I. (2016), the multinational firms from the USA

 

I.      Introduction

In universal health system, pharmaceutical has shown a pivotal function
in terms of diagnosing, healing, handling, and obviating illnesses (Ni et al.,
2017).  According to Akkari et.al. (2016),
the multinational firms from the USA and the Europe which known as the Big
Pharma has dominated the pharmaceutical sector, but the rise of pharmaceutical
markets, particularly in Brazil and China which consider as the ‘pharmeging
countries’ will also has a significant role in maintaining the pharmaceutical
industry sustainable growth. 
Furthermore, Akkari et al. (2017) also stated that the pharmaceutical
industry has turned to be one of the most lucrative trade sectors according to
its dynamism and innovation.  Moreover,
at the same time it also can generate the economy growth.

IMAP  (2012) and the Pharmaceutical
Research and Manufactures of America or PhRMA (2012) stated the growth of
global pharmaceutical market from 2010 to 2015 will be expected to increase
about 33.8%, from $733 billion in 2010 up to $981 billion in 2015.  Subsequently, in context of Brazil and China,
the Pharmaceutical Research and Manufactures of America or PhRMA (2012) and IMAP
 (2012) also stated that these two
countries which known as the pharmeging countries will be driven most of the
drug sales increase demand, which are 67% in Brazil and 109% in China during
the 2010-2015 period.  This increase
determines by some factors such as health care systems expansion, the rising of
income levels, and aging population.   In
addition, IMS (2013) categorized the pharmerging countries, in this case China
and Brazil, in level 1 and 2 respectively regarding their potential of growth
share in future pharmaceuticals global market. 
Furthermore, IMS (2013) also mentioned about information that forecast the
indication of global expenditures medication will achieve US$ 1.2 billion in
2017, which is parallel with the increase in 2012 with amount of US$ 205-235
billion. 

Akkari et al. (2017) argued the development and the generation of
competitive advantages of pharmaceutical sector within the pharmeging countries
are depend on their concern regarding two crucial factors which are the
public innovation policies and the regulatory actions involved in the
development and protection of new drugs and the level of investment in R&D.

This paper attempts to compare about the Science, Technology, and
Innovation (STI) policies between Brazil and China in pharmaceutical sector
based on their similarities and differences which emphasis on the STI policies
within the R&D and Intellectual Property Rights (IPRs) sector.  Finally, based on this similarities and
differences, this paper is trying to elaborate what kind of lesson learned that
can be taken from both countries experiences.

II.     
Discussion

A.   
Similarities between Brazil and China
regarding Science, Technology, and Innovation  (STI) policies development and implementation.

1)      In
terms of Research and Development (R&D).

Both Brazil and China government are conducted certain actions on
Research and Development sector through various policy approaches.  For example, in context of Brazil, according
to a study by Queiroz in 1994 (as cited in Guenif and Rahmani, 2010), Brazil
already started the establishment of public laboratories since the very early
stage.  Public laboratories such as the
Biologic Institute, Bacteriological Institutes, Oswaldo Fiocruz Institute, and
Butanta Institute were established  from
1892 to 1927 in order to develop and produce vaccines and serum to tackle the
spreading epidemics within the urban population. 

Furthermore, in 1984, the CEME or Central de Medicamentos – a public procurement agency which created
in 1971 – conducted a collaboration project with the CODETEC (Company for
Technology Development) –  an
organization which created in 1976 through collaboration between the State
University of Campinas (UNICAMP), the Ministry of industry and trade, and a
group of firms, mostly from the public sector – and some private pharmaceutical
firms which focusing on API (Active Pharmaceutical Ingredient). The project aim
was to recognize the output of research from universities that have potential
to be commercialized and explore how they can be brought into the market. There was $5 million that allocated to fund this
project up to 1990, with 60 API development, but merely 13 that  accomplish the production stage (Queiroz in
1994, as cited in Guenif and Rahmani, 2010)

The Brazilian Federal Government has an
important role in STI policies implementation.  According to studies conducted by Palmeira and Capanema in 2000 and
Capanema in 2006  (as cited in Tigre et
al., 2016) The Brazilian Federal Government had performed a financing innovation
through Technological Fund (FUNTEC) of the National Economic and Social Development
Bank (BNDES) and the Program to Support the Development of the Health
Industrial Complex (PROFARMA), in order to grant financial support for company
restructuring, production, exports, and innovation. There were around 100
projects that had been agreed or were under examination since 2013, with
overall financial support amount of BRL 3 billion (Tigre et al., 2016).

Beside those financial schemes manages by the
federal government above, the Brazilian government also creates some policies
that related to the institutional building, initiatives and programs to support
Research and Development within the pharmaceutical sector.  For example, in 2000, the Department of
Science and Technology (DECIT) was established based on Decree 3496 of June 1, 2000.  The main objective of this institution is to
provide financial research to support the SUS (Sistema Unico de Saude or Unified Health System) principles which
comprise the promotion of integrality, resoluteness, universality, and equity. Furthermore,
in context of pharmaceutical services, DECIT had distributed overall of R$33.5
million to funded 228 studies from 2011 to 2014 through national and state
(Research Program for the Unified Health System: Shared Management in Health) direct
financial support and public notices (Gadelha et al., 2016).

In addition, Gadelha et al. (2016) also
mentioned about The formation of  the
Department for Pharmaceutical Services and Strategic Health Supplies in 2013 as
national institution that responsible in developing and coordinating the
National Medicines Policy in Brazil. The duties of this organization such as promoting, regulating
and coordinating the procurement and distribution of strategic inputs, at
different levels of care; supporting, monitoring and evaluating the
implementation of pharmaceutical care services and improving the quality of
pharmaceutical services in SUS; and cooperating technically to enhance the
managerial and operational capacity of states and municipalities. Moreover, in order to
to execute the policies above, and to ensure people’s right of entry to medicine
and pharmaceutical services, the Brazilian government created diverse
initiatives such as the Brazilian Popular Pharmacy Program or Programa Farmácia Popular do Brasil, issued
in 2004; the National Policy for Medicinal Plants and Herbal
Medicines or Política
Nacional de Plantas Medicinais e Fitoterápicos, issued in 2006; the Specialized Component for
Pharmaceutical Services or Componente
Especializado da Assistência Farmacêutica, issued in 2009; and the National
Program of Pharmaceutical Services Qualification),within SUS (QUALIFAR-SUS) or Programa
Nacional de Qualificação da Assistência Farmacêutica, issued in 2012.  In addition, to support the implementation of
public policies, programs and initiatives,  the Brazilian Ministry of Health also has supply
and increase the funding in pharmaceutical services from around R$2 billion in
2003 to approximately R$15 billion in 2015.

Meanwhile, in context of China, there are some examples of STI
policies implementation conducts by the Chinese government within the R
sector such as  the accomplishment of policies in terms of
science and technology input and tax preference to promote technology
innovations in the pharmaceutical industry.  Subsequently, the Chinese government also has been gradually rising its
financial support for drug R activities within the  domestic pharmaceutical industry. For instance, the Chinese
government expands its support for the large pharmaceutical firms’ R&D
expenses from approximately $125,000 in 2002 to $313,000 in 2007. Moreover, the
government also implemented policy regarding the reduction of tax for high
technology industry, as well as the pharmaceutical industry. In this policy
scheme, Pharmaceutical firms have the right for exclusion of sales and income
taxes for their drug R&D expenditures (Ding et al, 2011).

Furthermore, Ding et al. (2011) also
mentioned about one important Chinese government’s national program that
support the R activities in pharmaceutical sector which known as the
Major New Drug Creation program.  The
goal of this program is to grasp the national strategy of advancing the competence
of independent innovation and constructing an innovative nation.  In context of pharmaceutical sector
innovation, this program intends to build up a chain of innovative drugs for 10
primary illnesses such as cardiovascular diseases and vicious tumors by
allocating about US$1 billion budget. 
This project formally establish in May 2008 which is comprises of three
stages that planned for 12 years duration of implementation. The approximation
of funding regarding this project will boost from $1 billion to around $4.3 billion
per 2020 (Ren, 2009, as cited in Ding et al., 2011).

The Chinese government also conducted a
sequence of main national investment project to support the innovation within
the pharmaceutical industry for instance, the 863 program and the Spark Plan, and
to provide firms fiscal support for technology innovations. In addition, there
are also some national policies that assist the formation of environment for
pharmaceutical innovations such as the “Provisional Regulations of the National
Hi-tech Industry Development Zone Policies” (1991) which offered tax advantages
to hi-tech corporations, including pharmaceutical firms (Ding et al, 2011).

The Chinese
government also provide enormous amount of R financial support for
departments and programs within Chinese universities, particularly in
biopharmaceutical research through all forms of government resources, for
instance the Nature Science Foundation Committee of China, the Ministry of
Health (MoH), the Ministry of Science and Technology, and the State Food and
Drug Administration (SFDA).  Moreover, biopharmaceutical industry became
one of China main industries, since ‘The Pharmaceutical Industry Eleventh
Five Development Guidance’ was introduced by the State Development and
Reform Commission in 2006. (Hu and Chung, 2015).

2)      In
terms of  Intellectual Property Rights
(IPRs).

Both Brazil and China government conduct some policies related to IPRs
activities.  For instance, in order to
obey the provision of the TRIPS agreement, Brazil issued the Industrial Property Law in 1996.  The law that also known as the Patent Law (No
9279/1996) starts to permit the protection of pharmaceuticals products (Palmeira et al., 2012, as cited in Akkari,
2016).  According to Orsi and
Coriat (2006) the TRIPS or Trade-Related Aspects of Intellectual Property
Rights agreement was signed in 1994, in order to compel some rules regarding
the implementation of the international standardization of Intellectual
Property (IP) system for every countries the signed the agreement.  As one of the member of World Trade
Organization, Brazil is required to change its intellectual property system due
to the commitments that made under the TRIPS Agreement (Cohen, 2000).

Meanwhile, on
April 1, 1985 China introduced its first patent law which follows by the
issuing of the Drug Administration Law and the Trademark Law as the basic
policy system for drug IP protection. 
Moreover, China also amended its Patent
Law in 1993 and 2000 successively and revised the “Detailed Rules for the
Implementation of the Patent Law” due to its preparation for joining the WTO
and to meet the terms of TRIPS agreement. China’s
Patent Law provide protection for health products, process, and products gained
by the patented process.  The IP legal
system in China comprises patent, trademark and copyright laws, which one of the most significant
patent law – the new patent law was passed on October 1,2009 – is on drug
R&D.  In addition, to support the national
pharmaceutical firms to  cultivate new
medications with autonomous IPR, Chinese government allocates nearly
one billion dollars of budget plan through Major New Drug Creation program (Ding
et al, 2011).

B.     Differences
between Brazil and China regarding Science, Technology, and Innovation policies
development.

1)     
In terms of Research and Development
(R&D).

Compare to China, Brazilian pharmaceutical industry considered
has a low level of technological innovation development.  According to Frenkel in 2002 and Palmeira and Capanema in 2010, as cited
in Akkari et al., 2016, this situation occur due to some factors such as the
Brazilian pharmaceutical industry more emphasizes its activities on marketing and
drugs production (particularly products with expired patents, by ignoring the
intensive science technology activities such as R&D.  In addition, lack of active polices to
support pharmaceutical sector (merely identified pharmaceutical industry as strategic
segment in 2004), centralized multinational R&D activities only within the
enterprise headquarters, and the delicate innovation system due political and
economic situation within the country also contributed to the low level of
innovation within the  Brazilian
pharmaceutical industry.

In China’s case, the
Chinese government give a robust support for its pharmaceutical industry,
particularly in context of R, through public policies from 1996 to 2005
period (two 5 year plans, 1996-2000 and 2001-2005), such as the creation of numerous
research centers  (Wang et al., 2009).

3)      In
terms of Intellectual Property Rights (IPRs).

In context of the number
of pharmaceutical patents granted for residents (locals) and non residents
(foreigners), Brazil is far left behind compare to China.  According to Akkari et al. (2016), from period
1996 to 2013 there were 65,785 pharmaceutical patents granted
in China, which around 58% or about 37,967 protections owned by locals, opposed
to to 27,818 patents that gave to foreigners. 
On the other hand, in the same term, there were 461 patents granted within
the Brazilian pharmaceutical segment, which merely 39 patents belonged to
locals, compared to 422 patents or 91.5% of patents that gave to foreigners.  This condition as the result of low
innovative occur mainly because the low innovative clout within the of the
Brazilian medication sector.