R&D India

Newsletter 

Dec. 2007

Project Sponsored by 

DSIR, New Delhi

http://www.rndindia.info 

Dec. 2007

Industrial Innovativeness on the Rise – NKC How Cos Approach Innovation - A Global Survey GoI to Move Legislation to Stimulate Innovation Global Trends on Patenting

 

R&D News of the Quarter

Auto majors seek to work with EU companies on R&D

Aviation R&D hubs book a ticket to India

Domestic auto-makers speed up patent filings

India Patent Office gets global recognition

Innovation not priority, firms spare little for R&D

Microsoft India leads CSIR in Innovation

Quantum to invest $10 million in R&D centre

Suven Life high on innovation

Tata Chemicals to invest in Biotech and Nanotech R&D

Wipro to take over Nokia Berlin Unit

XILINX to make India center a global R&D hub

 

Industrial Innovativeness on the Rise – National Knowledge Commission  It is heartening to note that Indian Industries are innovative. This is the conclusion of a study on the topic by National Knowledge Commission. The study of 137 firms – 58 of them large and 79 SMEs – defines innovation as a process by which varying degrees of measurable value enhancement is planned and achieved in any commercial activity.   This process may be breakthrough or incremental, and it may occur systematically in a company or sporadically. It may be achieved by introducing new/ improved goods or services; implementing new / improved good or services; operational processes; or organizational or managerial processes.  The study shows that 42 percent of the large firms and 17 percent of the SMEs are highly innovative. They have introduced ‘new to the world’ variety of innovation. Thirty-seven percent of the large firms have introduced ‘breakthrough innovation’, while 76.4 percent have introduced incremental innovation.  SMEs have greater innovation intensity than large firms. Innovation of MNCs is significantly higher than their counterparts, and so also foreign owned companies are more innovative than the Indian owned firms. Those with primary market in India have higher innovation intensity, than those with their main market abroad.  Innovation intensity is higher for manufacturing than services. Innovation intensity measures the revenue derived from products / processes or services that are new to the firm. The firms have introduced innovations that are new to the firms, country and to the world. The average innovation intensity has increased from 6.49 percent in 2001-02 to 11.15 percent 2005-06.  For SMEs, innovation intensity is over 20 percent in 60 percent of the firms surveyed. However, R&D based innovation is the lowest among the other category of innovations measured in the study. These include innovation in human resource management, sales and marketing, operations and finance.  Firms see skill shortage as a big hurdle in innovation processes. They also feel lack of collaboration with Universities and R&D institution as a hurdle.  Innovation intensity does not correlate statistically with profits for large firms and has negative but significant relation with firm’s annual revenue.  It is heartening to note that innovativeness is on the rise within the industry, though it is not of R&D variety. All the same, the results would have been more convincing if we had a representative listing of the nature of HRM, finance and marketing innovations that have made National Knowledge Commission come to this conclusion. Innovation in India. National Knowledge Commission. 2007 http://knowledgecommission.gov.in/downloads/documents/NKC_Innovation.pdf    How Companies Approach Innovation  A McKinsey Global Survey of 722 top managers on how companies approach innovation shows that executives feel innovation is a top priority for driving growth. Top managers and other executives agree that successful innovation depends on having the right people but disagree when identifying the company’s current talent problems.  As per the survey 70 percent of corporate leaders say innovation is among their top three priorities for driving growth.  But the way companies manage and govern innovation doesn’t reflect that importance, comments the survey.  Only 36 percent of top managers—and just over a quarter of other executives—say innovation is part of everything the organization does. Further, although more than a third of top managers (those at the senior vice president level and above) say innovation is part of the leadership team’s agenda, an equal number say their companies govern innovation in an ad hoc way.  Top managers and other executives agree that the most important drivers of innovation are culture and people—and that companies face significant challenges with both  The survey suggests, however, that companies discourage talented staff from pursuing innovation by offering limited incentives, being risk avrse, and having no plan for dealing with failure. And, top managers and other executives have different perceptions of the struggles related to finding and aligning their people. About 40 percent of top managers say that they do not have enough of the right kind of employees. Areas of disagreement include whether the company has the right people to innovate and particularly whether top managers adequately protect these people. Similarly, 38 percent of top managers say their organizations encourage learning from innovations that fail, a view shared by less than a quarter of other executives.  The most widely shared idea for making innovation take its prime of place is by making it a core part of the leadership’s agenda, followed by modeling the right behavior and improving processes for managing innovation risk. Only a third of the executives say innovators are protected by senior leaders. The survey concludes that globally innovation remains a difficult challenge. The reasons lie in what members of the leadership team identify as their top challenges.    Source: 2007 McKinsey survey on innovation   GoI to Move Legislation to Stimulate Innovation The Indian government is preparing to introduce legislation that it hopes will reverse the traditional hands-off attitude at most Indian universities toward commercializing the results of basic research. The proposed bill, a draft of which was obtained by Science, sets out rules that institutions must follow once their scientists make a patentable discovery. In addition to serving as the first such nationwide guidelines, the legislation is meant to send a message to university officials that technology transfer is part of their job.  The legislation directs institutions to report patentable discoveries to the funding agency as soon as they come to light and to file patent applications within a year. Institutions and inventors who fail to meet the deadline would forfeit their intellectualproperty rights to the agency that funded the research. Institutions must give inventors at least 30% of any revenues from a patent and spend the rest on research.  National Research Development Corp. in New Delhi, which markets technologies developed through public-funded research, expects the bill to pave the way for more governmental support to labs and universities to help with patent filings. But Ghosh  and other analysts also wonder whether the government has the resources to carry out its threat to claim patentable discoveries if institutions drag their feet. Global Trends in Patenting The United States continues to be the leading source of newly patented inventions compared with the EU and Asia. Asia’s patenting activity is growing rapidly, however, especially in Japan, South Korea, and Taiwan. Inventors residing in the United States accounted for 53% of U.S. patent applications in 2005. Asia, the second-ranked source of U.S. patent applications, more than doubled its share from 13% two decades ago to 29% in 2005, led by growth from Japan, South Korea, and Taiwan. U.S. patent applications from China and India are also growing, although from a low level. U.S. inventors are also the leading source of economically valuable patents known as triadic patents. (Triadic patents include only those inventions for which patent protection is sought in all three major world markets: the United States, Europe, and Japan.) In 2005, the U.S. share of triadic patents was estimated at 37%, followed by the EU (30%) and Asia (28%). Asia’s share of these more important, economically valuable patents has been flat, unlike its rising share of U.S. patent applications. U.S. inventors are the leading source of U.S. patents granted in two key technology areas: (1) information and communications technology (ICT) and (2) biotechnology. Asia is ranked second as a source of U.S. patent grants in ICT and third in biotechnology, and the EU is ranked third as a source in ICT and second in biotechnology. http://www.nsf.gov/statistics/seind08/c6/c6h.htm#c6h7  R&D News Picks of the Quarter Dr REDDY'S GETS USFDA NOD FOR RANITIDINE  Dr Reddy's Laboratories of Hyderabad has received final approval from the US Food and Drug Administration for its abbreviated new drug application for Ranitidine (Zantac) 150 mg tablets. DRL is the only generic manufacturer to receive FDA approval for this product following the expiry of innovator patents. This is the first approval received by the company's over-the-counter business in the US. The company had announced the launch of a Store Brand OTC Division in the US in mid-May 2007. XILINX TO MAKE INDIA CENTRE A GLOBAL R&D HUB Xilinx Inc, a fabless semiconductor company, has decided to make its centre at Hyderabad in India an R&D hub for global operations. The Xilinx India, belonging to Xilinx Inc, has so far developed 60 IP cores and will undertake global R&D activities that include software development and systems and applications in addition to its existing IP core development projects. INNOVATION NOT PRIORITY, FIRMS SPARE LITTLE FOR R&D The ratio of Research & Development (R&D) spending to net sales of 251 large Indian companies declined to 0.66 percent in 2006- 2007 (0.68 percent in 2005-2006). The aggregate net sales income of the 251 companies, however, increased by 25.4 percent to Rs9,42,659 crore (Rs7,51,722 crore). The aggregrate R&D expenditure of the 251 companies increased by 21 percent to Rs6,206 crore (Rs5,129 crore). Tata Motors registered the highest R&D spending in 2006-2007 of Rs796.86 crore, followed by Ranbaxy Laboratories with Rs483.82 crore, Dr Reddy's Laboratories Rs292.80 crore and BHEL Rs253 crore. In terms of sectors, textiles sector registered the highest increase in R&D expenditure in 2006-2007 of 192.1 percent, followed by electric equipment 75.9 percent, paper 55 percent, fertilisers 49.4 percent and automobiles 48.5 percent. DOMESTIC AUTO-MAKERS SPEED UP PATENT FILINGS  Indian auto-makers are patenting their technology following increasing competition from global automotive companies. The number of patents filed by the six major Indian auto manufacturers has increased by 85 percent since Jan 2005. The number of patents granted to the major auto makers as a ratio to the number of patents filed is 24.38 percent. AVIATION R&D HUBS BOOK A TICKET TO INDIA Boeing and Lockheed Martin are thinking of establishing captive research and development (R&D) centres in India. This has prompted manufacturers of smaller aircraft and business jets also to set up R&D units in India. Bombardier, ATR, European Aeronautic Defence and Space (EADS), Socata, Eurocopter, Hawker and Falcon are looking for an R&D presence in India with a third party information technology (IT) services provider or independently. The R&D centres will come under the engineering services segment of IT. According to a study by the National Association of Software Services Companies (Nasscom) and Booz Hamilton, engineering services outsourcing is estimated to touch $40 billion by 2020 and the contribution by aerospace is expected to be around 15 percent. EADS is investing Rs11,000 crore to set up a technology centre in Bangalore. WIPRO TO TAKE OVER NOKIA BERLIN UNIT  Wipro Technologies has acquired the business and assets of the radio access related R&D business of Nokia Siemens Networks in Berlin. As part of the plan, 58 employees of Nokia Siemens Networks will be fully integrated into the operations of Wipro Technologies. Nokia Siemens Networks will provide Wipro with business assurance. QUANTUM TO INVEST $10 MILLION IN R&D CENTRE  Quantum Corp is planning to invest $10 million in its research and development centre in Hyderabad. The company has commissioned the Quantum India Development Centre to handle R&D work. The centre is expected to focus on back-up, recovery and archive strategy of the company. The centre has the mandate to work on the entire product development lifecycle. TATA CHEMICALS TO INVEST IN BIOTECH AND NANOTECH R&D  Tata Chemicals Ltd is planning to invest in biotechnology and nanotechnology to change its revenue mix in the next five years. The company expects to derive 33 percent revenue from new activities. Tata Chemicals derives 54 percent of its revenues from chemical business and the rest from fertilisers. The company has set up a pilot plant to produce bio-ethanol from sweet sorghum at Nanded in Maharashtra. Tata Chemicals intends to increase the soda ash production capacity to 1.2 million tonnes with an investment of Rs400-600 crore. AUTO MAJORS SEEK TO WORK WITH EU COMPANIES ON R&D  Tata Motors, Mahindra and Mahindra and Ashok Leyland are planning to set up a consortium with automotive companies in the European Union for research and development (R&D). The companies intend to focus on hybrid technology and alternative fuels like jathropha oil, ethanol, electric and hydrogen vehicles. The consortium is expected to share investment to meet the challenges faced by developed and developing countries. Indian companies intend to pay special attention to two and three-wheelers, biofuels and hydrogen-based vehicles. MICROSOFT INDIA LEADS CSIR IN INNOVATION  Microsoft Corporation India (MCI) replaced Government of India's Council of Scientific & Industrial Research (CSIR) in the top slot of receiving patents for research done in India. MCI secured 584 patents against CSIR's 476 patents in 2006. INDIAN PATENT OFFICE GETS GLOBAL RECOGNITION  The Indian Patent office has received the recognition from the World Intellectual Property Organisation (WIPO). WIPO has recognised the office as the International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA). Patents granted by the Indian Patent Office will be applicable in all the WIPO member countries. The recognition has placed the office in the club of 15 nations and organisations at the global level. SUVEN LIFE: HIGH ON INNOVATION  Suven Life Sciences has received US product patent for its Suven 502 drug. The drug is targeted at treating neuro-degenrative diseases such as Alzheimer's and Parkinson's and is estimated to have a global market potential of $18 billion. The company expects to launch the drug by 2012. the company plans to raise $50 million through equity by Jan 2008 to invest in R&D facilities and to start clinical trials on its new drug.

Chinese Global Market Shares of Selected Industries 2005   Product Global Market Share of Chinese Production (2005) China overtakes Japan in R&D The Organization for Economic Cooperation and Development, Paris France, recently announced the results of a study indication g the R&D spending in China in 2006 exceeded that of Japan, $136 to $130 billion.  China's R&D has grown from $17 billion in 1995 to $94 billion in 2004 to its current $136 billion. During the same period, China's researchers grew in number to 926,000 second only to the U.S.'s 1.53 million. http://www.oecd.org  Television Sets 40% Air Conditioners 50% Refrigerators 30% Microwave Ovens 51% Digital cameras >50% Mobile Phone 37% Marine Containers 70% Shoe/tie/toys/lighter 54% Ties 40% Toys 60% Lighters 70% Cranes 50% Sewing machines 70% Personal Computers 35% Source: Private Companies form the Majority Among the Top 20 There has been a substantial change in the industrial in-house R&D scenario in the recent years. In the year 2006-07 only four, out of the top 20 companies belonged to the public sector and the rest are from the private sector. Pharmaceuticals make the single largest group of companies which investments in R&D, being eight out of twenty. The total R&D spend of these eight companies works out to Rs. 1578 Crore. There has been a fall in the Pharma R&D in the past year, though.  Nearly three-fourth of the R&D expenditure in the top 20 are from private companies, as opposed to the public sector domination in the not so distant past. Unusual Capital expenditure from the Tata Motors in the R&D category pitches the company to the first position. Top 20 Indian Investors in R&D - 2007 Company Capital Current Total Economic Activity Tata Motors Ltd. 636.73 160.13 796.86 Heavy commercial vehicles Hindustan Aeronautics Ltd. 0.00 495.70 495.70 Aircrafts Ranbaxy Laboratories Ltd. 97.49 386.33 483.82 Drugs, medicines & allied products Gandhimathi Appliances Ltd. 0.00 378.23 378.23 Grinders, mixers & fruit or vegetable juice extract Reliance Industries Ltd. 167.40 157.30 324.70 Petroleum products (Refineries) Dr. Reddy'S Laboratories Ltd. 47.09 245.71 292.80 Drugs, medicines & allied products Bharat Heavy Electricals Ltd. 8.00 244.00 252.00 Prime movers Sun Pharmaceutical Inds. Ltd. 34.65 153.62 188.27 Drug formulations Cipla Ltd. 28.41 147.32 175.73 Drug formulations Infosys Technologies Ltd. 0.01 167.00 167.01 Computer software Mahindra & Mahindra Ltd. 0.00 166.85 166.85 Utility Vehicles incl. jeeps Ashok Leyland Ltd. 77.88 78.52 156.40 Heavy commercial vehicles Cadila Healthcare Ltd. 26.90 129.10 156.00 Drug formulations Lupin Ltd. 10.93 131.21 142.14 Rifampicin Bharat Electronics Ltd. 15.51 124.83 140.34 Electronics Oil & Natural Gas Corpn. Ltd. 48.27 86.36 134.63 Petroleum oil Wockhardt Ltd. 76.65 51.21 127.86 Drug formulations Bajaj Auto Ltd. 47.34 67.69 115.03 Motorcycles Torrent Pharmaceuticals Ltd. 38.18 73.96