How patents have given medical researchers a shot in the arm

What impact have patent laws and intellectual property rights had on the number of studies of neglected diseases in low-income countries?


More than one billion people around the globe suffer from at least one neglected disease such as malaria, tuberculosis, encephalitis and leishmaniosis, according to the World Health Organization (WHO). More than 90% of deaths from neglected diseases are concentrated in low income countries.

Yet there has traditionally been little investment by pharmaceutical companies in developing drugs for these afflictions. The Drugs for Neglected Diseases Initiative reveals that only 4% of 850 new drugs and therapeutic products approved between 2000 and 2011 were for neglected diseases.

Many attribute this in part to a simple reason: they couldn’t protect their investments. Organisations that sold cures in low-income countries such as India were powerless to stop local companies from copying and selling the same drug for far less.

One of the reasons is that many developing markets lacked well-functioning patent laws before the mid-1990s, according to Keyvan Vakili, Assistant Professor of Strategy and Entrepreneurship at London Business School. As a result, pharmaceutical companies struggled to prevent other businesses from stealing their intellectual property.

But that was before the introduction of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement in the mid-1990s. At that point, all nations joining the World Trade Organization had to implement the agreement, which sets out the minimum standards for many forms of intellectual property rights and patents. Developing countries were granted a five-year grace period to comply. Lesser-developed countries had until 2006, and later 2016.

The TRIPS agreement was controversial. The proponents of the agreement argued that implementing TRIPS would give local and international pharmaceutical companies the legal means to protect, for example, their research into neglected diseases such as malaria and tuberculosis.

But past research couldn’t find evidence of any meaningful increase in clinical trials or drugs for neglected diseases in low-income countries where TRIPS had been implemented. Therefore, critics argue that TRIPS has failed to increase investment in drugs for neglected diseases.

Vakili’s research suggests a different story: maybe it’s too early to expect clinical trials and drugs for neglected diseases, because the basic fundamental science on these afflictions has been significantly lacking. Instead of searching for evidence of the TRIPS effect on clinical trials, Vakili looks at its effect on scientific research, in the form of scientific publications. 

His study shows that the level of drug-related scientific research in developing countries has in fact risen. “We found that implementing intellectual property rights in low-income countries has had a positive effect on the number of studies into neglected diseases,” he says in his paper ‘Healthcare’s Grand Challenge: Stimulating Basic Science on Diseases that Primarily Afflict the Poor’

The paper – co-authored by Anita M. McGahan, Professor of Strategic Management at the Rotman School of Management, University of Toronto – looks at why scientists in developed nations are carrying out more research. “We looked at various publications on these diseases and discovered a key finding. Scientists around the world will more likely study neglected diseases in low-income countries that are TRIPS-compliant than ones without the agreement in place,” Vakili says.

“Why is that? TRIPS was largely meant to create financial incentives for pharmaceutical companies to carry out drug-related research. However, we should keep in mind that basic scientific research is often carried out by academic scientists who are largely motivated by non-financial incentives such as academic credit and prestige.

“Our argument is that countries had to make big changes when they became TRIPS-compliant. They had to create records of scientific knowledge to keep track of their intellectual property, putting more spotlight on science and innovation. TRIPS has potentially created better ties between academia and industry. It has also encouraged more international scientific collaborations.

“This led to low-income nations establishing international ties with other countries through their respective research. It also encouraged scientists in developed nations to start studying neglected diseases.”

Vakili says the rise in scientific research among TRIPS-compliant nations was a somewhat unexpected – but welcome – side effect. “Many low-income countries didn’t want TRIPS. Implementing TRIPS had significant costs for these countries. They could take other nations’ technology and intellectual property – including drug-related research – and copy it relatively cheaply. But that changed when TRIPS became a requirement of WTO membership. Suddenly, they had to pay more as the technology was protected by patents and copyright laws.”

Patents encourage big pharma to carry out more studies

The big question is: what’s behind this positive effect? In their paper, Vakili and McGahan attribute the rise in research to governments of WTO-member countries investing more in science institutes.

“The research into neglected diseases is taking place in universities and public research institutes,” Vakili says. “Scientists care about financial incentives, but they also care about being connected to peers who read and cite their research. Countries that have implemented TRIPS tend to provide more support for science institutes, which in turn puts scientists in the spotlight.”

Vakili adds: “Scientists in developing countries are working in close proximity to people suffering from malaria or tuberculosis, so it makes sense for them to focus on those neglected diseases when carrying out their research.”  

Vakili is encouraged by the rise in number of scientists studying neglected diseases but he wants to see more medication developed for sufferers in low-income nations. “The gap between basic research and creating new cures is still huge. There are still questions around whether these countries have the institutions in place to take the basic research they’re doing and apply it to clinical trials, with the aim of producing an actual drug.”

However, he insists more investment in research is needed to help develop cures. This could be achieved by introducing other complementary policies that incentivise scientists to carry out more basic studies.

“We know that scientists care about recognition, academic credit and publications. If we put policies in place that recognise and celebrate their findings, giving them funding to do the research while connecting them to other scientists around the world, we’ll encourage them to do more. It’s about making it easier for scientists to do research that not only motivates them, but also advances our knowledge of neglected diseases.”


Institute of Entrepreneurship and Private Capital

This article was provided by the Institute of Entrepreneurship and Private Capital whose aim is to inspire entrepreneurs and investors to pursue impactful innovation by equipping them with the tools, expertise and insights to drive growth.


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