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ECONOMICS OF KNOWLEDGE
and an Interview with Mashelkar
below this article
16th Dr. C D Deshmukh Memorial Lecture By Dr. R.A. Mashelkar, F.R.S. Director
General, Council of Scientific & Industrial Research
New Delhi.
January 14, 1999
INDIA INTERNATIONAL CENTRE
NEW DELHI
I feel privileged and honoured to have been invited to deliver the CD Deshmukh
Memorial Lecturetoday. CD Deshmukh was a person of such rare charm and
brilliance, erudition and versatility. He had given sufficient indication of an
extraordinary career that awaited him when at the young age of 22, he topped the
Indian Civil Service Examination in 1918. It was at that time the pinnacle of
glory for an Indian. An administrator par excellence in the highest tradition of
his service, a lawyer by training, an outstanding expert in finance, an
educationist with a vision; Deshmukh was also a great institution builder, a
scholar, an author and a poet. Deshmukh wore several caps with equal ease and
grace. Few would know that tugged among his several works largely dealing with
economics, development, finance and education, there is one, Sanskrit Kavya
Malika.
Deshmukh was instrumental in the creation of several institutions which have
played a foundational role in planning and which influenced the course of
evolution of postindependent India. Deshmukh pioneered the nationalisation of
Imperial Bank and reformation of the Company law; he was very concerned with
reforming the tax system and environment for achieving the apparently
conflicting objectives of growth with equity. It is a sign of very different
times that despite the fact that he was not a political person and belonged to
no party, he was inducted into the cabinet on the sheer strength of his
expertise and experience to mould the destiny of a nascent nation through the
always choppy seas of finance and economics. I consider it a special privilege
that I have an opportunity to pay my humble tribute through this lecture to this
great son of India.
When I look at the list of those, who have given this prestigious lecture in the
past, I feel truly overwhelmed. I find that they were some of the greatest
leaders, visionaries and thinkers covering many walks of our life. My choice as
a speaker is perhaps influenced by the fact that I am a scientist and that the
breathtaking pace at which science is moving is not only shaping our present,
but also is going to dominate our future. This is the last year of the century,
and indeed the millennium. We stand at the threshold of the next one with
anticipation and excitement. Many feel that the next century will be the century
of the mind. Some say that the next century will be the century of knowledge. A
nation’s ability to convert knowledge into wealth and social good through the
process of innovation is going to determine its future. I, therefore, want to
focus on the exciting subject of economics of knowledge, which will dominate the
coming century.
Knowledge societies
Let me set the stage by dreaming about our tomorrow. Tomorrow’s societies will
be knowledge societies. Tomorrow’s markets will be knowledge markets. Tomorrow’s
wars will be fought not by the conventional weapons, guns, missiles and so on,
but they will be fought in the knowledge markets with thenew thermonuclear
weapons called information and knowledge. The war on a patent right, which took
place between Eastman Kodak and Polaroid, was settled for about one billion
dollars recently. This is half of India’s R&D budget! So these wars in the
knowledge market will be quite expensive.
The power of knowledge in the knowledge society is there for all of us to see.
The paradigm shifts are truly dramatic. For more than a century, the world’s
wealthiest human being has been associated with oil, starting with John
Rockefeller in the last nineteenth century and ending with the Sultan of Brunei
in the late twentieth century. But today, for the first time in history, the
world’s wealthiest person is a knowledge worker, his name happens to be Bill
Gates!
I want to emphasise that to meet the twin objective of growth with equity,
knowledge cannot be the prerogative of a few; everyone in the society must have
access to knowledge and become a knowledge worker. Nations which do not create
knowledge societies will vanish into the oblivion. But those that do create
these knowledge societies will have the potential to lead the world. India has a
chance to become a leader provided it sets this process of creating the
knowledge society in place with speed and determination.
Knowledge workers
If the Indian society has to become a knowledge society, then it is important
that every Indian becomes a knowledge worker. We need to recognise the concept
of a knowledge worker in the broadest possible sense. It is not scientists and
technologists alone, which will be knowledge workers. Even a farmer can be a
knowledge worker, provided he understands the soil that he is sowing his seeds
in, he understands why and how of the micro nutrient and pesticide addition that
he makes, he lives in an information village, where he has the benefit of short
and medium range weather forecasting to plan his farming activity and so on. If
he does so, then he will be a continuous user of knowledge and he will be a
knowledge worker.
Let me illustrate this concept further. I had the privilege of witnessing some
truly novel models being tested by M.S. Swaminathan Research Foundation on
creating new knowledge systems in the villages around Pondicherry last week. The
knowledge system for sustainable food security in the Pondicherry villages has
its goal the empowerment of rural women, men and children with information
relating to ecological agriculture, economic access and utilisation. Such a
knowledge system is being managed by local youth at the Village Knowledge Centre,
from where the computer-aided information system is operated. Farmers, who are
becoming the knowledge workers, are also being trained to maintain a “Soil
Health Card” to monitor the impact of farming systems on the physical,
chemical and microbiological components of soil fertility.
If a customer becomes a knowledge worker, he will change the market dynamics. We
take great pride in the white revolution that took place in India, with India
emerging as the largest milk producer in the world last year. But let us
remember those early days when some producers began diluting the milk and
customers could not determine its quality before buying it. It was empowering
the customers with knowledge with simple kits to determine the buttermilk
content, that put emphasis on quality, and led to the qualitative and
quantitative growth of milk production.
Enlightened citizens empowered with knowledge will be able to see the crucial
link between the 5 Es, namely environment, ecology, economics, equity and
ethics. They will not be then guided by misinformation fed by vested interest
groups. But they will use their knowledge to decide on their own as to what is
wrong and what is right. They will not stop projects that lead to economic
development, but they will stop those that lead to destruction. India’s
economic development will crucially depend on society’s understanding of the
new knowledge. After green revolution, we need an evergreen revolution and a
nutritional revolution. We will have the gigantic task of producing 350 million
tonnes of food grains by the year 2040 to feed 1.5 billion Indians. We will have
to produce more food from the same land; only new knowledge can do that. Modern
biotechnology involving genetically engineered crops will be a crucial
alternative. But lack of understanding in the society can stop the process of
this new knowledge reaching the farm, the signs of which are already seen in
India. Empowerment with knowledge at all levels is, therefore, crucial.
In a knowledge society, the knowledge workers will perform different tasks. Some
of them will generate knowledge, some will acquire knowledge, some will absorb
knowledge and some will communicate knowledge. Generating knowledge will require
an ab initio approach and will build on creativity. India traditionally has been
good at this. Acquiring knowledge will involve both development of knowledge
indigenously as well as acquiring it from elsewhere in the world, through
licensing agreements, foreign investment and so on. Absorbing knowledge will
involve ensuring universal basic education, creating opportunities for lifelong
learning, supporting tertiary education in science and technology, etc. For
building true knowledge societies, extending education to girls and other
disadvantaged groups will be crucial. Education will be crucial for development,
but education without openness to innovation and knowledge will not lead to
economic development. Soviet Union had near hundred percent literacy but severe
restriction on innovation in the market place led to an economic decline.
Communicating knowledge will involve, among other things, creative use of modern
information and communications technology through competitive environment, but
at the same time ensuring that the poor have an access. Revolution in
information technology will galvanize the process of knowledge communication.
The cost of transmitting a million bits of information over a kilometer has
plummeted in the last twenty years from over twenty dollars to a few cents; and
the curve is logarithmic. In 2020, half of the world’s population will be
connected by Internet; we will be then talking about ‘netizens’ and not ‘citizens’
! Access to information and knowledge will therefore assume a different
dimension altogether.
Knowledge industries
Increasingly the traditional factors of production land, labour and capital have
become less important when compared with technology; the economists have termed
this as the ‘expansion of the production frontier’. The source of technology
is in science, that is rooted in knowledge. It is easy to visualise that
tomorrow’s industries will be knowledge industries. The emphasis will not be
on physical or tangible assets, but on intangible knowledge assets. The value of
intellectual capital of an industry will determine its rank and competitiveness.
In such industries, there will be a major shift from people, who handled
information and did routine and unthinking work, to those who will use knowledge
at every stage. For knowledge workers, information and knowledge will be both
the raw material of their labour as well as itsproduct.
World’s major growth industries such as microelectronics, biotechnology,
designer-made materials, and telecommunications are already brainpower
industries. These knowledge industries stimulate other industries, in turn, to
become knowledge based. Consider the oil industry. The issue of “bottom of the
barrel” is driving the economics of these industries. New knowledge embedded
in three-dimensional acoustical sounding, horizontal drilling, and deep offshore
drilling is turning oil business into a knowledge industry.
One might wonder as to why the physical assets such as machinery in a factory,
are becoming less important. Plant and machinery are tradable commodities today.
Even capital was a scarce commodity until recently and was used as a competitive
advantage. But with globalised markets the companies around the world have
access to finances at inexpensive rates. So even capital is no longer a scarce
commodity. It is the intangible assets which are knowledge based, and that are
non- replicable, unique and proprietary, that are providing companies with a
competitive edge.
The nature of intangible assets will vary from industry to industry, but they
will include several commonalties such as research and development, patents,
proprietary technologies, databases, brands and even relationships, people and
so on. The dominance of intangible knowledge assets will mean that we will have
to make major changes in the management structures. Around the world, the
managements are built in the framework of strategy, structure and systems. The
top management is always the grand strategist and decides on the allocation of
resources, and the lower management merely implements and administrates the
strategy. With domination of intangible assets, one will have to create new
models. The top management will create only an overarching purpose and an
environment in which the people have the freedom to deliver. This means the
emphasis will shift to defining the purpose of the organisation, setting the
right process and getting the right people and empowering them to deliver.
The industry will have also to think about things which it never cared for. For
instance, among the intangible assets, customer loyalty which arises out of
customer satisfaction and the commitment of employees will be the two very
important intangible assets. The investors will not merely focus on tangible
assets but start assessing the customer satisfaction index or an employee
satisfaction index of a firm. Such intangible assets may become the heart of the
annual reports of the companies. My own CSIR is a knowledge-based organisation.
When dealing with our industrial clients, we wish to undertake research as a
business and do it in a businessline manner. Last year we set up the process
of reviewuating the customer satisfaction index and making it as one of
the performance indicators that will determine every laboratory’s budget. I
expect this process to spread as rapidly as the quality movement in India spread
during this decade.
Will the accounting norms for intangible-asset-dominated companies change? Can
the intangible assets be valued and formally be a part of the balance sheet of
firms? Will the stock markets be willing to recognise intangible assets as
something real, particularly when accounting norms do not do so? Will the
lenders who lend today against current fixed assets be prepared to consider
knowledge assets? One does believe that this paradigm shift will come in the
near future and the balance sheets of knowledge based companies will undergo a
formal change. After all Japan is already accepting intangible assets such as
intellectual property as a security against loan and not insisting on fixed
assets. A couple of years ago, CSIR laboratories were allowed to use knowledge
as an equity in start up companies, and not insist on payment of fees. Such and
other formal recognitions will push companies into developing their intangible
assets further leading to a better performance.
Finally, for a cash starved but intellectual capital rich country like India,
emergence of knowledge industry is a good news. But harnessing the full
potential of knowledge industry requires an aggressive and visionary policy
framework, creative planning, daring and risk taking. It needs to be recognised
that the knowledge industries such as software development, pharmaceutical
industry, biotechnology, engineering services etc. operate in a highly
competitive environment with great demand on the speed of response in dynamic
market conditions. A high operational efficiency and functional flexibility is
crucial for such industries. The Government policies, therefore, have to be
conducive to provide these. For example, the knowledge based companies that
employ knowledge workers are in great demand and some of them may require global
level compensation with schemes to create and share wealth. Employers’ stock
option plans need to be made available in such industries. India has yet to set
up proper technology financing mechanisms, which are risk taking and which can
cater to the knowledge industries. In particular, the venture capital financing
is very poor in India and yet at the same time we recognise that Intel,
Microsoft, Apple, etc. would not have seen the light of the day but for the
venture capital financing. Appropriate regulatory frameworks need to be set up.
The labour laws in India are obsolete when one considers the environment in
which knowledge workers in knowledge industry thrive. For instance, Shops &
Commercial Establishment Act, 1961 and Rules restricts working hours to 9 hours
on any day and 48 hours in a week whereas in knowledge industries, flexible
timings to meet the needs of the global customers are absolutely essential. It
is important to recognise that knowledge work in knowledge intensive industry
cannot be governed by using the laws meant for physical labour. Several other
changes in foreign exchange regulations etc. will be needed to cater to the
needs of export intensive knowledge based industries.
Options on knowledge generation and acquisition I was attending a meeting of the
Third World Academy of Sciences in Trieste recently. Fredrico Mayor, the
Director General of UNESCO made an interesting statement. He said “Knowledge
flows from north to south and wisdom flows from south to north”. I remember
making a small correction; ‘knowledge’ may flow from north to south but ‘usable
knowledge’ does not flow that easily from north to south, since usable
knowledge has the potential to create wealth. No country, no corporation gives a
competitive advantage to another, excepting at a price. India itself has
realised this in the post liberalisation era.
In India we always considered the ‘make’ or ‘buy’ options, which
unfortunately got converted to ‘importing’ and ‘import substituting’ in
the closed economy that we had. But if India has to create the best practice in
economics of knowledge then it will have to carefully consider not just the two
options of ‘making’ or ‘buying’, but also ‘buying to make better’,
‘making to buy better’ and ‘making it together’. Let me explain what I
mean. ‘Making’ has been a preferred course of action, but one cannot make
everything. Also if one has to reach a high rate of economic growth, then other
alternatives have to be sought. ‘Buying’ the knowledge embedded in a
technology or a machinery is possible, when the owner is willing to part with
it. Even in the post liberalised era, India has realised that when Mark III
technologies are available with the owner, one has managed to discuss only Mark
II and one has been lucky to get Mark I, since no one wants to give away a
competitive advantage. Let us realise that India is not being looked at as a
bottomless pit of demand but as a global competitor.
Smart countries like Japan opted for the third option of ‘buying to make
better’ route. They acquired knowledge through licensing, absorbed it and
developed superior products, which competed with the best in the world. India
did not do that; we kept on buying and buying. We have also not followed the
fourth option of ‘making to buy better’. Familiarity with a knowledge or a
technology domain gives one an advantage in negotiations, strategic positioning
and so on. It is only then one can negotiate for Mark III and get Mark III from
a position of strength.
For a resource poor country like India, ‘making it together’ is the
preferred option in the long run. This means creating knowledge networks between
all knowledge centres in the academic world, national laboratories, etc. and our
productive sector. Let me pursue this option in some depth.
Building knowledge networks
How do we build knowledge networks between the productive sector and R&D
institutions and what are the hurdles? Publicly funded R&D institutions
should be used as idea generators and providers of new concepts by the industry.
Industry should not look at institutions as super markets where off-the-shelf
technologies are sold. Indian industry should be prepared to assume the role of
partners, who have the technical, financial and marketing strengths to take
ideas to the market place. As regards the products emerging from R&D
laboratories, these invariably come out as some sort of packages containing
knowledge and information, whereas the business units will have to convert these
into goods and services, which are saleable.
The Indian industry should willingly integrate national R&D resources into
their business strategy. Improved communication and understanding, faith in
mutual growth and development of healthy working relationships is necessary. The
fact that new knowledge has to make an economic sense has not been realised by
our institutions. On the other hand the fact that competitive advantage in
business will be reached by using cutting edge knowledge has not been realised
by our industry. There has to be a meeting ground between the long-term horizon
of R&D institutions and the short-term horizon of business units. CSIR, as a
large publicly funded R&D system, is trying to make a cultural shift in its
operations, by looking at research as a business, defining a new product,
defining a new process and doing it in a business like manner. The
transformation process has just begun, but CSIR hopes that it will become an
effective hub in the Indian knowledge network and play a crucial role in driving
forward the issue of getting economic gains from a vibrant Indian knowledge
bank.
I have spoken about Indian knowledge networks, but I see equally exciting
possibilities for global knowledge networks for economic gains, where India
could assume a dominant position. The chain of concept to commercialisation
necessarily crosses transnational boundaries today. Thus many major
multinational corporations in USA and Europe, whose R&D budgets are larger
than even India’s R&D budget, are becoming partners of India’s R&D
laboratories. CSIR’s partners today include giants such as Mobil, General
Electric, Du Pont, Boeing and so on. For India, rather than remaining a
perennial seeker of knowledge from the west, opportunities are opening up for
doing even reverse transfer of knowledge.
What is driving this process? Many companies across the world today consider it
to be rather unwise to attempt for self-sufficiency in technology development,
particularly in an era, where the R&D costs are increasing rapidly. The
concept that technology could be acquired rather than reinvented is gaining
momentum. As a part of the global innovation strategy, several companies world
over are scouting for new ideas and patents. These companies believe that the
surest way of becoming technically strong is through knowledge networking with
premier organisations across the world. In an era of global connectivity through
modern information technology, the concept of virtual laboratory is gaining
ground. These global networks are allowing the real-time management and
operation of laboratories in any part of the world. Thus, companies are seeking
to gain a competitive advantage by using the global knowledge resource and
working with a global time clock.
Basic skills are gaining importance and the new paradigm is skill-based
competition. The high technology companies are asking as to what skills,
capabilities and technologies should they build up, rather than asking a
stereotype question, as to which markets should they enter, and with which
products. I see an enormous opportunity for India to become a global knowledge
platform in the coming century, by partnering these companies in areas where we
can cooperate, leveraging strategically those Indian niches, where we have a
competitive advantage.
Role of IPR in economics of knowledge
I made a reference earlier to the expensive wars in the knowledge market that
the Indian industry will have to face, as it integrates its economy with the
global economy. Intellectual Property Rights (IPR) will be crucial in fighting
these wars! Indeed in the world of knowledge based competition, IPR will emerge
as a key strategic tool. India is way behind the rest of the world and the
continuing illiteracy in IPR will hurt us badly. Incorporating strong systems on
generation of IPR, its capture, documentation, valuation, protection and
exploitation will need a massive thrust.
The issue of patents in particular, has created a national interest and debate
of great dimension. I thought it might be useful to focus on this specific area.
A weak physical infrastructure, inadequate intellectual infrastructure, poor
public awareness and delays in implementing government policies is hurting India
today. We are behind the rest of the world in patents, both quantitatively and
qualitatively. Why is this so? The basic criterion for the grant of a patent is
that the innovation must have elements of novelty, non-obviousness and utility.
How much of the research that we do today meets even some of these basic
criteria? Many of the Indian R&D institutions and industrial firms have so
far focussed on imitative research or reverse engineering. How do we change our
mindsets so that we move on to doing truly innovative research or doing forward
engineering? This is the first big challenge.
Skills in filing, reading and exploiting patents will be most crucial in the
years to come; but our ability to read or write patents is very poor. Neither
can we properly protect our inventions nor can we understand the implications of
the patents granted to our competitors. Many of the patents written by our
professionals could be easily circumvented. Manpower planning for IPR protection
needs priority. IPR must be made a compulsory subject matter in the law courses
in the universities in India. Our graduates coming out of engineering and
technology streams have no idea about IPR, and yet it is these young people, who
will have to fight these emerging wars in the knowledge markets. A number of
patent training institutes will have to be set up. China has already set up 5000
patent training institutes! Judicious management of patent information will
require well-structured functioning of information creating centres, information
documenters and retrievers, information users, IPR specialists and information
technology experts.
Need for rethinking IPR
There are several areas of conflict and debate in the existing patenting system.
One issue is that of public vs. private knowledge. Some types of knowledge for
example educational technologies, life saving technologies, must be available to
all, not just to the rich. We need to develop principles by which we determine
as to when the knowledge will be publicly available and when it will be kept
private. Agencies should be set up to buy knowledge for the public good,
including by using those principles used in land-acquisition proceedings but
this requires a clear legal and policy framework.
The present patent system is made applicable to all types of industries, types
of inventors and types of knowledge. This cannot work. The electronics industry,
where product life cycles are small, wants speed and short term protection.
Whereas pharma industry, where profits are earned, after a long time of rigorous
reviewuation of safety, toxicity etc., wants long term protection. We must
realise that one size does not fit all and revisit the patenting system based on
the issues of cost, speed of issuance, dispute settlement and so on based on the
type of industry, inventor, knowledge, etc.
The industrial property systems were set up centuries ago for inanimate objects,
and that too in formal systems of innovations. A great challenge is now emerging
to look at the systems that will deal with animate objects (such as plants and
animals) and with informal systems innovation (such as those by grass root
innovators like farmers, artisans, tribes, fishermen and so on). The standard
intellectual property system will certainly not suit such innovators and their
innovations. We need innovation in the intellectual property system itself.
Shorter duration patents for smaller innovations, including specific
improvements in the traditional knowledge need to be conceived. They will
involve simple registration-cum-petty patent system where the inventive
threshold would be lower but even a small improvement in material, process,
product or use could be protected at much lesser costs and for shorter duration.
This will give a boost to the creative capabilities of otherwise deprived
innovators. We, in India, will have to develop our own models for this.
New IPR regime and Indian knowledge industry
The knowledge based industry in India, such as the IT industry, pharmaceutical
industry, etc. will have to face new challenges in the new IPR regime. The IT
industry has maintained an impressive growth rate and we have the dream of
becoming an IT super-power, raising our software exports from $2 billion to $50
billion in the next 10 years. If this has to happen, then we will have to reduce
the content of body shopping and move on to innovative IT products, which will
need IP protection. The Indian IT industry has not so far cared for this, but it
will have to play an increasing attention to this aspect.
The same is the case with our pharma industry. From an importer of even the
formulations in early 50s, our pharma industry has become a net exporter. We
need to recognise that it will start feeling the heat of the global competition
soon. The global pharmaceutical industry is a knowledge industry and the
emerging Indian pharma industry will have to be no exception. It has survived so
far without developing new molecules. Indeed, only fourteen new molecules have
been developed so far in the last forty years, out of which eleven have been
from the CSIR system. But with the advent of the new patent regime, the
strategies will have to change. I do strongly believe that the Indian industry
can once again rise to the occasion just as it did in the 70s under the
provisions of the Indian Patents Act 1970. Indian pharma industry, apart from
pursuing novel synthetic routes to known molecules must pursue basic research
for
patent-worthy inventions comprising new molecules. It will have to forge
partnerships with national laboratories in a Team India spirit to surge ahead.
As a new strategy, the pharma industry could pursue the development of new
molecules up to the point of pre-clinical stage and then forge strategic
alliances for co-development or license these to national and international
partners. Some of the enlightened pharma players in the Indian industry are
already beginning to reap the benefits of this strategy.
Before we protect IP, we must generate IP which is worth protecting. Our
institutions, national laboratories and industrial R&D laboratories will
have to gear up for this. Nurturing a strong innovation base through a balanced
system of recognition and rewards is the need of the hour. We will have to
invest liberally to enhance the skills and knowledge base of scientists, through
structured in-house and external professional training programmes, some even
abroad, on understanding, interpreting and analysing the techno-legal and
business information contained in IP documents, and in drafting of IP documents.
For this we need to avail the services of high-class national and foreign
consultants and attorneys. We need to encourage the publication of R&D
results in scientific papers only after careful consideration of the
consequences on IP rights. It is hard to estimate the loss of Indian
intellectual property due to the inadvertent publication of usable knowledge in
the last few decades. Monitoring national and international patents and other IP
through access to on-line databases, to ensure effective protection and to ward
off infringements and threats to India’s IP portfolio will be crucial.
Analysing and assessing techno-legal and business information and market
intelligence to identify strategic alliances and to exploit potential uncovered
niche areas of opportunities itself will give rise to new knowledge based
business.
I believe that we will have to mobilise public opinion and influence government
decisions and policies on diverse IP issues. This should be done, not through
emotional cries, but on the basis of analytical and scientific studies taken up
in-house or commissioned nationally and internationally. We must spearhead a
movement towards formulating a national IP policy.
Economics of traditional knowledge
In my pursuit of economics of knowledge so far, I have dealt with factors which
will drive knowledge markets dominated by conventional industries as in
industrialised societies. The issue of economics based on traditional knowledge
and biodiversity are far more complex. India, with approximately 8% of world’s
biodiversity and as one of the greatest storehouses of traditional knowledge,
has the potential of becoming a major player in the global trade in herbs-based
formulations, medicines and products. An estimate by the EXIM Bank puts the
international market of medicinal plants-related trade at US $ 60 billion per
year growing at about 7% annually. India has only 2.5% share of this
market.
Knowledge-rich companies and researchers from the developed world have been
attracted to the wealth the poorer countries have in their biodiversity and the
traditional knowledge systems. Some argue that the access to such biodiversity
and community knowledge by the industrially developed nations is necessary for
the larger welfare of mankind as this advances knowledge and leads to new
products which contribute to the well being of global consumers. However, this
is not the point. The point is that this access to the resources of the poor
does not benefit them in any way, while their natural resource and intellectual
property continues to be appropriated and exploited.
Many researchers who have obtained knowledge about biodiversity and its uses
from local innovators, communities and institutions do not even acknowledge
their contributions, let alone sharing of the benefits resulting from such
knowledge. One recalls here the case of a new antibiotic. This was launched in
the USA based on the discovery of peptides in frog skin by a researcher who had
found three tribes in Africa and America, which knew about the wound healing
capabilities of the frog skin and were using it for that purpose. However, no
benefit was given to the tribes.
The local communities or individuals do not have the knowledge or the means to
safeguard their property in a system which has its origin in very different
cultural values and attitudes. The communities have a storehouse of knowledge
about their flora and fauna their habits, their habitats, their seasonal
behaviour and the like and it is only logical and in consonance with natural
justice that they are given a greater say as a matter of right in all matters
regarding the study, extraction and commercialisation of the biodiversity. A
policy that does not obstruct the advancement of knowledge, and provides for
valid and sustainable uses and intellectual property protection with just
benefit sharing is what we need. When we come up for reviewing TRIPS, we need to
push for TRIPS plus, meaning TRIPS plus equity and ethics.
It needs to be emphasised that the issues of the economics of community
knowledge are truly complex. While it is true that many indigenous cultures
appear to develop and transmit knowledge from generation to generation within a
system, individuals in local or indigenous communities can distinguish
themselves as informal creators or inventors, separate from the community.
Furthermore, some indigenous or traditional societies are reported to recognise
various types of intellectual property rights over knowledge, which may be held
by individuals, families, lineages or communities. Discussion of IPRs and
traditional knowledge should draw more on the diversity and creativity of
indigenous approaches to IPR issues. In addition, there are power divisions as
well as knowledge divisions among people in many communities, and sharing of
benefits with a community as a whole is no guarantee that the people who are
really conserving traditional knowledge and associated biodiversity will gain
the rewards they deserve for their efforts.
To encourage communities, it is necessary to scout, support, spawn and scale up
the green grass root innovation to generate employment and use natural resources
sustainably through linking of innovation, enterprise and investment. This
requires building up adequate linkages with modern science and technology and
market research institutions. In short, one needs new models of development,
employment generation and conservation of natural resources. In this connection,
one looks with hope to organisations like Gujarat Grassroots Innovation
Augmentation Network (GIAN). GIAN has attempted to set up venture capital fund
for small innovation providing for its linkage with R&D and scaling it up
into viable enterprise. The recent effort by DSIR and DST to set up a
Technopreneurs Promotion Programme is also noteworthy, since it provides the
much needed financial support for the first time for such endeavours.
There is also a deep philosophical divide on the issue of IPR that we have to
deal with. The existing IPR systems are oriented around the concept of private
ownership and individual invention. They are at odds with indigenous cultures,
which emphasise collective creation and ownership of knowledge. There is a
concern that IPR systems encourage the appropriation of traditional knowledge
for commercial use without the fair sharing of benefits, or that they violate
indigenous cultural percepts by encouraging the commodification of such
knowledge.
While recognising the market-based nature of IPRs, other non-market-based rights
could be useful in developing models for a right to protect traditional
knowledge, innovations and practices. Geographical indications and trademarks,
or sui generis analogies, could be alternative tools for indigenous and local
communities seeking to gain economic benefits from their traditional knowledge.
To date, debate on IPRs and biodiversity has focused on patents and plant
breeders’ rights. The potential value of geographical indications and
trademarks needs to be examined too. They protect and reward traditions while
allowing evolution. They emphasise the relationships between human cultures and
their local land and environment. They are not freely transferable from one
owner to another. They can be maintained as long as the collective tradition is
maintained.
Whether one likes it or not, it is a hard fact that a mere focus on morally
defined rights will not be successful, because it is too difficult to build
arguments to bridge the wide gap between general human rights and indigenous
peoples’ rights in the changing value systems in the modern world. It is
generally difficult to attribute an objective economic value to the knowledge of
local and indigenous communities, and associated resources, for a number of
reasons. One could be the absence of a market for genetic resources, and the
complexity of inputs into creation of new crop varieties. It will be more
pragmatic to focus on the costs of conservation to indigenous and local
communities as a guide to designing economic incentives that will help them gain
adequate rewards. Different interest groups, such as industry, intellectual
property experts, and indigenous and local peoples’ organisations need to
cooperate in order to define mechanisms for more effective sharing of benefits
with the providers of traditional knowledge and genetic resources.
Finally I believe the next century will belong to Asia. I believe India
will have a chance to lead. I also believe India will be an economic power,
mainly because of her great intellectual capital and its mastery over the theory
and practice of economics of knowledge. I do really believe that the creative
potential of millions of individual Indians will be unleashed from the bondages
of self inflicted mental sanctions. For too long we have talked about the
potential of India. The latent potential energy of the creative Indians will be
converted into creative and productive kinetic energy. The unique knowledge
society in India will be based on Indian ethos and the ethics.
I believe many schools will flourish, where brilliant new theoretical frameworks
for economics of knowledge of the 21st century will be developed and India will
assume a conceptual leadership in this development. This brings us to an
interesting thought. 1998 was a great year for India. Amartya Sen won the Nobel
Prize in economics. His development of welfare economics combined economic
theories with philosophy and ethics. If knowledge economics has to deal with the
issues of growth and equity, then it will have to combine economics, science and
technology, philosophy and ethics in the most creative and innovative way. Will
an Indian win the Nobel Prize in knowledge economics? Why not? We certainly have
the right to dream.
Thank you.
Top
Interview
/ Dr R A Mashelkar on
rediff.com,
Nov.10, 2000.
'India can be a biotech superpower in the 21st century'
At the Wellspring Hospital in south Bombay on November 8, invitees to the
launch of the GenoMed programme, listened in rapt attention as the chief guest,
a bureaucrat, shared his vision of India as a potential superpower in the 21st
century.
"If the US had Silicon Valley in the 20th century, we will have Genetic
Valleys in the 21st century. Ours should be a 'bio-click economy', not a
brick-and-mortar economy or a brick-and-click economy," he said. The
applauding audience seemed to enjoy every word of his anecdotal, masterly,
incisive, peppy address.
But describing the speaker, Dr Raghunath A Mashelkar, 57, secretary of
India's department of scientific and industrial research, as a bureaucrat is bad
form. Sorry.
His achievements in science and research, and activism in intellectual property
rights issues, have won him global recognition and honours. He has
endeared himself so much to the government that not only has it honoured him
with Padma Bhushan, but retained him as the director-general of the Council of
Scientific and Industrial Research since 1995.
The legendary status of this medium-built man makes even giants such as
industrialist Ajay Piramal behave like obedient students in his presence.
In an exclusive interview with Y Siva Sankar, Dr Mashelkar delineated
his understanding of the emerging biotech industry, "the next Big
Opportunity after infotech for India".
It is now universally agreed that governments should not
be in business. Now you say genomics is the next big business opportunity for
India. And the government is seeking to actively engage in this business. Isn't
this a contradiction of sorts?
Not at all. The reason I'm saying 'There's no contradiction at all' is that,
this entire genomics industry is going to be based on knowledge.
And that particular knowledge at this point in time is not with the private
sector. It is with the public sector because it was government of India which
understood the importance of biotechnology, and made huge investments in
creating diverse schools and diverse laboratories to create that knowledge base.
We are reaping the benefits today.
For example, the kind of knowledge base the Centre for Biochemical Technology
has created on its own premises... it just does not exist with any private
sector company. And that is where the partnership comes in from.
What Nicholas Piramal is trying to do is to source that knowledge. So, rather
than keeping that knowledge closeted in a publicly funded laboratory, what we
are doing is opening up those doors to private companies so that together we can
make rapid strides.
Although genomics is said to offer huge business
potential for the Indian software industry, there doesn't seem to be enthusiasm
of the kind witnessed for Y2K projects. Is this a cause for concern?
Let me put it this way. As far as the current development of our information
technology-based economy is concerned, it has not been really based on creating
new products.
We have done lot of work for foreign companies which is not linked to generation
of new knowledge. On the other hand, this new opportunity (genomics) that is
coming up would mean that companies, in case they want to get into this, will
have to invest in knowledge and innovation.
For example, in this area, if one wants to move in, then you will have to have
people who understand not only, let us say, the information that keeps on coming
on genome sequences, but basically genetics and issues associated with
that.
That means, there is a need for creation of a special manpower that can be an
interface between biology and information technology. It is only then that we
will be able to advance.
You've said that Corporate India, which generally tends
to ignore global-scale scientific breakthroughs, has for the first time reacted
positively to the human genome sequencing news of June 26, and its implications.
Please elaborate. Have corporates interacted with you on this?
As far as this advance is concerned, we did sign an agreement with Biological
Advance. It was signed by the Centre for Cellular and Molecular Biology in
Hyderabad. The agreement has to do with gene chip and so on, but in the same
knowledge domain.
In addition, there have been serious discussions with Satyam, NIIT, Infosys,
Reliance. This means that those with interests in the information technology
industry, have also moved in to this biotech field.
There are other pharma companies which have also evinced interest in forging
tie-ups with us. GenoMed with Nicholas Piramal is the first collaborative
venture we have signed.
I'm sure, as time passes by, there will be more such ventures.
The Indian ethos accords godly status to doctors and
everything that has to do with healthcare. Pursuit of profit, if any, is frowned
upon. Now healthcare is being increasingly talked of as much interms of business
and bottomlines as in terms of welfare. Genomics is an example. What does all
this signify?
I look at it this way. Seventy per cent of Indian population does depend on our
traditional systems of medicine like ayurveda, unani, homoeopathy. What is
likely to happen in time to come is affluence will increase -- this country is
not going to remain perennially poor.
Today, we've 40 per cent of the people below the poverty line. But, I've a
simple hypothesis -- take two factors together.
One is that in 1980s, we had a 5.6 per cent GDP growth. And that was without
reforms. With reforms, that 5.6 per cent could easily change to 8 to 9 per cent.
I see no difficulty in that with reforms.
Along with that, if you consider the factor that the population growth has
declined from 2.2 per cent to 1.7 per cent, you would realise that population is
going to stablise by 2020 or 2025.
If you put these two together, economists will tell you that the number of
people below the poverty line will shrink from 40 per cent to less than 15 per
cent. Which means, to repeat, India is not going to remain perennially
poor.
Similarly, the size of the middle class is also growing. Therefore, the
affordability of medicine is not going to be what it is today; it is going to
change. That is one issue.
The second issue is, there are also efforts to bring the old and the new
together. Which means, we are trying to pick up clues from ayurveda to develop
new drugs at different levels.
For example, the CSIR and Ayurveda Vaidhyashala have worked together to develop
new molecules. We've got some spectacular clues in ulcer, diabetes and so
on.
What does this mean? This means, the cost of development of new drugs, because
of this new business-like approach to healthcare, is going to be much lower than
the traditional western model which takes ten to 12 years and takes 400 to 500
million dollars.
If this cost is going to be low, then the advantage will be passed on to the
consumer.
You mean modern pharma companies will increasingly
harness traditional Indian health systems?
Indeed. In fact, you will find that the old mindset is changing for a number of
reasons. The first factor is that because of the new intellectual property
rights laws, which allow product patents latest by January 2005, the drugs and
pharmaceutical industry is intensifying its research.
If you see the R&D spending of Nicholas Piramal, Ranbaxy, Dr Reddy's Labs
and others, you will find that it is going up from 1 per cent to 2 per cent to 3
per cent. Many companies have set the targets of reaching within the next five
years at least 5 per cent.
So there is this growing awareness that in order to remain competitive, we can't
be copycats but we must also discover something.
Secondly, there is the scent of success also, because we always thought that it
is only those people (foreigners) who will develop new molecules, we
can't.
But, suddenly, people are finding that we can do too, like Dr Reddy's Labs which
has developed an antibiotic technology. It has been licensing out the technology
for a few million dollars to Novo Nordisk. More such examples are coming.
So, with confidence rising, companies feel that, 'yes, there are possibilities
of returns'. And, therefore, the new scenario is going to be essentially
knowledge-based, innovation-based, research-based and development-based, rather
than just reverse engineering because reverse engineering is not just going to
pay.
How genuine or serious do you think are the concerns in
India about the imminent WTO regime, biopiracy, patents?
We need to understand the whole thing in proper perspective. Look at biopiracy.
It was the issue of turmeric patent and wound healing that the CSIR, my
organisation, fought in 1996. We said then that this is our known knowledge.
'You cannot patent it,' we told the US patent office.That patent was
revoked.
After that, the neem patent was revoked in the European patent office. After
that, the Basmati patent, certain claims in that patent application of RiceTec.
So, one after the other, you have seen successes. The net result of that has
been that the US patent office itself has taken a note of the fact that their
non-patent databases are weak.
In fact, I was the chairman of the World Intellectual Property Organisation (WIPO)'s
SCIT, the Standing Committee on Information Technology. There are 171 nations in
it. So I had a chance to interact With, both, the developing as well as the
developed world.
It became very clear... the US patent office told me that when somebody applies
for a turmeric patent, they go to their computerised databases, and key in
*turmeric, wound, healing, powder*. The search doesn't throw up any information.
Nothing is shown on the computer screen because your knowledge is either in your
head or is buried in some book.
The trick is to create electronic databases. What we are now doing is tackle the
real disease because this is what happens otherwise -- the lack of non-patent
databases. The government is launching a major programme called Additional
Knowledge Digital Library where all this knowledge will be retrieved, stored and
made accessible.
So that next time the US patent officer gets an application for, say, a turmeric
patent, he will consult our database and realise that knowledge belongs to
India, that is an IPR, and, therefore, not patentable.
I believe that this fear of biopiracy must be converted into an adventure of
biopartnership. Let's not forget that bioresource-rich we may be, traditional
knowledge-rich we may be, but the capital and technology exist in the West. They
cannot do without us, we cannot do without them.
I believe the breaking of these barriers and clarity that has come are extremely
important. Let me add that since I fought the turmeric battle, I look at it as a
kind of a drop of a small stone in the pool and the kind of ripples it created,
the waves that resulted, have helped focus attention on this issue.
Now the US patent office is saying, 'We'll treat traditional knowledge on par
with industrial property systems as far as patents are concerned.' Five years
ago, that was not the case.
Genomics as a sunrise industry may be capital-intensive.
Do you think financial institutions should adopt a proactive approach and fund
such ventures?
Indeed. I feel that venture capital is going to be a key issue. If you see the
growth of these companies in the US, you will find that it has been spectacular.
Why has it been impressive? It all goes back to fundamentals and the presence of
venture capitalists.
I'd say Apple, Intel, Microsoft or the knowledge-based industries would not have
made it big but for the initial support of venture capitalists. So we can't
expect traditional banks with conventional thinking and no-risk attitude to
support research of this particular kind.
Massive venture capital financing both from the domestic private sector and
foreign institutional investors will make the difference. Let's not forget that
even the US, for example, was also slow till mid-70s until the mutual funds,
insurance funds ploughed back a certain fraction of their money into this kind
of industries. From millions, the figure quickly rose to billions. I feel that
kind of support is necessary in India today.
Do you think genomics will generate jobs?
I don't think genome-based drugs and pharmaceutical industry will generate large
employment. I look at it the other way round. If it is able to reach out to the
Indian population in the manner that is proposed (by tackling areas like
diabetes, hypertension, schizophrenia, etc), I do believe that medicine at an
affordable cost will improve the productivity of the workforce.
If you look at other aspects like... based on ayurvedic practices, and the plant
that has been used in experiments, we are getting clues to new molecules. That
will generate employment. How? The medicinal plants will have to be grown in
very large numbers. That sector has to be organised. They have to become the
suppliers of these plants.
Based on that, the downstream industry extracts these molecules, creates new
compositions, and new drugs, and then does the compounding, etc. So the whole
range then becomes different. So in that area, there is an employment
opportunity. Not in genomics per se.
You think it's all right for India, which has been for
long labeled an emerging market, a Third World country, to focus on genomics in
a big way?
I think so. This is not only capital-intensive, but knowledge-intensive. And
that knowledge comes in two forms. One, the knowledge and innovation that reside
in the creativity of our researchers (whose levels are very high); two, the
knowledge that arises from the huge genetic diversity and information that is
available.
So when we talk in terms of the bio-click economy -- that is a term I coined --
then the content of knowledge is extraordinarily high although it may also be
capital-intensive.
There may be certain sophisticated sequences that may be necessary. That is
fine. Eventually, if you look at the final product, it is the content of
knowledge that is going to dominate the final price and not what the
contribution of that sequence is going to be.
To sum up, can genomics add to India's riches?
Genomics won't make India rich. But it will make India a healthier country,
because the Indian problems of health will be addressed in the GenoMed programme.
And the programme will be designed for the benefit of Indians.
For example, there is a drug that is banned in the US. There is a query as to
whether it can work in India or not. It is genomics which is going to give that
particular answer. These would be the more subtle issues that a programme like
this will be able to address.
All that I would say is, there are several landmark achievements. The first one
is that GeneQuest will be the first genomics-based company. Secondly, for the
first time, I'm seeing a proactive approach and daring in the corporate world
about scientific breakthroughs.
This (foray into genomics) is really an arrow into the future and based entirely
on knowledge. Yet, the Piramals have taken this very bold step ahead of the rest
of them (industrialists).
If this spirit of technology, entrepreneurship, daring, innovation is multiplied
across the country, I see no reason why India should remain a rich country where
poor people live. It will become a rich country where rich people live.
