CINE Project
Methods employed by R and
D of various companies for
screening ideas
Submitted to:
Prof. Anil Gupta
On
25th February, 2007
By
Ananda Chakraborty
1
Acknowledgement
On the onset, I would like to thank Prof. Anil Gupta for providing this unique learning
opportunity. For the successful completion of this project, I would like to express
gratitude to Mr. Abhijit Sinha, Manager, R and D (Foundry), Tata Motors,
Jamshedpur Plant and Mr. Vinod G. Kumar Manager, R and D (Foundry), Tata
Motors, Jamshedpur Plant. I would also like to thank Mr. P. K. Mazumdar Director,
Syngenta and Chairman, Croplife India, from whose guest the project has borrowed
heavily.
Ananda Chakraborty
2
TABLE OF CONTENTS
Introduction .................................................................................................................. 4
Patent Law .................................................................................................................... 4
New Product Registration ........................................................................................... 7
The typical steps in product registration in India .................................................... 8
New Product development and screening of ideas in Agrochemical industry: ...... 9
R and D in manufacturing industries: ..................................................................... 11
Conclusion: ................................................................................................................. 14
References ................................................................................................................... 15
3
Introduction
In today’s competitive scenario, Research and Development has assumed a very
important role. For many large corporations, R and D is the source for competitive
advantage. Some firms use innovative ideas to develop new products, molecules
while others innovate to reduce cost or improve product/ service quality and some
businesses are completely developed from an innovative idea. In this study, the
functioning of R and D has been studied in two different roles, one of developing new
products and second is of reactive research to improve a process.
Agrochemicals and Pharmaceuticals are two such industries where the whole business
thrives on how many new products a company can bring to the market. In other
words, R and D is the most crucial function for them. But along with being innovative
and creating new products, there is also another important concern about the
Intellectual Property Rights which guarantees the return from R and D that these firms
make. So it is necessary to understand the patents laws first to appreciate the methods
of screening new ideas by these firms.
Patent Law
Any industry which is characterized by high R&D processes require intellectual
property rights to protect its inventions and earn justifiable return on huge investments
it has incurred for R&D. India followed process patent law till 2005. Under process
patent law, protection is given to the process and not product. So it is quite possible
for any other firm to make the same product through reverse engineering in which
only different process is used to manufacture same product. This way any well
performing product could be copied and launched by rival firm, thereby reducing the
revenues for original inventor. So no organization would have any incentive to invest
huge money in R&D to discover new pesticide molecules. Moreover onus of proving
infringement was on patent holder. Such kind of regulatory environment discouraged
any R&D efforts in India. Hence till 2005, India has major off patented products in
market.
4
Development in 1995:
India joined WTO in 1995 and hence obliged to follow TRIPS (Trade Related
Intellectual Property Rights) agreement. Under TRIPS Agreement, fundamental rights
of innovator are protected through patent protection. TRIPS agreements does not
discriminate innovations as large or small, incremental or pioneering, but establishes a
framework for judge the inventive quality of an invention. It has given general
guidelines for judging the invention to be patentable. These guidelines are
 Process/product must be new
 Involves an inventive step
 Should have capability of industrial application
Under Article 65.1 and 65.2 of TRIPS Agreement, developing countries had 5 years
to comply with the TRIPS provisions. Under Article 65.4, a further 5 years were
provided to comply with the requirement of granting product patents in areas where
such protection was not granted. These provisions were made so that developing
countries could develop their own system of strong patent law. India availed 10 years
through these provisions.
1st amendment in 1/1/1995:
First amendment was made as soon as India joined WTO. Under this amendment
Government of India provided EMR (Exclusive Marketing Rights) and initiated Mail
Box facility to accept product patent applications. EMR gives exclusivity to the
innovator for marketing of the product embodying the innovation. This provision
prevents any other manufacturer to sell the same product in the specified market.
EMR was given subject to an applicant holding a process patent, market approval in
other countries and the innovation pertaining to post January 1, 1995 period.
2nd amendment in 1/1/2000
Under 2nd amendment, companies were given “Uniform” patent term of 20 years for
innovations in all areas, major efforts were put in rationalization of patent process and
5
tried to reduce the time required for grant of patent. Other features of this amendment
were following:
 Same treatment was given to innovations made abroad as given to the innovations
made in India
 Onus of patent violation was shifted on the infringer
 Safeguards for protection of public interest, nation security, bio-diversity,
traditional knowledge etc were incorporated in the amendment.

Patent (amendment) act 2005
On completion of 10 years joining WTO, India launched new patent law in 2005 with
major breakthrough by shifting to product patent as obliged by TRIPS agreements.
Though India has product patent now, there are lot of loop hole which are impeding
the process. We will study some of them here.
• Product patent to only “new chemical entities” (NCE): India patent law gives
product patent to New Chemical Entities (NCE) only. But NCEs are beyond reach of
many innovators as it takes lot of R&D budget and time. At the same time there are
lots of innovators who does increment innovation and these innovations are not
patentable. In Indian situation, many Indian companies, research institutions, scientists
have huge potential for incremental innovations but patent law 2005 doesn’t support
such innovations. But given that India need to comply with TRIPS agreement, which
suggests patent protection to all innovation including incremental ones, have not
included protection for incremental innovations.
• TRIPS agreement has general guidelines criteria for innovation getting qualified
for patenting. But Indian patent law has different definitions for criteria which has
created lot of confusion among MNCs. Because there are
• Law hasn’t made any provision to increase the protection period for mail box
applicants. Because for mail box applicants, the rights and privileges are available
from date of patent grant if they have filed application after 1/1/2005 whereas rights
commence from date of publication of application. This reduced the protection period
for 1995 mail box applicants.
6
• The provision for pre-grant opposition permits anyone to file opposition to patent
claim by innovator, and in case if patent office accept such application, patent
applicant does not have right of appeal. Besides, the time lines prescribed for filing of
pre-grant opposition application i.e. 6 months after the date of publication or any time
before the grant of patent can lead to substantial delays.
• The amended Patent Act permits import of patented product without the
authorization of the patentee. This could lead to import of products from a country
where the product are off patent or patent is expired.
• If an innovator from India wants to get a patent abroad, it needs the prior
permission of authorities in India. Now such double process of getting permission in
India first and then filing patent application lengthen the whole process.
New Product Registration
It is a regulatory process of evaluation and acceptance by the statutory authority of the
claims made by the applicant in order to protect the health of people, animals, plants
and environment and to ensure that pests are controlled in a safe and efficient manner.
Registration of agrochemicals is handled at central Government level whereas issues
regarding implementation of the Act including manufacturing license is done at the
state level. It is a multidisciplinary endeavor including chemistry, bio-efficacy,
toxicity and packaging.
Types of registration
•
Provisional Registration u/s 9(3b)
–
For the new molecule introduced first time in India. Usually granted
for a period of 2 years
•
Regular Registration u/s 9(3)
–
•
Subject to the submission of complete data
“Me-Too” Registration u/s 9(4)
–
After 9(3) registration of a molecule, any other person can apply for
registration
7
The typical steps in product registration in India
(The basic steps are same for agrochemical and Pharmaceutical industry)
2. CIB & RC, Ministry of Agriculture (Registration & Scrutiny)
Submits
application
along with
data
1. Applicant
Deficiency
report
Admn
Office
Legal
Chemistry
Bioefficacy
Registration Committee
Packaging
Toxicology
4. Ministry of Health (MRL Fixation)
3. ICAR
5. Central Insecticides
Laboratory (Testing)
For Products Manufactured in India
SCPR
studies data
and
recommend
s the MRL
Secretariat
scrutinizes
residue pro
forma
CCFS studies
SCPR
recommendati
on and
approves MRL
Inspector
visits site and
collects the
sample
Sample
analysis
For Imported Technicals
Submit
samples
Sample
analysis
Time required for obtaining Patent for different kind of Agrochemicals:
Activity
9(4) – “Me Too”
registration
9(3) and 9(3b) Fresh Registration
Documentation and Form 1
and other documents
verification by legal
0.5 month
1 month
CIB&RC analysis, covering:
1-3 months
6-12 months
Sample submission, collection
& Analysis
2-6 months
2-6 months
MRL Fixation (Ministry of
Health)
1-2++ months
3-12 months
Registration Certificate
Issuance
2 months
2 months
OVERALL PROCESS
Minimum 6 months
Minimum 12-36 months
•
•
•
•
Chemistry
Bioefficacy
Toxicology
Packaging
8
New Product development and screening of ideas in
Agrochemical industry:

The main contention in Agrochemical and Pharmaceutical industries is not
only the fact that there is around 3 years lead time between a product is being
applied for patent and it is actually out into the market. The lead time actually
conceptualizing a product and finally selling it commercially is even more. For
the last 10 years industry average, the lead time between a product being
synthesized for the first time to the market is about 9.1 years (Ref: Mazumdar
P.
K.
(
2006,
January
13)
“R
and
D
of
new
molecules”
http://www.ficci.com/media-room/speeches-presentations/2006/jan/agrochem/
SessionIII/MrMazumdar.ppt ).
For formulating one successful, unique product (Noble Product) of crop production,
there is actually a screening of about 140,000 molecules and the whole process costs
about $ 210 million from inception to consummation (Ref: Mazumdar P. K. ( 2006,
January 13) “R and D of new molecules” http://www.ficci.com/media-room/speechespresentations/2006/jan/agrochem/ SessionIII/MrMazumdar.ppt ). So the main concern
is to design a product looking ahead into a market of 10 years ahead. The R and D of
an agrochemical company will have to assume the market conditions, prevailing
problems and regulations 10-12 years ahead and then design a new product.
The process of new product development starts from collecting new leads or ideas.
The new leads may come from existing products or problems in the market.
Sometimes new leads come from combinatorial chemistry i.e. combining the active
ingredients or functional groups of some existing products. Sometimes leads may
come from natural products or by discovering the properties of some new molecule.
Then these ideas are thoroughly screened and infeasible ideas are eliminated to get
some workable leads.
After the workable leads are identified, then starts an iterative process of
implementing it by actually synthesizing the chemical, screening the properties of the
new compound on actual samples. Then based on the shortcomings of the compound,
a new molecule is generated, then again it is screened and again a new molecule is
generated. This process continues until a noble product is obtained.
The main parameters for screening are:
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 Action: how much active will the new compound be on the target pest/ insect?
 Selectivity: Will the new compound be active only on the target pest or it will harm
the whole ecosystem? The laws regarding non-selective chemicals are becoming
more and harsher every year.
 Residual toxicity: will the residual toxicity be within the permissible limits? The
regulations on residual toxicity are being more stringent, so will the compound will
be permissible after 10 – 12 years?
 Soil toxicity: the users are becoming very sensitive to after effects on soil. So how
quickly the soil will be free from all toxic effects?
 Patentability: Will the new product be patentable or it is very similar to some
existing product? Is some company working on the same direction and had it made
any significant progress so that they can file a patent before?
Thus based on these parameters and projecting them for a market of 10 years down
the line, this iterative process is continued until a satisfactory product is obtained.
Synthesize
target
New lead
Screen
Think of a new
Target Compound
Evaluate
results
Noble
Product
Screening process for innovating new chemicals in agrochemical industry
The priorities for different judging criteria are as follows:
•
Activity & Selectivity – 1st Consideration (Performance Parameters)
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•
Properties of the chemical, Residual toxicity and Soil toxicity – 2nd Consideration
(mainly environmental parameters)
•
Patentability, Cost of manufacturing and others – 3rd Consideration (mainly
commercial parameters)
Data Protection:
Thus we see that the research of a new agrochemical requires generating a large
database of the chemical nature of the molecule, its action selectivity, residual toxicity
etc. This involves huge efforts as the applicant has to conduct studies and generate
data to demonstrate the safety and efficacy of the product. For a new chemical, the
cost is about US$ 150 million and is almost the same as the expenses incurred on
innovation. The whole process may take 8-10 years. The data generated has
considerable value. It is in no way different from a tangible asset (such as land, plant
& machinery) that a person acquires by spending money and effort. This data will
also be very useful for the development of other products along the same lines and
competitors getting access to this data will have significant advantage especially for
developing a me-too kind of product.
Presently in India, there is no provision for protecting the data once the application for
patent is filed. In many other countries, there is a data protection period of 1-3 years
to reward the efforts of the developer. This absence of data protection is also a major
concern in the agrochemical industry.
R and D in manufacturing industries:
Apart from being used in developing new products, R and D assume another equally
important role of process improvement. In this section, R and D is viewed in a context
of process improvement and modifying rather than actually creating new ideas.
In manufacturing industries, when a new product comes to market, it stays there for a
long time and a series of improvements and add-ons are made to that product. So the
R and D is bifurcated into two streams. One concentrates on developing new product,
while the deals with improving the existing products and processes. We can take the
example of Tata Motors, a premier motor manufacturer in India. For new product
development, there is a separate department “Engineering Research Centre” (ERC)
which is separate from the plants R and D department. ERC develops new models,
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tests them, evaluate the results, make necessary changes and hand them over to the
plant for manufacturing. However, each of the three plants of Tata Motors have an
independent R and D department which works for improvement of the products being
manufactured by that plant. In this perspective, these in plant are more interesting.
The R and D dept. of each plant is divided into two parts. One part of R and D deals
with overall process development and the second part deals with product
improvement, like improving the design of a spare part or a sub-assembly. We first
look into the product improvement part. Its work mainly comprises of some reverse
engineering and minor alterations of the parts.
The triggers for product improvement come mainly from two places:
 Dealers: The dealers are most aware about the market conditions. Sometimes they
give input to the company that one of the competitors model is doing better than
Tata’s cars in some parameters. Then this division try to analyse the competitors
model and try to pin point the causes for its better performance. If there are some
minor changes in some components of the model, they try to make those
alterations in the Tata’s model provided they do not any major parameter in the
manufacturing process.
 Service Persons: They often report the recurring problem in the Tata’s models. In
that case the product improvement team tries to find out the cause of the problem.
In general the problem could be either of two kinds: wrong usage by the end user
like not using clean water in the radiator, or there could be manufacturing flaws. In
case of wrong usage the message is given to the sales department. In case of
manufacturing faults, product improvement team tries to make minor alterations in
the manufacturing process or they refer it to the process improvement team.
The process improvement team’s task is to improve the manufacturing process of the
plant. They either may react to the triggers mentioned above or if sometimes some
process goes completely out of control of the shop floor workers or the cost of
manufacturing needs to be reduced to retain the profitability, then process
improvement team is called for rescue. So this team generally starts working with a
major problem in hand. Then their next task is to explore the probable causes of the
problem. Sometimes when the cause is not very obvious from the visual inspection, a
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brainstorming session is arranged to find out the probable causes. Then, after some
working hypotheses are formed, these persons go into the shopfloor and find out the
critical parameters that affect the manufacturing process of the concerned part/
assembly. Then they test their hypotheses and come up with some recommendations.
If the changes needed to be made are very drastic and the entire assembly line is to be
changed significantly, then they refer the problem to ERC.
Product
Improvement
In Plant
R and D
Process
Improvement
R and D in
Tata Motor
ERC
(central level)
Research and Development Structure at Tata motor
So, the in plant R and D of Tata Motors plants can be classified more as a reactive
research than a proactive one. The basic criteria for selecting or rejecting an idea in
the in plant R and D are effectiveness of the idea on the cause, its ease of
implementation i.e. the disruption to the manufacturing process should be minimum
possible and cost effectiveness. Here an optimum combination of Effectiveness &
Ease of implementation is desired first and then cost effectiveness is the
distinguishing factor.
Apart from the ideas generated by the R and D dept., Tata Motors also encourage new
and innovative ideas generated by the shop floor level employees. R and D screen
these ideas and reward the workable ones. They also hand out handsome reward to the
shop floor workers up to Rs. 30,000. The ideas generated by the shopfloor workers
are also a very significant source of improvement for the Tata Motors plants.
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Conclusion:
Based on the above observations, a few conclusions can be made about how
companies contemplate R and D and how they vary from context to context.
 Consideration of the market: it is very important to keep in mind the market
conditions of the time when the idea will be actually marketable. For instance, in
pharmacological or agrochemical industry, the lead time is very high and so they
have to consider the customer demands, regulations etc. of 10 – 12 years ahead and
not of the present. The same is with ERC of Tata motors, they will have to
consider the changed customer preferences but only the lead time to market is not
that long.
Hence all new ideas should be developed by looking into the future market. If a
company wants to launch a really good product which should stay very long time
in market, then they should look even ahead than the time it will be in market.
 Difference in judging criteria: there is a huge difference in the judging criteria
used for proactive research and reactive, improvement based research. In the
earlier case, the success of the idea is the main criterion while in the latter case, the
main consideration is that the idea should be effective and creative, but it must gel
with the existing process causing the minimum possible disruption.
So, when a company is designing a new process for manufacturing a new product
this should be kept in mind. It implies that once a process is established, it is not
going have many major changes until the process is shelved. So during the first
designing, as many contingencies as possible should be taken into account.
 Difference in new product vis-à-vis improvement based research: these two
aspects of R and D are completely different from each other. New product design
is an aggregate level business decision, while the later one is a functional research.
These two should be kept separately as their functioning is entirely different. Tata
Motors duly appreciates this fact and thus ERC there is centrally controlled while
the functional research is controlled by each individual plant.
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References

Mazumdar P. K. ( 2006, January 13) “R and D of new molecules”
http://www.ficci.com/media-room/speechespresentations/2006/jan/agrochem/SessionIII/MrMazumdar.ppt

Gupta.U. .( 2006, January 13).”Encouraging Innovation in Crop Protection
Industry
Indian Laws vs TRIPS Agreement” www.ficci.com/media-
room/speeches presentations/2006/jan/agrochem/SessionII/Uttam.Gupta.ppt

Kumar.A.( 2006, January 13). “Agrochemical
Global
View”.
Molecules
Registration:A
www.ficci.com/media-room/speeches-
presentations/2006/jan/agrochem/SessionII/Ajay.kumar.ppt

Madan U.S. (2006, January 12). “Challenges and Problems Faced by Indian
Pesticide
Industry”.
www.ficci.com/media-room/speeches-
presentations/2006/jan/agrochem/SessionII/U.S.Madan.ppt

MNCs outsourcing pesticides production, research to India. (2005, April 23).
http://onlypunjab.com/fullstory2k5-insight-news-status-25-newsID-2119.html

Nair M.D. (2004, February 18). First & Second Amendment to IPA 1970:
Balancing
TRIPS
obligations
and
safeguarding
Indian
interests.
http://www.pharmabiz.com/article/detnews.asp?articleid=20499&sectionid=4
6

Ramachandran. R. (2006, January 12) Impact of TRIPS on Agrochemical
Industry
in
India.
from
www.ficci.com/media-room/speeches-
resentations/2006/jan/agrochem/SessionVIII/MrRamchdran.ppt
15