Innovation or
R&D?
There is an urgent need
to define terminologies used in the context of R&D. It is
more so because of increasing amount of attention being paid
to successful innovation and innovators tied to a company’s
business success. And, interestingly less interest is accorded
to the leaders of R&D or science and technology. Well,
innovation and R&D are different after all. Tim Studt,
Editor of R&D Magazine, states that while successful
innovation can provide growth to organizations, it should not
be confused with the successful implementation of long-term
R&D or S&T programmes.
Google for instance is
recognized as most innovative company more because of their
business and marketing-related innovations. On the other hand,
Boeing and Cisco are well-recognized leaders in the R&D
community is not considered in the same category of leading
innovators.
One of the recent
issues of R&D Magazine [May 2006], addresses the
issue of defining R&D related terminologies.
- Research - Investigations to
discover, revise, or apply knowledge
- Basic Research - Research to
further knowledge for knowledge’s sake
- Science - Investigation and
explanation of phenomena
- Technology - Application of
knowledge
- Engineering - Application of
science to commerce
- Innovation - Commercialization of
a technology-based device
- Development - Progression from a
simple to a more complex form
R&D is only one
component of innovation activities. It represents the most
developed, widely available, and internationally comparable
statistical indicator of industrial innovation activities. It
comprises creative work “undertaken on a systematic basis in
order to increase the stock of knowledge in all fields and use
this knowledge base to devise new applications”. [World
Investment Report 2005. New York, UNCTD, 2005]
R&D includes
both basic
and applied research along with development.
In industry basic
research is defined as research that advances scientific
knowledge but does not have specific immediate commercial
objectives.
Applied research, in the
industry context, includes investigations to discover new
scientific knowledge that has specific commercial objectives
with respect to products, processes or services.
Development is the
systematic use of the knowledge or understanding gained from
research directed towards the production of useful materials,
devices, systems or methods, including the design and
development of prototypes and processes.
Innovation drives the
creation of revenue that companies need to survive. It helps
organizations take existing knowledge to create their new
products. Yet, Innovation cannot be a long-term substitute for
R&D that creates new knowledge and technologies.
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A study undertaken by the National Association of
Software and Services Companies and management consultant Booz Allen
Hamilton indicates that Indian IT firms could earn close to $40 billion
from offshoring of engineering services by 2020. This would give India a
30 percent share of the market in this segment by 2020 as compared to 12
percent market share at present. The report states that offshore
engineering services could create up to two lakh additional jobs in the
country. Global spending on engineering services stood at $750 billion
levels in 2004 and this is projected to touch $1.1 trillion by 2020.
India has a relatively strong position in the automotive and
high-tech/telecom engineering services market with a $25-billion
opportunity by 2020.
The latest report by Forrester Research indicates
that top tier Indian IT services companies are ahead of their global
counterparts on the parameters of revenue and profit growth. The report
states that Indian Tier I software firms have continued to thrive while
others lose ground, especially in the application services market.
Indian companies such as Tata Consultancy Services, Infosys Technologies
and Wipro have reported outstanding revenue and profit growth in their
latest financial results while most legacy service providers such as
IBM, Accenture, Unisys and Keane have posted minimal to negative
growth.
The Andhra Pradesh Government wants universities to
protect their intellectual property rights, get patents for their
innovations and collect royalty. This will not only help universities
get revenues but also make them turn competitive, feels the state
government officials. A.P. Minister for Agriculture has asked the
Vice-Chancellor of ANGRAU to discuss the issue at the university level
and get back to the Government.
The Minister expressed that "The seed and other
companies have been using the innovations and benefiting. Then, why not
they pay some fee".
A group of information technology
and private
equity operators are seeking approval from the Government of India
to set up a high-tech research and development City, called
Gandhi City, near Bangalore, under the special economic zone (SEZ)
scheme. The first R&D Special Export Zone (SEZ) will be spread
across 1,000 acres land and the initial investment is pegged at around
Rs700 crore. The project is expected to attract R&D companies in IT,
pharmaceuticals, aviation and financial services. The plan is to tie up
with leading research institutions worldwide and offer them ready-made
infrastructure. The project will provide an incubator for scientists who
do not have the financial backing or infrastructure.
Biocon has filed 266 patent applications globally and
has been granted 37 patents, including eight in the US. Of the 26 patent
applications, 76 applications have been filed under the International
Patent Cooperation Treaty. The recent acquisition of the intellectual
property (IP) assets of Nobex has enhanced Biocon's scientific and
technical resources.
The Government of India is considering
to offer
incentives for the automobile sector on various levels. Two separate
committees have been set up, namely, the Mashelkar Committee on fiscal
incentives and the Anwar-ul-Hoda Committee on duty structures. The
intention is to prepare a comprehensive manufacturing competitiveness
plan and provide research and development (R&D) incentives for the
automobile sector. The Mashelkar Committee will look into providing 100
percent grant for fundamental research, 75 percent for pre-competitive
research and 50 percent grant for product development. It will also
consider zero taxes on technology transfers for products, features,
alternate fuels and so on. It will look at the feasibility of extending
increases in weighted tax deduction for expenditure under R&D from
150 percent to 200 percent. Extending the period of applicability of the
tax set off from 2007 to 2016 will also be considered. The Committee may
recommend duty concession for products manufactured in India. The Hoda
Committee is looking at a three-tier tariff structure along with
rationalisation of taxes on inter-state movement of vehicles and goods.
It is also considering the setting up of a technology upgradation fund
and virtual special economic zones for the automobile
sector.
The 2004 world piracy rate is more than 45 per cent,
involving a loss of $32 billion. In the case of entertainment software,
the losses were around $3 billion as per the data collected from
around 50 countries ); global
music piracy (2004) accounted for around $4.6 billion and losses to
companies annually on motion pictures worldwide were around $3 billion.
Ms Inez Miyamoto, Supervisory Special Agent in the Cyber Crime Fraud
Unit of the FBI, US, while addressing the CII delegates said that India,
as a major innovator, should participate in global efforts to protect
IPR. "Our competitive advantage” it was opined, “is only as good as our
ability to protect our ideas."
The Government of India is preparing a proposal to
establish five new institutes for pharmaceutical education and research,
similar to the National Institute of Pharmaceutical Education and
Research in Chandigarh. The new institutes will work on new drug
research separately and in partnership with pharmaceutical companies.
The Government has proposed to set up the institutes in Hyderabad,
Ahmedabad, Kolkata, Hazipur and Guwahati. According to the Government,
the five institutes will require a total funding of Rs750 crore during
the Eleventh Plan period. Additionally, each institute will require
non-Plan outlays of Rs10 crore per annum to meet their operational
expenses, until they become self-sustaining.
Pharmaceutical companies from Hyderabad have got many
intellectual properties (IPs) on vaccines from the National Institute of
Health (NIH) of the US. The NIH had out-licensed the vaccines during
2003- 2005. Shantha Biotechnics Ltd, Indian Immunologicals Ltd,
Biological E and Bharat Biotech International Ltd are based in
Hyderabad. The Serum Institute of India Ltd of Pune, Panacea Biotech of
New Delhi and Biomed Ltd have also got the licence from the NIH to
produce the vaccines.
The ICICI Knowledge Park in Hyderabad is the first
major Indian initiative in the life sciences space, with a focus on
pharmaceuticals, biotechnology and speciality chemicals. The park has
been developed on 200 acres of land and enables companies to build
customised research and development centres in modular units. A total of
26 ready-to-use modular wet laboratories have been constructed in two
phases on a total area of 54,000 sq feet. Another 20,000 sq feet of
modular wet laboratory space has also been developed under phase three
of the project. ICICI Knowledge Park is planning to establish an
innovation seed fund at the zero stage level to assist start-up
companies.
The Office of the Comptroller General of Patents
& Designs has cleared 50 pharmaceutical patent applications during
2006. Pfizer Inc has received patent for 3-Azablicyclo (3,1,0)
derivatives and AstraZeneca AB for Midaso Pyridine derivatives.
Entwicklungs AG, an Austrian biotech company, has also obtained the
patent for a method of preparing anti-idiotypical antibody preparation
as cancer vaccine. Ranbaxy Laboratories has secured seven process
patents for the preparation of its drugs. Medichem, Strides Arcolab,
Aristo Pharma and Jubilant are some of the other companies which have
received patents during 2006.
India filed for a total of 1,278 US patents during
2005, which is a 36 percent increase over the number of patents filed in
2004. The issuance of patents to India improved by 11 percent to 405
patents in 2005. The Council for Scientific and Industrial Research was
issued 142 patents of the 229 US patents granted to Indian inventors in
2004-21005. Indian companies that were granted patents in 2005 for the
US market include Ranbaxy, Orchid Chemicals, Biocon, Sun Pharma and
Cipla among others.
The Government of India has decided to share the
country's traditional medicinal knowledge with other nations in digital
format in order to help them reject any patent applications filed under
their jurisdiction based on India's centuries-old knowledge. The Centre
has decided to authorise a CSIR institute to sign non-disclosure
agreements with patent offices in other countries. The National
Institute of Science Communication and Information Research will permit
patent offices in other countries to access its digital traditional
knowledge library only for patent research.
International Institute of Information Technologies
(IIIT), based in Hyderabad, is in the process of development and
commercialisation of its Web search engine linked to Indian languages
and data retrieval. Search engines like Google and Yahoo are unable to
search many Indian language sites encoded in proprietary encodings. Web
Khoj, the search engine created by IIIT, enables searching of sources of
Indian language content and currently supports Hindi, Telugu, Tamil,
Kannada and Bengali. IIIT is filing a patent for the new technology for
its commercialisation.
Datamatics will set up a global development centre in
Mumbai for Bupa Foundation of the UK. Bupa Foundation is a major
healthcare non-government organisation with a strong international
presence. The agreement includes application development, maintenance
and support services for the foundation's healthcare service activities
worldwide.
None of the information technology (IT) companies of
India figures in the list of top 10 Indian companies filing for patents
under the Patent Cooperation Treaty (PCT) 2004. Leading the pack is
Council for Scientific and Industrial Research (CSIR) with 186 patents
filed, followed by Ranbaxy Laboratories with 56 and Dr Reddy's
Laboratories with 19. The National Association of Software and Service
Companies (Nasscom) feels that the number of patent applications filed
by IT companies will increase in the next five years as more and more
companies will start developing embedded software for electronic
devices. Presently, the Patent Act allows filing of patents only for
software programmes that have been created to be embedded in a hardware
device. The other constraints are the filing fees ($10,000 and above)
for filing of patents, which the small enterprises find difficult to
cough up and the inadequate legal services available to small
enterprises.
Indian IT service companies are innovating solutions
to build intellectual property to compete with their global rival
companies including IBM and Accenture which are augmenting presence in
India to take advantage of the low-cost technical talent. Tata
Consultancy Services invests four percent of its Rs13,386-crore revenue
in R&D. Tata Research Development and Design Centre, the R&D arm
of Tata Consultancy Services, focuses on creating intellectual property
in new technologies and products. It is working towards complete
automation in call handling systems. The software engineering and
technology labs of Infosys have generated 82 invention disclosures and
20 patent filings in 2005-2006. Wipro has more than 10,000 engineers at
its R&D centre. Its innovation initiatives accounted for five
percent of its revenues for 2005-2006, which the company intends to
increase to 10 percent in three years.
Motorola Inc plans to increase the headcount of its
research and development (R&D) professionals in India from 3,500
engineers in its Bangalore and Hyderabad divisions to 4,000 engineers as
40 percent of its software is developed from India. The company has
expanded its product portfolio in India by launching a new range of
colours in its MotoPEBL, MotoRAZR V3I and MotoSLVR series of mobile
phones.
Microsoft India has launched a Rural Innovation Fund
(RIF) of $2,00,000 in association with International Development
Research Centre (IDRC). The fund intends to initially focus on
telemedicine, education and agriculture. RIF is expected to help local
software application development vendors in smaller towns to provide
localised applications and solutions. A committee set up under Mission
2007 will manage the fund.
The National Manufacturing Competitiveness Council
(NMCC) will finalise a proposal for re-formulating the research and
development (R&D) oriented incentives for the manufacturing sector.
NMCC is preparing a 10-year blueprint for the same. NMCC has initiated
the task because the Government of India plans to withdraw most of the
tax exemptions; including R&D related ones, as part of ongoing tax
reforms. NMCC will work towards ensuring that R&D promotion receives
sufficient policy thrust, even as distortive tax exemptions are removed
by the government. A sectoral group consisting of secretaries to the
government and industry heads have already had a preliminary discussion
on the blueprint on 16 May 2006.
Patent
Applications Rise Five-fold in Ten Years
The number of applications received at the Patent
Facilitating Centre (PFC) of the Department of Science and Technology,
Government of India, for securing patents for exclusively developed
products has increased by about five times during 1995- 2005. PFC has
received about 20,000 patent applications in 2004- 2005 as against
3,000-5,000 in 1995. Of the 20,000 applications, foreign nationals and
institutes have accounted for 15,000 applications. However, on an
average, only 20-30 percent of the total applications qualify for patent
rights, while only 4-5 percent have commercial utilisation. As of
2004-2005, information technology and electronics sectors were the two
leading sectors in filing patent applications.
Plant breeders in India will soon have IPR for 12
crop varieties under the Protection of Plant Varieties and Farmers Act.
The varieties have been mostly developed under public-private
partnership and include food crops, vegetable crops and fibre crops. The
PPV Act was promulgated in 2001, but the implementation has started
recently since the Government of India was waiting for the designated
authority to formulate regulations. A total of 12 crops will be
registered under the Act initially, and this will be later extended to
35 crop varieties developed by various breeders across the country. The
entire registration process is scheduled for completion within the next
three years. The PPV Act secures the rights of plant breeders while also
protecting the rights of farmers.
Researchers at Motorola's Bangalore centre are
examining usage patterns in rural India. The aim is to make the mobile a
friendlier gadget to use by the rural folk.
Challenges faced by rural India, include intermittent
connectivity (network issues) and insufficient computing power in
low-end models for tasks such as accessing Internet.
Simplifying the menu of the mobile is an important
detail and Motorola reports that 100 engineers are working on making a
more transparent user interface. These low-tier models suited to rural
India would be ready 12-18 months from now.
With speech recognition, mobiles can be trained to
follow voice commands. Motorola engineers are working on tailoring a
speech engine for Indian languages.
Beginning with Hindi, Tamil and Gujarati, mobiles
that understand commands in other languages would soon follow. A step
beyond this is training the engine for different accents and
inflections.
Motorola is also planning to bring out a range of
`Indianised' phones, designed by engineers at Bangalore. Changes would
probably be reflected in the keypad and ability to weather Indian
climatic conditions.
In the next three years more than two hundred drugs
are scheduled to go off patents, opening up global generics opportunity
of about $50 billion (Rs 2,23,175 crore). Since January 2005, Indian
drug firms have bought over 30 companies abroad for $1.3 billion (Rs
5,802.5 crore) to dominate the global generics space. Indian drug
makers, have expertise in reverse engineering of novel drugs and
launching copycat versions. In 2004, these companies have spent $142
million (approximately Rs 631 crore) on research and development to
develop new formulations. Indian companies have low-cost advantage and
can obtain clearances prior to sales as required by most markets. But
the companies prefer to out-licence to multinationals for co-development
owing to high cost of launching new drugs requiring over $1 billion (Rs
4,442.5 crore).
The Indian Institute of Technology, Madras, is
working on a Rs 100-crore project to create a `Research Park.' Tamil
Nadu Government has allotted 6.5 acres in Chennai (near Tidel Park),
where a special purpose company started by the IIT will put up a
1-million sq. ft building.
The Ministry of Human Resources Development is
expected to chip in with some funds. IIT-M is said to have earned Rs 40
crore from consultancy and sponsored research activities last year,
compared to Rs 33 crore in the previous year.
The IIT M received Rs 90 crore from the Government of
India, of which about Rs 70 crore went towards salaries and maintenance
of the estate.
India's leading watchmaker, Titan Industries and
Innoviti Solutions, an embedded solutions provider, have joined hands to
bring out a smart watch. The watch can be configured to bring real-time
news, cricket scores, stock market updates, weather and traffic reports
as scrolling messages. The watch face will have an Organic Light
Emitting Diode (OLED) display, which will allow scrolling messages and
updates and enable many ways of showing the time. The smart watch
project has been christened `Sanketh' and has a research and development
(R&D) spend of Rs3-4 crore.
Countries vary vastly in their innovative
capabilities. There are several indices to measure these capabilities.
- UNDP
– Technology Achievement Index [revealed
technological capacity across the economy (focus on broad
diffusion of old and new technologies]
- UNIDO
– Competitive Industrial Performance Index [revealed
technological capacity in industry only focus on manufacturing
competitiveness]
- WEF
– National Innovative Capacity Index [institutional and
policy environment for innovation]
- WB
– Knowledge Economy Index [the advantage is
in its flexibility]
- UNCTAD
–Innovation Capability Index [underlying
technological capacity (focus on inputs – education and
R&D]
- Francisco
Sagasti – S&T Capacity Index
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UNCTAD Innovation Capability Index (UNICI) measures
two critical dimension, namely Innovative Active (Technological Activity
Index) and The skills availability for such activity (Human Capital
Index).
National Innovative Activity can be measured by its
inputs and outputs. On the input side the usual measures are R&D
expenditures and / or
employment R&D does not
capture informal technological effort. It includes defence and basic research that
may not be relevant to the types of company R&D.
Innovation outputs are often proxied by patents and
scientific publications. Data from the USPTO are considered as they
provide a comparable level of novelty and commercial viability. Patents
are better indicator of invention than of innovation, since they do not
capture the commercial utility of the discovery. Scientific publications
are further removed from the market, though they do show the knowledge
base on which the technological activities depend.
The human resource base for technological activity is
generally measured by educational enrolment. However, enrolment data do
not capture differences in the quality and relevance of the
education.
These measures have to be normalized by economic size
to make them comparable across countries.
The table below shows the components and variables of
the UNICI. The three components of the Technological Activity Index are
weighted equally, while those making Human Capital Index are assigned
different weights. Merit of the UNICI is that it is based entirely on
quantitative variable, and used only those that are direct measures of
technological activity and technical human capital.
UN
Innovation Capability Index
|
Components
|
Technical Activity Index |
- R&D personnel (per million population)
- US patents (per million population)
- Scientific publications (per million population)
|
Human Capital Index |
- Literacy rate (as percent of population) Weight 1
- Secondary school enrolment (as percent of population) Weight 2
- Tertiary enrolment (as percent of population) Weight 3
|
UNCTAD Innovation Capacity Index |
- Technological Activity Index
- Human Capital Index
|
Regional Average of
UNICI
Region |
2001 |
Developed Countries (Excl. the new EU
members |
0.869 |
The new EU members |
0.707 |
South East Europe and CIS |
0.584 |
South-East and East Asia |
0.518 |
West Asia and North Africa |
0.361 |
Latin America and the Caribbean |
0.360 |
South Asia |
0.215 |
Sub-Saharan Africa |
0.160 |
India |
0.287 |
Source: UNCTAD: World Investment Report
2005
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