," FBK-IRVAPP Working Papers 2016-05, Research Institute for the Evaluation of Public Policies (IRVAPP), Bruno Kessler Foundation.
  • Handle: RePEc:fbk:wpaper:2016-05
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    Keywords

    Intellectual Property Rights; Pharmaceutical sector; Innovation; Patents; TRIPS; Developing countries;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)

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