FV-90 | The Importance and Characteristics of Patent for Innovation in the Chemical-Pharmaceutical Industry

Prof. R. Weder, Dr. D. Filimonovic, Th. Gerber

Aussenwirtschaft und Europäische Integration


Research Topic
With this research project, we want to investigate the effects of intellectual property protection on the pace of innovation in Swiss pharmaceutical and related industries. More specifically, we are interested in finding out the impact of patents and their characteristics on the process of innovation in the respective parent industry as well as in other related technological fields and industries. The gained insights may help us to understand better (1) the conflicting positions among current stakeholders of the pharmaceutical industry regarding patent protection, R&D and innovation and (2) the alleged significance of the lack of patent protection for the emergence of the Swiss chemical-pharmaceutical industry at the end of the 19th century.    


Statement of the Problem
The region of Basel, but also the entire Swiss economy heavily depend on the Pharmaceutical industry’s economic impact and its R&D activities. The Swiss pharmaceutical sector is often denoted as “one of the most important centers of pharmaceutical research world-wide, with a reputation that reaches far beyond Europe” (Interpharma, p.7). According to a forthcoming CIEB report (CIEB, 2020), however, the number of published patents in the pharmaceutical industry in Switzerland seems to have lost its pace to some extent after 2008. Moreover, in the same period the collaborative innovation network of the Swiss pharmaceutical industry in terms of the use of other technologies’ knowledge also seems to shrink. Nevertheless, the Swiss pharmaceutical industry remains one of the leading innovation hubs world-wide. Sustaining that role is one of the crucial challenges in the future. Whether this is possible depends on a number of public-policy variables including migration, tax and access-to-foreign-market policies. Intellectual property (IP) protection is also an important element, which we want to focus on. To which extent may some of the specific characteristics of IP protection be responsible for the apparent “innovation slow-down”? Is it possible that the future direction of research and products in the pharmaceutical industry requires a different kind of IP protection? What can we learn from the past development of the Swiss chemical-pharmaceutical industry, possibly going all the way back to its origins? Interestingly, some industries have experienced some new developments concerning IP protection. The most prominent example might be Tesla. In 2014, Tesla released its entire patents to the public and pledged not to take any legal action against the future users. Elon Musk (CEO, Tesla) argued that this would benefit everyone (and in the end also Tesla itself) by accelerating the development of electric vehicle technology platforms (Musk, 2014). In the last 5 years, the industry’s electric vehicle market indeed grew immensely, both in terms of its supply and demand where Tesla’s patent policy may have played a mayor role. The “open source movement” to which Musk refers to in his Blog is prominent in other industries as well, such as in the software or mobile phone development (Sivills, 2019).The following question arises: Are these developments particular to industries based on technologies that differ from the ones used in the chemical-pharmaceutical industry or may they also be relevant for this industry? This question may surprise, given that representatives of pharmaceutical firms emphasize the importance of having a strict and uniform application of IP laws globally (e.g., Schwan, 2013). But this may not be in contradiction with a possible reform of IP protection that takes into account the technological disruption envisioned in pharmaceutical research (“digitization”, “access to data”) and some recent analyses in medical and economic research (e.g., Gold et al., 2009).

We want to contribute to the clarification of these issues by (1) writing an academic paper that tries to empirically analyze the effects of IP protection on innovation, distinguishing between “more open” and “less open” patents with a focus on the chemical-pharmaceutical industry and (2) providing a web-based, interactive research output accessible to a non-academic audience. Thereby, we plan to lay the foundation for a more rigorous analysis of the lack of IP protection in Switzerland around 1900 for the emergence of the Swiss chemical-pharmaceutical industry.    

Importance, Usefulness, and Novelty of the Project
Extremely relevant for all stakeholders who are involved in the pharmaceutical industry, given that there is no sound empirical evidence tackling this question in depth.