June 8, 2021
Innovation deserves to be rewarded. Designing a revolutionary product or process involves human capital as well as other resources, including money and time. Patenting these new products or processes is the cornerstone of social, industrial, and economic development.
From Coca-Cola to Barbie doll, many items owe their enduring market dominance to the intellectual property rights (IPR) regime.
But even the World Intellectual Property Organization (WIPO), a specialized agency of the United Nations, accepts that laws around IPR are “complex” and “difficult to interpret”.
Today, the world is debating patent waiver for COVID-19 vaccines and world leaders have different views on the subject. US President Joe Biden favors an IPR waiver while German Chancellor Angela Merkel has rejected the proposal. Canada’s Prime Minister Justin Trudeau is yet to accept or reject the idea.
The arguments of the proponents and the critics of the waiver sound valid. Advocates say the pandemic has gripped the world and developing and underdeveloped countries with limited or no domestic manufacturing of COVID-19 vaccines are being hit the hardest.
Take for example India, the country that first proposed a vaccine IPR waiver. Despite being the world’s largest manufacturer of COVID-19 vaccines, it has been able to inoculate a mere 3 per cent of its population. Patents and technology transfer are major hindrances.
Critics of the waiver have valid arguments too.
For example, vaccine makers argue that making the doses isn’t like any other regular industrial activity and requires controlled and high-tech facilities to ensure quality and efficacy. They say it is near impossible to create new production facilities in poor nations, and hence transferring the technology makes no sense. Add to this the dearth of input raw material in already existing facilities in developed countries.
This was about the pharma industry and politicians. But as WIPO suggests, let’s consider more complex issues to interpret this issue.
Global stock indices posted significant losses in first three months of 2020 as COVID-19 spread beyond China. March brought increased volatility to the markets owing to countries opting for shutdowns to contain the virus’ spread.
Over just few days in March 2020, most indices fell more than 20 per cent, with the S&P/TSX Composite Index registering more than a 25 per cent plunge (between March 1 to 20).
Then things began to improve.
Global stock markets were recording new highs, and this is not due to governments abandoning fiscal prudence or central banks keeping interest rates low.
Markets have revived, with even oil futures gaining the ground lost in 2020 on the back of increased economic activity globally.
More and more people in the US are getting vaccine shots. Canada too has ramped up vaccine procurement. The Center for Disease Control in the US has even suggested doing away with masks for fully vaccinated people. Even though this stance has been critiqued by health experts, its impact on investors’ sentiment has been positive. Developed countries are also lifting restrictions on domestic travel and trade, which is why inflation has been picking up.
What about developing countries? What about Bangladesh which is expected to surpass India in terms of per capita GDP, according to IMF?
Bangladesh is reportedly facing acute shortages of COVID-19 vaccines and has re-imposed a nationwide lockdown. It is reaching out to the US, China and even India to procure vaccines.
The lockdowns in Bangladesh and in various states in India along with limited lockdowns in other countries suggest that any imminent economic boom is wishful thinking, unless the world comes together to address the vaccine shortage.
The latest development is China backing the patent waiver proposal. This brings a geopolitical angle to the entire debate.
Canada’s policy stance on a vaccine IPR waiver and that of European countries needs a rethink, urgently.
Yes, innovation deserves to be patented, but a global crisis demands unconventional solutions.
Kunal Sawhney is the founder and CEO of Kalkine. An accomplished financial professional, he has extensive expertise in equity markets and adopts quantitative and qualitative stock selection practices.