Competitive Advantage and New Patent Regime, 2005: A Study of Indian Pharmaceutical Industry

Abhinava S. Singh

Background to the Context• 3 Decades of reverse engineering patented products, flourishing

domestic generics market, strong chemistry & process engineering expertise (Indian Patent Act,1970)

• January 1, 2005, Introduction of product patent protection in the Indian Pharmaceutical Industry (IPI)...

• More direct investment by MNCs...

• New Focuses for the firms in the IPI (new business model, new options, new strategies...)

• Ability to deal with Uncertainty, Complexity, Intraorganizational Conflict...Turbulence in a fast changing IPI critical for firm survival...

Research Problem

The introduction of product patents in 2005 has forced the firms in the IPI to rethink their sources of competitive advantage. The main question is that;

“How would firms in the IPI generate competitive advantage due to changes brought through the new patent regime?”

Research Objective/s In context of a rapidly changing environment like IPI

mainly due to the implementation of product patents, the research objectives were as follows;

To examine the role and extent of key capabilities namely marketing, manufacturing, human resource (HR) and R&D capabilities in generating competitive advantage and superior performance

To understand the role and extent of strategic leadership in managing key capabilities and resulting in competitive advantage and superior performance

To study the role and extent of government support for generating strategic competitiveness and superior performance

To explore the emergent strategies of firms and their contribution to strategic competitiveness and superior performance

Justification of the Research Well established in literature (Kumar, 2002; Watal, 2000; Rasaih, 2002) that

technological advance achieved by the IPI owes much to 1970 patents Act Reforms led to creation of manufacturing capacities, lower price drugs,

and availability of modern drugs to masses The lack of IPR laid the foundation of a strong domestic industry To meet obligations under TRIPS, India had to amend its patent laws by

2005 After introduction of product patents on January 1, 2005, Indian firms in

particular have been forced to re-think their business model The New Patent Regime has attracted more MNC companies with

deeper pockets and stronger brands Serious implications as it would affect their balance sheets and profits

earned through sales and exports of cheaper versions of patented products Access to new knowledge and technology assumed to be difficult in the

new patent regime

Key Studies• Barney (1991) and Hamel and Prahalad (1993) pointed out that building core

competencies within the firm was highly effective for the firm to succeed in a fast-changing competitive environment

• Typically, core competencies are related to a firm’s functional capabilities like marketing, research & development, manufacturing and human resource (Dutta, Narasimhan, and Rajiv, 2005; Hitt, Ireland, Hoskisson, and Manikutty, 2012)

• Strategy literature does not seem to recognize the role of a leader as a driver of capabilities (Manikutty, 2008)

• As of yet, there seems to be no generally accepted theory—and certainly no systematic evidence—as to the origins or the dynamics of differences in firm performance i.e. origins of competitive advantage lack a clear answer (Cockburn, Henderson, and Rebecca, 2000)

Continued...• Managerial capability as the binding constraint that limits the growth of the firm (Penrose,

1959) and distinctive competencies in which senior managers were considered as the ultimate source of competitive advantage (Selznick, 1957)

• Three conditions-uncertainty, complexity, and intra-organizational conflict affecting important strategic decisions (Amit and Schoemaker, 1993)

• Criticality of government support in the new patent regime (Grace, 2004; Sampath, 2006; Kumar, 2002; Watal, 2000)

• Emergent Strategies are theories of how to compete and gain competitive advantage in an industry that emerge over time or that have been radically reshaped once they are initially implemented (Mintzberg and Waters, 1985)

• Honda effects- the success of Honda was attributed to its ability to experiment, to learn quickly from mistakes, and redesign its products to explore new opportunities (Pascale,1984; Rumelt, 1996)

An Overview of the IPI• 4th largest by volume and 11th largest in terms of value• As per MAT, 2010, domestic market worth Rs.49,467 crores (21.5% growth)...Rs.57,466 crores (15.3% growth

as per MAT, 2011)• As per E&Y/ IBEF report (2007), Domestic consumption (57%) while exports (43%) • Total Firms (Expert Committee, 2003) not more than 5877• Top 300 Companies account for over 95% domestic market, rest are marginal players, Top 100 close to 90%

and Top 50 around 80% (MAT, 2010; ORG Ranking, 2005; Sampath, 2006)• Extremely fragmented market, top player accounting for around 6% Market Share • Anti-Bacterials/ Antibiotics, Anti-Diabetec Therapy, Antacids, Hypotensives, Vitamins, Anti-inflammatory top

therapies as per MAT, April 2011

a

Top 10 Players of the IPICompany Value (Cr) Market Share (%) Growth Rate (%)

Abbott+Piramal+Solvay3070 6.21 13.1

Cipla2669 5.39 16.4

GSK2302 4.65 10.1

Ranbaxy2297 4.64 5.6

Sun2089 4.22 14.6

Zydus Cadila1909 3.86 11.6

Alkem+Cachet+Indchemie1633 3.30 18.7

Lupin1590 3.21 22.1

Mankind1485 3.00 20.7

Pfizer+Wyeth1463 2.96 18.6

Source: MAT September 2010 Audit

Challenges to shift from;Pre-2005 Post-2005

Process Patents Product Patents

Reverse Engineering, Imitation Innovation

Limited Competition Global Competition

Friendly Regulations Stiff Regulations

Small and Entrepreneurial Firms Large, Diversified Firms

Unregulated, Semi-Regulated Markets Regulated Markets

Domestic and Exports Focus World-Wide Focus

Strategic Option to Compete and/or

• The emerging business model of the IPI in the new patent regime could be to compete thru the following strategies;

Expand in new areas like Bio-tech, Bio-Generics & Vaccines Challenge IPRs in Regulated Markets Non Infringing Processes and NDDS Invest in R&D for Proprietary NCEs Filing DMFs and ANDAs Plain Vanilla & Specialty Generics Targeting Regulated/ New Markets thru International Acquisition

Co-operate

• The emerging business model of the IPI in the new patent regime could be to co-operate thru the following strategies;

Contract Manufacturing and/or Custom Synthesis Preferred API supplier Clinical Outsourcing In-licensing and Out-licensing Collaborative R&D Sales & Distribution/ Marketing Collaborations Targeting Regulated/ New Markets thru Joint-Ventures

Literature Review • Effect of TRIPS/ WTO on the IPI Emerging strategies and options of firms in the new regime

Elucidated on the role, support and initiatives of the government

Researchers have explored inter-organizational learning, dynamic capabilities, entrepreneurial leadership, knowledge, technological, financial and innovation as sources of superior performance for firms in the IPI

Many have used external factors and RBV as foundation but none of them have examined the suitability of strategic leadership and key capabilities in seeking competitive advantage and superior performance for firms operating in the IPI

Continued...• Strategy Marketing, HR, manufacturing and R&D capabilities are positively correlated with

competitive advantage and/or superior performance

Effective strategic leadership can lead to competitive advantage and superior performance of a firm in an environment characterized by technological revolution and globalization

One of the primary tasks of strategic leaders is to effectively manage the firm’s resource portfolio and organize them into capabilities

Superior performance outcomes reflect competitive advantage

Research Gaps In context of rapidly changing IPI due to introduction of product

patents in 2005;

• Suitability of RBV thru Key Capabilities (Marketing, HR, R&D and Manufacturing) as a source of competitive advantage and superior performance of the firm not researched

• Strategic leadership as source of competitive advantage and superior performance of the firm seems to be missing

• Role of strategic leadership in resource-development process appears to have been ignored in literature

• Relation between competitive advantage and superior performance not established clearly

Hypotheses

H1: The extent of government support in the new patent regime will be positively associated with the strategic competitiveness and superior performance of the firm in the IPI

The following areas of government support were identified for testing:

• Reducing Price control

• Patent Amendment Act, 2005

• Access of land for expansion and creation of special zones

• Clarity and speed in patent application processing

• Collaboration and/ or enabling R&D conducive environment

Continued...

H2: In the new patent regime, marketing capabilities of a firm in the IPI will be positively associated with its competitive advantage and superior performance

The following marketing capabilities were used as key attributes for testing:

• Ability to manage good reputation with customers, government & partners

• Sales Responsiveness

• Ability to manage and create strong brands

• Ability to manage strong marketing channels for sales & distribution

• Ability to provide good and reputed customer service

• Ability to respond to market trends

Continued...

H3: In the new patent regime, R&D (product development) capabilities of a firm in the IPI will be positively associated with its competitive advantage and superior performance

The following R&D capabilities were used as key attributes for testing:

• Ability to harness scientific skills and knowledge

• Rapid transformation of technology into new processes and products

• Low cost R&D based innovation

• Ability in making used of advanced technology

• Capacity to innovate

• Improvement in quality of existing process and products

Continued...

H4: In the new patent regime, HR capabilities of a firm in the IPI will be positively associated with its competitive advantage and superior performance

The following HR capabilities were used as key attributes for testing:

• Ability of building human capital-knowledge, talent and skills of employees• Effective performance appraisals• Appropriate reward systems• Ability to motivate, empower and retain employees• Ability to manage social capital-to manage relationships inside and outside the

firm• Improvement in quality of existing process and products

Continued...

H5: In the new patent regime, manufacturing capabilities of a firm in the IPI will be positively associated with its competitive advantage and superior performance

The following key attributes of manufacturing capabilities were examined:

• Appropriate material planning system• Ability to manufacture as per customer requirements• Ability to manage outsourcing of non strategic manufacturing tasks• Ability to manage high quality, reliability and durability of products• Ability to achieve cost benefits due to continuous improvement (low cost

manufacturing)• Ability to apply process chemistry skills

Continued...

H6: In the new patent regime, strategic leadership at firm-level in the IPI will be positively associated with its competitive advantage and superior performance

The following key attributes of manufacturing capabilities were examined:

• Ability to scan the external and internal environment to form strategic intent

• Ability to establish balanced organizational controls

• Ability to sustain effective organizational culture

• Ability to effectively manage the firm’s resource portfolio

• Ability to set up effective organizational structure

• Ability to raise capital for funding high-risk strategies

Measuring Superior Performance Superior performance outcomes reflect competitive advantage (Day and

Wesley, 1988; Brush, Greene and Hart, 2001) (PIMS) model was used as reference Purpose of research was to evaluate performance based on opinion of

future outcome, simple measurable yardstick like ROI was use, other variables like cash flow and ratios used by PIMS were considered difficult to predict (too abstract for measurement)

Accordingly, four performance criteria were used:

• Return on Investment (Financial Performance)• Sales Revenue (Market Competitiveness)• Sales Growth (Market Competitiveness)• Market Share (Market Competitiveness)

Proposed Model

EXISTING SIZE, AGE, CULTURE & RESOURCES of PHARMA FIRM X

IPI ENVIRONMENT,

COMPLEX, UNCERTAIN

STRATEGIC OPTIONS

VISION, STRATEGIC INTENT & MISSION

Effective STRATEGIC LEADERSHIP of the

PHARMA FIRM X

Upgrading Resources

Gaining Resources

RECONFIGURED RESOURCES

KEY CAPABILITIES

SUPERIOR PERFORMANCE thru COMPETITIVE ADVANTAGE

EMERGENT STRATEGIES of the

PHARMA FIRM X

LEARNING

Methodology

• Multi-method study (Hitt, Gimeno, & Hoskisson, 1998; Judge & Zeithaml, 1992) or triangulation (Jick, 1979) in a single industry (Almeida, 1996; Kochhar et al., 1996; Miller & Shamsie, 1996)

• Semi-structured interviews with six experts (expert panel) for preparation and content validity of survey questionnaire ( Sekaran, 2000; Cooper and Schindler, 2003)

• Quantitative research (Meredith, 1998; Drejer et al., 2000) thru questionnaire survey (macro-level study) of 41 pharmaceutical companies in India (Stratified random sampling method with proportionate allocation)

Continued…• The final list of respondents from firms arrived at 41 out of which 27 were large, 7 were

medium and 7 were small group of firms. Some firms were deliberately chosen outside the ORG ranking list

• The questionnaires were mainly filled up by senior managers and above i.e. Single respondent in a firm (Balkin and Gomez-Mejia, 1990; Zazaj and Shortell, 1989) as it was generally agreed that respondents in fairly senior positions at different levels would have an overview of their firm’s strategic direction

• All Questions used a five point Likert rating scale method (Schertzer and Kerman, 1985; Madsen, 1989). Results collected from the questionnaire were tabulated using statistical analysis software SPSS version 15

• The Data was analyzed using Descriptive Statistics, Cronbach’s Alpha, ANOVA, correlations matrix, independent t-test, Post-Hoc Analysis, Regression Analysis and Factor Analysis

Continued...• On the basis of case study methodology (Hoskisson et al., 1999; Collis, 1991; Doz,

1996; Yin, 1994; Eisenhardt, 1989; Christensen ., 1978), 2 case studies (micro-level study) were chosen from Ahmedabad on the basis of classification of groups and to facilitate interaction and data collection. A dossier of both firms i.e. Zydus Cadila and Lincoln was also prepared thru secondary sources

• The case study research had research questions and the unit of analysis was the firm’s strategic leadership, resources, capabilities, CA & SP, emergent strategies and role of government support in the new patent era

• Primary data was collected thru interviews with the help of mostly unstructured and open-ended questions to aid discussions. Some interviews were audio-taped with permission. All the executives participating in the research were contacted again for clarity and updates

Sample Respondents based on Proportion and Groups

Group 1-Leaders (Large)

2-Followers (Medium)

3-Late-Movers (Small)

Sales Turnover (in Rs. crores)

>300 100-300 <100

Proportion 80% 10% 10%

No of firms responding to the questionnaire

27 7 7

Reliability Statistics

Reliability test using Cronbach’s alpha (Scale: All variables)Reliability Statistics

Cronbach's Alpha

Cronbach's Alpha Based on

Standardized Items N of Items

.954 .953 97

The Cronbach’s Alpha value is 0.954 which is considered to be excellent and shows the inter item are consistent in line with the objective of the research problem. The value is significantly higher than 0 and very close to 1, indicating a high level of reliability.

Discussion of Findings• Government Support Government intervention emerges as the fifth most important factor and underlines the extent to which the

government would support firms in the new patent regime.

Key attributes of government support positively associated with strategic competitiveness among which providing collaborative R&D conducive environment, provision to expand and set special zones and the patent amendment act, 2005 being the most important ones. These findings are consistent with other related studies on the IPI (Sampath, 2006).

Significant difference across all the groups of firms on the view of government support leading to superior performance.

Government support is weakly associated with the firm’s superior performance and may not be viewed as a positive association as the relationship is insignificant.

Zydus Cadila felt that the government can play an important role by taking initiatives for boosting their competitiveness and should provide financial assistance to Indian firms which are targets of MNC acquisitions (IPA).

Continued... Lincoln felt that the patent bill, 2005 would be favourable to the consumers and neutral

to the IPI. It supported the government initiatives for R&D related subsidies and support.

Both firms deny reliance on government support for superior market and financial performance although they agree that it could be crucial for strategic competitiveness.

On the whole, it can be implied that the initiatives (attributes) of the government are appreciated and considered important by the firms in the IPI but they are not sure whether it is leading to their superior performance although it improves the strategic competitiveness of the industry in general. Overall, the findings extend the literature on the role and extent of government support in the new patent regime of the IPI and expands the literature by highlighting critical issues like limitations of the current government policy, slow paced patent application process of the Indian patent office, lack of funds and potential problems like unavailability of quality medicines at affordable prices and dip in exports from India.

Continued...• Strategic Options Vanilla and specialty generics space continues to be mainstay strategy for competing as a

strategic option

Collaborative R&D, global joint ventures and marketing collaborations among the most preferred ones for cooperating as a strategic option

Significant difference among groups in response to competing and cooperating as strategic options

All groups by and large are keener on cooperating as a strategic option especially the large group which would like to gain new resources and capabilities besides reducing the risk of competing at the global-level. The most important factor human-led innovation refers to the ability of firms in integration of human resource and R&D capabilities to compete successfully in the IPI while the second factor focused partnering refers to the ability of firms to use manufacturing capabilities as a key capability (core competence) to cooperate successfully in the IPI.

Continued...

From the case study findings, Zydus Cadila has manifested both the strategic options in the form of its emerging strategies and business model in the new patent regime.

From the case study findings of Lincoln, the emerging strategies of the firm include expansion in the domestic formulations market and consolidation in the local market i.e. Gujarat, exports to unregulated and semi-regulated markets, and marketing medical devices used in surgery.

On the whole, the findings add value to the research literature on the strategic options and emerging firm strategies in the new patent regime of the IPI. It also expands the research by highlighting marketing of medical devices as a viable strategy for medium-sized firms.

Continued...• Key Capabilities The quantitative results suggest that among all the group of firms, marketing capabilities

are the most important key capability in generating competitive advantage and superior performance followed by manufacturing capabilities. The results vary group-wise. For the large group of firms, R&D capabilities were rated as the most important when related to competitive advantage. Medium group of firms have shown preference for marketing capabilities while small group was in favour of manufacturing capabilities.

Ability to respond to market trends, provide good and reputed market service, improve in quality of existing process & products, create and manage strong brands, generate sales responsiveness, low-cost manufacturing among the top 10 attributes of key capabilities.

These capabilities were found to be important in the case studies although there was no ranking undertaken in them. The competitive consequences were assessed using VRIN model (Valuable, Rare, Costly to Imitate and Non Substitutable).

Continued...

• Marketing Capabilities

Marketing capabilities were rated as the most important capability related to competitive advantage among all the firms in the quantitative results. Marketing capabilities have been positively associated to competitive advantage by all the groups and statistically they have the highest average mean score among the key capabilities.

From factor analysis, marketing and superior performance emerge as the third most important factor and is aptly titled as marketing competence for firms in the IPI which focus on customer-centric model and aggressively pursue the global generics opportunity through marketing efforts.

There is a very strong positive correlation between marketing capabilities and superior performance emerging from the regression results.

Continued...• Overall from the quantitative results, the findings for marketing capabilities are consistent

with empirical research (literature review) on functional capabilities/ core competencies like marketing affecting firm performance positively. Moreover, it expands the research literature on new patent regime of the IPI by examining the role and extent of marketing capabilities as sources of competitive advantage and impact of firm performance.

• From the case study findings of Lincoln, it is mainly marketing focused with strong local connections and has an intense desire to expand nationally through marketing capabilities.

• From the case study findings of Zydus Cadila, the overall focus of marketing is customer-centric.

• The case study findings are consistent with the quantitative results and they also adds important dimensions like the role of IT in customer service, the focus on relationships, value based pricing strategy, focusing on speed and others.

Continued...• R&D Capabilities Large group of firms consider R&D (product development) capabilities to be the most

important.

Among R&D capabilities, improvement in quality of existing process & products rated as most important followed by ability to harness scientific skills & knowledge and low cost innovation capability.

Capacity to innovate lowest ranked R&D attribute highlighting the fact that most of the Indian firms are taking baby steps in the area of R&D and also the acute shortage of funds for R&D investments to compete at the highest level.

Through factor analysis, the most important factor emerging is human-led innovation which highlights the importance of R&D capabilities in the new patent regime.

Significant difference in opinion on R&D capabilities linked to competitive advantage and superior among the three groups highlighting the fact that the scope of R&D activities increases as the size of the firm increases.

Continued... R&D capabilities drive the vision of Zydus Cadila to become a R&D focused player by 2020.

Since 2005, the company has invested over 5% of its revenues on R&D i.e. NME, biological, NDDS research and generics development every year. A robust R&D pipeline, strong ANDA and DMF filing, patents, and focus on new areas like biosimiliars and vaccines speak highly of the company’s ability to innovate

Lincoln due to its small scale of operations has little investment in R&D and launching new brands is handled by the marketing team.

On the whole, the findings extend the RBV suitability of R&D capabilities to the studies of the new patent regime of the IPI. They extend the intangible resource spectrum (Hall, 1992; Grant, 1991) to the IPI studies through innovation/ R&D attributes like scientific capabilities and capacity to innovate and are also consistent with the R&D capabilities like rapid transformation of technology into new processes and products (Hitt, Ireland and Hoskisson, 2008). It highlights the role and extent of R&D capabilities among different groups of firms in the IPI and provides insights on the reconfiguration of R&D practices and their importance in large Indian firms like Zydus Cadila.

Continued...

• Manufacturing Capabilities

From the quantitative results, manufacturing capabilities are the second most important capability related to competitive advantage among all the firms and the most important among the small group of firms.

Ability to manage high quality, reliable and durable products, appropriate material planning and low-cost manufacturing the top manufacturing attributes.

Manufacturing capabilities are moderately but positively correlated with superior performance.

Manufacturing capabilities contribute to the second most important factor for policy makers by combining with cooperating as a strategic option and are aptly named as focused partnering.

Continued...

At Zydus, their manufacturing facilities are the backbone of the strategies pursued in the global markets. They have undertaken various initiatives like SLIM (Strategic Lean Integrated Manufacturing) and kaizen which have ensured productivity, full capacity utilization, high quality and low-cost benefits.

Lincoln outsources 80% of its manufacturing requirements which again restricts them to only market products and attribute it to their size.

On the whole, the findings extend the RBV suitability of manufacturing capabilities as sources of competitive advantage and superior performance. It expands the IPI research literature by highlighting the process of up-grading and reconfiguration of manufacturing capabilities by firms like Zydus Cadila in the new patent regime of the IPI and the preference of firms like Lincoln to outsource their manufacturing requirements due to scale limitations.

Continued...• HR Capabilities

Among the HR capability attributes, the ability to manage relationships outside and inside the firm was ranked as the most important. It is consistent with the research on social capital (Adler & Kwon, 2002) which helps the firm to accomplish tasks and create value for stakeholders.

Ability to generate trust was second most important HR attribute and is consistent with research which relates trust with competitive advantage (Barney & Clark, 2007).

One of the reasons for less effectiveness of HR capabilities relative to the other key capabilities in the IPI is the nature of ownership of Indian firms especially those representing the small and medium group. There is a lack of HR initiatives in family-owned Indian firms.

Interestingly, HR capabilities contribute in the most important factor integrated with R&D capabilities and competing as a strategic option aptly named as human-led innovation.

Continued... HR capabilities were relatively weak but positively correlated to superior performance for

firms in the IPI.

The HR capabilities of Zydus Cadila play a crucial role in enabling successful transformation in the product patent regime and appear to be as important as any other key capability of the firm. The findings are consistent with the attributes covered in the quantitative survey and add more value through detailed coverage of HR activities.

From the case study findings of Lincoln, there is evidently lack of proper HR system.

On the whole, the findings extend the suitability of RBV through HR capabilities in the context of the new patent regime of the IPI. It adds value to the existing literature of IPI studies by highlighting the lack of HR professionalism especially in small and medium-sized firms in the IPI and also gains insights on the process of reconfiguration of HR capabilities by firms like Zydus Cadila in anticipation of challenges in the new patent regime of the IPI.

Continued...• Strategic Leadership From the quantitative results, the role of strategic leadership has been voted as the most important

factor in generating competitive advantage and superior performance among all the groups. Statistically, strategic leadership variable has the highest average mean score among all the variables.

The ability to scan the external and internal environment to initiate transformation rated as the most important attribute.

Strategic leadership has the highest mean score among all the respondents for the entire performance criterion. All firms positively associate strategic leadership with superior performance in the entire four performance criterion.

There is a significant difference among the three groups for their opinion on strategic leadership related to competitive advantage and leading to superior performance.

From the regression analysis, strategic leadership is positively associated with superior performance and has strong positive correlation.

Continued...• Zydus Cadila has a unique Zydus Leadership Model which requires capability building (skills and

traits) in the following areas; entrepreneurship, networking, results focus, strategic thinking, business planning and people development. These capabilities or skills are consistent with exemplary work on leadership (Kotter, 1988; Drucker, 1996).

• According to the CMD of Zydus Cadila, transformation in anticipation of product patent regime is a leadership challenge and is critical to provide direction, to make it easier for the people in the company to connect with the big picture, and tap their abilities (key capabilities) to deliver on their commitments (execution skills).

• Strategic leadership at Zydus Cadila also gives direction and aides the development and reconfiguration of the key resources and capabilities of the firm through human capital inputs to deliver competitive advantage and superior performance.

• These key capabilities have led to competitive advantage and superior performance of Zydus Cadila through their emergent strategies which are a continuous source of learning as acknowledged by the organization.

Continued...• From the case study findings, Lincoln has a relatively centralized decision making team

comprising of the top management team along with department heads. They are actively involved in key areas of marketing, corporate finance and exports to unregulated and semi-regulated markets.

• On the whole, the findings extend the role and extent of strategic leadership in context of the new patent regime of the IPI. It highlights the role of strategic leadership in development of new capabilities in functional areas like marketing, R&D, HR and manufacturing and setting up effective organizational culture and structure to leverage them and generate superior performance to the firm.

• The findings also elucidate on the style of leadership and the skills/ traits essential for strategic leadership. It also gives insight into one of the key actions of strategic leaders of firms in the IPI i.e. raising capital to fund high-risk strategies.

• The literature on the IPI studies does not seem to recognize the role of strategic leadership as a driver of key capabilities.

Integrating the FindingsOverall, the integrated findings are as follows;

• The internal factors (strategic leadership & key capabilities) are more effective than external factors (extent of government support) for generating competitive advantage and superior performance for the firm in the IPI.

• Key capabilities (marketing, manufacturing, R&D and HR capabilities) are positively associated with competitive advantage and superior performance of firm in the IPI.

• Strategic leadership is positively associated with competitive advantage and superior performance of firm in the IPI.

• The correlation of government support with superior performance is weak but positively correlated.

Continued...

• The five factors emerging from the study which could be crucial for policy makers include;

1. Human-led Innovation

2. Focused Partnering

3. Marketing Competence

4. Effective Strategic Leadership

5. Government Intervention

• “In the context of a rapidly changing environment in the IPI due to the introduction of product patent regime in 2005; effective strategic leadership plays a transformational role in developing the key capabilities of the firm which generate competitive advantage (superior market and financial performance) for the firm through emergent strategies ”.

Limitations & Critical Reflections on the Research• One of the limitations of the study was the nature of the firms in the case studies. Both the

firms representing large and medium sized group of firms were selected from Ahmedabad to facilitate the data collection and interviewing process. Both firms represented strong family owned Indian firms. Had the sample included a non-Indian firm i.e. MNC firm, it would have given a fresh perspective on strategic leadership, key capabilities, government intervention and emergent strategies.

• The other limitation was the overall sample size and sub-sample size. Although 41 respondents were used to produce statistical results for the total sample, the samples size of the groups showed variability due to the assumption of proportion and hence meaningful statistical analysis between the groups was difficult. Moreover; there was less control and access to the respondents as they were senior managers working in companies located across the country.

• In hindsight, longitudinal case studies should have been carried out at Zydus Cadila and Lincoln to check whether competitive advantage and superior performance can be sustained and to seek more clarity on the idiosyncratic and socially complex role of strategic leadership.

Continued...

• The overall research is limited to the study of key capabilities, strategic leadership, government support and emergent strategies of the IPI and not to predict or assess IPI’s present legal situation and issues therein related to full implementation of its product patent regime.

In spite of the above limitations;

it is believed that they would not deter from the overall conclusions. Nevertheless, this study can be seen as an important step in investigating the suitability of applying RBV through the concept of key capabilities namely marketing, manufacturing, R&D and HR in the new patent regime of the IPI as there was no previous study carried out. No research in context of the new patent regime of the IPI has investigated the role and extent of strategic leadership at firm-level in developing capabilities and leading to competitive advantage and superior performance.

Contribution of the Study

• There are a large number of strategic management related studies on the effect of TRIPS and WTO on the IPI (literature review). Most of the studies used single research methods, for example, Chaturvedi and Chataway (2001) study was based on multi-case design. Others were of an empirical nature, for instance, Sampath (2006) carried out a survey of 103 firms in the IPI.

• This study took a different approach by combining a quantitative survey with case studies. The multi-method adopted in this thesis provided an in-depth understanding of the problem context and at the same time offered high generalisability.

• This study can be seen as an important step to investigate the suitability of applying RBV through the concept of key capabilities namely marketing, manufacturing, R&D and HR capabilities in the IPI as there was no previous study carried out.

Continued...

• Again, no study seems to have investigated the role of strategic leadership in developing capabilities and leading to competitive advantage and superior performance in the new patent regime of the IPI.

• This research contributes to the study of RBV and strategic leadership by proving that it is effective in generating competitive advantage and superior performance of firms in the new patent regime of the IPI.

• The overall findings may be useful to policy makers by arguing that building capabilities in key areas through effective strategic leadership to meet market challenges in a more viable strategy in the new patent regime. The success of firms would depend on their ability to experiment, to learn quickly from mistakes, and reconfigure their capabilities to explore new opportunities in a rapidly changing IPI.

Future Directions• It is suggested that the study be carried out on a larger scale to include various industries

(multiple industries) to check if there is any difference among different industries. Further research should be carried out on exploring the role of strategic leadership in developing competencies in the context of rapidly changing complex environments.

• The study of key capabilities with attributes can also be expanded by adding more attributes and testing them empirically.

• As Indian firms compete in global market, the capabilities and positions of firms are becoming more complex. Hence, it will be difficult for strategic management researchers to examine problems using a single theoretical framework. It is suggested that researchers should integrate multiple theoretical frameworks and methodologies to explain complex international strategic issues as pointed out by Hoskisson et al. (1999).

• Finally, it is also suggested that further empirical work should be undertaken to untangle the relationship between competitive advantage and superior performance to explain firm performance.

Thanks for the Patience!