Development of health biotechnology in developing countries: Can private-sector players be the prime movers?

Biotechnology Advances 30 (2012) 1589–1601

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Research review paper

Development of health biotechnology in developing countries: Can private-sector players be the prime movers? Gulifeiya Abuduxike ⁎, Syed Mohamed Aljunid United Nations University-International Institute for Global Health, HUKM Complex, Faculty of Medicine, National University of Malaysia, Jalan Yaacob Latiff, 56000 Cheras, Kuala Lumpur, Malaysia International Case-Mix and Clinical Coding Centre, UKM Medical Centre, Faculty of Medicine, University Kebangsaan Malaysia, Kuala Lumpur, Malaysia

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Available online 19 May 2012 Keywords: Private sector role Health biotechnology Health innovation system Economic growth Public/private partnership Innovative developing countries

a b s t r a c t Health biotechnology has rapidly become vital in helping healthcare systems meet the needs of the poor in developing countries. This key industry also generates revenue and creates employment opportunities in these countries. To successfully develop biotechnology industries in developing nations, it is critical to understand and improve the system of health innovation, as well as the role of each innovative sector and the linkages between the sectors. Countries' science and technology capacities can be strengthened only if there are nonlinear linkages and strong interrelations among players throughout the innovation process; these relationships generate and transfer knowledge related to commercialization of the innovative health products. The private sector is one of the main actors in healthcare innovation, contributing significantly to the development of health biotechnology via knowledge, expertise, resources and relationships to translate basic research and development into new commercial products and innovative processes. The role of the private sector has been increasingly recognized and emphasized by governments, agencies and international organizations. Many partnerships between the public and private sector have been established to leverage the potential of the private sector to produce more affordable healthcare products. Several developing countries that have been actively involved in health biotechnology are becoming the main players in this industry. The aim of this paper is to discuss the role of the private sector in health biotechnology development and to study its impact on health and economic growth through case studies in South Korea, India and Brazil. The paper also discussed the approaches by which the private sector can improve the health and economic status of the poor. © 2012 Elsevier Inc. All rights reserved.

Contents 1. 2. 3.

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Health innovation systems, the role of the private sector and economic developments . . . . 3.1. Health innovation capabilities and its components: South Korea as an example . . . . 3.2. Private sector contributions to health biotechnology and economic growth: case studies 3.2.1. India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2. Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Abbreviations: AIDS, Acquired Immune Deficiency Syndrome; APEC, The Asia-Pacific Economic Cooperation; DNDi, Drugs for Neglected Diseases Initiative; DCVMN, Developing Countries Vaccine Manufacturers' Network; EMVI, European Malaria Vaccine Initiative; FIND, Foundation for Innovative New Diagnostics; FDA, Food & Drug Administration (USA); GERD, Gross Expenditure on Research and Development; GDP, Gross domestic product; HDI, Human Development Index; HHVI, Human Hookworm Vaccine Initiative; HIV, Human Immunodeficiency Virus; IAVI, International AIDS Vaccine Initiative; IDC, Innovative Developing Countries; IDRI, Infectious Disease Research Institute IP—Intellectual Property; IPM, International Partnership for Microbicides; IMF, International Monetary Fund; iOWH, Institute for One World Health; MIHR, Centre for the Management of Intellectual Property in Health Research and Development; MGDs, Millennium Development Goals; MMV, Medicines for Malaria Venture; MVI, Malaria Vaccine Initiative; NEPAD, New Partnership for Africa's Development; NIS, National Innovation System; OECD, Organization for Economic Co-operation and Development; PID, Integrated Programme on Genetics; PPP, Public Private Partnership; PPP‐PDs, Public Private Partnerships for Product Development; PDPs, Product Development Partnerships; PNI, National Immunization Program; PCT, Patent Cooperation Treaty; R&D, Research and Development; S&T, Science and Technology; SME, Small to Medium Enterprise; TRIPS, Trade-Related Aspects of Intellectual Property Rights; UNICEF, United Nations Children's Fund; UNDP, United Nations Development Program; USA, United States of America; MMV, Medicines for Malaria Venture; WTO, World Trade Organization; WIPO, World Intellectual Property Organization; WHO, World Health Organization; WHO/TDR, World Health Organization/Research and Training in Tropical Diseases. ⁎ Corresponding author. Tel.: + 60 3 9171 5394, + 60 16 9655900 (H/P); fax: + 60 3 9171 5402. E-mail addresses: [email protected], [email protected] (G. Abuduxike). 0734-9750/$ – see front matter © 2012 Elsevier Inc. All rights reserved. doi:10.1016/j.biotechadv.2012.05.002

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4. Approaches to exploit the private 5. Conclusions . . . . . . . . . . Acknowledgements . . . . . . . . . References . . . . . . . . . . . . .

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sector's role . . . . . . . . . . . . . . . . . .

in health biotechnology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1. Introduction Health biotechnology is becoming one of the driving forces behind the economic development of developing countries and a vital tool for improving the efficiency and accessibility of healthcare for the poor. Several developing countries have made remarkable progress by addressing local health needs through intensive research and development and innovative health products (Jason, 2006; Mahoney and Morel, 2006; Thorsteinsdóttir et al., 2004a). For instance, Brazil, China, Cuba, Egypt, India and South Africa are considered innovative developing countries (IDC), as they have made significant gains in research capacity and outcomes by increasing the number of health products, patents and scientific publications that they produce. These developments were supported by significant government investment, as well as by the growth of the private sector, which contributes to economic growth (Jason, 2006; John, 2005; Mahoney and Morel, 2006; Morel et al., 2005a; Thorsteinsdóttir et al., 2004a). The rapid growth of health biotechnology in developing countries is partially due to a dramatic shift in the focus of health biotechnology in industrialized countries. Previously, research focused on chronic diseases such as cardiovascular disease, diabetes mellitus, respiratory diseases and cancer. Less than 10% of health research worldwide is dedicated to diseases prevalent in developing countries (John, 2005). From 1975 to 1999, out of 1393 new biotechnology products produced in western countries, only 16 (~1%) targeted tropical diseases and tuberculosis, the main health issues in developing countries (Cheri, 2010; Jason, 2006; John, 2005; Troullier et al., 2002). Similar trends were observed in the number of US patents from IDCs from 1990 to 2003; only 10 of 105 drug, vaccine and pharmaceutical products targeted the diseases that mainly affect the poor in developing countries (Morel et al., 2005a). Essential medicines and healthcare are not available or affordable to most people in the developing world (John, 2005). Thus, innovation in heath biotechnology can be used to meet local health needs in the developing world. The continuous development of science and technologies has made novel health products, such as new vaccines, therapeutics, and drugs available for the prevention and treatment of infectious and non-infectious diseases. Innovative diagnostics and medical devices have significantly improved the accuracy and speed with which the diseases that affect the developing world can be identified, prevented and treated (Daar et al., 2002; John, 2005; Mahoney et al., 2005; Morel et al., 2005a; Sarah et al., 2006; Daar et al., 2007). In 2002, the top 10 health biotechnologies were identified in a study conducted by the University of Toronto with the participation of scientists from both developed and developing countries. These technologies align with the United Nations Millennium Development Goals (MDGs) by improving the health status of the poor and other economic-development indicators over the next 5–10 years (Sarah et al., 2006; Tara et al., 2004; Thorsteinsdóttir et al., 2004a). These technologies are molecular diagnostics, recombinant vaccines, vaccine and drug delivery, bioremediation, sequencing of pathogen genomes, female-controlled protection against sexually transmitted infections, bioinformatics, enriched genetically modified crops, recombinant therapeutic proteins, and combinatorial chemistry (Daar et al., 2002; Sarah et al., 2006; Tara et al., 2004). Developing nations, however, could take better advantage of these technologies if they were widely implemented, overcoming the lack of funding and resources, shortage of scientific capacity, and inefficient policies and regulations, as well as the weak linkages between

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the public and private sector. This latter shortcoming is largely the result of an inadequate national innovation system (NIS) (Jean, 2004; John, 2005; Tara et al., 2004). Innovation studies have found that a successful health-biotechnology industry requires a relatively strong health-innovation system to assess a nation's science and technology capacity (John, 2005). A country's national system of innovation (NSI) is “a system which encompasses various institutions that contribute to the creation, diffusion, and use of new economically useful knowledge and the linkages and synergies between the institutions. These institutions not only include formal ones like firms, universities, research centers and government, but also institutions in a wider sense, such as social norms and law” (Lundvall, 2010; Sarah et al., 2006; Tara et al., 2004; Thorsteinsdóttir et al., 2004a). A national health-innovation system consists of such dynamic networks of public and private sector, connected through nonlinear interactions and activities to generate specific knowledge and use it to produce and supply new technologies to solve health problems (John, 2005; Morel et al., 2005a). The government has a fundamental role in health-innovation systems, as policymakers establish government agencies and encourage research institutions, universities and private companies to initiate and develop health biotechnology research programs with funding and resources (Jason, 2006; Mahoney and Morel., 2006; Thorsteinsdóttir et al., 2004a). Nevertheless, the private sector is becoming a vital player in biotech industry development in IDCs. Many scholars who study innovation systems have stated that private firms/sectors are the core of health innovation and that they are crucial for the success of IDCs (Lundvall et al., 2002; Mahoney and Morel, 2006; Morel et al., 2005a; Sarah et al., 2006; Thorsteinsdóttir et al., 2004a). Private sectors contribute significantly to health biotechnology, using knowledge, expertise, resources and relationships to translate basic research and development into new commercial products and innovative processes (Krattiger, 2002; Sarah et al., 2006; Thorsteinsdóttir et al., 2004b; UNDP Commission on the Private Sector and Development, 2004). The contribution of private sector development was stressed in the report by the UNDP Commission on the Private Sector and Development (2004): “The Commission believes that any approach to private sector development—and the policy and action recommendations that accompany it—should be grounded in the realization that the savings, investment and innovation that lead to development are undertaken largely by private individuals, corporations and communities. The private sector can alleviate poverty by contributing to economic growth, job creation and poor people's incomes. It can also empower poor people by providing a broad range of products and services at lower prices”. Studies have examined the relationship between economic growth and private sector investments and have demonstrated that countries with higher growth had higher private investment (UNDP Commission on the Private Sector and Development, 2004). In developing countries, however, most of the investment in health research is sponsored by the government and carried out in public institutions, while the private sector is the largest biotechnology investor in developed countries (Krattiger, 2002; Morel et al., 2005a; UNDP Commission on the Private Sector and Development, 2004). The most recent estimate of annual research and development (R&D) investments in medical, agricultural and industrial biotechnology was US$12 billion in both the public and private sectors. Out of the total investment, approximately 60% occurs in the USA, nearly 30% in Europe and less than 10% in Japan. Only 20% of the total is invested by the public sector, with the majority coming from the private sector. Nearly 80% of the total private investment is directed to medical applications.

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Biotechnology investments in developing countries are estimated to be less than 5% of the total global investments in biotechnology R&D (Krattiger, 2002). According to a report by Ernest and Young (2008), only 3% of the global biotechnology market revenue is returned to Asia‐Pacific countries, while 77% is dominated by publically traded companies in the US, followed by Europe and Canada (16% and 4%, respectively) (Ernest and Young, 2008). As a result of a study by the researchers from the McLaughlin-Rotman Centre for Global Health on health biotechnology in DC, recommendations emphasized the significance of the private sector in development. The private sector advocates developing the academia–industry interface, improving collaboration and networks at various levels, and facilitating the involvement of SMEs. Recommendations also emphasize the importance of regulation, an IP rights framework for commercialization and funding mechanisms to encourage private-sector involvement (Daar et al., 2007; Thorsteinsdóttir et al., 2004b). Thus, a welldeveloped, commercially innovative and actively involved private sector is increasingly vital for addressing the health needs of the poor and encouraging economic growth in developing countries. At the same time, the interdependent and interrelated nature of health innovation processes entails that no organization innovates independently (Global Forum for Health Research, 2009; UNDP Commission on the Private Sector and Development, 2004). Hence, all sectors in the health innovation system, including government, public institutions and funding entities, must work together to build and support a sound innovation system, as such a system requires a strong foundation in the global and domestic macro-environments, physical and social infrastructure and rule of law (Global Forum for Health Research, 2009). Private sector firms are at the heart of any health-innovation system, as they can actively diffuse and integrate various types of knowledge to develop innovative health products. In addition, they are the main arm of commercialization, distributing the products in the market to fulfill the unmet needs of the poor (Harris and Mahoney, 2005; Sarah et al., 2006; Thorsteinsdóttir et al., 2004a). A number of characteristics of the private sector make it a vigorous player in the development of a health biotechnology industry, as follows: the relatively high efficiency driven by competition; flexibility in organizational structure and management; freedom in decisionmaking from bureaucracy and political concerns; performance-based operation and quality management; capacity for investments and human-capital development; capacity to reduce the unemployment rate and create revenue; and a strong ability to acquire and diffuse new technologies and infrastructure (Prasanta, 2004; Roy and Katherine, 2004; World Economic Forum, 2005). On the contrary, the private sector would not be able to function effectively without strong support and political will from the government and its agencies. Policy-makers should set private-sector development as the main agenda of their policy and regulations, creating a well-governed macro-environment for business and increasing the transparency and accountability of related policies and regulations (Sarah et al., 2006; UNDP Commission on the Private Sector and Development, 2004; World Economic Forum, 2005). To build a successful health biotechnology industry, the advantages of the private sector should be exploited through the establishment of strong networks and collaboration between the private and public sectors (Sarah et al., 2006; UNDP Commission on the Private Sector and Development, 2004). Public/Private Partnerships in Product Development (PPP-DPs) or Product-Development Partnerships (PDPs) have been established to develop new health technologies focused on the needs of the poor in developing countries. PPP-DPs/PDPs leverage the private sector's strengths (investment, advanced technologies and infrastructure) to increase the funding for R&D, commercialization and production of the health products. In addition, PPP-DPs/PDPs manage the linkages with and contributions of the public sector, industry, NGOs, institutions and academics to discover and produce new health technologies targeted to specific diseases in developing countries (Cheri, 2010; Sarah et al., 2006). The aim of this paper is to discuss the role of

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the private sector in the context of health biotechnology development and to study its impact on health and economic growth of the country through case studies from several countries such as South Korea, India and Brazil. The paper also considers approaches to exploit the role of the private sector in improving the health and economic status of the poor. 2. Methodology The review has been carried out by selecting articles using the key search terms “private sector”, “health biotechnology”, “health innovation system”, “national innovation system”, “public/private partnership” “economic development”, and “developing countries”. The search was performed through PubMed, Google Scholar, and other official websites and sources, such as OECD, WHO, NEPAD, UNDP. Any published paper discussing the private sector was included, and content analysis was conducted. This review focuses on the following questions: – What are the roles of the private sector in health biotechnology innovation? What is its contribution to economic development in developing countries? – How has the private sector contributed to health biotechnology industries in other developing countries? – What approaches can be used to leverage the private sector to develop a successful health biotechnology industry? 3. Health innovation systems, the role of the private sector and economic developments 3.1. Health innovation capabilities and its components: South Korea as an example Health-related science and technology can be used to improve the health care system, reduce the disease burden, and improve economic status of the poor in the developing world (Krattiger, 2002; Tara et al., 2004). In developing countries, the capacity for science and technology consists of several main aspects: human capital and expertise in healthcare technology-related disciplines; availability and accessibility of funding and investments for health research and development; focus and effectiveness of research institutions and universities; development and linkages between the private and public sectors and their role in health-related innovation; government policy in relation to health-related technologies and their implementation (John, 2005). In particular, innovation in health biotechnology requires capabilities in health research as well as the ability to translate research findings into commercial products. Without this capacity, investments by developing countries may result only in academic jobs and publications, with no significant impact on health, no tangible products and no improvements to health policy and services (Morel et al., 2005b; Harris and Mahoney, 2005; UNCTD, 2004). As most research is carried out in government research institutions and universities, it is crucial to bring the private sector to these research facilities to overcome barriers to transfer technology and diffusion (UNCTD, 2004). This approach requires an efficient health innovation system in which government, the private sector, universities, and research institutions are important parts of this larger system of knowledge and interactions that allows diverse actors with varied strengths to come together to pursue broad common goals for innovation (Calestous and Lee, 2005a, 2005b; Morel et al., 2005b; UNCTD, 2004). In a study by Morel et al. (2005a, 2005b) this approach is described as “… health innovation systems have multiple components, operating in both the public and private sectors, including the following: education, research, financing, manufacturing technology management practices, intellectual property rules, regulatory rules, and domestic and export markets (including public procurement). The system refers not only to those components but also to the technical, commercial, legal, social and financial interactions; the interlinkages among components; and the

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policies and practices that guide them. The faction (or dysfunction) of and dynamic linkages among these components contribute to the production and delivery of health products and services to people—or lack thereof” (Fig. 1). The private sector is an important component of the innovation process, especially in investment in transfer technologies and in applying R&D to health products. Crucially, the private sector partners with the public sector to market and commercialize these products. Some developing countries, such as India, China, Brazil, Cuba and South Africa, are considered IDCs, as they are actively involved in health biotechnology and have reached certain stages in health innovation. As shown in Table 1, the four-stage framework consists of six determinants and can be used to assess the health innovation capacity and to illustrate how developing countries can advance their capacity for innovation (Mahoney, 2007; Mahoney et al., 2005; Morel et al., 2005a, 2005b). To become an IDC, a country must pay concerted attention to these six components of product innovation: creating capacity for and undertaking R&D in the public and private sectors; creating and implementing regulatory mechanisms for drugs and vaccines to achieve safety and efficacy; building capacity to manufacture new health-related technologies with high standards; creating national distribution systems in both the public and private sectors; creating international distribution systems (including supply of drugs and vaccines through international organizations such as UNICEF, the operation of global funds, and trade among countries); and creating effective systems for managing Intellectual Property (IP) (Mahoney, 2007; Mahoney et al., 2005; Morel et al., 2005a). One important aspect of this framework is that the determinants are dynamically linked and their progress is strongly interdependent. Foreign firms in developed countries will form joint ventures based on the value of the domestic market in the developing country, the capacity of local R&D centers, IP protection and drug regulation systems (Mahoney, 2007; Mahoney et al., 2005; Morel et al., 2005a). South Korea has achieved remarkable economic growth over the last four decades, advancing the nation from one of the poorest agriculture-based societies to a developed, knowledge-based economy (Kate and Katharina, 2004; OECD, 2009, 2010). The overall health status of the population also improved following the economic development of the country, with the life expectancy for adults increasing to 80.6 in 2011 (UNDP, 2011) and the gross domestic product (PPP) increasing to US$1.459 trillion, with a real growth rate of 6.2% in 2010. The per-capita GDP is US$30,600 in 2010 (IMF, 2011; The World Factbook, 2010est). The country is ranked 15th in the Human Development Index (HDI) out of 187 countries, with a value of 0.897

in 2011 (UNDP, 2011). Korea obtained the status of an OECD country in 1995 and has rapidly developed its R&D capabilities, continuing to increase investments in this field (Mashelkar, 2005; OECD, 2009). As a newly industrialized country, the rapid development of Korea is mainly the result of strong political and financial support from the government, priority given to S&T and immense effort on the part of the private sector (Mahoney et al., 2005; OECD, 2010). South Korea is a good example of using the above framework to assess the swift development of the health biotechnology industry, in particular of its vaccine industry. This industry has progressed through all stages by addressing the six components of innovation and has illustrated the significance of involvement by the private sector (Mahoney, 2007; Mahoney et al., 2005). The Korean government has successfully developed protection for IP rights and a drug regulatory system to encourage the influx of foreign technologies and to support the innovative production of local health products by the domestic private sector (Joseph et al., 2004; Mahoney et al., 2005). Between 1980 and 1990, Korea improved its system for IP protection by joining the World Intellectual Property Organization (WIPO) in 1979 and acceding to the Paris Convention in 1980 and the Patent Cooperation Treaty (PCT) in 1984. In 1995, the IP system conformed to the agreement of Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement) (Mahoney, 2007). Other developing countries can benefit from Korea's experience to develop their product innovation capability for health biotechnology and to understand the significant contribution of the private sector to the development of essential health products and medicines for the poor (Joonghae, 2001; Mahoney et al., 2005). Among the OECD countries, Korea is fourth regarding level of R&D investment after Sweden, Finland and Japan, with the gross expenditure on R&D (GERD) increasing from 3% of GDP in 2006 to 3.4% in 2008 (OECD, 2010). The average annual growth in real GERD was almost 10% between 2000 and 2008, and in 2008, the GERD per capita of USD931 (in current PPP) was above average. In general, 73% of GERD is invested by the private sector, and only 0.2% is funded by foreign companies (OECD, 2010). The private sector was encouraged to engage in technology development through a wide range of measures, including tax incentives, financial provisions, public procurement and S&Trelated infrastructure (Dong and Martin, 2007). In 2003, 75.1% investment of total R&D expenditure was funded by the private sector (Deok, 2006; OECD, 2009), which shows that Korea's innovations are mainly driven by domestic private sector (Dong and Martin, 2007). In 2009, public R&D investment in biotechnology ranked first, followed by information technology, energy/environment technology,

Fig. 1. Health innovation system and its components. Health innovation system is related to all the sectors in a country such as education system, legal/regulatory system, industry, public universities and research institutions, health delivery system and services, etc. Health biotechnology products development process involves all the segments in the society and requires having sufficient interlinkages between them. Source: Adopted from C. Morel et al. (2005a, 2005b).

A sophisticated agency overseeing regulatory approvals of drugs and vaccines; the government also oversees clinical trials and production facilities and enforces rules/regulations A sophisticated system of IP management according to the requirements of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) Generous support for health research from basic to applied. Large research investment by private companies including large pharmaceutical manufacturers and biotechnology companies Highly profitable market Global companies in both the public and private sectors, generating profits to support, in part, advanced research Highest capabilities to produce high technology drugs and vaccines Stage 4. Developed countries

Advanced capabilities but not at highest level because of lack of enforcement capabilities Vast acceleration of funding Advanced IP system but not fully meeting TRIPS requirements for R&D. Development of because of lack of enforcement major research centers, linking with private sector Small‐scale advanced R&D effort capable of creating new products for domestic and export market Increasing exports that are becoming a significant contribution to GNP Rapidly growing domestic market of interest to foreign companies Manufacture of domestically developed, high technology products Stage 3. Maturation of IDC

Limited services but without enforcement capabilities Foreign inventors getting interested, and local inventors starting to file more patents Development of university and independent research centers. Capacity building R&D to understand technology either to produce on license or to copy Growing. companies learning how to establish export markets Growing local market of increasing interest to foreign companies. Import substitution Production on license or by copy Stage 2. Capacity building

Very limited Initial development allowing patents for local; no interest in foreign inventors Very little Very little, except as toll Very little manufacture Small domestic market. Importation of Stage 1. Establishment finished goods or of foundation assembly of finished products

International National

Public

Development of R&D capabilities

Private

Development of distribution system

Development of manufacturing

Table 1 The four stages and six components of product development capabilities in biotechnology. Source: Mahoney et al., 2005

IP system

Drug and vaccine regulation

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space/air/ocean technology and machine/manufacturing technology (MOEST, 2010). In the first biotechnology fostering plan, Biotech 2000 (1994–2006), the total governmental R&D expenditure in biotechnology was 4.3 trillion KRW (=US$3.6 billion), with an average annual growth rate of 23% (Bong, 2010). These efforts have yielded remarkable outcomes from R&D in the number of health products, scientific publications and patents since the 1980s (Joseph et al., 2004; OECD, 2010). In 2008, there were 44 triadic patents per million population (above the OECD average) and 672 scientific publications per million population (OECD, 2010). In 2001, 12% of all university research spending was invested in health-related R&D (Deok, 2006; Joseph et al., 2004). The number of health biotechnology‐related publications by South Korean researchers increased tenfold from 1992 to 2002 (Joseph et al., 2004). Korea was ranked fourth in the number of patents and utility models applied for in 1997, inventing 175,791 items (3.7% of the world total) (Deok, 2006). Within a few years, industries have grown incredibly fast and have increased their investment by establishing R&D laboratories (Deok, 2006). Several startup companies have achieved remarkable success. For instance, South Korea's LG Life Sciences and CJ Group both produced their own recombinant hepatitis B vaccines in the mid-1990s. The company played an important role in addressing the needs of the local market as well as those of other developing countries by exporting the vaccines to sell at a lower price (Joseph et al., 2004). In 2004, researchers from Seoul National University had successfully derived human ES cells from cloned embryos donated by Korean women. This achievement positioned South Korea as a leader in health biotechnology innovation (Joseph et al., 2004). Macrogen is another successful startup company that focuses on DNA microarrays, DNA sequencing and the Korean Genome Project; this company has been growing significantly since its establishment in 1997 (Joseph et al., 2004; Mahoney et al., 2005). 3.2. Private sector contributions to health biotechnology and economic growth: case studies of India and Brazil The concept of national systems of innovation has evolved and diffused quickly over the last 20-plus years among scholars and policymakers in different disciplines focusing on economic growth (Lundvall et al., 2002). The OECD in particular emphasizes the importance of diffusion and innovation for economic growth by producing many reports on the subject (Stephen, 2003). Several studies have illustrated the interrelations between science and technology, health and economic development. For instance, Mashelkar illustrated that there is a strong correlation between economic strength, science and technology, and capacity for innovation. He assigned countries to four categories, as shown in Table 2. Innovative developing countries belong to the category with low economic strength but with relatively high science and technology capacities, such as Brazil, India, China, South Africa, Malaysia, Mexico, and Argentina (Morel et al., 2005a, 2005b); however, he also emphasized that the assignments can change. South Korea has proved this point by growing into a hightech industrialized country from a developing country in a short period with an economy mainly driven by private sector involvement (Jason, 2006; Mashelkar, 2005; Morel et al., 2005a). The biotechnology sector is estimated to have generated at least US$34.8 billion in revenues and employed approximately 190,000 individuals in publicly traded firms worldwide. An estimated 4200 public and private biotechnology firms were in operation (Ernest and Young, 2002; UNCTD, 2004). In the Asia-Pacific region, the revenue of publicly traded biotechnology companies grew by 21% (US $3970 million), as the R&D expenses grew by 22% (US$488 million) to keep up with the revenue (Ernest and Young, 2008). Several developing countries have had success in using health biotechnology to improve the health of population and at the same

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Table 2 Relationship between economic strength and indigenous capacity in science and technology. Source: Adapted from Mashelkar, 2005. Economic strength

High

Low

Low

High Indigenous S&T capacity Rich countries with weak Developed nations innovation capabilities –USA –Japan –Middle eastern countries –Europe Innovative developing Least developed countries countries (IDCs) –Sub Saharan African countries –Brazil –Some Asian countries –China –India, etc.

time to alleviate poverty. A series of studies has evaluated the development of health biotechnology in several developing countries (Thorsteinsdóttir et al., 2004a, 2004b). Fig. 2 presents the output of R&D in some IDCs from 1991 to 2002 and shows a rapid increase in the number of scientific publications, as well as an increase in the number of patents issued in the US (The Economist, 2004). We can see from the experience of these countries that the private sector has made important contributions to the success of the health biotech industry. In this review, India and Brazil serve as case studies of developing health biotechnology and of the vital contribution of the private sector to development. 3.2.1. India India is the second most populated nation in the world; the population grew to over 1.2 billion with a population growth rate of 1.344% in 2011 (UNDP, 2011; The World Factbook, 2012). It ranked 134 out of 187 countries, with an HDI value of 0.547. The GDP per capita is US$3500, with a real GDP growth rate of 10.1% in 2010 which is the fifth in the world in 2010 (UNDP, 2011; World Fact Book, 2010est.). India is a major contributor to the emerging Asian economy, which reached approximately 8% real GDP growth in 2011 (IMF, 2011). In spite of significant economic development over the last few decades, more than 25% of the Indian population lives below the poverty line (Roddam, 2008) and suffers from various infectious diseases such as HIV/AIDS, bacterial diarrhea, hepatitis A and E, dengue fever, malaria and other neglected diseases. The total life expectancy is 66.8 years. Other major health indicators such as the maternal mortality rate (230 deaths/100,000 live births) and the infant mortality rate (47.57 deaths/1000 live births) are much lower than those of comparable countries (The World Factbook, 2012). At the same time,

non-communicable diseases such as heart disease, cancer, mental illness, diabetes and injuries are becoming bigger threats to the poor (NCDs policy brief—India, 2011; The World bank, 2011). India is still far from reaching the millennium development goals for the eradication of poverty and diseases in the poor. Nevertheless, these facts have catalyzed the biotechnology and pharmaceutical sectors to develop solutions to local health problems such as lower respiratory infections, prenatal conditions, diarrheal diseases, TB, and HIV. Today, India is a powerful emerging economy with strong domestic health biotechnology/pharmaceutical companies that produce, manufacture and commercialize numerous essential medicines at prices affordable for the poor in India and to millions of people in other developing countries (Sarah et al., 2007, 2008). Since India attained independence in 1947, the government has emphasized the benefits of science and technology to the overall development of the country and has focused on developing S&T capabilities and infrastructure (Abhishek, 2007; Nandini et al., 2004; Roddam, 2008; Sarah et al., 2006). Government policy and regulations, such as the Scientific Policy Resolution (1958), the Technology Policy Statement (1983), and Science and Technology Policy (2003), have resulted in notable scientific successes (Jonathan et al., 2009). Starting in 1980, the economy has become more liberalized. The private sector gradually became a bigger player in wealth creation and development (Roddam, 2008). As one of the first few developing countries to realize the significant advantages of biotechnology for well being and economic development, India has given strong political support to the development of this industry (Satyanarayana, 2007; Sachin, 2002); however, because limited resources are available for R&D, the government has supported product processing rather than innovative product development because the government was the dominant funding source for the health biotechnology industry (Nandini et al., 2004; Sarah et al., 2006). Another major reason to focus on developing generic products and manufacturing services is the patent system. Since the patent act of 1970, pharmaceutical products have been excluded from patent protection in India; thus, generic drugs can be produced cheaply to meet the needs of the poor, making India the world leader in the manufacturing of high-quality generic drugs (Janice, 2006; Jean and Margaret, 2005; Sarah et al., 2006). In 2005, India reintroduced patent protection for pharmaceutical products to meet the requirements to become a WTO member country; this decision was a major turning point in India's pharmaceutical and biotechnology industry (Janice, 2006; Satyanarayana, 2007; Sarah et al., 2006). The implementation of this patent regime in the pharmaceutical and biotechnology industry shows that an effective and efficient patent system can encourage innovation and promoted transfer of technology (Janice, 2006; Peter, 2008; WIPO,

Fig. 2. Output of R&D in some developing countries by no. of papers and no. of patents (1991–2002), (1). Number of published papers related to health biotechnology (2). Number of patents issued related to health biotechnology by US, 2003. Source: The economist, 2004.

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2007). It is estimated that of the 24,505 patent applications that the Indian Patent Office received in 2005–2006, 33% were for chemicals, drugs and food and 39% were for biotechnology (Peter, 2008). Since 1990s, the Indian government has established diverse innovation policies to support private firms/companies investing in and carrying out innovative research and development on health products (John, 2005; Sachin, 2002). The incentives include tax exemptions and venture capital funding for startup companies, price control exemptions on the export of health products, etc. In 1994, the government invested at least 0.81% of its Gross National Product on R&D, mainly targeting health science-related research and focusing on developing human capital, research centers and agencies (John, 2005). After the initiation of India's Sixth Five Year Plan (1980–1985) and the establishment of the Department of Biotechnology to promote development of the biotechnology industry, domestic biotechnology companies and biopharmaceuticals grew aggressively under a liberalized IP regime (Ernest and Young, 2010; Parveen, 2005; Sachin, 2002). It is estimated that biotechnology employs more than 10,000 people and generates roughly US$500 million in annual revenue. Additionally, the biotechnology market increased its sales from Rs.50 billion in 1997 to Rs.70 billion in 2000 (Abhishek, 2007). India's strengths (a large and highly skilled scientific and technical workforce, low-cost R&D and manufacturing, information technology skills and the growing demand for health care) created huge opportunities for the growth of biotechnology companies (Ernest and Young, 2010; Nandini et al., 2004). India has a well-established knowledgedriven pharmaceutical industry dominated by small-to-mediumscale private investors. Investment by industry and the private sector have increased significantly over the years (MIHR, 2005). In 2003, India became the fourth largest (by volume) producer of pharmaceuticals in the world (13th by value) and occupied 8% of the global pharmaceutical market by volume (1% by value). India has the largest number (>60) of manufacturing facilities approved by the US Food and Drug Administration (FDA) anywhere outside of the United States (MIHR, 2005; Morel et al., 2005a; Satyanarayana, 2007). From 2003 to 2004, the top ten pharmaceutical companies spent more than Rs9.7 billion on R&D, while the entire pharmaceutical sector spent more than Rs13.0 billion which is the highest R&D investment of any Indian industry sector (Satyanarayana, 2007). In India, local health biotechnology firms play a leading role in the development of health biotechnology products, accounting for 60% of the total biotechnology market in 2003 (Abhishek, 2007; Nandini et al., 2004; Parveen, 2005). Studies have shown that the health biotechnology firm's activities, services and products mainly focus on the development and manufacturing of vaccines, non-vaccine therapeutics, diagnostics, bioinformatics, innovative product development and contract services, including R&D, manufacturing, and clinical trials (MIHR, 2005; Parveen, 2005; Sarah et al., 2007). In 2003, nearly 60% of the firms were engaged in specialized domains, such as recombinant drugs, DNA, proteins, hormones, microarrays, diagnostics and vaccines, with R&D as a prominent feature. More than 400 drugs have been developed by Indian firms (MIHR, 2005; Parveen, 2005). It is estimated that the Indian biotechnology market is worth US$700 million in manufacturing, as well as research services. The export market accounted for 56%–60% of the value, while the local market constitutes approximately 40%. The value is expected to reach US$5 billion by 2010 and to create more than one million jobs in that time (National Biotechnology Development Strategy, 2005; Parveen, 2005). India is a member of the Developing Countries Vaccine Manufacturers' Network (DCVMN), with the greatest number of private entities as a network member (namely Panacea Biotech Limited, Serum Institute of India, Biological E. Limited, Bharat Biotech International Ltd., Indian Immunologicals Limited, and Zydus Cadila Healthcare Limited). DCVMN is a voluntary public health-driven alliance of vaccine manufacturers owned by and located in developing countries. These manufacturers offer a consistent and sustainable supply of

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quality vaccines that are affordable and accessible to developing countries (Suresh et al., 2008; see also www.dcvmn.org). In 2007, as one of the six member countries of DCVMN, India was awarded up to US$2.5 million in grants for technology transfer to establish a manufacturing capacity for the influenza vaccine. This investment is in line with the Global Pandemic Influenza Action Plan; by increasing the vaccine supply, the WHO aims to reduce the production gap (Suresh et al., 2008; WHO, 2007). The vaccine industry in India holds the largest share (40–47%) of the biopharmaceutical market. Biopharmaceuticals (mainly vaccines) account for 75% of the export market (MIHR, 2005; Nandini et al., 2004; Parveen, 2005; Padmanaban, 2003). In India, the first indigenously developed hepatitis B vaccine, a recombinant form of the hepatitis B surface antigen vaccine (Hep-B vaccine), was launched in 1997 by Shantha Biotechnics (Hyderabad). It has now supplied nearly 40% of the United Nations Children's Fund's (UNICEF) global requirement for the Hep-B vaccine. This vaccine is distributed to many other countries in Africa and Latin America (Justin et al., 2011; Nandini et al., 2004; Padmanaban, 2003; Parveen, 2005; Sarah et al., 2006, 2007, 2008). In 2009, Shantha sold over 120 million doses of the Hep-B vaccine to dozens of developing countries around the world, with revenues exceeding USD$90 million. That same year, the company was acquired by the multinational giant Sanofi-Aventis (France) at a valuation of USD$784 million. This purchase is a major landmark for the Indian biotechnology industry (Justin et al., 2011). The Serum Institute of India (Pune) is another major private sector player in India's vaccine industry. The company is not only the largest supplier of vaccine to the Indian government's immunization program but also the largest manufacturer and exporter of the measles, diphtheria, pertussis, and tetanus (DPT) vaccines. The company has a 138-country distribution network and provides vaccines through UNICEF and the Pan American Health Organization to 50% of children immunized globally (Sachin, 2002; Sarah et al., 2007, 2008). Another private health biotech company, Panacea Biotech (New Delhi), supplies its oral polio vaccine to the Indian government and UNICEF (Sarah et al., 2007, 2008). The major companies use cost-effective and efficient manufacturing processes and affordable prices to meet the needs of the poor people in India and other developing countries (Justin et al., 2011; Parveen, 2005; Sarah et al., 2007, 2008). Dozens of small-to-medium innovative, private companies are working on vaccine development and other areas with their innovative technologies and are playing an important role in increasing the accessibility and affordability of basic medicines for the poor (Justin et al., 2011; Parveen, 2005; Sarah et al., 2006, 2007, 2008). For instance, Biocon (Bangalore) was one of the first domestic companies to sell recombinant human insulin. Cost-effective production of the product using an innovative technology allowed the company to sell its product at the lowest price in the country (Sarah et al., 2006, 2008; Sachin, 2002). Diagnostics is another major area that Indian health biotechnology companies have focused on. In 2003, the diagnostics market was approximately 9% of the health biotechnology sector (MIHR, 2005; Parveen, 2005). Generally, the numbers of scientific publications and patents are used as major indicators of the outputs of R&D in health biotechnology. India produced 69% of the research output from low-income countries in 1991 and 73% in 2001 (John, 2005). In a study examining the health biotech industry in seven developing countries, the results showed that from 1992 to 2003, India produced the second largest number of patents (178) after South Korea (337). Additionally, India has the second highest percentage of patents (>65%) assigned locally, demonstrating a relatively high proportion of patent ownership and greater potential to capitalize on their inventions (Uyen et al., 2006). In the early 1990s, India produced the greatest number of scientific publications (more than 200), demonstrating that India focused on health biotechnology development early on. The number of publications increased steadily from 1991 to 2002; of these publications, 50.3% were contributed by

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public universities and 43.3% by research institutes (Thorsteinsdóttir et al., 2006). 3.2.2. Brazil Brazil is an upper-middle income developing country as classified by World Bank, and the HDI rank is 84 among 187, with a value of 0.718 (UNDP, 2011). The GDP per capita (PPP) is US$11,300, with a real growth rate of 7.5%. The unemployment rate was 6.7% and the adult literacy rate was 88.6% in 2010 (IMF, 2011; World Factbook, 2010 est.). Brazil has 200 million people, most whom live in poverty with a total life expectancy of 72.9 years (WHO, 2012; The World Factbook, 2012). Many people suffer from chronic non-communicable diseases such as cardiovascular diseases, chronic respiratory diseases, cancer, and diabetes. These diseases accounted for 72% of the disease burden for the poor in Brazil in 2007, with neuropsychiatric disorders being the leading cause of death (Maria et al., 2011). In spite of various difficulties and obstacles, since 1994, Brazil has prioritized health research by establishing health-related S&T policies/regulations and agencies at various levels to implement these policies. In 2003, Brazil launched new funding mechanisms to support R&D in health research; the investment of US$60 million over 2 years (2004–2005) increased to US$36 million in 2006 (over 10% of the total 2005 budget) (Jonathan and Christopher, 2009; Moisés and Suzanne, 2006). Brazil is an innovative research-based economy with strong R&D in cutting-edge science and technology. The investment in R&D has increased significantly since the 1970s. In 2007, R&D expenditure reached US$13 billion (adjusted PPP), almost 1% of GDP (Jonathan and Christopher, 2009). In 2008, 1.4% of GDP was invested in S&T, and from 2003 to 2005, Brazil invested US$2234.5 million in healthrelated R&D (Global Forum for Health Research, 2009). Fig. 3 shows the data on funding resources and performance of the sectors in Brazil. The private sector is an important source of funding, contributing 23.5% of the total investment. More than 60% of the investment is sourced from government agencies, such as the Ministry of Education (22.1%), Ministry of Health (11.0%), Ministry of Science and Technology (11.8%) and other states/municipalities (20%). The universities and research institutions receive 66.7% of the total expenditure, followed by the industrial sector and the Ministry of Health (21.1% and 7.7% respectively) (Global Forum for Health Research, 2009). Similar estimates of funds were invested in health research from 2000 to 2002. The public sector accounted for approximately 73% of this amount, and the private sector contributed 23.7%. The rest is external funds (Guimarães et al., 2006). From these figures, we can clearly see the financial mechanisms and dynamic roles of actors in Brazil's health R&D.

Since the 1970s, the Brazilian government has launched a series of nationally integrated programs to promote and develop the biotechnology industry. Specific programs include the Integrated Program on Genetics (PID), the Integrated Program on Tropical Diseases (PIDE) and in 1981, the National Biotechnology Program (PRONAB) to integrate institutions and budgets in agricultural, energy and health biotechnology. Government agencies, in particular the Ministry of Science and Technology and the Research Support Foundations (FAPs), have played leading roles in the development of this sector by consistent investment. These programs strengthen scientific capabilities and the linkages between universities, research institutes and industries (Marcela et al., 2004; Thorsteinsdótti et al., 2005). These initiatives are supported by the Biotechnology Development Policy (PDB) and a 10year, US$4.0billion biotechnology development program (Tirso et al., 2010). Unlike in South Korea, the private sector in Brazil is not the leading sector in R&D, even though both faced similar situation in the 1970s. The contribution of the private sector increased dramatically, increasing from 28.8% to 74% in the 1990s in South Korea. There was no change in private sector participation in R&D in Brazil during the 1990s; however, the number of firms involved in R&D is currently increasing. From the 1980s to 1995, the trend was consistent; the government is the main investor and performer of R&D, while the private sector contributes only approximately 20% of the total investment (Kate and Katharina, 2004). Brazil's health biotechnology development has some similarity to the Cuban health biotechnology sector in the consistency of government support. The two countries additionally emphasize the establishment of institutions with integrated programs to promote health biotechnology and the necessity of a regulatory environment to protect IP rights (WTO in 1995 and TRIPs in 2005) (Marcela et al., 2004; Rahim et al., 2008; Thorsteinsdótti et al., 2005). Brazil has a very well developed vaccine industry, with one of the best and most complete National Immunization Programs (PNI) of any developing country (Akira, 2009; Rahim et al., 2008). There are 181 biotechnology companies in Brazil, of which 39.4% are related to health (21.1% human health; 18.3% animal health) and 19.6% are related to inputs (Akira, 2009); however, 83% of the PNI is supplied by two main health biotechnology players, namely, Bio-Manguinhos (Rio de Janeiro) and The Butantan Institute (Sao Paulo), which are members of DCVMN (Akira, 2009; Suresh et al., 2008; Rahim et al., 2008). As one of the six countries, Brazil was also awarded a grant worth over US$2.5 million in 2007 to establish manufacturing capacity for the influenza vaccine (Suresh et al., 2008; WHO, 2007). Brazil has a relatively compatible manufacturing facility and the S&T capabilities to manufacture and develop a series of conventional vaccines, such as yellow fever and the

Fig. 3. Financial flows by R&/H in Brazil, 2003–2005. Source: Global Forum for health research, 2009.

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meningitis AC vaccines, of which 100,000,000 doses were exported to over 60 countries (Akira, 2009; John, 2005; Marcela et al., 2004). The Butantan Institute has developed and manufactured several recombinant vaccines in collaboration with other institutions and marketed them with lower prices (Rahim et al., 2008); however, the industry is driven mainly by public research institutions, and there is a lack of interaction and participation of the private sector in these innovations. Governments are realizing the importance of private sector participation and are starting to emphasize public/private partnerships (PPP) to accelerate the development of new, affordable health biotechnology products, especially vaccines. In 2008, the Ministry of Health identified priority products and medicines and established several new regulations to encourage PPP (Akira, 2009; Rahim et al., 2008). As a result of these efforts, the Brazilian health biotechnology industry has gained remarkable success in creating innovative health products as well as an outstanding number of scientific publications. In the 1990s, Federal University of Minas Gerais and the Brazilian biopharmaceutical firm Biobrás (São Paulo, Brazil) collaboratively produced and patented the process for manufacturing recombinant human insulin. Another success is the development of a recombinant antigen test for Chagas disease (Marcela et al., 2004; Rahim et al., 2008; Thorsteinsdóttir, 2008; Thorsteinsdótti et al., 2005). Those success stories show that Brazil's health biotechnology sector has focused on addressing local health needs such as diabetes and Chagas disease, which are the most important health problems in this population. Brazil's sequencing of the plant pathogen Xylella fastidiosa demonstrated that the country has relatively strong genomics research capabilities. Brazilian researchers are currently involved in the world's largest clinical trial on stem cell therapies, the MiHeart Study, which is a multi-institutional collaboration examining the safety and efficacy of stem cell treatments for cardiovascular disease (Tirso et al., 2010). Guimarães et al. (2006) analyzed of Brazil's performance in medical and biomedical research indexed Brazilian publications in all fields and found that the number of publications increased 165-fold from 1973 to 2001. Brazil was 23rd and 21st among the top 30 countries in scientific output in medical and biomedical research, respectively (Morel et al., 2005b). A study analyzing health biotechnology publications in several developing countries showed that from 1991 to 2001, publications increased 3.5-fold in Brazil, and 36% of all papers were produced in Sao Paulo (Thorsteinsdóttir et al., 2006). This trend is similar to other reports showing that the number of publications increased dramatically from 1991 to 2002, as observed in Fig. 2. Another study showed that the number of publication increased sharply, increasing from 96 to 179 from 1998 to 2001 (Marcela et al., 2004; Thorsteinsdóttir, 2008; Thorsteinsdótti et al., 2005). As shown in Fig. 3 in Brazil, universities and public research institutions are the main investors and innovators in the health biotechnology sector. Examples include the Oswaldo Cruz Foundation (FIOCRUZ, Rio de Janeiro) and the Institute Butantan (Sao Paulo) (Akira, 2009; Rahim et al., 2008); however, several studies have noted that the linkages between universities and research institutions and the private sector are not strong. The role of the private sector in applying scientific knowledge to practical products, marketing and commercialization of the health products are not well exploited and have a proven lack of collaboration between private firms regarding health biotechnology (Eduardo and José, 2001; Marcela et al., 2004; Rahim et al., 2008). Knowledge and practice from the health care system are not considered as sources of innovative ideas or solutions by other sectors (Eduardo and José, 2001; Thorsteinsdóttir, 2008; Thorsteinsdótti et al., 2005). It has been highlighted that the connection between health care systems and the health biotechnology industry is stronger in Cuba than in Brazil (Thorsteinsdóttir, 2008; Thorsteinsdótti et al., 2005). One of the key characteristics of health innovation systems is strong user–producer links. As hospitals and physicians are the main users of the health products developed by health biotechnology industries, they play key role in this interaction as well as the development

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and utilization of the health innovative products (Eduardo and José, 2001). As mentioned before, to encourage contributions by the private sector, the Brazilian government initiated several regulations, including “the innovation law and the law of the good” in 2005 and 2006 to support knowledge- and resource-sharing between sectors and to emphasize the strong support for R&D in the private sector (Marcela et al., 2004; Rahim et al., 2008). Since the 1990s, the private sector in Brazil (mainly SMEs) has expanded (Rahim et al., 2008). The number of biotechnology firms increased from 76 in 1993 to 354 in 2001. Of these, approximately 70% are local private firms, 25% are multinational, and 5% are state-owned firms. The healthcare market constituted 26% of the total biotechnology market in 2003 (Marcela et al., 2004; Rahim et al., 2008). Brazil has attracted a large number of multinational pharmaceutical companies and has become the 11th largest pharmaceutical market in the world (Marcela et al., 2004); however, these companies are not involved in development and therefore have very limited impact on the production of novel, innovative products. The government, private firms, and public institutes and universities have made significant efforts to develop innovation capabilities by strengthening and fostering collaborations and partnerships between sectors, firms and partners from other countries. One active player in this growing area is FK Biotecnologia S.A., which in 1999 became the first Brazilian biotechnology firm to receive venture capital (both domestic and foreign) for the development of its innovative technologies. FK Biotecnologia develops and markets immunodiagnostic kits and currently has over 70 products (WIPO, 2004; Rahim et al., 2008). FK Biotecnologia is also actively involved in producing vaccines and diagnostic kits for TB and Chagas disease and supplying those products at low prices (Rahim et al., 2008). Other players are involved in diagnostics, therapeutics and contract services (Rahim et al., 2008). According to Ernest and Young (2010), FK Biotecnologia has established a partnership with the Canada-based ZBx Corporation to direct the clinical development of FK's vaccine for prostate cancer. In December 2009, the leading Brazilian biopharmaceutical company EMS Sigma Pharma announced its plans to form a Brazil-based joint venture with Cuban pharmaceutical company Herber Biotec. In addition, EMS Sigma Pharma entered another agreement with two Shanghai-based laboratories, Biomabs and Guijian, to create a technology platform for the production of the rheumatoid arthritis treatment Etanercept. The pharmaceutical company Uniao Quimica announced plans to invest R $150 million (US$85.5 million) to establish an insulin manufacturing plant in Brasilia (Ernest and Young, 2010). The Brazilian pharmaceutical company Cristalia has begun construction of a new biotechnology unit in Rio de Janeiro to manufacture human growth hormone and interferon. The company has invested R$20 million (US$35.5 million) in the project and plans to invest an additional R$25 million (US$44.3 million) in the new facility (Ernest and Young, 2010).

4. Approaches to exploit the private sector's role in health biotechnology Partnership with the private sector has emerged as a new path for development in biotechnology, partially due to resource and management limitations in the public sector (Kent and Walt, 2000; Mahoney, 2011; Morel et al., 2005b; Prasanta, 2004). Neither the public nor the private sector alone can operate optimally in the health care system, and partnerships are crucial for bringing resources to public health to benefit the poor. Such partnerships diminish the traditional distinction between the public and private sectors' aims and responsibilities (Kent and Walt, 2000; Morel et al., 2005b; Ridley, 2004). The significance of partnerships and the role of the private sector have been emphasized by the United Nations, as partnerships with pharmaceutical companies are included in the Millennium Development Goals (MDGs) to provide the poor with access to essential medicines

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(Kent and Walt, 2000; Roy and Katherine, 2004). The Global Economic Forum report (2005) states, “The role of the private sector is to create wealth, whereas the public sector's job is to create health. Where these two overlap is the PPP”. In particular, the persistent inequalities in the accessibility and availability of basic medicines for the poor, the attention given to the private sector in innovation and R&D for emerging diseases in developing countries, and public/private partnerships (PPPs; also called product development partnerships, PDPs) in both developing and developed countries have been strongly emphasized by governmental and international organizations. Strong financial support was also available from a number of funding agencies, such as the Bill and Melinda Gates Foundation and the Rockefeller Foundation (Calestous and Lee, 2005a, 2005b; Elizabeth, 2005; Kent and Walt, 2000; Mahoney, 2011; Morel et al., 2005a, 2005b; Prasanta, 2004; Ridley, 2004; Roy, 2001). Beginning in the mid-1990s, a group of nonprofit ventures emerged to address the needs of the poor by developing health products and essential medicines for diseases associated with poverty in developing countries (Cheri, 2010; Elizabeth, 2005; Mahoney, 2011; Moran et al., 2005, 2010; Patrick, 2011; Ridley, 2004). There are several definitions of Public–Private Partnerships for Product Development (PPP-PDs). For instance, it is defined by Elizabeth (2005) as “a project or portfolio of projects in which public or philanthropic funds and resources are combined to discover and/or develop a product (medicine, vaccine, diagnostics) to meet a public health need”. In another report, Moran et al. (2010) defined Product Development Partnership (PDP) as “public-healthoriented, not for‐profit organizations that drive product development for neglected diseases in conjunction with external partners”. These initiatives aim to develop innovative medicines, diagnostics, vaccines and interventions to target neglected diseases, such as HIV/AIDs, TB, malaria, and diarrhea, and other infectious diseases that are more prevalent in developing countries and that are associated with few commercial incentives for research by large pharmaceutical companies (Elizabeth, 2005; Moran et al., 2005, 2010; Patrick, 2011; Ridley, 2004;). The primary goal of PDP is the advancement of public health rather than commercial gain, but private sector management, including portfolio management and industrial project management, are usually used in R&D. In addition to product development, many initiatives conduct global advocacy work to increase the profile of their target neglected diseases (Cheri, 2010; Moran et al., 2010). The main drivers of these initiatives have been increased awareness of the burden and distribution of disease, lack of prevention or treatment for these diseases, economic challenges faced by pharmaceutical companies, and the rarity of successful players to approach specific health problems. These ventures use new models to manage and promote the parallel development of a range of different candidate products. Such portfolio management is adopted from industry and pharmaceutical companies to reduce the risk of failure in individual projects (Cheri, 2010; Elizabeth, 2005; Moran et al., 2005; Roy and Katherine, 2004). The first two ventures are the International AIDS Vaccine Initiative (IAVI) and Medicines for Malaria Venture (MMV), which were legally established in 1996 and 1999, respectively (Mahoney, 2011; Patrick, 2011; Roy and Katherine, 2004). IAVI is the first vaccine development initiative founded by Rockefeller Foundation to develop an HIV vaccine, and MMV is the first drug development entity funded by several foundations and agencies (Mahoney, 2011; Patrick, 2011; Roy and Katherine, 2004). More than 20 PD‐PPPs/PDPs emerged after these two initiatives, mainly to develop HIV/AIDS vaccines and microbicides, malaria drugs and vaccines, TB vaccines, drugs and other diagnostics for TB and treatments and vaccines for other neglected diseases (Cheri, 2010; Moran et al., 2010; Roy and Katherine, 2004). These PDPs include the International Partnership for Microbicides (IPM), Malaria Vaccine Initiative (MVI), Global Alliance for TB Drug Development (TB Alliance), Aeras Global TB Vaccine Foundation, Human Hookworm Vaccine Initiative (HHVI), Foundation for Innovative New Diagnostics (FIND), Drugs for Neglected Diseases Initiative (DNDi), International Vaccine

Institute (IVI), Infectious Disease Research Institute (IDRI), European Malaria Vaccine Initiative (EMVI), Sabin Vaccine Institute, Institute for One World Health (iOWH) and World Health Organization: Special Programme for Research and Training in Tropical Diseases (WHO/TDR) (Elizabeth, 2005; Moran et al., 2005, 2010; Morel et al., 2005a, 2005b; Robert, 2004; Roy and Katherine, 2004; Roy, 2001). The WHO estimated in 2005 that more than US$1 billion has been invested in PDPs by private foundations, governments, government agencies, and private organizations. More than US$700 million is provided by the Bill Gates Foundation, which became the single largest foundation for PDPs (followed by the Rockefeller Foundation and others) (Elizabeth, 2005). The trend is similar to estimations from other studies. For instance, Moran et al. (2005) found that approximately US$50 million is pledged by the public and private sectors to all PDPs for 2005; 79% of the total is given by philanthropic organizations. The Bill Gates Foundation contributed 58.9% of this funding. In 2007, it was estimated that US$261.6 million was allotted to PDP R&D; 72.2% of the total is from private foundations, and the Bill Gates Foundation contributed the largest portion (49.3%) (Mahoney, 2011; Moran et al., 2010). From the figures, we can see that the contribution and role of the private sector in public/private partnerships cannot be underestimated, especially as the main source of funding is corporate and private philanthropic organizations (Krattiger, 2002; Moran et al., 2005, 2010; World Economic Forum, 2005). Of the total official flow of financing and philanthropy from the US to developing countries, US $2.7 billion is US corporate donations (World Economic Forum, 2005). Three pharmaceutical companies (Pfizer, Merck & Co., and Johnson & Johnson) contributed an annual equivalent of about US$1.5 billion in drugs, vaccines and other healthcare-related products and support (World Economic Forum, 2005). The continuous efforts of PDPs have yielded some success since their establishments. As illustrated in Fig. 4, PDPs have 122 candidate products in different stages of the development pipelines, and 10 health products have been launched by 2009. Out of all of these products, 90 are biopharmaceutical candidates, and 46 (51%) are products in the pre-clinical stage. Others are in different clinical trial stages, including 6 products that have been launched. Similar trends can be observed with the 32 candidate products for diagnostic and vector control. Most of the products are in early development stages including 4 diagnostic products that have been launched by PDPs (Cheri, 2010; Ridley, 2004). As more products are reaching clinical trials, drug development also explains why PDPs are putting more effort and emphasis into strengthening capacity and infrastructure for clinical trials in developing countries (Cheri, 2010; Ridley, 2004) These approaches are being harmonized by new collaborations between developing countries, a manifestation of the growing globalization of R&D in health biotechnology. For instance, Brazil, India, and South Africa have been working together to identify areas for trilateral cooperation that include nanotechnology and efforts to prevent and treat HIV/AIDS (Calestous and Lee, 2005a, 2005b; Daar et al., 2002). South Korean biotechnology firms are also creating and participating in transnational collaborative linkages in R&D, investment, licensing partnerships and arrangements. These models have extended to Asia, North America, Europe and Middle Eastern countries (Joseph et al., 2004). India is becoming a global center for both vaccine and drug productions, as most global pharmaceutical companies have established facilities. India is also rapidly increasing its capacity to undertake innovative research and development and already has extensive capabilities in clinical assessment (National Biotechnology Development Strategy, 2005; Nandini et al., 2004; Padmanaban, 2003; Sarah et al., 2007). India is now the fourth largest producer of pharmaceuticals in the world and has one of the largest manufacturing facilities approved by the FDA outside the US (Morel et al., 2005b; National Biotechnology Development Strategy, 2005). Several studies have examined collaborations between developed and developing countries (South–North collaboration), as well as the

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Fig. 4. Overview of the different stages of PDP technologies in development. Source: Boston consulting group analysis presented at PDP Forum, PDPs in 2009: State of the Art July 2009 (adopted from Cheri, 2010).

partnership between developing countries (South–South collaboration) (Christina et al., 2009; Thorsteinsdóttir et al., 2010, 2011). Fig. 5 shows the collaborations of biotechnology firms in the studied developing countries and compares their collaborations with developed and developing countries. The collaborations vary, as Cuba has the highest percentage of firms (~ 75%) involved in both South– South and South–North collaborations. Approximately 60–70% of biotechnology firms in India, Brazil and South Africa are actively involved in South–North collaborations. This figure is much higher than the rate of collaboration with other developing countries. In China, only 33% of firms are involved in South–North collaboration, and China has the lowest percentage of firms partnered with other countries in the South. Egypt has the lowest percentage of firms (14%) that have partnerships with the North (Thorsteinsdóttir et al., 2011). These trends greatly depend on factors such as country's innovation system, policy/ regulations and capabilities; however, partnerships between countries are increasing, and the collaborations between South and North are also growing rapidly due to several drivers, including capacity-building, economic development, access to new technology, expertise and access to diverse research materials (Thorsteinsdóttir et al., 2011). Growing numbers of countries are entering bilateral and multilateral North–South S&T agreements; for instance, the Australian government

Fig. 5. Percentage of firms in international health biotech collaboration, comparing South– North with North–South collaboration. Source: Christina et al., 2009.

established the Australia-India Strategic research Fund in 2009; Canada and Brazil signed a framework for cooperation in S&T under the ISTP Canada Brazil program in 2008. A cooperative health technology cluster called Pharmaceutical Gateway China-Finland/Europe has been established with an overall aim of increasing cooperation in the biomedical sciences between Finnish and Chinese universities and health technology companies (Thorsteinsdóttir et al., 2011). As shown in Fig. 5 above, those emerging economies are forming South–South collaborations by signing various agreements on S&T (Thorsteinsdóttir et al., 2011). South–South business alliances between developing countries can provide the poor with access to more affordable health products and services. For instance, the majority of India's (67%), Brazil's (74%) and Argentina's (92%) exported drugs are sent to other developing countries. In some developing countries, most drug imports come from countries in the South (Morel et al., 2005a). It is estimated that approximately 60% of UNICEF's vaccines for extended immunization programs are supplied by India, Indonesia, Cuba and Brazil (Morel et al., 2005a). India is the main supplier of the raw materials or ingredients for antiretroviral production in Thailand and South Africa. In addition, a Brazilian firm, Farmanguinhos, supplied 40% of the antiretroviral required by the Brazilian government, and Indian, Chinese and Korean firms also supplied the antiretroviral, in total, 74% in 2002 and 94% in 2003 (Morel et al., 2005a). Few programs are targeted to developing S&T capabilities in African countries. These programs include the China–Africa Science and Technology Partnership Program (CASTEP) and the Africa–India Framework for Cooperation (Thorsteinsdóttir et al., 2010). In 2004, the WHO Developing Countries' Vaccine Regulatory Network was created to focus on R&D for HIV vaccines, new drug development and prevention of HIV/ AIDs. This network includes Brazil, China, India, Indonesia, Russia, South Africa, South Korea and Thailand (Morel et al., 2005b; Thorsteinsdóttir et al., 2010). As mentioned earlier, 24 manufacturers of vaccines in developing countries have formed the Developing Countries Vaccine Manufacturers' Network, DCVMN (http://www.dcvmn. com/), mainly to address the needs of the poor by consistently supplying affordable, high-quality vaccines to developing countries (Suresh et al., 2008; Thorsteinsdóttir et al., 2010). As an IDC, Cuba collaborates actively in health biotechnology with other developing countries as well as with developed countries. Cuba

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has the highest rate of South–South and South–North collaboration among the emerging developing countries, followed by Brazil. The Finlay Institute in Cuba is another member of DCVMN (Suresh et al., 2008; Thorsteinsdóttir et al., 2010). Some examples of other types of collaborations include the following: a R&D partnership between Ranbaxy Laboratories (India) and GlaxoSmithKline for product identification; a partnership between Biomanguinhos/FIOCRUZ (Brazil) and Glaxo SmithKline for the production of Haemophilus influenzae vaccine; and a partnership between the Instituto Butantan (Brazil) and Aventis Pasteur for the production of influenza vaccine (Morel et al., 2005a, 2005b). To improve their innovative capacities and the success of their health innovation systems, developing countries should strengthen their IP protection, develop their R&D and manufacturing capacities, promote their export and import markets and establish vaccine and drug regulations (Mahoney, 2007; Mahoney and Morel, 2006; Mahoney et al., 2005; Morel et al., 2005a; Harris and Mahoney, 2005). These components are essential for the development of a domestic private sector and its involvement in innovation in the country. In particular, a strong IP system in developing countries can make the private sector more inclined to work with the public sector on essential drugs and health products (Mahoney and Morel, 2006; Mahoney et al., 2005; Morel et al., 2005a; Prasanta, 2004). 5. Conclusions Health biotechnology is the fastest growing arena in which developing countries can address their specific health problems. It has the potential to bring economic benefits to the country. This review explores the roles of the private sector in the development of this particular field and attempts to identify the practical approaches that could leverage private sectors through the experience and success of other innovative developing countries. For most developing countries, improvements to the health status of the poor and to health care accessibility are a critical challenge. To overcome this challenge, developing countries must place science, technology, and innovation at the center of their development strategies. The creation of non-linear linkages and interrelations between knowledge generation and enterprise development is another vital challenge faced by developing countries. Governments should encourage close connections between different innovation actors such as universities, research institutions, financial agencies and the private sector by establishing policies, regulations that provide incentives to the sectors, and infrastructure, as well as by improving the financial mechanisms of the country. Priority should be given to strengthening and expanding institutions that create synergies between biomedical researchers, teachers, medical practitioners, and outreach groups. Governments should build an innovation ecosystem sufficient to support private sector development, as it is one of the key resources in economic development human welfare. The government can serve as a vital channel for the delivery of medical services. In summary, we suggest that the private sector is the key in the development of health biotechnology. Health innovation systems should be emphasized, and more specific, practical actions must be taken to address the health problems of the poor by leveraging private sector capabilities and resources. We strongly emphasize that to harness the private sector, governmental and international organizations should encourage and facilitate various partnerships between sectors, regions and countries. Acknowledgements The authors would like to thank Associate Professor Dr. Halla Thorsteinsdóttir for her useful comments on the manuscript and for her time.

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