In developing countries, the issue of getting intellectual property rights for the development of new drugs by pharmaceutical companies becomes an issue. This is because property rights or patents can be a disadvantage for developing countries in two ways. Firstly, these will increase the knowledge gap and secondly the producers of knowledge will have more bargaining power as a result.
And most of these producers of knowledge themselves live in developed countries. Giving out patents will put the developing nations in a weak bargaining position when negotiating prices from the monopoly suppliers of drugs. Also, is believed that by awarding such rights to multinational companies, the introduction of new products by the local industries will be delayed and new medicines will become more expensive for a common man in these poor countries to afford. The resulting impression will be that of denying the people an access to the new drugs. (Charles Y.J. Cheah, 2004)
Therefore the defense of the intellectual property rights is one of the major managerial issues of pharmaceuticals in developing countries just like the case of Novartis in India
These companies argue that these rights would promote innovation and technological development which will eventually lead to social welfare and economic growth in developing countries. Patents provide an incentive to producers for investing in research and development, hence innovation. (Shah, 2010)
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