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How National Policies Impact Global Biopharma Innovation: A Worldwide Ranking

Innovation is not manna from heaven, as Nobel Prize-winning economist Robert Solow once suggested. Rather, it is the product of intentional human action. And, in the case of life-sciences, innovation requires years of cumulative, painstaking, expensive, and risky research. Despite these challenges, many nations, universities, and companies remain focused on developing new life-saving and life-improving treatments and cures. But these efforts are limited by nations that “free ride” and fail to do their fair part. Some countries do not invest adequately in life-sciences research. Some seek to pay less than their fair share for drugs by enacting weak intellectual property protections or forcing drug companies to sell drugs at artificially low prices. These policies make it harder for life-sciences innovators to capture returns from one generation of biomedical innovation to fund investment in the next, weakening a virtuous cycle of life-sciences innovation.

If nations establish the right conditions under which life-sciences innovation can flourish, they contribute to biopharma innovation not only for their own citizens, but for citizens throughout the entire world.

This report builds upon the Information Technology and Innovation Foundation’s Contributors and Detractors: Ranking Countries’ Impact on Global Innovation report by specifically examining the extent to which the public investment, intellectual property, and drug pricing policies of 56 countries proactively contribute to or detract from global life-sciences innovation. Countries with robust life-sciences innovation policies contribute disproportionately to the global stock of innovation in life-sciences fields, as the benefits of this innovation exceed what is captured by the host country, spilling over into the global public commons.

In contrast, countries that invest little in life-sciences research, that fail to provide adequate IP protections, or that restrict drug prices to such a degree that innovators have little incentive to develop groundbreaking life-sciences products at best do little to contribute to and at worst actively harm the global environment for life-sciences innovation. These nations have made the choice to free ride off the global stock of life-sciences innovation by investing less in research and paying less for drugs. These choices hurt all of humankind by slowing down biopharmaceutical innovation.

This report finds that the United States places first overall, with policies (on a per-GDP basis) that contribute the most to global biopharmaceutical innovation, followed by Switzerland, Taiwan, Singapore, and Sweden, in that order. On the other end of the rankings, India’s policies do the least to facilitate global biopharmaceutical innovation, followed by South Africa, Thailand, the Philippines, and Australia, in that order.

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