INNOVATION, PATENTS AND ECONOMIC GROWTH - Innovation in the Biopharmaceutical Industry - page 80

expensive, creating particular problems for SMEs or fast moving industries. Patent
protection and enforcement of IP rights are inadequate in some member states. There
is no EU-wide community patent and this unfavourable environment constrains
reward opportunities and acts as a major deterrent to investment decisions as regards
innovation.
Political and public understanding of the importance of IP remains poor. Patent-
ing and IP are often trivialised and in many quarters ideological opposition to IP
remain strong. While the UK, Germany and the Nordic Countries demonstrate good
practice, with initiatives to encourage R&D, innovation and IP management, these
are the exceptions rather than the rule. Instead, EU remains home to a heteroge-
neous mosaic of many member countries, with a lack of senior political figures to
champion necessary reforms to create a more enabling environment that encourages
innovation and creation of IP.
Progress has been poor in implementing The Lisbon Agenda, which explicitly
identified the EU's objective to become the world's leading knowledge-based econ-
omy. The life sciences industry is one of the few industries where the EU enjoyed
global competitive advantage but this advantage continues to erode. The EU is failing
to leverage its knowledge base and infrastructure in the life sciences sectors — and,
the ability to leverage this knowledge base is hindered by the cumbersome patent
system.
There is a need for substantial investment to encourage more R&D and innova-
tion and to raise awareness of IP amongst the politicians, companies, R&D intensive
organisations and the general public in order to clarify any misunderstandings and to
communicate the benefits of IP. But this investment needs to be coupled with a sys-
tem that encourages development and commercialisation of research outputs along
with appropriate incentive systems to reward organisations investing substantial
resources into development and commercialisation of new technologies. Without
this investment coupled with strong political leadership the European dream of
becoming the leading knowledge-based economy will remain just that: a dream.
References
Aghion, P et al . (2001). Competition, imitation and growth with step-by-step innovation.
Review of Economic Studies , 68(3), 467-492.
Aghion, P and P Howitt (1998). Endogenous Growth Theory . Cambridge, MA: MIT Press.
Arora, A, M Ceccagnoli and WM Cohen (2003). R&D and the patent premium. NBER
Working Papers # 9431.
Arora, A, A Fosfuri and A Gambardella (2001). Markets for Technology: The Economics
of Innovation and Corporate Strategy . Cambridge, MA: MIT Press.