Understanding the Innovation Landscape in India

The Institute for Competitiveness

Understanding the Innovation Landscape in India – A Study of Twenty Innovators (Individuals and Enterprises)

Amit Kapoor Sandeep Goyal

November 2017

Understanding Innovation Landscape

Understanding the Innovation Landscape in India – A Study of Twenty Innovators (Individuals and Enterprises)

Amit Kapoor, Honorary Chairman, Institute for Competitiveness Sandeep Goyal, Fellow, Institute for Competitiveness

The Institute for Competitiveness

Page 1

Understanding Innovation Landscape

Š 2017 The Institute for Competitiveness. All rights reserved.

For more information about obtaining additional copies of this or other Institute for Competitiveness publications, please visit IFC’s website, www.competitiveness.in

ABOUT THE INSTITUTE FOR COMPETITIVENESS Institute for Competitiveness, India is the Indian knot in the global network of the Institute for Strategy and Competitiveness at Harvard Business School. Institute for Competitiveness, India is an international initiative centered in India, dedicated to enlarging and purposeful disseminating of the body of research and knowledge on competition and strategy, as pioneered over the last 25 years by Professor Michael Porter of the Institute for Strategy and Competitiveness at Harvard Business School.

Institute for Competitiveness, India conducts & supports indigenous research; offers academic & executive courses; provides advisory services to the Corporate & the Governments and organizes events. The institute studies competition and its implications for company strategy; the competitiveness of nations, regions & cities and thus generate guidelines for businesses and those in governance; and suggests & provides solutions for socio-economic problems.

Visit www.competitiveness.in for more information.

The Institute for Competitiveness U 24 / 8 DLF Phase 3 Gurgaon 122 002 Haryana, India Phone: +91 124 437 6676 Email: info@competitiveness.in

Page 2

Understanding Innovation Landscape

CONTENTS ABOUT INSTITUTE FOR COMPETITIVENESS ........................................................ 2 1.

EXECUTIVE SUMMARY .............................................................................................. 4

2.

INTRODUCTION ........................................................................................................... 6

3.

METHODOLOGY – SAMPLING AND DATA COLLECTION ........................ 11

4. ANALYSIS ......................................................................................................................... 13 4.1 Indian Institute of Technology, Madras (Prof. T. Pradeep) ............................................. 13 4.2 Indian Institute of Technology, Kharagpur (Prof. Rabibrata Mukherjee) ...................... 17 4.3 Nayan Eye Centre (Dr. Suven Bhattacharjee) .................................................................. 21 4.4 JNTBGRI (Dr. Palpu Pushpangadan) ........................................................................... 24 4.5 CSIR - Institute of Microbial Technology (IMTECH) ................................................. 27 4.6 Jubilant Life Sciences ........................................................................................................ 30 4.7 Stempeutics Research ......................................................................................................... 33 4.8 Biocon................................................................................................................................. 36 4.9 Forus Health Pvt. Ltd. ..................................................................................................... 40 4.10 Perfint Healthcare ............................................................................................................ 43 4.11 Lupin .................................................................................................................................. 47 4.12 Glenmark Pharmaceuticals ............................................................................................... 51 4.13 Cipla................................................................................................................................... 54 4.14 Sun Pharmaceutical.......................................................................................................... 57 4.15 Cadila Healthcare ............................................................................................................. 60 4.16 Suven Life Sciences .......................................................................................................... 63 4.17 Mettl .................................................................................................................................. 66 4.18 Uniphore ........................................................................................................................... 69 4.19 S4S Technologies ............................................................................................................. 72 4.20 ThinkPhi........................................................................................................................... 75 5. FINDINGS AND RECOMMENDATIONS ............................................................ 78 5.1Dynamic environment influences the focus on R&D and innovations ............................. 78 5.2 Mindset of the founders and investors make a difference ................................................. 79 5.3 Patenting involves high opportunity costs in terms of efforts, time and capital ............... 79 5.4 Need to enhance the research incentives and socio-cultural mindset .............................. 80 5.5 Lack of research and innovation ecosystem in academic institutions ............................... 80 5.6 Need to strengthen the regulatory standards and intellectual property laws ................... 81 5.7 Enhance the research partnerships and collaborations ...................................................... 81 5.8 Commercialization of patents is not easy........................................................................... 82 5.9 Access to funding at early stage matters ............................................................................ 82 6.

CONCLUSION ............................................................................................................... 84 Page 3

Understanding Innovation Landscape

1. EXECUTIVE SUMMARY There is a tremendous shift in the socio-economic landscape globally due to the rapid pace of globalization and technology advancement. The companies globally are grappling with the moment of continuous change and transition by aligning with different modes of product, process and business model innovations. There is a renewed focus on research and innovation as the strategic levers for gaining the competitive advantage.

India is making a consistent progress in enhancing the competitiveness and innovation ecosystem. The progress is evident from the latest rankings of India on the Global Competitiveness Index (GCI) and Global Innovation Index (GII) in 2017. India climbed by 31 positions from 71st (2014) to 40th (2017) rank on GCI 2017 scorecard. Similarly, India jumped by 21 positions from 81st (2015) to 60th (2017) rank on GII ranking.

However, India still needs to go a long way to be considered at par with the global R&D focused countries like USA, Japan, S Korea, China, etc. A continuous focus and improvement in the overall R&D ecosystem are required to take up research as a career option, patent productivity and R&D budget of the companies across industries.

This study is aimed at understanding the research and innovation landscape in India. It focuses on the following research questions – • •

What are the different challenges faced by the innovators in India?

What kind of strategic choices and growth levers are practiced by the successful innovators in India?

The interaction with the twenty innovators from different industries in India having different scale and size brings out the key challenges faced, and underlying strategic choices adopted by these companies.

The study highlights the following challenges faced by the companies and individual innovators in India.

The first challenge was regarding the dynamicity of the macro-environment regarding regulatory guidelines, competitive dynamics, pricing and quality variance. The second challenge involved dominant mindset, potential trade-offs, and dilemmas faced by the start-up companies and individual innovators while deciding on filing the patents for their innovations. The third challenge faced by the companies was regarding the need for significant investment of time, money and workforce in the patenting process. The fourth challenge involved difficulty in attracting and retaining high caliber individuals as researchers due to limited research incentives. The fifth challenge was related to the lack of focus on research and innovation in the Indian university ecosystem. The university system in India lacked focus on research and innovation as per the changing market landscape and technologies. The sixth challenge faced by the innovators especially in sectors like pharmaceutical, biotechnology, and software, etc. was related to the lack of stringent regulations and Intellectual Property (IP) laws. The next challenge involved increasing risk of failure of the innovations being undertaken on a stand-alone basis.

Page 4

Understanding Innovation Landscape

As highlighted above, the dynamicity of the macro-environment and rapid advancement of technology led to a scenario where companies found it safer to undertake a collaborative research in association with global partners.

The other two challenges faced by the companies especially the start-ups and individual innovators was regarding the commercialization of patents and getting access to early-stage funding. Commercialization of patents required prototyping and proof of concept. Also, early stage funders were not easily available thereby creating a cash flow constraint for the start-ups and individual innovators during the early years of their innovation.

These challenges require strategic orientation and action plan at three levels – government, companies and academic institutions.

There are increasing eorts by the Government of India in the form of IP awareness programmes, reforms, speeding up the patenting process, and strengthening of the digital copyright acts. All these actions are aimed at ensuring the ease of filing patents thereby increasing the productivity from the existing levels of 17 patents per million people. Also, the government of India is promoting research as a career by oering better incentives and recognition. The action is being taken to enhance the compliance standards and guidelines in specific sectors like pharmaceutical at par with global standards.

Academic institutions in India like IITs have been quite successful in creating an advanced research ecosystem relating to futuristic technologies. The research labs and incubation setups motivate the students to get involved in high-end research, patenting and commercialization. Also, increasing number of students passing out of IITs and IIMs are starting as start-up entrepreneurs leveraging the research and incubation ecosystem at these institutions. The similar kind of setup and accountability is required across the universities in India, which account for the significant proportion of the graduates every year in India.

There is a need for setting up the mentoring platforms at industry levels for enabling the networking and right direction for the innovators especially the start-ups and individuals. In that context, there are an increasing number of public and private incubators and accelerators coming up in India to facilitate the mentoring and early-stage funding for the start-ups and individual innovators. Alignment with the incubators and accelerators enable the start-ups to think from the long-term perspective and get access to channels for getting early-stage funding, filing the patents and developing the working prototypes for ease of commercialization.

This study also reflects upon the increasing numbers of companies in India looking at innovation rather than imitation as a key success lever for competitive advantage. The companies are increasingly moving towards the collaborative mode of research by building research and innovation oriented partnerships with the universities, global organizations and government institutions.

Page 5

Understanding Innovation Landscape

2. INTRODUCTION Research and Innovation drive the competitive advantage of nations and companies. This has become increasingly relevant in today's world where globalization and rapid evolution of innovative technologies and business models are influencing the socio-economic landscape at a pace like never before. However, there has been a marked difference in the priorities and focus of different nations in terms of R&D budgets and spending. India spends around 0.9% of its GDP on science and technology1. The government accounts for 80% of this spending with remaining 20% being contributed by the private sector. These spending patterns imply a double whammy impact in the sense that focus on R&D and innovation is not that important for the government as well as the private sector in India. This lack of intensity and priority towards spending on research gets reflected in the global rankings and scorecards like Global Competitiveness Index, EU R&D Scorecard, Global Innovation Index, International Intellectual Property Index, and so on. Even the leading Indian states on innovation find themselves lagging behind their global counterparts2. There are primarily three criteria for understanding the research and innovation landscape of a country.

The first criterion involves analyzing the R&D budget outlay, the number of researchers, and patent related statistics at the country level. Table 1 highlights the comparative analysis of major countries in terms of R&D spending, number of researchers, and patents.

Table 1: Comparative View on Research Spending – Country Level Analysis (Year 2015)3

The comparative analysis in Table 1 indicates that India lags considerably as compared to the developed and developing economies not only in terms of R&D spending as the percentage of GDP but also in terms 1http://www.swaminathansivaram.in/media/data/INDIA%E2%80%99S%20SPEND%20ON%20SCIENCE,%20TE

CHNOLOGY-May-2016.pdf (last accessed 28 September 2017) 2 The India State Innovation Report 2016. http://competitiveness.in/state-innovation-index-2016/ (last accessed 23 November 2016) 3http://www.swaminathansivaram.in/media/data/INDIA%E2%80%99S%20SPEND%20ON%20SCIENCE,%20TE CHNOLOGY-May-2016.pdf (Adapted from UNESCO SCIENCE REPORT, 2015; NATURE, 2011, 2013 AND 2015 AND WORLD BANK DATA) (last accessed 28 September 2017)

Page 6

Understanding Innovation Landscape

of the number of researchers and patents. In fact, India gets only 17 patents per million people, which is considerably low as compared to the patents filed by other major countries (Table 1).

This point holds significance especially when India holds the distinction of being the second most populated country in the world. The number of patents filed by any country, institution or company acts as an empirical evidence to the focus on research and innovation. In that perspective, certainly, India as a country falls behind its peers and especially the leading global economies like USA and China. There is a counter-argument that the quantum of grass root innovations can't be assessed by having a narrow focus on patents and R&D investments as the metrics for the innovation landscape in a particular country. This is true to a certain extent especially when we look at the concentration of the poor population in the developing and under-developed economies. This low-income segment needs practical and universal access based solutions for the fulfilment of their basic needs. However, despite this argument, there is no denying the fact that focus on patents and R&D investments drives the competitive advantage of the nation and the companies.

The second criterion involves analyzing the R&D focus areas at the country level. Table 2 highlights the percentage of government budget allocation for R&D across the various categories. In 2016-17 budget outlay, a considerable proportion of the R&D budget (56%) by the Indian Government was allocated to defence, atomic energy and space sectors. This was followed by 14.5% for Council of Scientific & Industrial Research (CSIR)4 and Science and Technology, 11% for agriculture, 9% for renewable energy, 3.1% for biotechnology, and minuscule 2% for healthcare5. The above statistics regarding R&D budget spending reflects considerable allocation of the budget towards maintaining the research institutions or doing research in areas like space, defence etc. These focus areas in terms of R&D spending had no correlation with the challenges and underserved needs of the majority of the population in India. One positive reflection in the budget outlay was the focus on agriculture and biotechnology.

CSIR is a R&D setup focusing on different areas of research in science and technology. It is a dynamic network pan-India comprising 38 national laboratories, 39 outreach centres, 3 Innovation Complexes and 5 units across India. Available at: http://www.csir.res.in/about-us/about-csir (last accessed 3 October 2017) 5 Ibid.

4

Page 7

Understanding Innovation Landscape

Table 2: India - R&D Budget Allocation (2016-17)6

The third criterion relates to the review of the country-specific industrial policy as well as R&D spending done by the companies from different sectors in India. A recent study in 2016-17 by Department of Industrial Policy and Promotion (DIPP) highlighted the fact that lack of significant spending on R&D by the industry leaders in India was one of the key reasons affecting the R&D and innovation ecosystem in India7. Table 3 highlights the comparative details of top R&D spenders across different industries globally8. There are global companies which spend a significant proportion of their annual revenues on R&D like Microsoft, Huawei, Apple, and Google, etc. spending around USD 12 billion (@14% of annual revenues)9, USD 11.5 billion (76.4 CNY @ 14.6%)10, USD 10 billion (5%)11, and USD 13.9 billion (15.5%)12 respectively. These figures are significantly higher than the R&D spending done by the companies in India.

6http://www.swaminathansivaram.in/media/data/INDIA%E2%80%99S%20SPEND%20ON%20SCIENCE,%20TE

CHNOLOGY-May-2016; https://thewire.in/105887/research-budget-biotech-iiser/ (last accessed 27 September 2017) 7 http://www.livemint.com/Opinion/9tH3XR1kkvHIPuVeE5SKQM/Making-the-most-of-the-new-industrialpolicy.html (last accessed 28 September 2017) 8 http://iri.jrc.ec.europa.eu/scoreboard16.html#modal-one (last accessed 28 September 2017) 9 https://www.microsoft.com/investor/reports/ar16/index.html (last accessed 27 September 2017) 10 h"p://www-file.huawei.com/-/media/CORPORATE/PDF/annual-report/AnnualReport2016_en.pdf (last accessed 27 September 2017) 11 h"p://investor.apple.com/secfiling.cfm?filingid=1628280-16-20309&cik=320193 (last accessed 27 September 2017) 12 h"ps://abc.xyz/investor/pdf/20161231_alphabet_10K.pdf (last accessed 27 September 2017) Page 8

Understanding Innovation Landscape

Table 3: Global Analysis of R&D Spenders in Top 10 Sectors (EU Scorecard 2016)13

There are two major findings of the EU Scoreboard 2016 list (Table 3) which ranks the top 2500 R&D spenders in the world. The first finding is that there were only 22 Indian companies in this list as compared to 327 companies from China. This was even less than 1% of the top global R&D spenders. The second finding is that there were only three sectors (Pharmaceuticals and Biotechnology, Automobile and parts, and Software and Computer Services), where more than one Indian company got listed among the Top 2500 R&D spenders. This implies a significant gap in the numbers as well as capabilities across sectors in comparison to China and other developed economies of the world.

There is a need to implement a holistic plan for deepening the focus on research and technology across multiple sectors. The planning requires action at multiple levels like setting up collaboration among dierent sectors for joint research and innovations, increasing the accountability of the companies and the institutions leveraging government research funding as well as research infrastructure, and attracting more and more researchers by oering them better salaries, career prospects and recognition, creating a support system for academic institutions and corporates to apply for more and more patents, and encouraging the setup of incubators and accelerators to ensure the commercialization of innovations at a large scale.

For example, EU Scoreboard 2016 listed ten Indian companies in Top 2500 from the pharmaceutical and biotech industries. However, there was no Indian company in global Top 2500 from the related core sectors like healthcare equipment and services. These two sectors should be looked upon together with the pharmaceutical sector in terms of sectoral industrial policy so that rather than operating independently, these three sectors complement each other. In that case, increasing the R&D push in the

Created from the data available at http://iri.jrc.ec.europa.eu/scoreboard16.html#modal-one (last accessed 27 September 2017) 13

Page 9

Understanding Innovation Landscape

healthcare equipment and services will lead to a catalytic impact on further deepening of technology and diffusion of affordable innovations in the pharmaceutical and biotechnology sector and vice-versa.

No doubt, there is a long way to go for India to become one of the leading countries regarding R&D and Innovation. However, the global competitiveness rankings over the last four years reflect a significant positive change in the competitiveness ranking of India. According to the Global Competitiveness Index (GCI) by World Economic Forum (WEF), India has shown significant improvement in the global competitiveness rankings from 71st in 2014 to 40th in 201714. One of the major contributors to this positive change has been the progress reflected in the Innovation Pillar of GCI. Regarding Innovation, India as a country has undergone a positive change in terms of the innovation capacity building, quality of scientific research institutions, company spending on R&D, etc. However, further focus on the larger scale is required to increase the number of R&D focused companies from India across multiple sectors. Few factors in the Innovation pillar, where India has lagged significantly as compared to its global peers are university-industry collaboration in R&D, the unwillingness of scientists and engineers towards research as a career option, and the number of Patent Cooperation Treaty (PCT) patent applications.

The aim of this study is to understand the real state of innovation in India primarily from the following perspectives.

• •

What are the different challenges faced by the innovators in India? What is the intent behind filing the patent? Does it hold importance across all the industries or not really?

What kind of strategic choices and growth levers are practiced by the successful innovators in India?

The next section highlights the details of the methodology including the choice of enterprises and institutions as well as mode of data collection for understanding the research and innovation landscape in India.

Global Competitiveness Scorecards by World Economic Forum. Available at http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2014-15.pdf & http://reports.weforum.org/global-competitiveness-index-2017-2018/ (last accessed 28 September 2017) 14

Page 10

Understanding Innovation Landscape

3. METHODOLOGY – SAMPLING AND DATA COLLECTION This study involves understanding the various aspects of R&D and innovation landscape in India from the perspective of the companies and individual innovators.

It was decided to undertake a detailed qualitative field-study as a mode of inquiry to understand the complexities, challenges and strategic actions taken by the selected enterprises and individuals concerning the R&D and innovations. There are many historical pieces of evidence in research and practitioner based studies, which highlight the significant role of interactive paradigm and field studies in understanding a particular phenomenon.

The key step in the methodology involved finalizing the list of twenty innovators (companies and individuals) in India. Following list of activities were involved in sampling and data collection: •

Forming the expert panel (academics and industry) having significant expertise and engagement in innovation and entrepreneurship.

•

Organizing the successive meetings of the expert panel to agree upon the criteria, steps involved, and data sources for compiling an initial list of 100 innovators (enterprises and individuals) operating in India. The criteria involved the following key points: Innovator was based out of India in terms of market or research focus.

Innovation was patented (application or granted stage) in India and/or globally.

Patents filed by the Innovator involved the name of Indian researchers.

Innovation was commercialized or under commercialization.

Innovation made a significant socio-economic and environmental impact on the target segment.

Innovation was scalable.

•

Undertaking the review of the secondary sources (company websites, company reports, patents databases, etc.) as per the agreed criteria and compiling the list of 102 innovators (enterprises and individuals) from India. These innovators were chosen from the diverse sectors, innovated the product or service offering, patented the same, and designed the business model to commercialize or gain competitive advantage. Refer to Appendix 1 for the complete list of 102 Innovators.

•

Sharing the list of 102 innovators with the expert panel to finalize the list of 20, whose innovations were found to be exemplary in terms of scale, reach, financial viability, and socio-economic impact on the masses.

•

An iterative approach was followed by dividing the execution of this project into two phases of 10 innovators (companies and individuals). The two-stage process ensured the depth and broader choice of innovators in the study. The learnings from the phase 1 study were incorporated while making a choice of next 10 innovators for phase 2.

Page 11

Understanding Innovation Landscape

o Phase 1 comprised the first set of ten innovators from the Pharmaceutical, Bio-technology, Information technology, and Individual Innovators from academics and healthcare. Refer to Appendix 2 for the first list of ten innovators. o Phase 2 comprised another set of ten innovators across industries. The selection of these ten innovators has been based on the learnings and company types taken during Phase 1. Refer to Appendix 3 for the second list of ten innovators.

The next section depicts the analysis of twenty innovators chosen as a part of the study. The scope of the analysis involves understanding the innovation ecosystem, challenges and strategic choices made by the chosen innovators in their respective industries or areas of expertise.

Page 12

Understanding Innovation Landscape

4. ANALYSIS 4.1 Indian Institute of Technology, Madras (Prof. T. Pradeep) The Innovation Design of affordable Nano-particle filtration systems for the purification of drinking water contaminated by pesticides and minerals like arsenic, fluoride, iron, and mercury, etc.

Challenge/ Need Addressed Water is a necessity for the survival of human beings and every other living being on this earth. However, more than one-tenth of the global population lack access to clean drinking water. Water contamination has remained a growing challenge globally especially in developing and under-developed countries like India. According to WHO estimates in 2014, more than 38% of the people in India got affected by waterborne diseases annually leading to 7.8 lakh deaths every year16. In fact, according to UN study, India was ranked at 120th position among the 122 nations regarding water quality. The majority of the affected people live in villages, city slums, and semi-urban locations and face the challenge of access to contaminated drinking water with minerals like arsenic, fluoride, mercury, pesticides, etc., thereby creating a serious health hazard for the humanity. There are at least six densely populated regions in India, which are contaminated by minerals and pesticides especially natural arsenic poisoning.

About Prof. Pradeep’s Journey and Thematic Unit of Excellence Prof. Pradeep, IIT Madras is widely acknowledged in India as a pioneer in the development of low cost and highly effective nano technologies for the treatment of contaminated drinking water. He started with the first research grant of INR 42000 in 1994 and graduated to the funding range of INR 2-3 lakhs over a period of time. He received INR 3 lakhs from his first innovation aimed at removing pesticides from drinking water.

The turning point came when Prof. Pradeep identified arsenic contaminated water as a challenge and decided to develop an appropriate technology. The basic premise for innovation was that it had to be low cost, easily deliverable, serviceable, and environment friendly. He set up the Thematic Unit of Excellence (TUE) at IIT Madras as an incubation cell in 2008 to bring together the researchers and doctoral scholars for solving the water problems. After a decade of efforts and hard work, the team designed a low-cost nano-particle filtration system for filtering out the arsenic in real-time. This required no power for synthesis, proved to be highly cost-effective, environment-friendly and required less than a minute for purifying the water with zero wastage. The successful outcome of the pilot project led to the formal launch of arsenic filtration water purifier branded as AMRIT (Arsenic Metal Removal by Indian Technology).

Prof. Pradeep and one of his students launched a start-up named as InnoNano Research Pvt. Ltd. at IIT, Madras to scale the innovation. By 2016, AMRIT filtration system got installed in more than 750 locations

http://www.forbesindia.com/blog/economy-policy/ten-facts-about-drinking-water-in-india-that-may-makeyou-sick/ (last accessed 6 September 2017) 16

Page 13

Understanding Innovation Landscape

across the states of West Bengal, Uttar Pradesh, Bihar, and Karnataka and provided clean drinking water to more than 5,00,000 people at the cost of less than five paise per litre.

The big day came on May 9, 2016, when InnoNano Research Pvt. Ltd. broke the glass ceiling by finalizing an agreement with US-based energy and water investment firm NanoHoldings LLC for an USD 18 million17,18 investment. The agreement involved setting up the manufacturing facility, a modern research laboratory and technology delivery offices across North America, Asia, and Africa to develop further its nanomaterials-based water technology that was used in India to remove arsenic from drinking water19. In December 2017, The Ministry of Drinking Water and Sanitation recommended the replication of the nanotechnology-based purifier in all states of India facing arsenic contamination20.

Innovations and Patents – Learnings The study of the journey undertaken by Prof. Pradeep as a researcher and innovator provides interesting insights regarding the whole idea of innovation coming out from the academic ecosystem – innovation orientation, underlying challenges, and future opportunities. He filed and received more than 70 patents in his name during 1994-2015.

Regarding innovation orientation, Prof. Pradeep attributed his success to the research background, ability to connect with people from diverse background, self-motivation, doer attitude, focused approach and institutional support. Since the early days as a low-profile researcher, he followed the hands-on approach with respect to setting up the lab, building spectrometers, and doing basic things. As funds started pouring in, access to resources became easier and focus shifted towards developing solutions for the real water related needs of the society. He chose water as a focus area because this was a perennial issue in countries like India and thereby presented itself as an infinite opportunity or real-life challenge where innovation was never ending. As he and his team gained experience and expertise, bigger and better innovations started happening like purification system for arsenic, iron, pesticides, etc.

Regarding innovation value chain, Prof. Pradeep adopted a focused approach on the water related needs of the society. He leveraged the institutional support from IIT, Madras and created a research ecosystem around the same by setting up the lab, and engaging the research associates and doctoral students. The baseline for taking up research about any new idea was to conceptualize the same into an affordable and high impact technology, which was scalable for the masses. Another key criterion for any research being undertaken was to build a working prototype for the same apart from getting a patent.

1 USD = 66.58 INR As on 10 May 2016. Available at https://www.poundsterlinglive.com/best-exchangerates/us-dollar-to-indian-rupee-exchange-rate-on-2016-05-10 (last access 8 November 2017) 18 http://www.livemint.com/Companies/2wxgyNhnUE3ejqbP6d1BfJ/InnoNano-Research-in-18-million-deal-withNanoHoldings.html (last accessed 8 November 2017) 19 http://www.livemint.com/Companies/2wxgyNhnUE3ejqbP6d1BfJ/InnoNano-Research-in-18-million-deal-withNanoHoldings.html & http://www.thehindu.com/sci-tech/science/With-18-million-funding-IIT-Madras-professorbreaks-the-glass-ceiling/article14492695.ece (last accessed 5 September 2017) 20 http://www.thehindu.com/sci-tech/science/With-18-million-funding-IIT-Madras-professor-breaks-the-glassceiling/article14492695.ece (last accessed 5 September 2017) 17

Page 14

Understanding Innovation Landscape

According to Prof. Pradeep, the patent in itself was a piece of paper having little commercialization value unless and until a working prototype for the same was available. Once an idea got converted into a technology innovation, the patent was filed, and the pilot was done to fine-tune and firm up the technology.

As pilot field study got successful, a prototype was created, and commercial alternatives were being considered in the form of licensing or setting up a company.

Regarding challenges, Prof. Pradeep highlighted multiple challenges in the innovation ecosystem of the academic institutions.

The first challenge was the lack of innovation culture in the majority of the academic institutions and universities in India. The exception being the IITs, which promoted research and innovations to a certain extent. However, majority of the students (more than 90%) studied in those universities, which did not oer any incentives and motivation to the students and faculty members for investing their time in research and innovation. The universities required more autonomy and self-governance to focus on research and innovation based outcomes. Also, the universities needed to promote an ecosystem for failures so that students and faculty members were willing to experiment and focus on innovations without fearing the repercussions of failure. The research was all about failures and trying again and again. On the positive side, Institutes like IIT, Madras developed the research and innovation ecosystem, which led to the incubation of more than 136 technology start-ups till 201621.

The second challenge was the socio-cultural mindset in India towards the future stability of research-based career. The Indian academic setup encouraged job seekers rather than job creators. The majority of the engineering or science graduates in India preferred economic security by taking up high paying corporate jobs rather than taking up research oriented jobs posing higher risks and lower pay-os. This resulted in the dearth of high impact research and innovations coming out from the Indian academic setup. Realizing the dilemma, risk, and uncertainty among the talented individuals, Prof. Pradeep set up a lab at IIT, Madras to build an ecosystem for systemic research with fairly attractive outcomes of launching a company around the successful innovations.

The third challenge was the limited scope of commercialization for the patents coming out from the academic institutions. The academic research involved multiple complexities like a number of patents filed, granted, rejected, and licensed, etc. Patenting was considered to be time and money intensive process where failure was not appreciated. At the same time, only 5% of the patents coming from the academic setup got commercialized. The majority of patents did not create any economic value. However, in the case of Prof. Pradeep, the ratio of commercialization was much better. He commercialized around 23 out of the 70 patents granted. The higher commercialization ratio was attributed to the following reasons. One, he filed a patent only when he was convinced that the innovation was beneficial to somebody. Second, he always created a working prototype of the patented technology before getting into conversations for commercialization. This led to the higher acceptance rate for his patents into a commercial oering.

21

http://www.incubation.iitm.ac.in/portfolio/all-startups (last accessed 6 September 2017) Page 15

Understanding Innovation Landscape

The success made Prof. Pradeep wonder, "Is the day too far when professors’ substantial earnings from their own research work become the talk of the town?22” Business Model Prof. T. Pradeep, IIT Madras Key Partners

Key Activities

Product innovation & development Patenting & Commercialization Expanding the research team Scaling the impact & reach

Investors like NanoHoldings LLC IIT Madras

State Governments Water Ministry Global Water experts – Academia and Corporates

Key Resources

Value Proposition

Customer Relationship

Pilot Studies Access to affordable and high impact Nano-filtration solutions for clean drinking water

Patents & Technology

Prototyping

IIT Madras Network Word of Mouth Channels Implementation & Support Partners

Research Team Collaborations & Partnerships Domain Expertise (Water)

Customer Segments

Individuals affected by lack of access to clean drinking water

State Governments Government Institutions like Ministry of Drinking Water & Sanitation Corporates for licensing

Access to Funding

Cost Structure

Revenue Streams

Research Infrastructure Setup

Salaries

Patents

Incubation related

Licensing

Incubation

Government & Institutional funding

http://www.thehindu.com/sci-tech/science/With-18-million-funding-IIT-Madras-professor-breaks-the-glassceiling/article14492695.ece (last accessed 6 September 2017) 22

Page 16

Understanding Innovation Landscape

4.2 Indian Institute of Technology, Kharagpur (Prof. Rabibrata Mukherjee) The Innovation Developed nano-patterning technique to manufacture nano materials on a nanometer scale. Nano materials have wider application in areas like organic electronics, organic light emitting diodes (OLEDs), thin film transistors (TFTs), plastic solar cells, super adhesives, and self-cleaning surfaces.23 Challenge/ Need Addressed The innovations undertaken by Prof. Rabibrata with his team of researchers at Instability and Soft Patterning Laboratory (ISPL), Department of Chemical Engineering, IIT Kharagpur looked at the issues related to nano-patterning and ordering of the polymer systems. The research involved controlling the self-organization and evolution of unstable ultra-thin films in various settings24. Nano in itself is equivalent to 1/1000th of a strand of human hair and thereby invisible to the human eye. Also, being nano implies that the pattern defies gravity effect and can undergo a change in properties at nano scale25. The range of applications involved scenarios like ensuring the non-accumulation of dust particles on solar panels or glass buildings created using nano structures thereby making them oil and water repellent, segregation of tumour cells and healthy cells while doing the surgeries, etc.26 About Prof. Rabibrata’s Journey Prof. Rabibrata gained global recognition as an expert and avid researcher on Nano patterning. His research competencies involved areas like polymer thin film instability, soft lithography, structural super hydrophobicity, soft Nano fabrication, colloidal crystals and sol-gel thin films, etc. During the decade (2007-17), he focused extensively on the research pertaining to the different applications of Nano structures thereby gaining expertise, patents, recognition, and a team of dedicated researchers and doctoral students.

During 2006-2017, he received more than thirty research publications and five patents.

His research in the area of Nano patterning gained recognition when one of his doctoral students bagged the Young Scientist award in 2017. Nandini Bhandaru was awarded "Young Scientist Award" from "Indian Science Congress Association" in 2017 and "European Materials Research Society's (E-MRS's) Young Scientist Award" in 2016 for undertaking the fundamental research in Nano patterning of Soft Polymeric Blends and their application27. There were two main highlights of the Nano patterning study: How Nano related research had the potential to enhance the efficiency of many industries like energy, healthcare, and cleaning?

http://indiatoday.intoday.in/education/story/nandini-bhandaru/1/670067.html (last accessed 15 September 2017) 24 https://sites.google.com/site/rmresearchgroup/ (last accessed 15 September 2017) 25 h"p://www.huffingtonpost.in/2017/01/26/these-iit-students-have-invented-a-surface-to-end-the-soulcrush_a_21701359/ (last accessed 15 September 2017) 23

https://www.thebetterindia.com/84133/iit-students-nanotechonology-window/ (last accessed 15 September 2017) 26

http://alumni.iitkgp.ac.in/content/self-cleaning-and-cancer-remedial-nanotechnology-award-winning-innovationiit-kgp-scientist (last accessed 15 September 2017) 27

Page 17

Understanding Innovation Landscape

How Nano technology was useful in doing the low-cost and high-quality fabrications on a large-scale costing less than INR 100 as compared to the machine-made patterns costing in the range of INR 30000 – INR 100,00028 ?

Innovations and Patents – Learnings The interactions with Prof. Rabibrata provided interesting insights regarding the research and innovation ecosystem in India's premier institutions like IITs. What are the challenges and opportunities in the academic setup especially regarding research orientation, patenting and commercialization?

Regarding research ecosystem and innovation orientation, Prof. Rabibrata attributed his success to the following set of factors - familiarity with the IIT ecosystem since his doctoral days, focused approach towards research in the area of Nano structuring, self-motivation irrespective of the institutional support, and ability to align and motivate the research scholars and doctoral students to focus on the new areas of research.

Prof. Rabibrata chose Nano structure as a research area due to its potential for wider applications in different industries. He attributed IITs in India as a great ecosystem for doing the research in diverse areas. However, he made it very clear that in order to be successful; one needs to be self-motivated, having a doer attitude and should not be having any expectations from the academic setup regarding special privileges or so. ISPL acted as a platform for bringing together the researchers engaged in innovating new technologies and patterns around nano structures.

Prof. Rabibrata created small teams of researchers to work on different areas of nano patterning with the primary focus on creating new techniques having a clear mapping to the various industries in terms of potential use and benefits.

One of these technologies, which led to global recognition was the development of a technique for creating Nano surfaces having self-cleaning and cancer remedial properties. This method used patterns and templates for enabling the alignment of the self-assembled Nano domains in a thin polymer blend film.

This innovation gained significant appreciation in terms of potential use in different ways (glass buildings, solar panels, and cancer surgeries, etc.) at a fraction of the cost. Regarding surgeries, this technique was tested further for development of polymer blend based Nano structured therapeutic patches having dual behaviour on cells isolated from different conditions (normal, pre-cancer and cancerous)29. The isolation and distinction made it easier to act on cancer associated cells in a targeted manner thereby limiting their growth post-surgery.

Apart from these, other research focus areas involved the development of oil-repellent anti-fingerprint surfaces, etc. The strengths of the IIT ecosystem in India involved attracting the best talent within India,

http://www.businessinsider.in/What-can-they-not-do-IITians-now-make-a-window-that-can-cleanitself/articleshow/56932980.cms (last accessed 15 September 2017) 29 http://alumni.iitkgp.ac.in/content/self-cleaning-and-cancer-remedial-nanotechnology-award-winning-innovationiit-kgp-scientist (last accessed 15 September 2017) 28

Page 18

Understanding Innovation Landscape

getting the funding from Government institutions, and getting access to a research lab for undertaking research and innovations. Prof. Rabibrata leveraged these three levers to build an internal ecosystem for conducting focused research in the area of Nano structures and developing highly impactful techniques and Nano patterns.

However, the journey of a researcher for Prof. Rabibrata had its share of challenges. The acknowledgment and recognition of the hard work did not come easily.

The first challenge highlighted by Prof Rabibrata was the lack of infrastructure for doing the cutting-edge research in academic institutions. No doubt, IITs in India developed a strong research infrastructure comprising research labs as well as recognition and incentives for the professors engaged in research and innovation. However, the rapid advancement of technology demanded continuous and faster upgrade of research labs with latest technologies and machines.

The second challenge was the lack of zeal and orientation among the majority of the students and faculty members in the academic institutions. From student's perspective, there was a trade-off between spending time and efforts on taking up low paying research job as a career option versus going for a high paying corporate job. These ambiguities pushed the majority of the faculties and the students away from the hardcore research orientation.

The third challenge was the lack of support in academic institutions for commercializing the research outcomes. The research in itself was perceived to be a significant achievement. The commercialization aspect lacked sufficient focus and attention in the majority of the research institutions. IIT, Madras had been successful in commercializing the research outcomes to a significant extent. However, Prof.

Rabibrata faced limitations in commercializing the inventions around Nano structures and patterns due to lack of time, awareness and guidance. The techniques like designing low-cost Nano structure surfaces having self-cleaning, and cancer remedial properties had tremendous potential for commercialization in the areas of cleaning, solar and tertiary healthcare industries, etc.

The fourth challenge was regarding the dependence on funding from the government for doing the research. The majority of the academic institutions in India relied on government for getting the research grant and had limited collaborations with corporates for funding the new frontiers of research. This lack of co-creation and communication between academic institutions and corporates affected the research ecosystem in India. Setting up Incubators in the institutional boundaries was one of the steps being taken by premier educational institutions to bring the corporates, entrepreneurs, and academicians together.

Page 19

Understanding Innovation Landscape

Business Model

Page 20

Understanding Innovation Landscape

4.3 Nayan Eye Centre (Dr. Suven Bhattacharjee) The Innovation Launched thin, uniplanar, flexible and transparent pupil expansion device, which was user-friendly, required a small incision for insertion and affordable as compared to other market devices.

Challenge/ Need Addressed Blindness is considered to be one of the biggest public health challenges for the humanity in the 21st century. It has a catalytic impact on the overall quality of life of an individual in terms of loss of earnings, dependency on others for day to day activities, loss of social network, and decrease in life-expectancy. More than 39 million people are suffering from blindness globally30. According to WHO (2010), cataract (clouding of the eye lens due to aging, eye injuries, inflammation, and some other eye diseases) accounted for more than 51% (20 million) of the vision impairment related cases31. The majority of these cases got reported in the developing and underdeveloped countries, especially from the semi-urban and rural areas.

Cataract surgery is considered to be one of the most effective options for restoring the eye vision.

However, lack of availability of eye specialists, prevalence of social stigma, pressure of day to day earnings, as well as low awareness levels in the semi-urban and rural areas act as barriers to the timely treatment of cataract-related blindness for the masses in the developing and under-developed economies.

About Dr. Suven Bhattacharjee Dr. Suven Bhattacharjee did his fellowship in vitreo retinal surgery under the mentoring of internationally renowned retinal surgeon at the Retina Foundation32. He set up very high standards for himself right from the beginning of his career as an eye surgeon. He ensured the ongoing focus on doing research and innovation as well as gaining global experience in terms of learning and teaching while doing his practice in eye surgery. Driven by the passion for innovation, he spent significant time and efforts in inventing the B-HEX Pupil Expander device for cataract surgeries. This invention became a game-changer for the industry in terms of ease of use by the surgeons, safety for the patients and economic viability for the healthcare system.

Innovations and Patents – Learnings The journey of Dr. Suven as an eye surgeon, researcher, and innovator provides interesting insights into the research and innovation dynamics for an individual innovator in India. He realized the operational complexity and challenges in using the existing pupil expanders available in the market for the cataract surgeries. In 2007, he decided to develop the better, economical and simpler pupil expander for the benefit of the surgeons and patients. It took him five years of hard work for launching the prototype of his invention known as the B-HEX Pupil Expander device. This device gained instant word of mouth recognition among the doctors world-wide mainly due to the credibility of the inventor, unique attributes as well as the price-performance ratio. The preloaded device simplified the surgery, the innovative design provided ease of insertion and removal, and the ring provided inter-operative exposure without hampering the surgical steps for the cataract removal.

http://www.cureblindness.org/cause (last accessed 19 September 2017) http://www.who.int/blindness/causes/priority/en/index1.html (last accessed 19 September 2017) 32 http://www.nayaneyecentre.in/dr_suven_bhattacharjee (last accessed 19 September 2017) 30 31

Page 21

Understanding Innovation Landscape

The invention made by Dr. Suven diered significantly from the existing devices in terms of structure and incision requirement. The competitive oerings in the market had the biplanar structure and required the bigger incision. B-HEX on the other hand had the uniplanar structure and required a very small incision at the time of surgery.

He faced several challenges during the journey from design to commercialization phase.

The first challenge involved lack of support system in India which can guide the industry practitioners willing to take up research outside their working hours. He was a practitioner and wanted to do the research in parallel. However, he did not know of any available ecosystem for the industry practitioners, which could provide him the basic inputs for taking up research. He attributed this lack of research ecosystem for the practitioners as one of the prime reasons for lack of inventions from the industry practitioners despite their rich experience. He went ahead with the research on pupil expander device from his home-based lab.

The second challenge was regarding the filing of patents. In 2013, he filed the India patent followed by the PCT application for the device33. Being an individual rather than an enterprise, he spent significant amount of time and money in patenting process. He engaged the support of patent lawyer but did not get a favorable outcome and decided to apply for the patent on his own. Developing the product and filing the global patent application required significant investment of time and capital without any assurance of tangible outcomes. He financed the development costs and patent applications related expenses from the internal reserves and Biotechnology Ignition Grant (DBT, Govt. of India), which he won in 2014.

The third challenge was regarding the award of the patent. The patent filed for B-HEX in India during 2013 did not come up for examination during the next four years. That delay posed a significant risk of replication for this invention as well as delayed the overall commercialization activity. However, rather than waiting for the same, Dr. Suven decided to proceed with the global filing of patents to protect his intellectual asset. The time and resources required for getting the patents in India and other countries is considered to be a major restraint by the majority of the individual inventors and start-ups while making of decision whether to go for patent or not.

The fourth challenge involved lack of interest from the device manufacturers in getting the license of BHEX for commercialization. The uniqueness of the concept and detailed design layout did not attract the device manufacturers despite the market potential. Dr. Suven realized the need for building the prototype of the B-HEX to gain the attention of the device manufacturers. He spent two years in handcrafting the set of 300 working pieces of the B-HEX pupil expander device34. He sent the prototypes for global trials to key opinion leaders in India, Germany, France, UK, Spain and the Netherlands. The positive reviews and award of best paper at the All India Ophthalmological conference and American Society of Cataract and Refractive Surgery meeting in 2014 set the ball rolling with interest being shown by device manufacturers in licensing the B-HEX technology.

33 34

http://medinventdevices.com/ (last accessed 19 September 2017) Ibid.

Page 22

Understanding Innovation Landscape

The fifth challenge was related to the lack of know-how and expertise in setting up the supply-chain and internal manufacturing of B-HEX devices at scale besides licensing the technology to the device manufacturers. Dr. Suven's invention won the gold medal at the India Innovation growth program (IIGP 2016)35. This recognition resulted in getting technology commercialization training by Stanford Graduate School of Business, commercialization support by IC2 Institute (University of Texas, Austin) and a visit to The Indus Entrepreneurs (TIE) Silicon Valley for experiencing the start-up environment.

Business Model

35

Ibid.

Page 23

Understanding Innovation Landscape

4.4 JNTBGRI (Dr. Palpu Pushpangadan) The Innovation Use of traditional knowledge to develop a scientifically verified and standardized herbal formulation for boosting stamina and relieving fatigue.

Challenge/ Need Addressed The increasing prevalence of stress and fatigue in human life due to irregular work-life patterns has led to the increased incidences of health issues thereby affecting the quality of life and work. The increasing number of people are resorting to different stress control measures thus complicating the side-effects on the body. The herbal formulation developed from natural plants grown in India was a disruptive innovation aimed at relieving the stress and pains of the people.

About Dr. Pushpangadan Dr. Palpu Pushpangadan worked across different botanical and biotechnological government institutions in India with the keen focus on research and innovation. He primarily worked as a director of Jawaharlal Nehru Tropical Botanical Garden and Research Institute (JNTBGRI) in Kerala, National Botanical Research Institute (NBRI) in Lucknow, and Rajiv Gandhi Centre for biotechnology in Thiruvananthapuram. He received multidisciplinary training in plant sciences and biotechnology. Also, he was considered to be a prolific researcher and author having published more than 300 research papers in national and international journals, authored/edited more than 15 books36. He filed more than 85 patents in herbal drugs and successfully commercialized 15 of those patents. Finally, He gained global acclaim for the creation of innovative herbal formulation using the traditional knowledge in 10-12 years between 1987199437.

Innovations and Patents – Learnings The innovation journey, which led to global recognition for Dr. Pushpangadan dated back to 1987. In 1987, he got associated with JNTBGRI, Kerala. He engaged the local tribals (Kani guides) while doing an expedition project in the Western Ghats during that time. He observed the significantly high energy levels of Kani tribals as compared to his team members and decided to find the reason for the same. The discussions with Kani tribals led him to the plant known as Arogyapacha (scientific name as Trichopus zeylanicus). He decided to do the intensive research on the properties of the plant at the lab in JNTBGRI. During the course of seven to eight years of intensive research and clinical trials, he was convinced by the medicinal properties of the plant and decided to put it forward as a unique herbal innovation named as "Jeevani”38,39.

h"ps://www.gitamritam.com/profile/palpu/ (last accessed 7 Oct 2017) h"p://www.wipo.int/ipadvantage/en/details.jsp?id=2599 (last accessed 7 Oct 2017) 38 Ibid.

39 h"p://www.goodnewsindia.com/index.php/Supplement/ar\cle/a-model-to-fight-bio-piracy/ (last accessed 7 Oct 2017) 36 37

Page 24

Understanding Innovation Landscape

After several successful clinical and non-clinical trials undertaken by Dr. Pushpangadan and his team, JNTBGRI collaborated with Council of Scientific and Industrial Research (CSIR) in 1994 and filed a process patent in India40. Subsequently, JNTBGRI entered into a licensing agreement of seven years with Arya Vaidya Pharmacy (AVP) and gave it the rights to manufacture the herbal formulation on the commercial scale. The licensing deal involved a base licensing fees and 2% royalties on sales41.

However, the journey from conceptualization to commercial launch of “Jeevani” involved multiple challenges.

The first challenge involved approvals from the Indian Forest department regarding large-scale cultivation of Arogyapacha for commercial manufacturing of "Jeevani"42. JNTBGRI and AVP conducted a pilot program during 1994-96. In this pilot programme, they engaged fifty tribal families, provided them training and money for the cultivation of Arogyapacha. Subsequently, JNTBGRI and AVP collected the leaves from the local Kani people. The tribals gained skills, employment and the additional source of income without any adverse impact on the forest land. The success of the model convinced the Forest department in 1997 to approve the cultivation of the plant in that location thereby paving the way for largescale commercialization.

The second challenge faced by JNTBGRI was regarding the intellectual property infringement and enforcement. Patenting involved significant investment of time and costs especially when filed in multiple countries outside India. The lack of sufficient reserves for patent-related expenses created a challenging situation for JNTBGRI as other companies in the USA filed the patents for the similar formulation with United States Patent and Trademark Office (USPTO) in 1999 and 200043,44. JNTBGRI had little legal recourse as it did not file any trademark protection with USPTO. Subsequently, many companies came up in the global market with their own versions of "Jeevani" thereby affecting the benefits, which should have gone to the Kani tribals with this innovation. However, the launch of "Jeevani" became a significant commercial success in India and led to the positive socio-economic impact on the lives of the Kani people.

h"p://www.wipo.int/ipadvantage/en/details.jsp?id=2599 (last accessed 7 Oct 2017) h"p://www.goodnewsindia.com/index.php/Supplement/ar\cle/a-model-to-fight-bio-piracy/ (last accessed 7 Oct 2017) 42 h"p://www.wipo.int/ipadvantage/en/details.jsp?id=2599 (last accessed 7 Oct 2017) 43 Ibid.

44 h"p://www.niscair.res.in/jinfo/JIPR/JIPR%201(2)%20(Patent%20News).pdf (last accessed 7 Oct 2017)

40 41

Page 25

Understanding Innovation Landscape

Business Model

Page 26

Understanding Innovation Landscape

4.5 CSIR - Institute of Microbial Technology (IMTECH) The Innovation Launched affordable thrombolytic drugs for dissolving life-threatening blood clots during the heart attack.

Challenge/ Need Addressed According to WHO statistics, cardio-vascular diseases (CVDs) accounts for more than 31% of the deaths globally. In 2015, CVDs led to more than 17.7 million deaths globally45. Around 75% of these deaths occurred in developing and under-developed economies due to lack of access to affordable and efficient treatment options. Among the developing nations, India accounts for the maximum number of CVDs cases and deaths happening due to heart attack46. One of the key solutions for managing the heart attacks involves dissolving the life-threatening blood clots within six hours of a heart attack47.

About IMTECH Setup in 1984, Institute of Microbial Technology (IMTECH) is a part of the research network of 37 national laboratories, six units and 39 outreach centers of the Council of Scientific & Industrial Research (CSIR)48. IMTECH operated in the niche domain of microbial biotechnology. The success of IMTECH was attributed to the research team as well as global collaborations with the research teams in USA, Poland, Spain, France, Switzerland, Japan, Australia, Finland, etc. Also, IMTECH collaborated with the leading biotechnology companies in India thereby gaining from the industry-academia interface.

During 1984-2017, IMTECH received more than 37 patents in India and 114 patents outside India49.

Besides patents, the other list of achievements involved more than 1200 research publications, more than 60 copyrights, and licensing of technologies to global biotechnology and pharmaceutical companies50.

Innovations and Patents – Learnings IMTECH recognized CVDs as one of the key focus areas in 1992 and launched a research program for the development of a novel drug for dissolving the blood clot with maximum efficacy and minimal sideeffects. The mandate for IMTECH was to develop new offerings, which were affordable, accessible and available to the masses. IMTECH studied the available drugs in the market for dissolving blood clots and found the marked discrepancy between the two leading drugs in terms of affordability and efficacy.

Streptokinase (SK) was a popular and affordable drug in the developing economies. Although it was useful in dissolving the blood clots, the use of medication increased the risk of allied health issues like intravascular bleeding and hemorrhage. Another alternative drug for dissolving blood clots was tissue plasminogen activator (TPA). TPA was more effective yet much more expensive than SK.

45 h"p://www.who.int/mediacentre/factsheets/fs317/en/ (last accessed 10 October 2017)

Ibid. h"p://www.wipo.int/ipadvantage/en/details.jsp?id=2916 (last accessed 10 October 2017) 48 h"p://www.imtech.res.in/about/about-IMTECH (last accessed 10 October 2017) 49 h"p://www.imtech.res.in/achievements/patents (last accessed 10 October 2017) 50 h"p://www.imtech.res.in/achievements/technologies-commercialized (last accessed 10 October 2017) 46

47

Page 27

Understanding Innovation Landscape

During 1992, IMTECH decided to develop an affordable and novel hybrid SK-based protein having minimal side-effects. The innovation involved two main attributes. The first attribute of the innovative hybrid SK-based protein involved delaying the active state of the drug near to the target blood clot. This was a unique property as unlike other available drugs, this medicine remained inactive for 5 to 30 minutes after administration and got activated only in the vicinity of the blood clot. The second property was related to the efficient dilution of the blood clot with minimal side-effects. Both these attributes made the drug more affordable and efficient than the ones available in the market. This drug went through further refinements in 2009, which further increased its efficacy.

During 1998-2000, IMTECH filed patents for the different versions of hybrid SK molecule and its production process in India and globally. In July 2006, CSIR-IMTECH licensed the hybrid SK molecule and its production process to Nostrum Pharma for USD 5 million51 plus add-on royalties52. In February 2009, the refined versions of the hybrid SK molecule were licensed to Nostrum Pharma for approximately USD 150 million53,54. The successful licensing of the novel and indigenous hybrid SK technology yielded attractive economic and social returns for CSIR-IMTECH. IMTECH did exceptionally well as a research organization, especially in integrating the research outcomes with global collaborations and licensing opportunities. It leveraged the expertise of CSIR network in creating a research and patent-driven culture. IMTECH had its share of challenges during 1984-2017. IMTECH faced the key challenge regarding the lack of timely allocation and availability of government funding for research. The organization collaborated with the global research centers as well as corporates to develop novel innovations like hybrid SK. It created revenue streams by licensing the innovations related to CVDs and others. However, the market-based revenue streams were not enough to become self-reliant in research-related expenses. Realizing the risk of dependency on government funding, IMTECH increased the focus and attention towards attracting industry bodies and corporates for collaborative and need specific R&D initiatives. The idea behind this was to focus exclusively on needspecific innovations which had immediate demand for commercialization.

1 USD = INR 45.93 (As on 3 July 2006). Available at https://www.poundsterlinglive.com/bank-of-englandspot/historical-spot-exchange-rates/usd/USD-to-INR-2006 (last accessed 8 November 2017) 52 h"p://www.wipo.int/ipadvantage/en/details.jsp?id=2916 (last accessed 10 October 2017) 53 Ibid.

54 1 USD = INR 48.879 (As on 2 February 2009). Available at https://www.poundsterlinglive.com/bank-ofengland-spot/historical-spot-exchange-rates/usd/USD-to-INR-2009 (last accessed 8 November 2017) 51

Page 28

Understanding Innovation Landscape

Business Model

Page 29

Understanding Innovation Landscape

4.6 Jubilant Life Sciences The Innovation Launched research-driven, high quality and specialized portfolio of offerings in three major business segments - life sciences, generic and specialty pharmaceutical products including allergic therapy, as well as integrated drug discovery solutions with the focus on oncology, metabolic disorders, pain, and inflammation.

Challenge/ Need Addressed The global burden and demand for healthcare are shifting tracks from infectious diseases to NCDs like cancer, diabetes, respiratory, and CVDs, etc. According to WHO (2017), the number of diabetes cases increased from 108 million in 1980 to 422 million in 201455. The year 2012 reported around 14 million new cancer cases globally and the count is expected to increase by 70% in the next two decades. Then, CVDs accounted for 127.7 million deaths in 201556. The complexity and ongoing evolution of different variants of NCDs diseases reflect an increasing demand and opportunity for the global pharmaceutical companies to invent new APIs, formulations, and drugs by stepping up the efforts towards R&D and innovation in the areas of life sciences, pharmaceuticals, and drug discovery solutions at molecular levels.

About Jubilant Life Sciences Set up in 1978, Jubilant Life Sciences Limited is an integrated global life-sciences and pharmaceutical company engaged in the discovery and manufacturing of diverse range of products and formulations like APIs, solid dosage formulations, radiopharmaceuticals, allergy therapy, advanced intermediates, fine ingredients, crop science ingredients, life science chemicals and nutritional products. The consistent focus on research and diverse range of offerings in the areas of life sciences, pharmaceuticals, and drug delivery solutions extended their reach globally with sales in more than 100 countries and ground presence in India, North America, Europe and China57. The drug discovery solutions segment focused primarily on the collaborative research and partnerships for undertaking proprietary in-house innovation for licensing purpose58. It set up three world-class research centers in India and USA. The company developed collaborative relationship with nineteen of the top twenty pharmaceutical companies and six of the top ten agrochemical companies across the globe59. The differentiated business model focusing on specialty pharmaceuticals (e.g. injectables) along with other business portfolios led to a strong performance in 201617 with an overall annual revenue of INR 60,063 million and net profit of INR 5,756 million60.

h"p://www.who.int/mediacentre/factsheets/fs312/en/ (last accessed 21 September 2017) Ibid.

57 h"p://www.jubl.com/about-us/company-profile (last accessed 21 September 2017) 58 h"p://www.jubl.com/uploads/downloads/136down_JLL-AnnualReport2016-17.pdf (last accessed 21 September 2017) 59 h"p://www.jubl.com/about-us/company-profile (last accessed 21 September 2017) 60 h"p://www.jubl.com/uploads/downloads/136down_JLL-AnnualReport2016-17.pdf (last accessed 21 September 2017) 55 56

Page 30

Understanding Innovation Landscape

Innovations and Patents – Learnings Jubilant Life Sciences attributed its success to the strategic focus on drug delivery solutions besides life sciences and pharmaceuticals61. The success in a diverse range of business segments was made possible through multiple factors like strong focus on research and development, adoption of quality oriented noninfringing processes for product development, and continuous cost reduction through process innovation.

One of the strengths involved setting up the R&D centers for different business segments across the distributed locations globally to leverage the best research minds for better research outcomes.

Jubilant Life Sciences faced the following key challenges during its growth journey.

The first challenge was related to the efficacy of the distributed R&D setup, especially when the company was scaling across multiple business segments - life sciences, pharmaceutical, and drug delivery solutions.

The company realized quite early that the success of the multi-location and globally distributed R&D setup was dependent on the coherence and cohesiveness of the research centers so that knowledge and innovations across different centers could be integrated and leveraged in allied scientific domains. The integrated R&D teams at Jubilant Life Sciences enabled the process intensification and quick absorption and commercialization of technologies.

The second challenge was related to the commercialization of the new technologies being developed in the R&D centers. This was a big challenge because usually R&D, manufacturing and sales function operate in silos thereby resulting in gaps and misfit outcomes. However, Jubilant Life Sciences tackled this very efficiently and had a high rate of commercialization of the inventions made in the in-house R&D. The R&D setup at Jubilant Life Sciences focused on developing new technologies at the lab scale. This implied that the scientists and manufacturing engineers worked together in close coordination to ensure synergy between the parameters established during lab development and actual on-file design and manufacturing. This close coordination and synergy between research and manufacturing team at the time during R&D stage enabled seamless scale-up without losing on the proficiency of the process.

The third challenge involved leveraging the market opportunity in drug delivery solutions segment. The pharmaceutical industry was going through a phase of patent expirations, high R&D costs, and increased regulatory pressures. This posed a challenge to Jubilant Life Sciences regarding re-evaluating and making its R&D value-chain more efficient and process oriented. This was needed to gain a significant share of the externalization of R&D processes by the other pharmaceutical companies. Jubilant Life Sciences leveraged this market situation by adopting a dual approach. First, it got the other pharmaceutical companies on board for R&D externalization by providing a high-quality research platform and engagement of highly skilled research team distributed globally. Second, it developed a portfolio of proprietary drug discovery projects in parallel, which were licensed to the pharmaceutical industry to generate revenues in the form of milestone-based fees and royalties along with research funding."

61

h"p://www.jubl.com/about-us/company-profile (last accessed 21 September 2017)

Page 31

Understanding Innovation Landscape

Business Model

Page 32

Understanding Innovation Landscape

4.7 Stempeutics Research The Innovation Launched the safe, effective, and affordable off-the-shelf stem cell products for curing diseases like critical limb ischemia (CLI), osteoarthritis, diabetes, liver cirrhosis, skin damage, etc. through cell regeneration62.

Challenge/ Need Addressed There are increasing numbers and types of diseases where traditional medicines are falling short of expectations. The issues like Buerger's disease involve a rare condition of reduced blood flow to the limbs and affects millions globally. The stem cell therapy is gaining recognition and acceptance across the countries as an alternative to the treatment of certain diseases, where there is a clarity of unmet needs due to lack of effective treatment via standard options like the case of diabetic foot ulcer, Buerger's disease, liver cirrhosis, and skin damage.63 About Stempeutics Research Set up in 2006 by the Manipal Education and Medical Group, Stempeutics Research was a late stage life science company doing extensive research-based innovations in the area of novel therapeutics based on adult stem cells. Cipla joined in as a strategic partner with 49% share by investing INR 50 crore in 2009.

The collaboration with Cipla strengthened the production processes as well as marketing reach of Stempeutics Research. The major competency of Stempeutics involved developing innovative stem cell products by focusing on cutting-edge research and extensive clinical applications through dedicated efforts of the research team.

The company launched innovative product offerings like Stempeucare, Stempeucel, and Stempeutron.

Stempeucare was introduced in the market in 2015 as an intensive firming skin-care cosmetic product.

Stempeucel got launched in 2016 as an off-the-shelf product for the treatment of Critical Limb Ischemia (CLI) due to Buerger's disease and other complicated health issues like osteoarthritis and liver cirrhosis (LC). The company created a strong patent protection for this product by filing more than 18 patent applications globally. This product got DGCI approval for the treatment of CLI patients. Finally, research and trials continued on Stempeutron in 2017, an automated medical device having utility in regenerative medicine for the repair of diseased organs as well as in plastic and reconstructive surgery64.

By 2016-17, Stempeutics Research created a portfolio of 68 patents filed globally and 60 research publications in the international, peer-reviewed journals. In fact, it became the first company globally to get a process patent granted in Japan for the stem cell drug based on the pooling technology65.

h"p://www.forbesindia.com/ar\cle/real-issue/stem-cells-industry-the-ba"le-within/34697/1 (last accessed 22 September 2017) 63 h"p://www.livemint.com/Companies/RllbD7wBDtWhELCPsfa04M/Indias-first-stem-cell-drugStempeucel-to-hit-market-by-fis.html (last accessed 22 September 2017) 64 h"p://www.stempeu\cs.com/aboutus.html (last accessed 22 September 2017) 65h"p://www.prnewswire.com/news-releases/stempeu\cs-receives-japan-process-patent-for-its-novelstem-cell-drug-stempeucel-506477671.html (last accessed 22 September 2017) 62

Page 33

Understanding Innovation Landscape

Innovations and Patents – Learnings The business model of Stempeutics Research involved building a strong IP portfolio by ensuring deep research based engagement in the area of stem cell technology and its application. The company attributed its success to the pool of patents filed globally. The IP pool included a mix of patents related to core processes, technologies, and usage orientation. The company's strategy of building the IP assets in the form of a pool of patents created a substantial entry barrier for the competitors as well as led to global recognition and acceptance. Each of the three product lines followed the multi-stage research and development life-cycle comprising the R&D stage followed by different levels of clinical and non-clinical testing and finally commercial launch depending upon the FDA approvals.

The launch of Stempeucel involved the sequence of steps including R&D, pre-clinical, phase 1, phase 2 and phase 3 followed by limited scale commercial launch after getting regulatory approval66. Similarly, the launch of Stempeucare involved R&D stage as a starting point followed by the sequence of formulation, stability check-point, volunteer study and finally commercial launch. The launch of third product line labelled as Stempeutron was in the pipeline during 2017. The research process for Stempeutron range of medical devices involved basic R&D followed by alpha testing, beta testing, pre-clinical trials, clinical study and final commercialization launch. This product completed the beta stage of testing and was expected to get the approvals for market launch in the coming years67.

However, Stempeutics had its share of challenges despite having a large collection of global patents, research publications, regulatory approvals as well as the leadership position in a niche market.

The first challenge was regarding the regulatory constraints and delays in approvals to the life sciences companies in India vis-a-vis other countries. Till 2013, the clinical trials were not streamlined in India, and the regulatory approvals took lot more time (12-18 months) as compared to the same in other countries like Singapore and Malaysia (60-90 days)68. This led to an uneven playing field for the life sciences players in India versus other countries thereby prompting the life sciences companies to shift their R&D as well as IP registration to other countries. The things improved over a period as India became more conscious regarding the significance of the life sciences in the treatment of complex diseases.

The second challenge involved going global by complying with the country-specific regulations. The diverse regulatory requirements in different countries posed a great challenge to the company regarding time, money and efforts allocation. The company completed the Phase 1 (proof of drug safety), and Phase 2 (proof of drug efficacy and dosage) trials for the Stempeucel branded stem cell drugs. Moreover, it also received the approvals for the launch of the same in India during 2016. The company decided to conduct the Phase 3 trials in USA and Europe to gain regulatory approvals in these markets for 2018 launch. In fact, European Medicines Agency granted the orphan drug status to Stempeucel thereby fast-tracking its clearances for launch in 2018. h"p://www.stempeu\cs.com/Products.html (last accessed 22 September 2017) Ibid.

68 h"p://www.forbesindia.com/ar\cle/real-issue/stem-cells-industry-the-ba"le-within/34697/1 (last accessed 22 September 2017) 66 67

Page 34

Understanding Innovation Landscape

The third challenge was lack of market awareness among the masses (companies and individuals) regarding the eďŹƒcacy and adoption of stem cell therapy. Moreover, weak regulations and presence of nonstandard stem cell players created a negative mindset among the people. Stempeutics brought in Cipla as a strategic alliance partner with a share of 49%. This was done primarily to leverage the production and marketing expertise of Cipla for the growth of the company.

The fourth challenge involved lack of suďŹƒcient availability of skilled professionals in the life sciences and analytical domains. Stempeutics backed by Manipal Group set up the research institute (Manipal Institute of Regenerative Medicine) for oering Post-Graduate and Ph.D. programs in regenerative medicine. The whole idea was to expose the students to the latest trends in stem cell as well as provide them the basis by which they can critically and independently think and contribute to the future of stem cell research.

Business Model

Page 35

Understanding Innovation Landscape

4.8 Biocon The Innovation A fully integrated biopharmaceutical company, offering a range of innovative and complex health-related product offerings especially in the areas of diabetes and cancer as well as R&D services to the global pharmaceutical companies. The company focuses on five verticals from the perspective of innovations and underlying business model – active pharmaceutical ingredient (APIs like statins and immunesuppressants), branded formulations, biosimilars (insulin, and monoclonal antibodies), novel products, and research services69.

Challenge/ Need Addressed There is a rapid shift in focus of the pharmaceutical companies from infectious diseases to NCDs due to the aging population, changing lifestyle and eating habits. According to the World Bank estimates, more than 60% of the deaths happened globally in 2015 due to prevalence of NCDs like cancer, diabetes, chronic respiratory, and cardiovascular diseases.

About Biocon Set up in 1978 for manufacturing enzymes with an initial investment of INR 10,000, Biocon became the integrated biotechnology enterprise having a leadership position in the biopharmaceutical sector in India.

After spending two successful decades in the manufacturing of enzymes, the company decided to foray into pharmaceuticals in 1998. During 1978-1998, Biocon developed a collection of IP assets in enzymes manufacturing70. It leveraged the knowledge base from enzymes manufacturing to undertake the development and production of drugs around fermentation and recombinant technologies rather than chemical synthesis71. Subsequently, it forayed into biosimilars in 200372. This time again, the company leveraged its core strength in fermentation technology to build the portfolio of generic insulin and analogs, biosimilar monoclonal antibodies and recombinant proteins at much lower cost as compared to those making use of synthetic chemicals.

As compared to generic drugs, biosimilars required significant investment of time (6-8 years) and capital (USD 50 - 100 million vis-a-vis USD 3-5 million for generic drugs) for a complete research cycle. Biocon developed the core competency in biosimilars category thus differentiating itself from the generic small molecule drug manufacturers. By 2016, the company invested more than USD 750 million73 in R&D and capital expenditure for developing a strong pipeline of ten biosimilars having a market potential of

h"p://www.businesstoday.in/magazine/features/biocon-kiran-chairman-mazumdarshaw/story/191153.html (last accessed 25 September 2017) 70 h"ps://www.outlookbusiness.com/specials/the-outperformers_2017/bold-and-boun\ful-3683 last accessed 25 September 2017) 71 Ibid.

72 Ibid.

73 1 USD = INR 66.527 (As on 4 January 2016) Available at https://www.poundsterlinglive.com/bank-ofengland-spot/historical-spot-exchange-rates/usd/USD-to-INR-2016 (last accessed 8 November 2017) 69

Page 36

Understanding Innovation Landscape

USD 60 billion especially in areas like cancer, diabetes, and autoimmune diseases74. During 2016-17, Biocon achieved a revenue turnover of INR 4078.7 crores and net profitability of INR 354.4 crores75.

Innovations and Patents – Learnings Biocon identified biotechnology sector as an area of expertise during the formative years of the industry.

As the industry gained traction in India, Biocon grew its presence and offerings and became a leading player in the industry. Innovation in biotechnology required a long development cycle thereby requiring considerable patience due to high risks of failure. Biocon focused on end to end discovery-led R&D process comprising the process development, non-clinical and clinical research. The research investments involved the dual focus on developing new products for the company as well as offering R&D as a commercial service via two subsidiaries - Syngene International Limited and Clinigene International Limited. At one end, Syngene provided R&D services related to synthetic chemistry and molecular biology for early-stage drug discovery and development. At another end, Clinigene provided R&D as a commercial service by conducting trials and study of the novel and generic molecules for Biocon itself and other international pharmaceutical companies76.

Regarding patents, Biocon came a long way from the invention patent in frontier fermentation technology to a significant patent pool of novel products and processes in areas like protein purification, drug delivery systems, and biotherapeutic molecules. The fermentation technology replaced the tray-based culture of microorganisms. Another well-known innovation by Biocon was PlaFractor, which became popular as a cost-effective bioreactor for providing a computer-controlled and closed-loop setup for nurturing of microorganisms. This innovation, in fact, acted as a bridge for Biocon to move from industrial enzymes into biopharmaceuticals. It filed the patent under PCT for PlaFractor in 1999 and was awarded the same by European Patent Office in 200577. Other key areas of innovation involved immunosuppressants (to reduce rejection risks of organs transplant). In fact, Biocon always considered high-quality patent portfolio as a "core value differentiator."

During the period (2000 - 2016), Biocon grew from filing around 9 to 88 patents annually. It adopted a progressive business model for R&D driven growth. During the early years, the company's R&D strategy involved developing processes and filing patents for generic pharmaceuticals, biologicals, and enzymes for world markets. The revenue generation from these patents led to R&D focus on the development of platform technologies aimed at discovering new chemical and biological entities78. For Biocon, innovation as a strategy involved spanning through different modes of discovery and commercialization incremental, evolutionary, experimental, and radical.

Ibid. h"p://www.moneycontrol.com/news/business/earnings-business/op\mis\c-of-opportuni\es-forbiosimilars-in-emerging-markets-in-fy18-biocon-2267539.html (last accessed 25 September 2017) 76 h"p://www.wipo.int/ipadvantage/en/details.jsp?id=2602 (last accessed 25 September 2017) 77 Ryder, R. D., & Madhavan, A. (2014). Intellectual property and business: The power of intangible assets.

SAGE Publica\ons India (last accessed 25 September 2017) 78 h"p://www.iipta.com/biocon-will-hiring-patent-professionals-2017/ (last accessed 25 September 2017) 74

75

Page 37

Understanding Innovation Landscape

The company faced multiple challenges since the time of inception.

The first challenge was related to the need for funding and the long gestation period for the patents from filing stage to grant. Despite the time and money challenge, Biocon remained committed to patenting its innovations as is evident from a portfolio of 984 approved patents, 448 trademarks and 1200 patents in the pipeline.

The second challenge involved the industry mindset of "Imitation" rather than "Innovation"79. The company faced a challenging time during early years when it was not appreciated for investing time and money in innovation, R&D, and patents. Imitation rather than Innovation was considered to be a better choice by many investors and capital market experts. However, with time, Biocon gained scale and recognition due to its patent pool.

The third challenge was related to the commercialization of patents. Unlike other players in the biopharmaceutical industry, Biocon had an impressive track record in commercializing its R&D outcomes. The commercialization success came in very early in the form of successful launch and adoption of PlaFractor. The success of PlaFractor led to a positive branding and recognition in the industry and many more discoveries in the years a decade ago.

The fourth challenge faced by Biocon was the prevalence of regulatory uncertainty in the biopharmaceutical industry. There had been some initiatives taken by the government of India to ramp up the R&D eorts of pharmaceutical companies in the treatment of NCDs80. One of the initiatives was the announcement of draft guidelines for "similar biologics" in 2016. This was aimed at expediting the development and market-launch of aordable and high-quality drugs for the pressing health challenges.

The second initiative involved the launch of "Start-up India" aimed at creating an ecosystem for the incubation of biotech entrepreneurs. The third initiative involved launching the National Biopharma Mission as an industry-academia collaborative mission for ramping up the discovery and development of biopharmaceuticals.

The fifth challenge involved the scarcity of skilled resources in the field of biopharmaceuticals. The company created a multi-location global setup to mitigate the infrastructure challenges as well as focus on internal skill-building programs to get the desired skills for undertaking R&D activities.

h"p://www.livemint.com/Poli\cs/jEaTS5ZzyoyTBXNWWXHSbP/Over-1-lakh-patents-ďŹ led-since2013.html (last accessed 25 September 2017) 80 h"p://health.economic\mes.india\mes.com/news/pharma/the-state-of-pharmaceu\cal-industry-inindia-an-overview/60273583 (last accessed 25 September 2017) 79

Page 38

Understanding Innovation Landscape

Business Model

Page 39

Understanding Innovation Landscape

4.9 Forus Health Pvt. Ltd. The Innovation An eye pre-screening device for early diagnosis of eye problems thereby preventing needless blindness.

The offering was simple, portable, rugged and can be operated by a minimally trained technician thus bridging the last-mile gap between ophthalmologists and patients in remote locations.

Challenge/ Need Addressed According to the WHO Statistics81 in August 2014, there were around 285 million people globally suffering from visual impairment. Out of these, 39 million were blind, and 246 million were visually impaired. More than 90% of the visually impaired population belonged to the low-income socio-economic group living in developing and under-developed economies. The majority of the visual impairment cases were curable with the timely diagnosis and affordable treatment.

About Forus Forus Health was the brain-child of K. Chandrasekhar and Dr. Shyam Vasudevarao. The genesis of the company was linked to the time when the founders were working with Philips Research and heard the talk given by the doctors from Aravind Eye Hospital regarding the challenge of needless blindness especially across the rural areas in India.

The company was set up in 2010 with the mission of eradicating needless blindness by ensuring ease of access to eye screening and doctor consultation anywhere and everywhere. The company developed and offered IP-driven image guided technology platform called as 3Nethra.

3Nethra acted as a portable and versatile device for diagnosis of different eye ailments (diabetic retinas, cataracts, glaucoma, cornea, and refraction issues) that led to blindness among the masses. Also known as the slick retinal imaging device, it was simple, affordable, portable, rugged and operable by the minimally trained technicians thereby enabling its reach and usage at the last-mile in the remote locations.

The technicians shared the screening images, patient details, and diagnostic report online with the doctor and arranged the doctor's consultation for the patient via telemedicine setup thereby enabling timely intervention and action.

The simplicity, portability, and ruggedness of 3Nethra led to the application of this device via multiple business models – eye screening on wheels, eye screening at kiosks, remote check-up by connecting the 3Nethra cameras to the telemedicine platform, mass screening via mobile health clinics and rural eye camps, etc.

During 2010-2016, the company completed more than 1300 installations in 26 countries and impacted more than 2 million people. The powerful technology interface, ease of use and portability enabled the global scale and reach in more than 26 countries.

81

http://www.who.int/mediacentre/factsheets/fs282/en/

Page 40

Understanding Innovation Landscape

Innovations and Patents – Learnings The study of Forus Health provides interesting insights regarding the whole idea behind innovations and patents, innovation value chain, and underlying challenges in the patent ecosystem faced by the start-ups in medical devices industry in India.

Regarding innovation orientation, the company was driven by the focus on innovation and patents from the time of inception in 2010. In fact, the first patent was filed in 2011 within one year of the launch of the company. The company attributed the innovation culture and mindset to the professional background and technical expertise of the founders given their experience at Philips Research before setting up Forus.

The push for patents was attributed to the following reasons. First, the founders recognized the importance of disclosing the innovation and getting protection on the intellectual property for a specified period of time. Second, the pool of patents gave them the legitimacy and recognition in the global market despite being a start-up against the global competitors. Third, the socio-economic mission required the company to focus on affordable value offerings having indigenous technologies rather than going for licensed technologies and paying royalties.

Regarding innovation value chain, the company adopted a customer-centric model to identify the underserved needs and design the solutions for the same. The first step involved doing a lot of discussions, interactions, workplace observations and spending time with the clients to identify the gaps and underserved needs. The second step was linked to prototyping. This involved allocating the time and resources to conceptualize the vague ideas. The third step included listing down the drafts and claims and filing the patent somewhere in the middle of the prototyping stage. The fourth step involved doing the clinical validations of the prototypes to ensure the usability and viability regarding social impact and revenue generation. The company aligned with the clinical partners to get the relevant data sets and demonstrate the prototypes for getting the feedback. The fifth step involved going ahead with the production phase. This stage continued for six months to one year and comprised steps related to quality and regulatory compliance with tests like bio-compatibility, electric shock, vibrations, etc. The product readiness was followed by the limited launch at selected locations for a limited duration and then full launch based upon the satisfactory response. The overall duration of the idea stage to product launch was three years.

Regarding challenges, patenting ecosystem in India involved multiple complexities regarding the mindset of the start-ups, time and cost implications, as well as access to legal counsel and technical databases.

The first challenge was related to the mindset and beliefs of the founders in the value addition of patents.

The majority of the start-ups in India were more worried about the survival strategies for the next twothree years rather than allocating time and money on getting patents. These were mainly considered to be a luxury in India, and more attention was given to value creation, delivery and revenue generation while leaving aside the patent related efforts and investments. However, trends started changing with the increasing role of venture capitalists and globalization. There had been a growth in the filing of patents as global investors came on board in the start-ups and started insisting for the same. However, there is still a long way to go for creating a patent culture among the start-ups especially in the field of medical devices.

Page 41

Understanding Innovation Landscape

The second challenge was regarding the time and cost investments required for patent filing and grant.

Indian start-ups had an added cost of filing the patents in multiple countries depending upon the key markets. Forus applied for the patent in India followed by the same in PCT, USA and other key markets for each innovation. The majority of the start-ups in USA and other developed economies had limited costs as compared to Indian counterparts from this perspective. Also, the grant or rejection of patents across countries was time consuming thereby mandating significant resource and time commitments from the startups having the scarcity of capital and resources.

The third challenge was regarding the limited access to the proper legal counsel for patent write-up (drafts and claims) as well as filing. The start-ups in India engaged legal advisors from outside for filing the patents which were cost intensive and impacted the quality of patents as against the option of having the legal counsel within the building of the patent applicants. This was particularly relevant for technology intensive industries like medical devices etc.

The fourth challenge was regarding the lack of access to prior art and literature in the form of scientific and medical journals. Access to these journals required paying subscription fees to publishers like Springer thereby making the research and verification process time consuming and costly. However, with more and more open journals coming up and online access, the search started becoming easier with time.

Business Model

Page 42

Understanding Innovation Landscape

4.10 Perfint Healthcare The Innovation Design of an image guided robotic system for undertaking cancer diagnosis, treatment plan, delivery of energy (thermal, radiofrequency, microwave, etc.), and review of the outcomes by doctors. This holds significance in interventional oncology and tumor ablation for the patients who suffer from inoperable tumors.

Challenge/ Need Addressed Cancer is considered to be one of the leading causes of mortality globally, accounting for around 8.8 million deaths in 2015. Around 60% of the cancer-related deaths occur in developing economies. Many of these cases involve those having late stage detection and tumor ablations82. Around 14 million new cases were reported in 2012 globally. The detection of new cancer cases has been increasing every year thereby getting the attention of multiple stakeholders – governments, global institutions, health practitioners, pharmaceutical companies, diagnostic and medical product companies.

About Perfint Healthcare Perfint Healthcare developed a suite of robotic systems to undertake the interventional oncology and tumor ablation for the cancer patients suffering from inoperable tumors. It enabled the radiologists around the world to perform image guided interventional procedures like biopsy, drug delivery, ablation, drainage, fine needle aspiration and different pain care systems for both cancerous and non-cancerous pains.

The company was started in 2005 by a team of four founders having expertise in technology and medical domain due to their prior experience in General Electric (GE) Healthcare. The company focused on the niche area between energy device companies (radiofrequency, laser, microwave, etc.) and large imaging companies like GE and Philips. The imaging companies focused on ‘placement’ rather than ‘procedure’ planning. Perfint focused on both procedural planning and placement as the base criteria for designing its suite of product offerings. There was a global market demand for around 2 million procedures annually83.

The adoption of the robotic system for undertaking the interventional oncology and tumor ablation was instrumental in making the whole process from in-patient to out-patient thereby saving time, money and efforts for the hospitals as well as making it accessible and economically viable for the growing number of cancer patients.

The company gained regulatory approvals in countries like USA, China, and Japan by 2015. During 200817, the company carried out more than 86 installations of different product offerings (Maxio, Piga CT, and Robio) globally.

http://www.who.int/mediacentre/factsheets/fs297/en/ (last accessed 9 September 2017) http://www.forbesindia.com/article/12-hidden-gems/perfint-healthcare-checkmating-cancer/34055/1 (last accessed 9 September 2017) 82 83

Page 43

Understanding Innovation Landscape

Innovations and Patents – Learnings The study of Perfint Healthcare provides insights regarding the whole idea of product conception, refinement, and iterative innovation as well as underlying challenges for start-ups in the domain of medical devices and healthcare.

Regarding ideation and product innovation, the company embraced R&D culture since the time of inception in 2005. It started as an R&D engineering company that offered product development services to the medical device manufacturers. However, limited focus on product quality in the medical devices industry prompted the companies to shift focus from services to product development. The founders decided to target niche area of imaging and scanning to leverage their professional expertise.

The first stage of research and innovation involved holding discussions with the radiologists across the country as well as doing the deep-down analysis of the market regarding available value offerings, customer requirements, and gaps. The analysis resulted in the identification of a niche segment requiring procedure based navigation system for the accuracy of biopsies. The company developed the prototype for the robotic navigation system and released the same for market testing and feedback in 2007. Based on the positive feedback, it went ahead with the full-scale product development for clinical use. Pega CT, a robotic system was launched in 2009 for accurate biopsy of liver and lung. However, the doctors found the scope of Pega CT to be limited and recommended the upgrade from purely being a diagnostic tool to treat tumors and manage pain.

This led to the second and third stage of innovation. In 2011, Perfint launched Robio as a tool for performing complex biopsies with high degree of accuracy and patient comfort. This was followed by a launch of Maxio in 2013 as a complete end to end care system that diagnosed the issue, planned the procedure, delivered the energy or drug for destroying the tumor, and enabled the doctors to review the outcomes. This end to end solution differentiated Perfint from the competitors like Siemens, Philips, and GE in the sense that it became the first company to offer the seamless workflow and protocol for product treatment, planning and verification using the robotic system into one simple procedure84. The application of Maxio in tumor ablation improved the results for treating tumors of the lungs, kidney, pancreas, and liver.

The company took longer time than expected to gain traction and recognition as a product based global R&D company. The company attributed the delays to mainly two factors. One, the majority of the countries relied on the Computed Tomography (CT) scanners and manual intervention as the de-facto approach rather than looking at robotic technology for procedural ablation of the tumor. It took the company lot of time to build awareness and interest among the hospitals globally, especially in the developing economies like India. Second, offerings like Maxio lacked imaging and energy delivery capabilities and were dependent upon the availability of electrodes and CT Scanners for procedural ablation of the tumor.

https://www.outlookbusiness.com/specials/indian-innovation/minimising-pain-2978 (last accessed 9 September 2017) 84

Page 44

Understanding Innovation Landscape

The company went ahead with the fourth stage of innovation to overcome the limitations in Maxio. The company targeted the development and launch of Sonio in 2018-19 as an end to end solution for interventional oncology and tumor ablation by integrating the imaging to energy delivery and verification.

The company proved its technological excellence by getting four patents in the USA, six patents in pipeline, and gaining regulatory approvals from USFDA in 201485. However, the journey was not smooth for Perfint. The company went through multiple challenges since inception in the niche area of interventional oncology and tumor ablation.

The first challenge was related to the lack of awareness and willingness among the hospitals to adopt the interventional oncology as a procedural approach. This resulted in the considerable investment of time and money in creating the necessary awareness.

The second challenge involved diďŹƒculty in getting proper funds for undertaking the product R&D and market building activities. Being a niche concept, there were limited options for funding the companies looking at the development of new technologies.

The third challenge was regarding the dependency of the robotic system on CT scanners for imaging and electrodes for energy delivery. In a way, the company misjudged the market by not going for an end to end solution based oering in the initial years.

The fourth challenge was related to the availability of technical resources having the research aptitude, motivation, and right skills in terms of clinical understanding and product engineering.

https://www.outlookbusiness.com/specials/indian-innovation/minimising-pain-2978 (last accessed 11 September 2017) 85

Page 45

Understanding Innovation Landscape

Business Model

Page 46

Understanding Innovation Landscape

4.11 Lupin The Innovation Launched research-driven, high quality and affordable formulations along with biotechnology products and APIs for complex and life-threatening diseases, especially tuberculosis (TB) and NCDs. Challenge/ Need Addressed According to the World Bank estimates, NCDs like cancer, diabetes, chronic respiratory diseases, and cardiovascular diseases accounted for every 6 out of 10 deaths in 2004. This situation continued getting worse in the subsequent years with the spread of NCDs in rural areas as well86. The number of people having hypertension will reach 213.5 million in India by 2025 as compared to 118.2 million in 2000.

According to WHO, the number of diabetic cases reached 422 million globally and 63 million in India by 201487. The rapid increase in the number of reported cases of NCDs demand intense focus on inventing high quality, affordable, and highly effective formulations, generics, and APIs. About Lupin Set up in 1968, Lupin is known as one of the few Indian origin pharmaceutical transnational companies having the market leadership in manufacturing generic TB drugs. The company was set up with the focus on fighting life-threatening diseases with high-quality, affordable drugs of social priority88. It became a global brand name in the pharmaceutical industry having a portfolio comprising wide range of high quality and affordable formulations and APIs related to TB, cardiovascular, diabetology, asthma, pediatrics, central nervous system (CNS), non-steroidal anti-inflammatory drugs (NSAIDS), and anti-invectives’89.

By 2016-17, the company became the fourth largest pharmaceutical player by market capitalization in India and sixth largest by sales globally90. Globally, the company created a network of 18 manufacturing locations and expanded its reach to more than 100 countries and achieved a global revenue of USD 2.55 billion91 in 2016-17. By 2016-17, the company created a patent portfolio of around 2837 patents globally, a significant increase as compared to the portfolio of 800 patents in 2008. In 2016-17, the company filed 12 applications comprising 39 formulations related, 128 API/process oriented in addition to 42 biotech

http://www.livemint.com/Politics/7oELZ7Hffm5T35XNQ6TXaJ/Spread-of-lifestyle-diseases-poses-a-freshhealth-challenge.html (last accessed 18 September 2017) 87 h"p://www.ib\mes.co.in/number-diabetes-pa\ents-doubles-13-years-india-who-672983 & h"p://www.who.int/mediacentre/factsheets/fs312/en/ (last accessed 18 September 2017) 88 h"p://economic\mes.india\mes.com/industry/healthcare/biotech/pharmaceu\cals/lupin-founder-db-guptaa-self-made-maverick-who-wanted-to-take-out-tb-in-india-dead/ar\cleshow/59320216.cms (last accessed 18 September 2017) 89 h"ps://www.ibef.org/download/Innova\on-and-Patents-May-2017.pdf (last accessed 18 September 2017) 90http://www.lupin.com/business-india.php (last accessed 18 September 2017) 91 x 86

Page 47

Understanding Innovation Landscape

related and 103 Novel Drug Discovery and Development (NDDD)92 related patent applications93.The company had a high rate of grants having secured 72 patents including 3 formulation patents, 3 API patents and 66 NDDD patents.

Innovations and Patents – Learnings Innovation is the DNA of the pharmaceutical industry in India. Besides generic manufacturers, global pharmaceutical companies in India are increasing the R&D spends, developing new molecules and getting them patented globally, and building external collaborations for maximizing the sales and revenues94. In India, the pharmaceutical companies contributed more than 15% of the 1.3 lakh patents filed during 2013-201595. The companies focused on the following innovation categories considering the high demand potential in the coming years - drug combinations (26%), anti-inflammatory (23%), plant extracts related (19%), anti-bacterial (17%), and anti-cancer (15%). The plant extract related drugs gained the attention of the pharmaceutical companies owing to the historical roots of Ayurveda and inclination of Indians towards natural plant-based remedies.

Lupin considered R&D focus as the driver for its success and competitive advantage in the pharmaceutical industry. It invested more than USD 244 million96 as R&D spending thereby showcasing a significant belief and confidence in expanding the patents portfolio as a means of gaining competitive advantage. It created an R&D setup at Pune and abroad employing more than 1700 scientists and technologists for undertaking the innovations related to process development, technology development, and preclinical research (phase 1 & 2)97. It created a collaborative research network with global laboratories, companies, and academic institutions. The continuous focus on R&D and manufacturing excellence enabled it to comply with the USFDA approvals and inspections. In fact, Lupin had Asia's only USFDA approved fermentation plant for rifampicin and WHO approved the facility for manufacturing the TB drugs.

However, Lupin faced multiple challenges during the course of their journey in becoming a leading transnational pharmaceutical company based out of India.

The first challenge was related to complying with the USFDA (US Food and Drug Administration) standards on an ongoing basis. There was a significant difference in process and compliance guidelines NDDD refers to the differentiated and innovative new chemical entities in focused therapy areas of CNS disorders, Oncology, Immunology, Pain and Metabolic disorders. http://www.lupin.com/nddd.php (last accessed 18 September 2017) 92

h"p://www.lupin.com/images/lupin-limited-annual-report-fy-2017-06-07-17.pdf (last accessed 18 September 2017) 94 h"p://stateofinnova\on.com/india-innova\on-trends-pharmaceu\cal-industry (last accessed 18 September 2017) 95 h"p://www.moneycontrol.com/news/trends/health-trends/india-pharma-companies-lead-in-patentfiling-report-2272395.html (last accessed 18 September 2017) 93

96

h"p://www.lupin.com/images/lupin-limited-annual-report-fy-2017-06-07-17.pdf (last accessed 18 September 2017) 97

Page 48

Understanding Innovation Landscape

between USFDA and Indian Central Drug Standard Control Organization (CDSCO)98. This gap between India's regulatory infrastructure vis-a-vis USFDA standards posed a huge business risk for the Indian pharmaceutical companies including Lupin. The company implemented stringent processes and quality checks to ensure 24*7 compliance with global regulatory standards. It implemented regular mock audits conducted by global consulting companies to ensure the compliance and preparedness for actual scenarios.

The second challenge involved maintaining a leadership position in differentiated product introductions and continuing as a formidable player in the generic space. As discussed above, the company focused extensively on setting up an R&D ecosystem, as well as collaborations with global research and academic institutions to invent and patent new formulations, APIs and newer dispensation forms especially in the areas of complex generics, NDDD and biotechnology99. The company invested 13.5% of the global revenues amounting to around USD 355 million (INR 23101 million) into R&D during 2016-17.

The third challenge was regarding synchronizing and streamlining the technology and operational setups of global acquisitions undertaken during 2005-2017100. Each acquisition led to the need for integrating the legacy solutions in that company within Lupin. The company decided to move from legacy technology setups in the acquired companies to a uniform technology platform on the cloud in 2015. The collaboration with Microsoft 365 for a cloud-based technology platform led to the effective integration of the acquired companies as well as resulted in lower cost of technology maintenance, latest upgrades, and efficient disaster recovery system.

h"ps://in.reuters.com/ar\cle/india-pharmaceu\cals-lupin-copy/lupin-sets-off-down-indian-pharmaslong-road-to-redemp\on-idINKBN19V066 (last accessed 18 September 2017) 98

h"p://www.lupin.com/images/lupin-limited-annual-report-fy-2017-06-07-17.pdf (last accessed 18 September 2017) 100 h"p://cioresearchcenter.com/2015/03/lupin-limited-a-prescrip\on-for-cloud-compu\ng-innova\on/ (last accessed 18 September 2017) 99

Page 49

Understanding Innovation Landscape

Business Model

Page 50

Understanding Innovation Landscape

4.12 Glenmark Pharmaceuticals The Innovation Focus on research and innovation in three streams namely formulations of niche products across the therapeutic areas of dermatology, respiratory and oncology; high-quality active pharmaceutical ingredients (APIs); and novel biological and chemical entities for the unmet medical needs of the masses.

Challenge/ Need Addressed The non-communicable diseases (NCDs) are growing rapidly aecting people of all age-groups globally.

More than 60% of the deaths today is attributed to the growing presence of NCDs. According to WHO, there are around 0.5 million diabetic patients globally. The ever-increasing environmental pollution, as well as contamination of land and water, is leading to growing numbers of respiratory and skin diseases.

The increasing instances of NCDs demand innovative molecular entities and formulations.

About Glenmark Glenmark Pharmaceuticals came into existence in 1977 as a generic drug and API manufacturer in India.

The company was set up with the firm focus on undertaking research and innovation for new drug discoveries especially related to NCDs like oncology, respiratory diseases, and dermatology. It positioned itself as a hybrid between the nimble biotechnology firm and steady generic company101. The company launched India's first digital dose inhaler - Digihaler having the ability to provide an accurate digital dose counter along with low dose warning indicator thereby enabling asthma and chronic obstructive pulmonary diseases (COPD) patients to track their adherence to the therapy.

Robust R&D setup enabled Glenmark to build and license seven novel molecules to the leading pharmaceutical giants. It created a global R&D ecosystem comprising five R&D centers in India and Switzerland employing more than 800 research scientists for discovering new molecule - NCEs (New Chemical Entity) and NBEs (New Biological Entity)102. The core strengths of Glenmark involved locating the skills, deciding upon as to which diseases to focus upon, and timing for licensing the new molecules103.

By 2016-17, it expanded its presence and outreach to more than 80 countries globally. During 2000-2016, the company expanded in 50 countries and grew its annual revenues from USD 31 million to USD 1.4 billion.

h"p://www.forbesindia.com/ar\cle/work-in-progress/glenmarks-rd-gamble/28502/1 (last accessed 7 Oct 2017) 102 h"p://www.glenmarkpharma.com/innova\on/ (last accessed 7 Oct 2017) 103 h"p://www.livemint.com/Companies/CcyYxxFdzHWVA0HMSSwJgM/Glenmark-to-reduce-RD-spendingas-challenges-mount.html (last accessed 7 Oct 2017) 101

Page 51

Understanding Innovation Landscape

Innovations and Patents – Learnings The R&D setup of Glenmark continuously focused on finding the innovative ways of doing things104. The sustained investment of time and energy in R&D led to the steady pipeline of specialty products and novel molecules in the core areas of oncology, skin and respiratory as discussed above. It created a pipeline of nine NCEs and NBEs in various stages of clinical and pre-clinical development. It went a step ahead and licensed out the seven molecules of NCEs and NBEs to five companies at an upfront fee of USD 217 million105. The company spent an average of 12% of revenues annually on R&D activities. Unlike most of the industry players, Glenmark stayed away from being a consolidator for pharmaceutical majors and instead focused on partnership and collaborative research with global players on NBEs and NCEs. Once new molecule entities passed the proof-of-concept studies, they were licensed out for maximizing the asset value. Another area of strength for Glenmark was APIs. Here again, the company gained the competitive advantage by focusing on intellectual property -protected innovations and first-to-file opportunities.

Despite R&D being the DNA of Glenmark, the market challenges forced the company to evolve its research and innovation strategy over the years. At one end, the company planned to develop an innovative product portfolio accounting for 30% of the company revenues. This implied increasing focus on R&D initiatives. At another end, the company decided to reduce the spending on R&D to 11-12% of the sales during 2017-2020 as against 14% during 2011-2017. During FY17, it spent INR 1262.23 crores on R&D106.

The primary trigger for the reduction in R&D spending was attributed to the structural changes in the US market, especially for the commodity generics. The increasing competition in commodity generics prompted Glenmark to limit the R&D spending to 4-5% for generics and allocate the rest of the R&D budget allocation for specialty and innovation products.

Besides the market complexities in developed economies like the USA, the company also faced the challenge of creating regular, sustainable outcomes. This involved increasing quality-compliance issues especially in the context of USFDA audits and compliance checks. The increase in compliance audits along with price erosion led to a double-whammy effect on sustaining the focus on R&D, especially for the price-competitive generic drugs.

The third challenge involved complex home conditions in India due to government price controls, demonetization of high-value currency notes, and launch of Goods and Service Tax. These government measures had short term implications related to declining return on capital employed (ROCE), tightening of market demand and scarcity of cash flows107.

The fourth challenge involved long-time taken by the R&D cycle and risk of failures. Unlike other pharmaceutical majors, Glenmark set up distinctive, short and precise timelines for the molecules from h"p://www.glenmarkpharma.com/sites/default/files/Glenmark_AR_2017.pdf (last accessed 7 Oct 2017) 105 1 USD = INR 66.527 (As on 4 January 2016) Available at https://www.poundsterlinglive.com/bank-ofengland-spot/historical-spot-exchange-rates/usd/USD-to-INR-2016 (last accessed 9 November 2017) 106 http://www.livemint.com/Companies/CcyYxxFdzHWVA0HMSSwJgM/Glenmark-to-reduce-RD-spending-aschallenges-mount.html (last accessed 7 Oct 2017) 107 Ibid.

104

Page 52

Understanding Innovation Landscape

identification to proof of concept. It was two years as compared to five or six years for the major pharmaceutical companies108.

The fifth challenge involved managing the patience and expectation of the investors who were not convinced by the huge R&D budget for minimal returns. However top management remained convinced and focused on innovation as a game requiring a dierent operating style, mindset and passion109.

The sixth challenge was attributed to limited availability of skilled resources having passion and skills for researching new drug discoveries and complex molecules. Glenmark created a global R&D setup with the presence in India and Switzerland to leverage the best minds in research globally.

Business Model

108 109

Ibid.

Ibid.

Page 53

Understanding Innovation Landscape

4.13 Cipla The Innovation Launched novel combinations of drugs and devices for providing therapies regarding central nervous system (CNS), respiratory, urology, gastrointestinal and human immunodeficiency virus (HIV) diseases110. Also, focused on technology transfer to the weak economies for maximizing the access to affordable healthcare.

Challenge/ Need Addressed India has a unique healthcare situation as compared to other countries globally. The pharmaceutical industry has been facing strict regulatory and compliance measures. IP rights related litigations have increased between the Indian and global pharmaceutical companies. The socio-economic pattern of India demands a much better healthcare ecosystem. Regarding healthcare spending, India is ranked at 147 out of 184 countries111. India spends around 1% of the GDP as compared to 8% or more by countries like USA and Sweden. The average cost of hospitalization increased from INR 9000 in 2004 to more than INR 25000 in 2017112.

According to WHO statistics, NCDs led to the maximum number of deaths globally in the last decade.

India and other developing economies need access to high quality and affordable drugs for managing the increasing risk of Non-communicable diseases.

About Cipla Set up in 1935, Cipla is known as one of the leading global pharmaceutical companies driven by the mission of providing life-saving drugs to the world113. During the previous eight decades (1935 - 2016), the company built competencies in various therapeutic areas and achieved a leadership position globally. By 2016, it became the 3rd largest pharmaceutical company in India having 43 manufacturing facilities and presence in 80 countries114. The company focused on intensive R&D to develop an extensive portfolio in complex and differentiated product lines besides generic drug offerings. By 2016, the company created a substantial collection of 2000 product in 65 therapeutic categories and a pool of more than 100 global patents115.

During 2016-17, Cipla's revenue grew by 6% to reach INR 14360 crores, and net profit was INR 1006 crores116. R&D investment increased from 6.3% of the sales in 2015-16 to 7.6% in 2016-17117.

The turning point for Cipla came in 2001, when it became the first pharmaceutical company to supply Anti-retrovirals (ARVs) in countries with high HIV prevalence at less than a dollar a day (USD 350 h"p://www.cipla.com/uploads/investor/1500033215_Annual%20Report%202016-17.pdf (last accessed 12 October 2017) 111 Ibid.

112 Ibid.

113 h"p://www.cipla.com/en/r-d.html (last accessed 12 October 2017) 114 Ibid.

115 Ibid.

116 h"p://www.cipla.com/uploads/investor/1500033215_Annual%20Report%202016-17.pdf (last accessed 12 October 2017) 117 Ibid.

110

Page 54

Understanding Innovation Landscape

annually) per individual118,119. This was a considerable shift from the existing market offerings available at the price of USD 12000 per year for an individual120.

Innovations and Patents – Learnings Science and innovation had always been the core of Cipla. Driven by the mission of providing access to high quality and affordable medicines to the masses, Cipla always changed the rules of the game by bringing out the high quality, economical and accessible generic versions of the global drugs for the millions of people rather than manufacturing more expensive innovative drugs. The nationalistic and humanistic streak drove the R&D strategy of the company towards creating affordable drugs in different therapeutic areas. Unlike the Indian and global competitors, Cipla created the brand image of a conscientious pharmaceutical company among the stakeholders.

Cipla considered R&D orientation as the critical success factor for its growth. R&D strategy focused on developing new drug formulations, APIs, drug delivery systems, collaborating with global research teams, strengthening the Intellectual Property as well as conducting clinical and bio-equivalence studies for regulatory approvals121. R&D team was also involved in filing DMFs (Drug master files) and ANDAs (Abbreviated new drug applications) in the USA, marketing authorizations in Europe, and filing product registrations globally122. During 2016-17, it filed more than 32 ANDAs including complex products.

During 2012-2016, the R&D spend doubled in percentage terms from 3.9% to 7.6% of the annual revenues123. The company employed more than 1500 scientists across its research facilities.

During the journey spanning eight decades (1935-2015), Cipla faced multiple challenges related to regulations, compliance, competition, patenting, and pricing.

The first challenge involved ensuring compliance with the USFDA (US Food and Drug Administration) guidelines. USFDA guidelines were very stringent as compared to those of other countries including India. Ongoing USFDA audits implied a considerable business risk for the Indian pharmaceutical companies including Cipla having the significant market base in the USA. Cipla created a reliable quality and audit ecosystem to maintain the quality levels and process excellence at par with USFDA standards.

It underwent more than 46 successful audits in 2016-17 by global regulatory bodies.

The second challenge involved creating a high brand image as compared to the global and Indian competitors. The company created the differentiation in the minds of the stakeholders by becoming a h"p://www.cipla.com/uploads/investor/1500033215_Annual%20Report%202016-17.pdf (last accessed 12 October 2017) 119 h"p://www.forbesindia.com/ar\cle/leadership-awards-2016/yk-hamied-ciplas-fearlesscrusader/44893/1 (last accessed 12 October 2017) 120 Ibid.

121 h"p://www.cipla.com/en/r-d.html (last accessed 12 October 2017) 122 h"p://www.cipla.com/en/r-d/leader-in-drug-delivery.html (last accessed 12 October 2017) 123 h"p://www.cipla.com/uploads/investor/1500033215_Annual%20Report%202016-17.pdf (last accessed 12 October 2017) 118

Page 55

Understanding Innovation Landscape

leader in development and commercialization of high quality and aordable drugs. Also, it collaborated with the global research and academic institutions for launching new drug formulations and APIs especially in the areas of complex diseases aecting millions of people like AIDS, oncology, respiratory, etc.

The third challenge involved maintaining the research-driven culture and orientation in the company. The company considered R&D to be the core focus area of the organization and kept on increasing the R&D budget over the years. R&D focus led to favourable outcomes in terms of product and process innovations, patent filings, and entering the global markets. During 2014-15, the company filed more than 90 patents for formulations in Europe and N. America and over 1,000 patents in other global markets124.

Business Model

h"p://www.business-standard.com/ar\cle/companies/cipla-to-invest-rs-600-cr-in-r-d114090400001_1.html (last accessed 12 October 2017) 124

Page 56

Understanding Innovation Landscape

4.14 Sun Pharmaceutical The Innovation Launched a diverse range of formulations in various therapeutic areas like diabetes, neurology, gastroenterology, psychiatry and cardiac-related etc. Also, offered different APIs in managing complex health issues such as cancer.

Challenge/ Need Addressed The global pharmaceutical industry has been undergoing a transformation due to regulatory pressures, increasing variation of diseases especially the non-communicable diseases, pricing pressures and the emergence of a large number of regional players. Indian pharmaceutical companies are also facing the similar set of macro and microeconomic challenges. At the same time, there is a tremendous opportunity for the pharmaceutical companies considering the increasing incidents and frequencies of health issues across the age groups. According to WHO statistics, four major NCDs namely cardiovascular, cancer, diabetes and chronic lung diseases accounted for 63% of the deaths in 2008125. The significant proportion of deaths due to NCDs happened in low-income countries. The trend continued during the period 20102016. The rising prevalence of NCDs led to the increasing focus on research by the pharmaceutical companies for developing new specialty and complex molecules.

About Sun Pharma Sun Pharma started its journey in 1983 with the focus on psychiatric disease. The whole idea at the time of inception was to focus on research-driven, high-value drug formulations rather than cheaper versions of generic drugs. Thereby, Sun Pharma started as a research-based company unlike the majority of the other pharmaceutical companies in India. Subsequently, it diversified into formulations for other complex health issues like cardiology, gastroenterology, neurology, orthopaedics, ophthalmology, and nephrology.

The company adopted merger and acquisition strategy as a means of gaining growth and diversification during 1998-2017. The acquisition of Ranbaxy in 2014 made Sun Pharma the most significant pharmaceutical player in India. By 2017, the company developed a production base of more than 40 manufacturing sites, market presence across 150 countries, and a diversified product portfolio of more than 2000 formulations and APIs126. In 2016-17, the company achieved the annual sales revenue of USD 4.9 billion127 and the net profit of USD 1.2 billion128,129. In 2016-17, the company spent 8% of the annual revenues on R&D and had team of 2000 scientists130.

Innovations and Patents – Learnings Sun Pharma was driven by a strong focus on R&D and Innovation. It became the 4th largest generic pharmaceutical company in the USA with a robust ANDA pipeline (157 ANDAs awaiting approvals) in h"p://www.who.int/gho/ncd/mortality_morbidity/ncd_total_text/en/ (last accessed 12 October 2017) h"p://www.sunpharma.com/ (last accessed 12 October 2017) 127 1 USD = INR 64.86 (As on 31 March 2017) Available at https://www.poundsterlinglive.com/bank-of-englandspot/historical-spot-exchange-rates/usd/USD-to-INR-2017 (last accessed 9 November 2017) 128 Ibid.

129 h"p://www.sunpharma.com/sites/default/files/annual/Sun%20Pharma%20Annual%20Report-FY17.pdf (last accessed 12 October 2017) 130 Ibid.

125 126

Page 57

Understanding Innovation Landscape

2017. The R&D team focused on drug formulations, APIs, and NDDS as the key focus areas for ongoing research. The increasing competition from regional players, pricing pressures as well as strict regulatory measures in generics segment led to the growing focus on specialty and technically complex products131.

The R&D team focused on developing non-fringing formulations and creating intellectual property assets by filing patents globally. This approach was undertaken in a bid to differentiate itself from the other companies in the hyper-competitive pharmaceutical market in India. The company received more than 750 patents by 2017132.

The company always looked upon the unmet needs of the people and designed their R&D portfolio accordingly. For example, it launched Gemcetabin InfuSMART as world's first licensed ready to administer (RTA) bag for oncology treatment in 2016. This offering became a blockbuster innovation in the global oncology therapy market. Another strong attribute of Sun Pharma was the in-house setup of end to end R&D process. The company did not believe in outsourcing the different stages of R&D like clinical or non-clinical trials or market study etc. Everything was done in-house in an integrated R&D setup for all the therapeutic areas. This enabled Sun Pharma to exercise full control on quality of product offerings.

Sun Pharma like other pharmaceutical companies faced multiple challenges in the dynamic global pharmaceutical industry.

The first challenge involved stringent USFDA compliance guidelines. USFDA compliance became a huge business risk for many pharmaceutical companies. Companies like Sun Pharma started focusing on process excellence and regular compliance audits to ensure the readiness for USFDA audits anytime.

The second challenge involved regulatory pressures, pricing guidelines, and hyper-competition in the category of generic formulations. The company focused the majority of its R&D efforts on developing new molecules related to specialty and complex generics thereby minimizing the exposure to price competitive, simple generics.

The third challenge was regarding the lack of supporting infrastructure for the pharmaceutical companies in India. The pharmaceutical industry was not vertically integrated and depended upon the imports of pharmaceutical equipments and APIs from other countries for the development of new drugs. This dependence on other nations for pharmaceutical equipment and APIs resulted in time delays and significant add-on costs.

The fourth challenge was regarding the complexities and time taken in award of the patents in India. Sun Pharmaceutical found it quicker to get a patent granted outside India. The patents filed in India took longer for decision as compared to other countries. The dragged performance of Indian Patent Office led

131 132

Ibid.

Ibid.

Page 58

Understanding Innovation Landscape

to high business risk for research-driven companies like Sun Pharma. As a result, Sun Pharma adopted a strategy of filing the patent globally immediately after making an application in India. For example, as stated above, InfuSMART was launched in Europe before India and became an enormous success.

The fifth challenge was regarding the pricing of new drugs being launched after intensive R&D eorts of 10-15 years. The company adopted a strategy, where it launched the product first outside India at premium pricing to recover the R&D investments in two-three years and then in countries like India at aordable pricing.

Business Model

Page 59

Understanding Innovation Landscape

4.15 Cadila Healthcare The Innovation Launched novel and affordable drugs, APIs, biosimilars and vaccines related to complex therapeutic areas like cardiovascular, gastrointestinal, respiratory, dermatology, diabetes, and oncology as well as consumer wellness and animal healthcare products.

Challenge/ Need Addressed According to World Health Statistics 2017, there had been a general improvement in all the health and living parameters outlined in Sustainable Development Goals (2015-2030). However, there had been some shifting trends leading to an increase in lifestyle diseases as the leading cause of deaths globally. In 2014, more than 90% of the population lived in places having air-quality below WHO standards, thereby resulting in millions of deaths. The countries like China, Bulgaria, and India accounted for an average of 171 deaths per 100,000 due to air-pollution133. The lifestyle diseases like cancer, diabetes, cardiac failure, etc. became the leading health issues. At one end, people increased their consumption of junk food, alcohol, and smoking as well as suffered from long and erratic working hours, exposure to mobile, tv, laptops and other electronic gadgets. At other end, people started taking up increasing number of health and wellness medicines or supplements.

About Cadila Healthcare Set up in 1952, Cadila Healthcare became known to the world as a company with a focus on R&D for development of affordable drugs for the underserved healthcare needs of the masses globally. This positioning required strong management focus and orientation towards growth driven by R&D and patents. The company restructured its operations in 1995, and Cadila Healthcare came under the aegis of the Zydus group thereby labelled as Zydus Cadila from there on. It became one of the leading pharmaceutical companies in India with the tag of innovation-driven and research-based organization. It excelled itself in the discovery and launch of finished dosage human formulations (generics, branded generics and specialty formulations, including biosimilars and vaccines), APIs, consumer wellness and animal healthcare products134,135. In 2015, the company entered into the licensing agreement with Gilead for manufacturing the generic variant of the patented Sofosbuvir drug for hepatitis C treatment.

The company adopted a dual strategy of research and first-mover in the acute and chronic therapeutic segments like cardiovascular diseases, gastrointestinal disorders, women healthcare, respiratory, dermatology, diabetes, oncology, pain management and anti-infectives. The Confederation of Indian Industry Innovation Awards 2015 ranked Cadila Healthcare as among the Top 25 innovative companies in India136. During 1995-2017, the company achieved the annual revenue growth from INR 250 crores to INR 9600 crores. The net profit reached INR 1490 crores in 2017. The company owned and operated more than 32 manufacturing facilities globally maintaining the quality standards at par with USFDA h"ps://www.usnews.com/news/best-countries/ar\cles/2017-05-18/10-findings-from-whos-annualworld-health-sta\s\cs-report (last accessed 27 October 2017) 134 h"p://zyduscadila.com/ (last accessed 27 October 2017) 135 h"p://zyduscadila.com/wp-content/uploads/2017/07/Annual-Report-CHL-2016-2017.pdf 136 h"p://zyduscadila.com (last accessed 27 October 2017) 133

Page 60

Understanding Innovation Landscape

guidelines. Regarding R&D performance, the company's persistent focus on developing new molecules, delivery systems, processes, and technologies led to the award of more than 440 patents globally by 2017137.

Innovations and Patents – Learnings The success and growth of Cadila Healthcare were driven by a firm belief and focus on R&D and patents.

The company considered the pure generics game to be a value destroyer in the long-term138. It created a team of more than 1200 researchers across 19 sites involved in ongoing R&D activities related to five broad areas as -new chemical entities (NCEs), biologics, vaccines, APIs, and formulations development139. In 2014, the company launched the first biosimilar globally for inflammatory arthritis140. Similarly, the company became the first in India to develop a novel drug for treating diabetic dyslipidemia. Approved in 2013, the drug got labelled as a "wonder drug" by more than 0.5 million patients141.

The company went through multiple challenges during its growth journey.

The first challenge involved achieving the global scale and reach. This required consistent focus on quality and differentiation. The changing environmental trends like pricing pressure in generics range of medicines, stringent USFDA compliance measures, and ever-changing regulatory guidelines had the enormous impact on the pharmaceutical industry in India. The companies, which did not push themselves upward the value chain in terms of R&D and innovation as well as lacked the willingness to implement global processes became obsolete in last ten years. Cadila was one of the few companies in India, which identified the generics positioning as a value destroyer and maintained a firm focus on processes and R&D to move ahead on the value chain. The company created centers of excellence to drive innovations in key therapeutic segments as well as focused on value-accruing improvements in the quality of product offerings142. There was a definite strategic orientation towards building presence in complex and relatively under-crowded therapeutic spaces having high entry barriers and better economic returns143.

The second challenge involved balancing the risks and gains in discovering NCEs. Drug discovery and patenting was the best way to build a distinctive competitive advantage. However, drug discovery involved risks due to the time, manpower and capital investments in discovery, trials, approvals, filing patents across different countries and launch. Despite the challenges, Cadila continued its focus on research-based novel drugs and APIs. Launched in 2013, Lipaglyn took 12 years of research from discovery

h"p://zyduscadila.com/wp-content/uploads/2017/07/Annual-Report-CHL-2016-2017.pdf h"p://www.forbesindia.com/ar\cle/india-rich-list-2014/for-cadila-healthcares-pankaj-patel-patentsare-key-to-growth/38861/1 (last accessed 27 October 2017) 139 h"p://zyduscadila.com/wp-content/uploads/2017/07/Annual-Report-CHL-2016-2017.pdf (last accessed 27 October 2017) 140 Ibid.

141 Ibid.

142 Ibid.

143 Ibid.

137 138

Page 61

Understanding Innovation Landscape

to market launch. It was developed at the cost of USD 250 million144. However, going by the market response, it had the potential to generate global revenues of more than USD 500 million145.

The third challenge involved scaling the reach globally. The company adopted a mix of organic and inorganic strategies to scale its business. The company made more than 15 acquisitions and entered into four joint ventures to setup the global foot-prints. While adopting an inorganic route for expansion, the company made sure to develop an employee-centric culture where no layos were done for the sake of cost optimization measures146,147. The employee-centric culture resulted in lot of synergy and dedication among the Indian and foreign national employees despite socio-cultural variations.

Business Model

h"p://www.forbesindia.com/ar\cle/india-rich-list-2014/for-cadila-healthcares-pankaj-patel-patentsare-key-to-growth/38861/1 (last accessed 27 October 2017) 145 Ibid.

146 Ibid.

147 h"ps://www.forbes.com/global/2010/0607/companies-cadila-healthcare-india-pankaj-patel-darkhorse.html (last accessed 27 October 2017) 144

Page 62

Understanding Innovation Landscape

4.16 Suven Life Sciences The Innovation Offering the world-class R&D solutions to global life-sciences companies. Design and manufacturing of bulk actives, drug intermediaries, and fine chemicals especially related to central nervous system (CNS)148,149.

Challenge/ Need Addressed CNS disorders account for one of the greatest unmet needs of the growing number of people globally150.

According to WHO, more than one billion people (one in every six persons) in 2006-07 suffered from neurological disorders like Alzheimer’s disease, parkinson diseases, strokes, multiple sclerosis, epilepsy, migraine, and neuro-infections. Around 6.8 million people died each year due to CNS disorders151. During 2007, as per the statistics, more than 50 million people suffered from epilepsy, 326 million from migraine, 62 million from cerebrovascular disease, and more than 24 million from Alzheimer’s and other dementias152.

Around 50% of the adults over the age of 65 years get afflicted with age-associated cognitive decline every year153. Globally, pharmaceutical companies started looking at this as one of the most challenging yet highly promising market opportunity.

About Suven Life Sciences Set up in 1989, Suven Life Sciences established itself as one of the leading pharmaceutical and contract research companies in India. The company adopted a two-tier approach. One, it focused on contract research and manufacturing services (CRAMS) thereby providing world-class R&D solutions for global life sciences companies with quality, speed and cost efficiency. The key activities in this category involved undertaking process research, NCE based intermediaries, APIs, formulation development and analytical services, and clinical supplies154,155. Second, it focused on discovery research comprising pre-clinical studies, design, and discovery of new CNS therapies156.

The company created multi-location facilities as well as market reach and presence across USA, Europe, Japan, Korea, and Israel. By 2016, the company built a research team of more than 420 scientists and executed more than 700 CRAMS projects157,158. Also, the company developed long-term collaboration with more than 22 global pharmaceutical companies for undertaking contract research and manufacturing as well as drug delivery and development support services159. The consistent focus on research pertaining h"p://www.suven.com/ (last accessed 19 Oct 2017) h"p://www.suven.com/Pdf/Suven_Business_Model.pdf (last accessed 19 Oct 2017) 150 Ibid.

151 h"p://www.un.org/apps/news/story.asp?cr=neurological&newsid=21689 (last accessed 19 Oct 2017) 152 Ibid.

153 h"p://www.suven.com/Pdf/Suven_Business_Model.pdf (last accessed 19 Oct 2017) 154 h"p://www.suven.com/Suven_CorporatePresenta\on_Mar2016.pdf (last accessed 19 Oct 2017) 155 h"p://www.suven.com/Pdf/Suven_Business_Model.pdf (last accessed 19 Oct 2017) 156 Ibid.

157 h"p://www.suven.com/ (last accessed 19 Oct 2017) 158 h"p://suven.com/Annual%20Report%202016-17.pdf (last accessed 19 Oct 2017) 159 h"p://www.suven.com/Pdf/Suven_Business_Model.pdf (last accessed 19 Oct 2017) 148 149

Page 63

Understanding Innovation Landscape

to new chemical entities (NCEs) led to the portfolio of more than 1100 product patents for 30 product inventions and 39 process patents for 9 process inventions160. During 2016-17, the company achieved a revenue of INR 544.48 crore and the net profit of INR 123.38 crore161.

Innovations and Patents – Learnings The success of the company was attributed to the well-integrated CRAMS and drug discovery services during 1989-2016. It started with the focus on generic APIs in 1989 followed by entry into design and development of complex chemicals in 1992. During 1995, the company started offering CRAMS, which led to the enhancement of research and innovation capabilities as per global standards. The company started focusing on in-house drug discovery and allied service offerings in 2003. During 2006, it initiated the discovery and research programs around CNS therapies. By 2015, it created a pipeline of 13 compounds linked to CNS therapies and became one of leading players in high-value CNS segment research globally162,163,164.

Suven adopted the differentiation approach as compared to other pharmaceutical companies in India on many parameters. First, it followed the contract research as compared to contract manufacturing practice by the competitors. Second, it followed an innovation-led long-term approach as compared to processoriented approach by the competitors. Third, Suven gave a lot of attention to CRAMS, NCEs and full spectrum services as compared to the focus on generics and chemistry services by the other players in the pharmaceutical industry165.

Suven's consistent focus on contract research and internal R&D led to its growth and competitive advantage. The company faced some typical challenges during its growth journey mainly related to increasing pressure on pricing and margins, rising standards for USFDA compliance, limited availability of skilled workforce for drug discovery and research, etc.

The first challenge involved increasing pricing pressures in the USA and unstable global economic conditions especially in countries like China, India, and others. This led to increasing pressure on pricing and margins thereby putting the R&D investments at risk primarily for the manufacturing of the generic drugs. The companies like Suven adapted themselves to the market dynamics by shifting the R&D focus from generic drugs to the discovery of complex molecules in therapeutic areas like CNS166,167.

h"p://suven.com/Annual%20Report%202016-17.pdf (last accessed 19 Oct 2017) Ibid.

162 h"p://www.suven.com/ (last accessed 19 Oct 2017) 163 h"p://www.suven.com/Suven_CorporatePresenta\on_Mar2016.pdf (last accessed 19 Oct 2017) 164 h"p://www.suven.com/Pdf/Suven_Business_Model.pdf (last accessed 19 Oct 2017) 165 Ibid.

166 h"p://www.suven.com/ (last accessed 19 Oct 2017) 167 h"p://suven.com/Annual%20Report%202016-17.pdf (last accessed 19 Oct 2017) 160 161

Page 64

Understanding Innovation Landscape

The second challenge involved increasing costs and risks of R&D investments owing to the dynamic socio-economic conditions, use of new technologies, more extensive clinical trial sizes, and need for superior clinical infrastructure for the discovery of complex molecules. This created an opportunity for Suven as it collaborated with more than 22 global pharmaceutical companies for undertaking contract research and manufacturing services. At one end, this created a stable revenue stream for Suven. At another end, this led to a global learning experience in terms of high-end research outcomes.

The third challenge involved maintaining a team of high caliber research scientists for developing NCEs in the complex CNS space. The company created a pool of talented research scientists including doctoral graduates from the premier institutions in India. Suven focused on providing high-end training on an ongoing basis and generous research incentives to motivate the research scientists towards delivering high-quality research outcomes.

Business Model

Page 65

Understanding Innovation Landscape

4.17 Mettl The Innovation Developed an online learning and assessment platform to provide internet-based learning opportunity to the students and professionals with real-time feedback as well as to enable the companies measure and track the skills of their employees and pre-hires168.

Challenge/ Need Addressed The majority of the graduates coming out of the higher education system in India lack the necessary skills to meet the expectations of the corporates thereby creating a huge gap between the employees getting hired vis-a-vis their performance on the job. The corporates need an online assessment and learning platform, which can be customized and facilitate the hiring of the right people as well as right skilling of the employees on an ongoing basis to keep them relevant and productive. Another aspect which needs attention is that rapid advancement of technology is changing the competitive dynamics as well as demand the continuous upgradation of skills for the employees. More and more companies are focusing on setting up the ongoing competency and skill building programs within their setup.

However, there is a gap here regarding lack of suitable technologies and platforms for making the proper skill assessment and determining the actual learning needs of the employees. This requires a platform to assess and design customized learning modules rather than offering a plain-vanilla approach. Companies like Mettl identified this opportunity and launched Software as a Service (SaaS) platform in 2011 for addressing the learning and skill assessment related needs of the companies from diverse industries.

About Mettl Setup in 2009, Mettl started as online learning and assessment platform for measuring, analyzing, and improving people skills. The company started by focusing on a niche area of learning and skill assessment of the pre-hires and employees. Founded by a team of two individuals coming out of the best institutions in India and having extensive experience with MNCs and start-ups, the company developed a SaaS platform for serving the assessment, hiring, performance evaluation, technical and functional competencies related requirements of the companies in a cost-effective, time efficient, and impartial manner. By 2015, the company created a client pool of 1000 companies spread over 90 countries, developed a technology and functional team of more than 220 employees across six offices in India169.

Innovations and Patents – Learnings Mettl attributed its success to multiple sets of strategic and situational factors. First, the founders of Mettl had complementary skills besides their strong technology background and prior professional experience with the start-ups. Second, Mettl had a strong network of mentors and advisors who helped them with the right decisions during the early years of the company. Third, Mettl developed a strong product development team with the continuous focus on improving the skill assessment capabilities of the platform for different industry types and needs. http://www.nytimes.com/2013/02/13/opinion/friedman-when-et-and-it-meet-id.html?_r=1& (last accessed 14 September 2017) 169 http://timesofindia.indiatimes.com/trend-tracking/HR-startups/articleshow/54867841.cms (last accessed 14 September 2017) 168

Page 66

Understanding Innovation Landscape

Mettl faced multiple challenges during their journey from being a niche start-up to a successful enterprise in the assessment and learning space.

The first challenge involved the right understanding of the assessment industry. Contrary to their understanding, assessment process required a different approach. The mentors and advisors enabled them to do the course correction during the early stage of their setup.

The second challenge involved creating a strong technology team within the company170. During the early years, Mettl faced the scarcity of capital and cash flow. Also, lack of brand image prevented the skilled technology people from joining Mettl. The company developed the first version of the assessment and learning platform with the support of consultants and launched the same. This led to some standing in the market, which enabled them to raise a small seed round and build an in-house R&D team. Mettl attributed the role of network, connections and continuous hiring orientation as the reasons behind setting up a strong technical and functional team over a period of time.

The third challenge for Mettl was the choice of right positioning and brand building. The founders knew the significance of clear positioning at the time of inception to ensure scalability and investors’ attention in the future. The founders decided to position the company's offering as skill assessment platform (recruitment, organization structure, education industry, etc.) rather than recruitment platform. This positioning enabled the company to showcase its compatibility with different types of assessment and learning needs across the industries thereby increasing the scope and attractiveness of their skill assessment platform.

The fourth challenge involved expanding the capabilities of the skill assessment platform on an ongoing basis. The industries were getting transformed due to the rapid pace of technology integration and globalization. New roles were getting defined. New companies offering niche products or services were getting set up. E-commerce wave was redefining the organizational structures and skill requirements of the new companies. These dynamics required ongoing demands for new types of skill assessment options.

The fifth challenge involved attracting more and more companies irrespective of their scale and volumes.

The company launched the platform as a SaaS (Software as a Service) based offering thereby optimizing the operating costs as well as enhancing the scalability and reach. This reflected upon the deep thinking within the organization and alignment with the latest technologies to make the technology accessible, scalable and affordable.

The sixth challenge involved gaining the confidence of the investors for a product offering and business model, which had no prior success story in the market. Mettl faced a tough time in convincing the investors and primarily got started by raising the angel funding from the personal and professional network.

However, the situation became better with time as the company started getting more and more clients on board.

https://yourstory.com/2013/02/entrepreneur-ketan-kapoor-of-mettl-sees-a-billion-dollar-opportunity-inonline-skills-assessment/ (last accessed 14 September 2017) 170

Page 67

Understanding Innovation Landscape

The seventh challenge involved lack of security for the proprietary design and code base. Like other information technology start-ups, the company faced the scenarios where security breach led to the theft of proprietary design and code base. However, the data protection and litigation options were minimal, and the company was not able to do anything on those thefts and losses. Also, the company found the patenting process and costs to be cumbersome. Moreover, patenting required disclosure of the proprietary design thereby making it easier for the competitors to achieve the similar functionality and design by dierent code base. Besides, the company felt that the competitive advantage in its industry required a whole business model innovation and product development was only one of the components in the entire value chain. So, patenting in itself did not add any value to their competitiveness considering the time, eorts and cost involved. Moreover, besides filing a patent in India, similar eorts, time and cost were required in dierent countries or target markets depending on the market size and scope. Mettl had a client base across 90 countries by 2017.

Business Model

Page 68

Understanding Innovation Landscape

4.18 Uniphore The Innovation Building a phone that can understand any language. This implies offering multilingual, speech enabled applications for mobile phones thereby bridging the digital and information divide prevalent in rural India171.

Challenge/ Need Addressed India is a land of diversity in terms of religions and languages. There are more than 400 languages and 600 dialects used by the Indian population even though Indian Constitution recognizes 22 official languages172. Around 250 million people in India understand English as a medium of communication173.

The diversity of languages and dialects every few kilometers in semi-urban and rural geographies of India has led to increasing complexities regarding access to information and better ways of doing business, especially for the poor segments. Add on to that, a sizable proportion of the people in India are illiterate and semi-literate thereby raising complexities for them regarding getting timely information in the local language concerning day to day issues related to business or general challenges.

About Uniphore Setup in 2008, the company broke the language barrier by offering a unique innovation quotient comprising a multi-lingual, speech recognition technology for the masses in rural India174,175. The launch of Uniphore was a second entrepreneurial attempt by Umesh Sachdev and Ravi Saraogi after a failed venture related to tracking of lost mobile phones in 2006. The product offerings included a wide range of speech recognition software solutions providing features like identifying trends, predicting outcomes and suggesting process improvements as well as industry-specific inputs like enabling banking transactions, weather-related inputs, agriculture-related information, etc. The whole idea behind Uniphore was to set up a SaaS company (Software-as-a-Service) offering innovative solutions for understanding and responding to the natural human speech thereby enabling people making use of the natural modes of communication to engage and instruct machines. The offerings included Voice Biometrics, Virtual Assistant and Speech Analytics176,177. The product offerings covered more than 25 languages and 150 dialects thereby becoming one of the leading speech recognition software solutions in the market having

171h"ps://www.outlookbusiness.com/specials/indian-innova\on/machine-language-2982 (last accessed 18

October 2017) 172 h"p://villgro.org/assets/img/Resource/case/case-pdf/Uniphore.pdf (last accessed 18 October 2017) 173h"ps://www.outlookbusiness.com/specials/indian-innova\on/machine-language-2982 (last accessed 18 October 2017) 174 Ibid.

175 h"ps://www.uniphore.com/ (last accessed 18 October 2017) 176h"ps://www.outlookbusiness.com/specials/indian-innova\on/machine-language-2982 (last accessed 18 October 2017) 177 h"p://www.business-standard.com/ar\cle/companies/speech-recogni\on-start-up-uniphore-plans-toset-up-r-d-in-us-117071400455_1.html (last accessed 18 October 2017)

Page 69

Understanding Innovation Landscape

application for the diverse range of industries178,179. During 2008-2016, the company created a clientele of more than 70 enterprises including Tamil Nadu Government, Axis Bank, etc., and received six patents180.

The product offerings benefitted more than 4 million users in India and other countries like Philippines and UAE181.

Innovations and Patents – Learnings Uniphore was incubated at the RTBI (Rural Technology and Business Incubator) center of IIT, Madras.

The company attributed the ability to design and develop speech recognition software as well as wider acceptance of the technology solutions to the guidance of good mentors and support from the incubator182.

Regarding innovation ecosystem in India, the founders believed that India happened to be in the first trajectory of entrepreneurship in 2016183. The increasing numbers of incubators and start-ups led to the launch of novel solutions for solving everyday issues. What was needed as the next step for India was to enhance the ecosystem for enabling in-depth research and solutions to the complex problems.

The company had a clarity that they wanted to focus on the technology and mobile based solutions for the information needs of the masses. The offerings were designed as per the strong product-market fit as well as applicability across the diverse range of industries including banking, financial services, healthcare, agriculture, education and retail184. However, it faced several challenges in designing and scaling the offerings.

The first challenge involved staying relevant to the latest technologies and changes happening globally.

The idea was to create the technology solutions having global relevance and appeal. The company relied on the exclusive R&D based partnerships with diverse research institutions and businesses to design and develop innovative solutions having ready acceptance among the masses. R&D partners included companies like Nuance, Syntellect as well as organizations like Telecom Centers of Excellence (TCOE), India-UK Advanced Technology Center, Mobile Payment Forum of India (MPFI), etc. These critical research partnerships enabled the company to devise solutions which were relevant and aligned with the latest technologies.

The second challenge involved expanding the scale of offerings across different business verticals. The offerings by the company had extensive applications across the diverse range of industries. What the company needed was the right and deep focus on each vertical to generate innovative ideas and solutions specific to the

h"ps://www.uniphore.com/ (last accessed 18 October 2017) h"p://www.thehindubusinessline.com/info-tech/uniphore-finds-its-voice-in-speechanaly\cs/ar\cle8765291.ece (last accessed 18 October 2017) 180 Ibid.

181 Ibid.

182 Ibid.

183 Ibid.

184 h"ps://www.outlookbusiness.com/specials/indian-innova\on/machine-language-2982 (last accessed 18 October 2017) 178 179

Page 70

Understanding Innovation Landscape

information related needs of each vertical? The company created dedicated sales force for each vertical like banking, healthcare, education, etc. to build expertise and network within that industry185.

The third challenge involved the limited availability of skilled technical resources who were willing to work with the latest technologies. The technology landscape was changing rapidly with the increasing focus on analytics, artificial intelligence, and robotics as next-generation technologies. However, the engineering graduates in India had limited exposure to these technologies thereby creating a shortfall of talent.

The fourth challenge involved raising funds for sustaining the growth momentum. The company created a positive buzz in the market and achieved the growth rate of more than 100% in 2013. However, to sustain the growth momentum, the company needed to make greater investment in skilled resources, marketing, and R&D. The R&D expansion in the USA was one of the key focus areas to leverage the skilled talent in latest technologies. The company was entering new geographies globally. All these expansion plans and growth areas required setting up new partnerships with impact investors and traditional investment sources.

Business Model

185

h"p://villgro.org/assets/img/Resource/case/case-pdf/Uniphore.pdf (last accessed 18 October 2017)

Page 71

Understanding Innovation Landscape

4.19 S4S Technologies The Innovation Providing healthy and nutritious food products with longer shelf life by making use of patented solar conduction dryer technology186,187. The novelty of the innovation lied in the use of solar-based technology to extract the water from the fresh agricultural produce while retaining the underlying nutrients thereby extending its shelf-life and making it lighter188.

Challenge/ Need Addressed According to United Nations Food and Agriculture Organization (FAO), more than 795 million people suered from hunger and undernutrition in 2014-16189. A significant proportion of this population (780 million approximately) lived in developing countries. One of the key reasons for widespread hunger and malnutrition has been attributed to the post-harvest losses and wastage of agricultural produce in these developing economies rather than shortage of production190. More than one-third of the food produced globally amounting to 1.3 billion tons gets wasted at various stages of the value chain due to lack of transportation and preservation facilities191,192. Moreover, the ineďŹƒciencies related to electricity, transportation and preservation in the rural regions of developing countries forces the farmers to do the quick selling of perishable goods at throwaway prices193. This leads to significant financial and emotional stress and losses for the farmers. In fact, India is one the leading countries regarding hunger challenge and wastes around 70 million tonnes of food annually due to lack of basic infrastructure in the villages for postharvest storage, processing, and transportation194.

About S4S Technologies Science4Society (S4S) Technologies was set up in 2008 with the firm objective of benefitting the society, especially the farmers by making use of innovative technologies195,196. S4S designed and developed a unique innovation in the form of low-cost solar-powered dryers, which enabled the farmers in rural areas to convert the farm produce into dehydrated goods having all the nutrients intact and one-year shelf-life197. h"p://desivdesifoods.com/ (last accessed 22 October 2017) h"p://s4stechnologies.com/ (last accessed 22 October 2017) 188 Ibid.

189 h"p://www.worldhunger.org/2015-world-hunger-and-poverty-facts-and-sta\s\cs/ (last accessed 22 October 2017) 190 h"ps://nextbillion.net/how-to-stop-was\ng-food-and-feed-the-world/ (last accessed 22 October 2017) 191 http://s4stechnologies.com/ (last accessed 22 October 2017) 192 h"ps://nextbillion.net/how-to-stop-was\ng-food-and-feed-the-world/ (last accessed 22 October 2017) 193 h"p://thestoryexchange.org/indian-startup-takes-ugly-farm-food-market/ (last accessed 22 October 2017) 194 h"p://www.thehindubusinessline.com/companies/desivdesi-foods-to-add-15k-farmers-expand-tometros-other-ci\es/ar\cle9664904.ece (last accessed 22 October 2017) 195 http://s4stechnologies.com/ (last accessed 22 October 2017) 196 http://desivdesifoods.com/ (last accessed 22 October 2017) 197 h"p://thestoryexchange.org/indian-startup-takes-ugly-farm-food-market/ (last accessed 22 October 2017) 186 187

Page 72

Understanding Innovation Landscape

The company started by selling the solar dryer to the individual as well as the group of farmers at aordable pricing ranging from USD 100 to USD 500. Due to minimal maintenance costs and electricity-free running, farmers were able to recover their investment costs in around 200 days and enhanced their income by more than 50%198. Besides selling the patented solar dryers to the farmers, the company also started buying back the dehydrated farm products from the farmers and began selling the ready-to-eat variants to the end consumers. By 2016, the company collaborated with more than 1200 farmer cooperatives thereby reaching around 10000 farmers in 100 villages across eight countries (India, Nepal, Sri Lanka, Bangladesh, Kenya, Jamaica, France and the Philippines)199,200. The company developed a network of ten strategic partners and reached an annual processing capacity of 3000 tonnes of dehydrated farm products into ready-to-eat varieties201. The company became profitable and clocked the revenues of INR 3 crores in 2016-17202.

Innovations and Patents – Learnings The company adopted a four-step engagement model to deliver the fresh farm products to the end consumer. The first step involved helping the farmers during cultivation and guiding them for best agricultural practices. The second step involved processing the farm produce with solar conduction dryer technology to enhance the shelf-life of fruits and vegetables up to 12 months. The third step was related to doing an extensive quality check of the processed farm products. The fourth step involved packaging and marketing the best quality products to the end consumers.

The inspiration for the innovation came from the traditional approach followed by rural women for preparing the dried chillies, mangoes, and herbs, etc. The company developed and patented the solardryer technology. However, the company gained recognition and popularity in 2013 after winning USD 60,000 prize money in the Dell Social Innovation Challenge203.

S4S Technologies faced several challenges during its journey from developing the solar-dryer to commercializing the same.

The first challenge involved changing the mindset of the village farmers using either traditional method for drying specific farm products or relying on intermediaries to sell their farm produce at under-pricing.

S4S Technologies spent a lot of time and eorts in demonstrating the benefits of solar-dryer to the village panchayats and farmers and convincing them to use the same for increasing the shelf-life of their produce and bargaining power in the market.

h"p://thestoryexchange.org/indian-startup-takes-ugly-farm-food-market/ (last accessed 22 October 2017) 199 Ibid.

200 h"p://www.thehindubusinessline.com/companies/desivdesi-foods-to-add-15k-farmers-expand-tometros-other-ci\es/ar\cle9664904.ece (last accessed 22 October 2017) 201 Ibid.

202 Ibid.

203 h"p://thestoryexchange.org/indian-startup-takes-ugly-farm-food-market/ (last accessed 22 October 2017) 198

Page 73

Understanding Innovation Landscape

The second challenge involved convincing the end consumers regarding the benefits of dehydrated food products sold by S4S Technologies. The end consumers carried a pre-conceived notion that dehydrated packaged food products were unhealthy and loaded with fats and preservatives. The company worked patiently on the communication and experiential strategy to change the preconceived notions of the end consumers.

The third challenge involved raising the capital for funding the technology development and commercialization initiatives while ensuring that the technology was aordable and accessible to the rural farmers. This was a key challenge for a start-up like S4S Technologies. However, winning the Dell Social Innovation Challenge in 2013 changed the situation for the better for the company as it got access to capital as well as gained wide-spread recognition among the masses thereby increasing the word-of-mouth publicity as well as adoption and acceptance of its innovation.

Business Model

Page 74

Understanding Innovation Landscape

4.20 ThinkPhi The Innovation Providing sustainable and environmental friendly solutions for harvesting rain-water and conserving solar energy.

Challenge/ Need Addressed According to Global Water Institute (2013), more than 700 million people globally suffered from acute water shortage204. The demand for water had been increasing at twice the growth rate of population during the 20th century. Going by the latest trends, the water demand will exceed the supply by 2025205.

As per UNESCO study in 2012, more than 1.8 billion people would be living in regions having absolute water scarcity, and two-thirds of the population will be living under water stress conditions by 2025206.

Considering the existing climate change scenario, water scarcity would displace millions of people by 2030.

About ThinkPhi Setup in 2015, the company offered sustainable engineering solutions for conserving rain-water, energy and waste management207. The founders leveraged their professional experience across global companies and start-ups to set up ThinkPhi in India for designing technology-based products and solutions leading to environmental conservation208. The solutions included simple, affordable and intelligent products that influenced the user behaviour and motivated them to conserve the natural resources on earth209. The water and energy conservation solutions offered by ThinkPhi attracted the big corporates, which set the ball rolling and drew other companies as well in due course of time. The company's flagship product “Ulta Chaata” had a dual application thereby appealing the industries and corporates in urban locations. During monsoons, the canopy converted rainwater into potable drinking water. During summer season, it produced energy with the help of solar panels210. One unit of “Ulta Chaata” had the capacity to collect 8-10 lakh quintal of rainwater annually and generated energy with maximum peak power of 1.5 KW. By 2017, the company completed the installations across more than 50 locations in India211.

Innovations and Patents – Learnings The company created a unique and differentiated product “Ulta Chaata” for providing integrated solution related to water, energy, and shade. The product incorporated multiple features like smart battery backup algorithm for managing the energy conservation and redistribution, energy efficient diffused lighting

h"p://www.unwater.org/water-facts/scarcity/ (last accessed 23 October 2017) h"ps://www.thinkphi.com (last accessed 23 October 2017) 206 h"p://www.unwater.org/water-facts/scarcity/ (last accessed 23 October 2017) 207 h"ps://yourstory.com/2016/06/thinkphi-funding/ (last accessed 23 October 2017) 208 h"ps://yourstory.com/2016/07/ulta-chaata/ (last accessed 23 October 2017) 209 Ibid.

210 h"p://www.thebe"erindia.com/91624/thinkphi-ulta-chaata-rainwater-solar-energy/ (last accessed 23 October 2017) 211 Ibid.

204 205

Page 75

Understanding Innovation Landscape

system, real-time sensors for collecting environmental data and sending alert signals for system maintenance, and filtration system for converting rainwater into potable drinking water212.

ThinkPhi focused on R&D and innovative product design as the key growth drivers for attracting the corporate clients and gaining the competitive advantage. The company faced many challenges in the initials years regarding the availability of capital, product design, and market acceptance.

The first challenge involved getting access to long-term funding for developing the product and market.

The company started with the bootstrap funding by the founders and subsequently had to play a waiting game in the first year for gaining the confidence and interest of external investors. The tie-up with companies like Godrej as the first client enabled ThinkPhi to gain the market confidence and credit from suppliers. Also, the company focused primarily on product design and innovation rather than undertaking the project execution directly. It created a partner network for project execution and civil work onsite213.

This led to optimal cost overheads with clear focus and positioning. Gradually, the induction of large corporates as clients and media highlights regarding the unique design and innovation of the product offering attracted investments from serial entrepreneurs and investors.

The second challenge was related to the filing of the patent in India and globally. Patenting in India required significant investment of time, capital, and workforce. The founders filed the concept patent before finishing the invention. The concept patent was followed by another patent on the utility and design of the system after creating few prototypes. By 2016, the company had filed two patents and applied for 14 claims. The patent filing in India was followed by filing an application for PCT and patent filing in individual countries. The company budgeted an expense ranging from INR 2 - 8 lakhs per country for filing the patents214. The company and its investors had a firm belief and vision in focusing on R&D investments and creating intellectual properties215. The company spent more than 20% of the budget on R&D and focused mainly on the high-end activities like in-house design and innovation, customer relationships while outsourcing the project execution and onsite civil work to implementation partners216.

The third challenge involved gaining the confidence of the market and corporates in our product offering.

Being a differentiated concept, design, and offering, it took the company a lot of time and efforts to build the confidence of the potential clients. The target clients wanted to have water and energy conservation related solutions, but then they also wanted to see immediate results and return on investments. In fact, the ambitious demands made by the target clients helped the company to improvise the product offering continuously. The product "Ulta Chaata" initially offered water conservation by harvesting rain-water up

h"p://bwdisrupt.businessworld.in/ar\cle/Behold-The-Incredible-Ulta-Chaata-From-The-ThinkPhiCouple/05-03-2017-113838/ (last accessed 23 October 2017) 213 h"ps://yourstory.com/2016/07/ulta-chaata/ (last accessed 23 October 2017) 214 h"p://www.dnaindia.com/money/interview-our-products-allow-the-users-to-experience-sustainability2229106 (last accessed 23 October 2017) 215 h"ps://yourstory.com/2016/07/ulta-chaata/ (last accessed 23 October 2017) 216 Ibid.

212

Page 76

Understanding Innovation Landscape

to 4-5 lakh litres annually. However, when customers questioned the founders regarding the benefits beyond water conservation, they did further research and added the solar module to generate 1.5-kilowatt solar capacity. The company did further research based on the ongoing feedback from the customers and added intelligent lighting system and mobile charging unit thereby making it a completely self-sustaining installation for the outdoors217.

The fourth challenge was ensuring the affordability of the product offering besides maintaining the innovative design and aesthetic appeal. The company focused on a series of cost engineering measures and tie-ups with different component suppliers across India, Europe, China, and USA. The company decided to focus on R&D and innovation rather than in-house manufacturing setup. The tie-up with global suppliers for different components ensured the mix of best quality and optimum pricing levels with ten years’ warranty.

Business Model

h"p://www.dnaindia.com/money/interview-our-products-allow-the-users-to-experience-sustainability2229106 (last accessed 23 October 2017) 217

Page 77

Understanding Innovation Landscape

5. FINDINGS AND RECOMMENDATIONS Interactions which have been done as a part of this study have strengthened the belief that there is a lot of scope for improvement in the overall research and innovation ecosystem in India. Things have started moving in the right direction with the increasing focus on enhancing the innovation capacity and competitiveness of the research institutions in India. The global rankings and scorecards do reflect an upswing in the global competitiveness and innovation ecosystem of India. As discussed above, India climbed from 71st (2014) to 40th (2017) rank on Global Competitiveness Index scorecard. Similarly, India climbed from 81st (2015) to 60th (2017) position on Global Innovation Index (GII) ranking218. On the flip side, India continued to rank at the bottom of the US Chamber of Commerce Intellectual Property Index at 43rd among 45 countries in 2016. The point of assertion is that India as a country has made incremental progress regarding its IP policy and requires substantial legislative reforms especially on its patenting ecosystem219.

The study has led to the following key findings regarding the current state of R&D and innovation ecosystem in India.

5.1Dynamic environment influences the focus on R&D and innovations The macroeconomic environment plays a significant role in the context of innovation across industries.

For example, the pharmaceutical companies in India are facing ambiguity and dilemma regarding the continuity of R&D investments in generic drugs. Primary focus on manufacturing generic drugs is becoming unsustainable due to hyper-competition, pricing pressures, and compliance audits. Also, the rising incidents of NCDs and research outsourcing by global companies has created an opportunity for Indian pharmaceutical companies to set up research competency centres for global companies and to intensify the R&D investments on developing a portfolio of specialty drugs, NCEs, biosimilars, and APIs. So, the future state of competitiveness and innovation in the pharmaceutical industry lies in developing the pipe-line of specialty formulations having global demand. Other industries in India are also undergoing a transition where start-ups and incumbents are betting on R&D investments in higher valueadded product oerings.

The companies need to focus on the following success levers to manage and leverage the dynamicity of the macro-environment. The first choice involves embracing new technologies to design better and costeective innovations for the market. Second, the companies need to make a gradual shift from the low end to the higher end of the value chain to sustain the competitive advantage. This is especially important considering the rapid pace of globalization and hyper-competitive landscape.

The third choice calls for maintaining the consistent focus on R&D and innovation despite the commoditization of the industry. Focus on R&D and innovation are the key dierentiators in a competitive industry landscape. http://economictimes.indiatimes.com/news/economy/indicators/india-60th-most-innovative-globally-china-at22nd-report/articleshow/59160953.cms (last accessed 29 September 2017) 219 http://www.livemint.com/Politics/xclc5fGhkySYU65WAI8WnL/India-ranks-43-out-of-45-countries-in-USCCintellectual-prop.html (last accessed 29 September 2017) 218

Page 78

Understanding Innovation Landscape

5.2 Mindset of the founders and investors make a difference During the interactions, it was observed that the founders and investors (especially India based) of the start-up companies did not believe in patenting as a source of significant value addition and competitive advantage. The start-up companies and individual innovators in India tend to survive with limited cash flow and scarce talent pool. So, they face a persistent dilemma regarding the trade-off between investing the available resources on filing the patent or creating the market awareness and acceptance. Biocon faced this challenge during its initial years when other stakeholders, particularly the investors did not appreciate the investment of time and money on filing the patents globally. Similarly, companies like Mettl found it better to invest in client relationship and market building rather than filing a patent for its technology platform. In fact, founders of the technology companies like Mettl believed that patenting was a risky proposition considering the weak intellectual property rights and need for mandatory disclosure of the technology thereby increasing the chances of replication by the competitors. One of the reasons for the narrow focus and mindset of the founders and investors across start-ups in India is attributed to the missing block regarding the mentoring of entrepreneurs220. The start-ups are run by young leaders carrying the vision to make a difference but at the same time lacking the maturity and know-how to think about the long-term outcomes of their strategic choices and actions.

The mentoring of entrepreneurs, especially the start-ups is very important to enable them to think and act from the long-term perspective. There are an increasing number of incubators and accelerators coming up in India to provide the mentoring and early-stage funding to the start-ups. Then there are centers of excellence set up by top Indian educational institutions like Centre for Innovation Incubation and Entrepreneurship (CIIE) by Indian Institute of Management, Ahmedabad (IIMA). These centers of excellence provide a platform to the young entrepreneurs to build, test, validate and commercialize their business ideas. The increasing numbers of incubators, accelerators, and centers of excellence are acting as a stimulus in driving the entrepreneurship and innovation ecosystem in India.

5.3 Patenting involves high opportunity costs in terms of efforts, time and capital The start-up companies and individual innovators find the patent filing to be a very tedious process in terms of resources. Due to competitive reasons and global market base, Indian innovators need to file the patent across multiple geographies in addition to India. This makes the patenting process time consuming and unviable. Moreover, patenting in India involves a lot of time (from filing to grant) thereby affecting the commercialization potential and competitive advantage.

Dr. Bhattacharjee from Nayan Eyecare faced a lot of challenges in filing the patent in India for his innovation. Similarly, start-ups like Forus faced issues in getting access to legal counsels for drafting and filing the patents. JNTBGRI faced a competitive threat in the global markets due to lack of sufficient reserves for filing the patents globally. The global companies copied the herbal product launched by

http://southasiainstitute.harvard.edu/2017/03/mentoring-of-entrepreneurs-is-missing-in-india-tarun-khannaharvard-business-school/ (last accessed 31 October 2017) 220

Page 79

Understanding Innovation Landscape

JNTBGRI and got it patented in the USA and other geographies thereby creating a significant market opportunity loss to JNTBGRI. There are increasing eorts by the Government of India to strengthen the IP laws in order to improve the eďŹƒciency of the patenting process in India. There is a gradual expansion in the resource pool engaged in the filing, review, and grant of patents. However, there is a widening gap between India and other countries in terms of filing the patents. There is a need for immediate steps to be taken by the Government of India to enable the ease of patenting in India by streamlining the resource constraints and strengthening the IP rights.

5.4 Need to enhance the research incentives and socio-cultural mindset The third finding relates to the limited research incentives as well as the socio-cultural mindset of the graduates and their families in giving priority to the corporate job vis-Ă -vis working as a researcher with academic or research institutions. This mindset is driven by several factors like job stability, earning potential and professional risks, and chances of career progression. The research-based careers, especially in the academic or pure research-based institutions are considered to be less stable and low incomeoriented as compared to other professional options. Dr. Pradeep and Prof. Rabibrata faced this challenge while driving the research-based projects in their respective research labs. They were unable to attract the high calibre individuals for their research projects due to lack of stability and limited research incentives.

There is a need for action by the Government of India to streamline the higher education system in terms of research ecosystem, incentives (remuneration, recognition, patenting, licensing, and incubation), and corporate-academic interactions. This will attract the graduates who are interested in research-based career opportunity but get constrained by the lack of incentives and industry interface.

5.5 Lack of research and innovation ecosystem in academic institutions Another significant finding is regarding the research and innovation ecosystem in the higher education institutions in India. Indian higher education system lacks systemic focus, attention, and funding concerning the latest trends in research and innovation. The institutions like Indian Institute of Technology (IITs) and Indian Institute of Science (IISc), Bangalore are among the very few in India that focus on continuous research and innovation. However, majority of graduates in India pass out of other institutions, which lack focus on research and innovation. This creates a bigger challenge regarding the availability of technical resources having the research aptitude, motivation, and right skills regarding clinical or non-clinical understanding, artificial intelligence and product engineering. The latest trends in India indicate the primary focus of these universities in churning out the graduates, most of whom are unemployable in any industry221. Dr. Pradeep and Prof. Rabibrata echoed the opinion regarding the lack of contemporary and futurist research and innovation culture in academic institutions. Also, start-ups and big pharmaceutical companies like Perfint, Mettl, Stempeutics, Suven, Uniphore, Glenmark, and Biocon http://www.thehindubusinessline.com/news/education/worthless-degrees-and-joblessgraduates/article9660619.ece (last accessed 29 September 2017) 221

Page 80

Understanding Innovation Landscape

echoed the similar view regarding the shortage of talent having the skills, interest, and capability to undertake research on latest technologies and themes.

The strategic choices involve creating the futuristic research and innovation culture in academic institutions. The future of work is undergoing a drastic change with the advancement of technologies and emergence of new research streams in areas like artificial intelligence, analytics, cloud computing, robotics, nano-patterning, etc. There is a need for graduates who can understand and align with the futuristic technologies across industries. This calls for the focus on futuristic skill-building and research ecosystem in the academic institutions of India.

5.6 Need to strengthen the regulatory standards and intellectual property laws Lack of stringent regulations and IP security laws are highlighted as one of the key challenges faced by the R&D focused organizations in India. The regulatory standards and guidelines, especially for the pharmaceutical and biotechnology industries in India are not comparable to the USFDA standards thereby creating complexities and rejections for the companies in these two domains. Firms like Lupin, Perfint, Jubilant Life Sciences, Suven, Cadila, Cipla, Sun Pharmaceuticals and Biocon faced increasing business complexities and risks due to the wide gap between the expected USFDA compliance guidelines vis-a-vis existing Indian regulatory compliance standards followed by the institutions like Central Drug Standard Control Organization (CDSCO), etc. In IT industry, companies like Mettl faced complexities and challenges in protecting the Intellectual Property of their software platform from others due to lack of stringent IP laws.

As discussed above, there are steps taken by the government of India to strengthen the digital ecosystem and IP laws. There are further steps needed to bring the quality levels at par with the global standards.

One, there is a need to enhance the digital ecosystem for transactional privacy while enabling auditory and regulatory access as and when needed. Second, focus is required on pushing the regulatory reforms to bring those at par with the global compliance standards. For example, pharmaceutical companies in India face the USFDA challenge while targeting the export market. The question is that how can the quality standards in India be at par with USFDA? Third, an ecosystem is needed to create widespread awareness about the IP laws and eďŹƒcient channels for IP related conflict resolutions.

5.7 Enhance the research partnerships and collaborations The global trend is shifting from closed-door innovation to open innovation. No longer, the companies are looking at R&D and innovation as a secret initiative being undertaken within the company. The companies are instead looking at research collaborations and partnerships as a strategic tool to minimize the chances of risks and failures in developing a new product or technology. The global pharmaceutical companies are collaborating with the Indian counterparts to set up research labs for identifying NCEs. Suven Lifesciences collaborated with more than 22 global pharmaceutical companies for undertaking the contract research on specialty drugs and formulations. Dr. Pradeep collaborated with global water experts from the research, academia and corporate setups to design and develop low cost and highly eective nano Page 81

Understanding Innovation Landscape

technologies for the treatment of contaminated drinking water. Similarly, other companies like Lupin, Cipla and Jubilant Life Sciences etc. collaborated with global research institutions and pharmaceutical companies for undertaking proprietary in-house innovation of complex drugs and formulations. Also, companies like Uniphore collaborated with diverse research institutions like TCOE, and MPFI, etc. to develop multi-lingual speech-enabled applications.

Collaborative research is gaining importance as one of the key success levers to mitigate the risk of failure and resource investments. The successful companies have shown increasing focus and orientation towards research collaborations with government institutions, global universities, and enterprises.

The partnerships with government, academia, and global enterprises enhance the capacity and capabilities to undertake research and innovations in high-end technologies.

5.8 Commercialization of patents is not easy Another finding is regarding the monetization challenges faced by the individual innovators and start-ups in India in terms of the patented technologies and processes. Multiple reasons are attributed to the underlying challenge of commercialization. The primary reason for the lack of willingness of the companies in taking the license or making commercial use of the patented technologies is attributed to the lack of awareness and confidence on the functionality of the new technology without trying the prototype of the same. Individual innovators like Dr. Pradeep, Prof. Rabibrata, and Dr. Banerjee attributed this to the lack of availability of support ecosystem for turning an idea into a prototype and finally a commercial product. Individual innovators like Dr. Pradeep and Dr. Bhattacharjee became successful by spending considerable eorts and money on creating prototypes for their innovations to attract corporates for licensing their technology. However, other innovators like Prof. Rabibrata faced diďŹƒculty in commercializing the high potential Nano-technology due to lack of support ecosystem to guide through the commercialization process. Even public and private companies like IMTECH, Stempeutics and Jubilant Life Sciences had to undertake extensive clinical trials in dierent countries to comply with the commercial launch of their technologies.

The challenge regarding commercialization of patents calls for a two-step action plan. One, there is a need for creating a network of centres for excellence across the academic institutions in India. The primary objective of these centres is to facilitate the patenting and commercialization of the inventions done by individual innovators and start-ups. The facilitation involves mentoring, sharing the best practices, and enabling access to the industry network. Second, the commercialization of any invention is primarily driven by the availability of a working model. The researchers who have created a working prototype tend to be more successful in commercialization aspect as compared to the others.

5.9 Access to funding at early stage matters Start-ups in India face a perennial constraint of getting timely access to the long-term funding for any new product or technology innovation. The investors in India prefer to invest the capital in start-ups having proven business models rather than the ones having global patents but no ready market. This creates a dilemma for the start-ups to choose between going for patents or market building considering the scarcity Page 82

Understanding Innovation Landscape

of capital and resources. A large number of start-ups in India tend to start their venture by investing the seed capital from personal savings, family, and friends. There is always huge pressure on the startup founders to showcase the commercial viability of the business model rather than getting patents. Uniphore faced the challenge of raising capital despite creating a novel product offering having wider application in India. Forus faced the similar challenge of getting timely investments at an early stage despite gaining market recognition and acceptance for its portable eye-screening devices. S4S technologies faced the similar challenge of cash flow in early years and managed by winning the Dell Social Innovation Award in 2013. JNTBGRI collaborated with the tribals and developed the unique herbal formulation for health and wellness. However, it lost the potential market in the USA and other countries due to the lack of access to funding for filing the global patents.

As discussed above, timely access to cash flow makes a significant difference in the success or failure of the start-ups and individual innovators. Scarcity of cash flow leads to shortcuts and affects the commercial viability of the new technology or product offering. The increasing numbers of accelerators, incubators, impact investors and centres for entrepreneurship are acting as a positive stimulant to the growth of startup entrepreneurs in India having interest in creating new products and technologies for the masses. The accelerators and incubators facilitate access to funding, industry experts and ecosystem for carrying out the research and innovation.

Page 83

Understanding Innovation Landscape

6. CONCLUSION India is at an interesting point of inflexion regarding research and innovation ecosystem. From the country perspective, India lags behind major economies in terms of research publications, researchers, and patents. The number of patents filed in India is around 17 per million people. This patent productivity is considerably low as compared to the figures in other countries like Japan (3716), S. Korea (4451), USA (910), and China (541)222. From the industry perspective, major R&D spenders are concentrated in three sectors in India namely pharmaceuticals and biotechnology, automobile, and software and computer services. This is in sharp contrast to the other countries where R&D spending is diversified across multiple sectors. For example, China has more than 240 companies from 10 industries among the top global R&D spenders.

The innovators in India face multiple challenges like scarcity of skilled resources due to the socio-cultural mindset which views research as a risky and non-paying career option, lack of strong academia-industry interface, limited focus on research and patents in the universities, difficulties in commercialization of patents, and limited sources of early stage fun ding for start-ups and individual innovators.

However, on a positive note, India is undergoing a rapid transformation in terms of strengthening the research and innovation ecosystem. This is also evident from the fact that India has been ranked at 40th position in the 2017 Global Competitiveness Index ranking. The increasing numbers of accelerators, incubators, impact investors and centres of excellence for entrepreneurship are strengthening the start-up ecosystem in India. The launch of new IP policy by the Government of India in 2016 and improvement in the patenting process showcase the commitment of the government towards improving the innovation ecosystem in India. Increasing numbers of companies in India are realizing the significance of innovation over imitation and have started looking at “R&D” as a long-term strategic investment. There is an increasing focus on the collaborative mode of research by building research and innovation oriented partnerships with the universities, global companies, and government institutions.

The time ahead presents both a challenge and an opportunity for Indian companies to become the R&D leaders and make a quantum jump in terms of high-value offerings at the global scale.

222http://www.swaminathansivaram.in/media/data/INDIA%E2%80%99S%20SPEND%20ON%20SCIENCE,%20T

ECHNOLOGY-May-2016.pdf (last accessed 9 November 2017) Page 84

Understanding Innovation Landscape

Appendix 1: Initial List of 102 Innovators in India

Page 85

Understanding Innovation Landscape

Appendix 2: Phase 1 Study – Selected List of Ten Innovators

Page 86

Understanding Innovation Landscape

Appendix 3: Phase 2 Study – Selected List of Next Ten Innovators

Page 87

Understanding Innovation Landscape

Institute for Competitiveness, India is the Indian knot in the global network of the Institute for Strategy and Competitiveness at Harvard Business School. Institute for Competitiveness, India is an international initiative centered in India, dedicated to enlarging and purposeful disseminating of the body of research and knowledge on competition and strategy, as pioneered over the last 25 years by Professor Michael Porter of the Institute for Strategy and Competitiveness at Harvard Business School.

Institute for Competitiveness, India conducts & supports indigenous research; offers academic & executive courses; provides advisory services to the Corporate & the Governments and organizes events. The institute studies competition and its implications for company strategy; the competitiveness of nations, regions & cities and thus generate guidelines for businesses and those in governance; and suggests & provides solutions for socio-economic problems.

The Institute for Competitiveness U 24 / 8 DLF Phase 3 Gurgaon 122 002 Haryana, India

Page 88

Phone: +91 124 437 6676 Email: info@competitiveness.in www.competitiveness.in