Wednesday 8 August 2007

Knowledge as Business

Business India, Oct 9-22, 1995

The Know Business

Can India become a player in the global knowledge market? Yes, and the trend has already started. Through an extensive investigation of knowledge based Indian business, Business India discovered companies and labs that view the opening up of the Indian economy as an opportunity.

Shivanand Kanavi

Suddenly, there is an air of excitement in a number of Indian companies and research centres. But not only excitement –more importantly, there is a curtain of silence, one that evokes secrecy.

If you walk around an R&D centre these days and ask casually what’s new, the surprising response could be the lack of an answer. All one gets is polite smile and, “Sorry, this cannot be disclosed.” It takes an enormous amount of legwork, ingenuity and creative persistence to get information on business-oriented issues. Why has this veil dropped, in organization that would brag about their lab scale results being “break throughs in technology”, only a little while back?

The answer is, because there is a new understanding of the concept of wealth today. There was a time when only tangibles counted, but in this changing world, ideas and knowledge increasingly translate into hard cash. A design, and idea, a novel chemical entity, a new testing procedure, a probe to identify the presence of certain biological molecules, a way to increase the yield an efficiency in a reaction, identification of a need in the software/hardware market which can be satisfied by a suitably designed new product –the list goes on and on. All such kinds of knowledge, and more, mean hared cash and that too in any currency in the world.

Transnational corporations, beleaguered by rising R&D costs and diminishing returns, have been on the prowl for new technology, in order to stay globally competitive. In the last three-four years, a quiet change has taken place. India has become an important destination on the itinerary of globe-trotting executive vice-presidents sourcing global technology for their giant employers. Abbott, Acer, Akzo, Du Pont, Eli Lilly, FMC, General Electric, Haldar Topsoe, Hewlett Packard, Hughes, Lum­mus, Motorola, Nova Nordisk, Smith Kline Beecham, Telstra, and Unilever are among the notables who already have R&D alliances in place here.

Indian industry, led by the pharmaceu­tical and agrochemical sectors, does not lag behind in its support of R&D. Even Reliance, which once prided itself in buy­ing global scale manufacturing plants for commodity chemicals, apparently ignor­ing R&D, now highlights its joint technol­ogy development with National Chemical Laboratory (NCL) Pune, in the latest (1994-95) annual report. The NCL process, involving a novel non-polluting zeolite-based catalyst to manufacture LAB (linear alkyl benzene), is being tested in a pilot plant at Patalganga. If successful, it will put Reliance on the global technology map again - but this time as a technology supplier.

Once knowledge becomes marketable, it has to be protected as property. But even while the law is taking its time to conform to international norms, a working arrange­ment has come into being with the Council of Scientific & Industrial Research (CSIR) framing its own intellectual property rights (IPR) policy. Today its labs are signing contract research and joint technology development agreements - with confi­dentiality clauses written in - with Indian and foreign clients like Abbott, Du Pont, FMC, GE, Nova Nordisk, SmithKline Beecham and others.
What has catalysed these stirrings among Indian companies and labs, which now aim to become global technology players? Very simply, it is the opening up of the Indian economy. So far, India has been known for manpower export, a thin cover for what is otherwise known as "body shopping". In the meantime, Indian industry focused on importing obsolete, "proven" technology and reverse engi­neering, while politicians back-patted themselves with pointless claims of having built the second largest scientific-technical manpower base in the world. But today, the scene is changing.

Externally, economic stagnation in North America, Europe and Japan has led to intense competition among giant corpo­rations. To stay ahead of one's peers, acquiring newer and newer technologies rapidly has become a must. And strategic alliances are the key to rapid acquisition.

As Dr David S. Weir, vice-president (global technology) at Du Pont, explains, "Self-sufficient, independent R&D efforts are unlikely to meet today's demands, even for giant corporations. Our search today is from a global perspective, rather than being country-specific. We have tar­geted India for special emphasis and cre­ated a separate technology office. For example, our tie-up with IICT (Indian Institute of Chemical Technology) Hyder­abad, to screen the molecules they synthe­sise for agrochemical activity, might lead to the joint development of new agrochemicals with patent and licensing rights shared by both. It is a win-win agreement”

If IICT produces a molecule with novel molecule with novel agrochemical applications, Du Pont will run it through its elaborate system of screening. It will take all te necessary steps to develop it into a product and register it as a safe agrochemical in different countries. The entire process is both expensive and time consuming, taking anywhere between four and six years. IICT will have the marketing rights for India and the surrounding region, while Du Pont will have the rights for the rest of the world. On top of this IICT will get a royalty of about 15 per cent.

The most articulate champion of research as business is CSIR director­-general Dr R. A. Mashelkar. Before his recent elevation to this prestigious position, Mashelkar headed the NCL. Much before the events in 1991 in Moscow, Berlin and New Delhi, he put globalisation of Indian R&D on the agenda, and started a series of changes there. Mashelkar is not only an internationally well-known chemical engineer and an authority on polymer engineering, he is also the most well-known Indian R&D manager. He transformed NCL very rapidly into a model R&D centre, one that thinks globally.

Today, NCL holds the highest number of international patents in India. A culture has been created where PhD students file international patents when they find some­thing interesting. Patent holders are given awards and peer recognition at NCL. In fact, nine of the 21 people felicitated by NCI. at its last foundation day for authoring US patents were PhD students. Because of the patents, MNCs have made a beeline to NCI. for contract research and even joint technology development, together with sharing intellectual property rights, in catalysis and polymers. GE, Du Pont, Akzo and Neste OY are among NCL'S better known clients and collaborators. And it is beginning to payoff. NCL'S foreign exchange earnings through technology sales and contract research exceed $2 mil­lion a year.

This is quite a change from earlier attitudes. There arc many cases of missed opportunities due to the earlier emphasis on publishing papers rather than developing marketable technol­ogy. Even realising what is patentable and what is not at the right time can lead to money flowing in. For exam­ple, the DNA fingerprinting tech­niques developed by Dr Lalji Singh at the Centre for Cellular & Molecular Biology at Hyderabad have not been patented despite being 30 per cent faster than others.

A good example of a sudden wind­fall as a result of holding original patent rights for a new drug molecule is that of Centchroman. Centchroman ­a non-steroidal oral contraceptive developed by the Central Drug Research Institute (CDRI) at Lucknow - recently attracted international attention. Due to its chemical nature, Centchroman doesn't have the side effects that steroidal contraceptives, ­which affect the pituitary gland ­have. But like other oral contracep­tives, it has a limited market in India, mainly due to cultural reasons. Recently, however, scientists discov­ered new uses for Centchroman that promise to bring in millions of dollars for the CDRI.

Firstly, Centchroman can be used to treat breast cancer. In terminal cases it has been found that the drug reduces cancer growth. Not only that, it often can stop fur­ther growth and at the least improve the patient's profile. The human trials for this activity arc at an advanced stage.

Again, it has been found that Centchro­man has been effective in halting brittle­ness of bones -- which can lead to fractures, or worse -- due to old age (osteoporosis). Swedish pharma company Nova Nordisk, which identified the activ­ity, rushed to ("DRI for joint ownership of a use patent and licensing.

Cases like this illustrate why one of the first things Mashelkar did when he took over C:SIR was to sit together with all the laboratory directors (there are 39) to iden­tify existing patentable content in their knowledge base.

Indian R&D’s thrust so far has been organic synthesis and process develop­ment. The strength of companies like Ran­baxy, Lupin, Dr Reddy, Cipla, SOL, Gharda, United Phosphorus, Excel and others has been in process development. While this has been reverse engineering in most cases, totally new processes, leading to international patents, have also been developed.

Specialty chemicals involve difficult process technology, novel catalysts etc. But one can at relatively low capital cost, build a 1.000 to 2,000 tpa plant to achieve global scales. Thus, specialty chemicals have become a playground for many Indian entrepreneurs and laboratories.

Ranbaxy's SLlccess with the compli­cated synthesis of Ccfaclor has become an industry legend. The story goes that Dr J.M. Khanna, head of R&D at Ranbaxy, went to the US patent office with 18 differ­ent processes for Cefaclor, each time fail­ing to prove novelty. Not disheartened, he continued to work at the proolcm, and the 19th time, produced an acceptable solu­tion. All that diligence and hard work is paying ofT. Says an industry observer, "If Ranbaxy can spend Rs40 crore a year today on R&D. it is the money from Cefa­clor that they arc ploughing back. Eli Lilly itself buys aoout SI) million worth of Ccfaclor from Ranbaxy."

Eli Lilly, the original inventor of Cefa­clor, was impressed by Ranbaxy's abilities to resynthesise and compete with it in the generics market once the drug went off patent. After all, Cefaclor is the biggest selling anti-bacterial today. The result was a joint venture with Ranbaxy. The relation­ship is strengthening, and today Eli Lilly­-Ranbaxy is investing $100 million in manufacturing and marketing under a joint brand name, as well as joint R&D in process development.

IICT is today minting money from process development. It expects to earn close to Rs 17 crore this year from tech­nology fees and sponsored research. That's more than half its budget! The institute has developed numerous processes for agrochemicals and pharma­ceuticals and its client list for full tech­nology packages, including process know-how, plant design and performance guarantees reads like the Who's Who of the Indian chemical industry.

Even commodity chemical manufac­turer Herdillia Chemicals followed the Strategy of specialty chemical development, under the guidance of well-known chemical engineer M.M. Sharma, FRS. Today, its isobutyl Ibenzene and diphenyl oxide plants compete with giants in the global marketplace.

Having widened their horizons to the global market, Indian entrepreneurs, even small and medium ones, are ready to take big risks on technology development, the gamble is worth it; the rewards are very high if they succeed. Herdillia invested Rs20 crore to 30 crore in process technology five years ago- a move that was considered bold at that time. But, today, R&D efforts are backed by ten times that amount.

For example, even a small Rs50 crore company like Adarsh Chemicals has teamed up with Indian Institute of petroleum(IIP), Dehradun and NCL and is planning to invest Rs200 crore in new technology. Part of the project – cloaked under a blanket of secrecy – is IIP’s patented process on the single-step oxidation of cyclohexane to produce and adipic acid which is being scaled up at Adarsh’s pilot plant near Surat. The foreign collaborator is the well-known international technology vendor, Lummus of the US.

Adipic acid is the crucial intermediate for Nylon 6,6. if successful, IIP and Adarsh will become global players in adipic acid technology. The existing technology, owned by Du Pont, is a two-stage one and has the added disadvantage of using the environmentally-dangerous concentrated metric acid. IIP’s process, developed by Dr. S.K.Gupta and his team, uses a non-poluting catalyst. The importance of the development may be gauged from the fact tat just prior to the signing of the agreement between Lummus, IIP and Adarsh, a senior DuPont executive camped for three days at Dehradun, trying vainly to swing the deal the DuPont way till the last minute.

Dr.V.P. Kamboj, director, CDRI, reinforces the oint about techies’ readiness to take risks. He relates an example, “today we have a partner in drug development –whose name we cannot disclose – who has joined us at the lead molecule stage. Normally, industry wants tie-ups at the much later stage of human clinical trials, where the possibilities of success full drug emerging are much higher. Whereas this collaborator is ready to spend crores of rupees and finance the elaborate and risky process of new drug development. The notable thing is, today he is not even among the top five Indian pharma companies!”

Others – Ranbaxy and Dr. Reddy’s Labs(DRL) among them – have also taken the plunge into basic research, investing crores of rupees in new drug development . the irrepressible Dr Anji Reddy has publicly declared his ambition of making DRL the first Indian company to develop a new drug. Recently, he filed four Indian and international patents for new molecules wit promising levels of anti-cancer and anti-diabetic activity. Trials in the UK are under way currently. If successful, his ambition may be realized. Global pharma companies are negotiating with him for alliances and licensing rights.

One route with less risks but with large benefits. If cleverly exploited, is that of contract research. Contract research means conducting a given experiment or carrying out R&D as per the client’s instructions. Why a particular project is to be undertaken or for what a synthesised molecule is needed is not told, and the fol­low-up information is also not supplied. This way, MNCS can exploit cheap intel­lectual labour in India. But Mashelkar championed it in NCL, believing that it would help upgrade project management, delivery schedules, documentation and similar disciplines at NCL. The results are there to be seen. Clients like GE and Du Pont keep coming back. In fact, they are now signing more lucrative joint technol­ogy development contracts, with intellec­tual property rights shared by both.

A similar development occurred at Biocon, a small biotech company (1994-­95 turnover: Rs30 crore) based in Banga­lore. It started as a IV between an Irish biotech company and CEO Kiran Mazum­dar in 1978. From value-added exports, Mazumdar soon shifted to developing skills in solid substrate fermentation. The technology was then closely held by Japanese companies, who ruled the roost in specialty enzymes. Today, Biocon is a significant player in this field, with exports of over $3 mil­lion a year. Mazumdar later set up an independent com­pany, Syngene, to exploit her skills in genetic engineering and peptide synthesis. Ini­tially, Syngene synthesised molecules on a contract basis. It has grown already, using skills in fungal products, and today screens its own mole­cules for therapeutic activity. The result is that Syngene is hotly chasing lead molecules.

At times, a technological adversity can be converted into an oppor­tunity. For example, most catalysts used in chemical processes are highly polluting. With environmental consciousness grow­ing in the West, there is greater and greater demand for' green technologies' - that is, process technologies that are less pollut­ing. Indian expertise in the non-polluting zeolite clay-based catalysts is now paying off, as they increasingly replace the tradi­tional ones. Paul Ratnaswamy and his group at NCL have become a frontline group internationally in zeolite catalysts. NCL and IIP are two labs that are making hay while the sun shines on zeolites.

Again, in the 1960s, thalidomide, given to expectant mothers to bring relief from morning sickness, was discovered to produce horrendous deformities in their babies. Further investigation into this medical tragedy led to the realisation that there are two mirror images of the thalidomide molecule. One has a benefi­cial effect while the other causes deformi­ties. Thus chiral synthesis, that is, synthesising the correct mirror image of the molecule selectively, became a chal­lenge. Today, Indians have acquired con­siderable expertise in chiral synthesis. Former director A.V. Ramarao built up a world-class group at IICT, Hyderabad in chiral synthesis.

Similarly, using their biotech expertise, Dr Qazi at the Regional Research Lab (RRL), Jammu and Dr Bhalerao at IICT, Hyderabad have come out with novel fer­mentation-based enzymatic processes for the chiral synthesis of drugs, work that is attracting attention. Qazi has just signed a contract for transferring the technology to synthesise chirally-pure Naproxen to a Hyderabad-based drug company that is the largest manufacturer of the drug. Enzymes, being themselves able to distin­guish between right handed and left handed molecules, selectively catalyse the synthesis of one of them. Enzymatic processes are one route to chiral synthesis, but they require economic production of sufficient quantities of the enzymes. Qazi and Bhalerao's work will be very useful here.

An adverse situation that was converted into an opportu­nity is that of Gugulipid - a cholesterol-lowering drug developed by CDRI. CDRI'S technology for isolating gugul­sterone from a plant resin was passed on to Cipla and a French company. But since the resin is not available now, the French are unable to manufacture the drug. Cipla chairman Yusuf Hamied, an excellent synthetic chemist himself, turned this adversity into advantage by developing the synthetic route for making gugulsterone and patenting it internationally. In the absence of plant material, there is no option but to develop synthetic routes if possible, or develop simpler synthetic analogues and convert them into drugs.

What about exploiting our vast bio­diversity - ranging from Himalayan flora and fauna to tropical rainforests? Multinationals have exploited India's plant wealth and developed a number of new drugs, but Indians themselves have not succeeded in doing so. Even the herbal drug industry is plagued by numer­ous problems like lack of standards, lack of proper technology for growing medici­nal plantations and hence lack of appro­priate plant material in sufficient quantities. But with an increasing number of people in India and abroad ready to try herbal medicines, the industry is expected to grow from the current Rs800 crore to Rs4,000 crore by 2000 AD. We must take steps to protect the intellectual property of our traditional medicinal systems.

Prof S. S. Handa director of RRL (Jammu-Tawi) and his associates' unsung work in plant-based drugs at RRL, Jammu is very important. They are verifying the claims made in Ayurvedic texts about ail­ments for which modem medicine has no clear-cut solution yet, such as arthritis, rheumatism, diabetes, liver disorders etc. Once a claim is verified, the formulation can be standardised, the herbs involved can be properly classified and even grown so that it can be marketed reliably . ''Today, the industry largely relies on the bazaar for these plant materials. Whether the species is right, in what condition it is stored, what disease the plant has had, etc, nobody checks. One often sees herbal godowns where rats and other pests have been having a field day," says Handa.

Parallel to its herbal drug programme, RRL is also involved in isolating both the most relevant herb and its active com­pound from ayurvedic cocktails, so that modem medicines can be developed from them. The results obtained by RRL in immuno-modulators, arthritis, hepato­protectors, etc have been very encourag­ing, and there is a possibility that new drugs might be developed. The work being done by this low-profile team in Jammu is not only first-rate but even heroic, when one realises that they have been caught in the midst of political turmoil. Its scientists have even been taken hostage by militants. (They were kept in custody for 46 days before being released in an exchange).

While catalysts and specialty chemi­cals like drugs, agrochemicals and others have been at the front line of Indian technological development, where are computer software and telecom, an essen­tial part of today's technological revolu­tion at the global level ?

"With all these high-profile computer professionals, Indian industry has not even produced a video game that can be sold worldwide!" sneers one industry observer. Points out another, "All the big business groups in India - Tatas, Birlas, Mafatlals, Mahindras, etc - are in the infotech busi­ness. In fact, the Tatas have at least five companies in the field. The absence of an Indian product in the global market implies that traditional Indian business­men cannot be pioneers in infotech."

Despite phenomenal growth rates, it is a fact that the Indian software industry has largely sold knowledge workers in its body shopping exports, rather than take risks and invest money in product development. Interestingly, it is relative newcomers like Wipro, Ramco and Infosys that have developed products that are making a name in the global market.

Every infotech and communication multinational worth its name is rushing to India to set up software development cen­tres. This is no different from body shop­ping. But it seems as though it will have secondary positive effects. One of the problems in Indian software product development has been the distance between users and developers. Knowledge and nearness of the market is absolutely essential to come out with a product that will succeed. The R&D arms of MNCS coming to India are thus indirectly bring­ing the market nearer. Soon we will see individuals coming out of these establish­ments and setting up their own "garage operations" as start-ups.

Signs of this emerging trend are already visible. A number of small software com­panies are coming out with niche products. In fact, since body shopping and project exports are manpower-intensive, they can only be done by large software houses. The only way smaller companies can survive is through innovative niche product develop­ment. Thus, what happened in Silicon Val­ley in the US might well repeat itself in India, albeit a quarter-century later. In infotech, the constantly changing technol­ogy and market needs allow latecomers to join in the gold rush.

"We have gone through the stages of body shopping, offshore development, India development centres (captive R&D groups dedicated to a client but located in India), product development on contract, etc, to reach a stage where we are devel­oping products of our own. Even now, it is not that all the earlier stages have stopped. However, their relative impor­tance will keep changing," says Dr Srid­har Mitta, president (technology), Wipro Infotech. With a new global partner like Acer in a JV, one will not be surprised if Wipro will be one of the first to design the architecture of systems based on the still­-experimental P6 (Intel 686 chip)! Wipro has come out with innovative products such as a Pentium-based symmetric processor, a LAN switch meant for data communication based on the Asymmetric Transfer Mode technology and a remote access LAN server. "The real money is in communication software products where we can make an impact despite being latecomers," comments Ashok Soota, president, Wipro group. The convergence of computers, communication and consumer electronics in multimedia and internet will provide numerous opportunities for the bold and farsighted.

Dr Bishnu Pradhan, executive director, C-DOT, is pleased that the industry is finally turning towards what he has been saying for quite some time about commu­nication software. Having suffered desta­bilisation at the end of the 1980s at the hands of politicians, and then further shaken up by the opening up of the telecom sector, C-DOT has finally emerged with an aggres­sive strategy. Pradhan's game­plan is to concentrate on developing telecom software while continuing the develop­ment of better and cheaper exchanges. The completion of service checks for the 40,000­line C-DOT MAX switch in Ban­galore signals that C-DOT's original mission has been more or less accomplished. The chal­lenge now is to develop the soft­ware and hardware to make the C-DOT switches ISDN-compatible. ISDN will make a single telephone line capable of carrying voice, fax and computer data. C-DOT is expected to complete this in three years.

C-DOT has also made important advances in developing switches that can provide value-added services like the 1­800 toll-free calls, credit card verification etc. The ccs-7 (Common Channel Sig­nalling) recently developed by C-DOT will help separate the switching function from the intelligent functions within a switch. This will make it possible to upgrade its exchanges to provide new value-added services the very next year. Pradhan has not been averse to forging alliances with Telstra, Motorola etc either. C-DOT's switches are still proba­bly the cheapest in the world and Telstra plans to use its rural automatic exchanges to link the scattered communities in Aus­tralia. C-DOT is also developing low-cost wireless in local loop telephony, meant for difficult terrain where physical cabling is not cost-effective.

Through its switch technology, C-DOT has earned royalties worth over Rs60 crore. Meanwhile, it is being continuously raided by multinationals for trained personnel- many admit they are the best in telecom in India, with lucrative pay packages. Pradhan is working hard to corporatise C-DOT to gain flexibility in business plans, salaries and become more market savvy.

While Wipro and C-DOT are probably the tip of the iceberg that will surface in the next five years, the Indian Space Research Organisation (ISRO) is already making waves in the sky. Intelsat, the global satel­lite communication consortium, has leased II C-band transponders on the Indian communication satellite Insat-2E (to be launched in 1998) that will yield a revenue of over $100 million to the department of space over 10 years. In another area, remote sensing, the painstakingly-built expertise in designing, building and launching Indian Remote Sensing satel­lites and developing the infrastructure for remote sensing software will make India the lead supplier of remote sensing data to the world market in three years. The alliance with the marketing company, Eosat of the US, is expected to help ISRO achieve this target.

The near-perfect launch of PSLV-D2 last October, if followed by another one in early 1996, will make it possible for ISRO to launch 2.5 to 3 tonne communi­cation satellites in the Low Earth Inclined Orbits. That might come in handy for a host of satellite-based global telecom schemes, including Motorola's Iridium, which can then avail of ISRO'S launch services. Meanwhile, ISRO is quietly negotiating lucrative subsystem supplies to major satellite builders of the world like Hughes, Matra-Marconi, Loral etc. Despite the shock suffered by a debilitat­ing media campaign of innuendo and sus­picion in the so-called 'ISRO spy scandal', ISRO'S low-profile scientists and engineers are producing a remarkable hi-tech success story, built painstakingly out of knowledge bricks.

At more perceptible altitudes is another success story in engineering and design in the making. And that is in civilian aircraft design. Indian aerospace engineering, which produced such internationally ­known engineers as S S Dhawan, R. Narasimha and others, is finally taking the plunge into the lucrative civilian aircraft market. The National Aerospace Labora­tory (NAL) in Bangalore has already come out with a pro­totype of a two-seater train­ing plane, the Hansa, targeted for flying clubs.

Now, NAL has developed a complete design package for a 14-seater aircraft. Named Saras, the aircraft can be configured as an air ambulance, a passenger air­craft, an eight-seater execu­tive plane and so on. There is an estimated demand for about 300 such planes in India over its manufacturing life cycle. A Russian design centre, the Myasishchev Design Bureau, which was in the midst of designing one itself, saw the superiority of the NAL design and teamed up with NAL to complete the package. Russia itself will need around 1,000 such aircraft. Currently NAL director Dr K.N. Raju and his team are looking for industry partners to produce prototypes.

Says Raju, "A similar aircraft produced by the Italians cost over $250 million for development. A liberal estimate of devel­opment costs for our design is expected to be $40 million, which is being shared equally by us and the Russians. Each air­craft will give a neat Rsl crore profit for the manufacturers while pricing it at about $3 million, well below all the competing models in the market. CSIR is putting up Rs25 crore and another Rs40 crore needs to be put up by any partner from the private sector. The manufacturing itself will need only RsI70crore." It won't be surprising if an ambitious new entrepreneur emerges soon, for NAL is currently negotiating with a number of them.

Each of these examples of knowledge ­based businesses are stories in themselves, but the trend, clearly, is that a few techies in business and research are mixing the two into a heady brew. Some businessmen are investing in research while some researchers are becoming businessmen. Mashelkar's provocative slogan, "I want to be known as the first CEO of CSIR Inc" is one side of the coin, while Reddy's ambi­tion to be the first Indian to develop a new drug, is the other side.

The ball has been set rolling. We have not even touched on the developments in other knowledge-based services like edu­cation, training, health care, market research, etc, which deserve a story to themselves.
It is already clear to many that a rupee put in well-directed technology development yields many mo' in a fairly short period of time.

Every nation in the newly ­industrialised fold used cheap labour as the first competitive advantage to climb up the lad­der, and are now looking for other niches like quality, basic research and specialisation. For example, Japan has concen­trated on automobiles and con­sumer electronics, Taiwan on personal computers, and South Korea on heavy ~engineering. India can use knowledge-based businesses like specialty chem­icals, catalysts, engineering design, telecom and computer software, aerospace technology, biotech etc as its core competence to leapfrog into the industrialised league.

These new technologies have also evolved in the last decade. They can be characterised as technologies in which size does not matter - an innovator can go ahead with a good idea even if not backed by a giant organisation. To that extent, the new technologies have a decentralising effect and are allowing newcomers an entry. Knowledge-based entrepreneurs have identified the opportunity and grabbed it.

A manufacturing advantage based solely on cheap labour hardly lasts long. One soon finds a country that can manu­facture even more cheaply. But it is diffi­cult to erode an advantage based on knowledge. What we need is far-sighted entrepreneurs and researchers, and it is heartening to see that India has them in plenty. And they are not restricted to the traditional trading -money lending - manu­facturing families that have dominated the business scene till today.

The new wealth

If one is to make money out of knowl­edge, it should first be acknowledged as property. In the world of Indian R&D today, there are no two opinions on intel­lectual property and the need for its pro­tection. There is a mad rush towards filing applications for international patents, despite the fact that a US patent costs thousands of dollars to file and to main­tain annually. Cipla's Dr Yusuf Hamied, who doggedly cautions against changing the Indian intellectual prop­erty rights (IPR) regime, is an exception. But then, Hamied, while advocating the exploitation of various clauses within the WTO framework to make sure that drugs will be available in India at affordable prices, has recently got two interna­tional patents himself.

Patent literacy is now on top of the agenda; Indian researchers are learning how to read and write patents. Dr R.A. Mashelkar, director-general of the CSIR, in fact, wants to launch a patent literacy mission. Says N.R. Subbaram, head of CSIR'S patent division and one of the few experts in India, on international technology patent­ing, "Many are realising that one should read patents before beginning work, so that the novelty of the line of work pro­posed is clear. You might even get a clue as to which line to pursue. At the same time, one should learn to write patents so that not much is disclosed."

However, even before the IPR regime is changed by law, both Indian researchers and foreign companies have recently formed working relationships, respecting both a high degree of confi­dentiality and exclusivity in joint research. While it is easy for private companies to form such relationships (as many are doing), it took an agonising time for the CSIR labs to do the same. Can a publicly-funded R&D organisation act as an arm of corporate R&D, was the question. Ranbaxy's Dr Parvinder Singh, whose corporate mission is to transform Ranbaxy into a 'research-dri­ven global pharmaceutical company', comments, "Two years back when we proposed a joint drug development pro­gramme with a CSIR lab with exclusive rights to us, it was rejected. Now that Mashelkar has come to head CSIR, things will change very fast."

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