Governments of middle-income nations need to coordinate their industrial and health policies if they are to succeed in encouraging investment in biopharmaceutical innovation, a new report advises.

They also need to have a consistent, long-term policy that is implemented effectively to develop early-stage innovative activity, adds the study, which was commissioned by the International Federation of Pharmaceutical Manufacturers and Association (IFPMA) from research firm Charles River Associates (CRA) to evaluate the policies of host governments that encourage such investment, and their implications for future innovation.

The report focuses on eight case study countries - Brazil, China, Colombia, India, Malaysia, Russia, South Africa and South Korea. It defines innovation as: "a multiphase process, beginning with lab-based research leading to patentable inventions, moving into the stages of clinical research, which are then translated into safe, effective and commercially-viable products from which society gains a benefit in terms of improved health."

The extent of progress among the eight countries studied varies considerably, the study finds. For example, overall spending on R&D for medicines has increased dramatically over the last decade in China, South Korea, Brazil and Russia, while in others it is growing more slowly.

There has also been a significant increase in the number of clinical trials occurring in China  - undertaken to a significant extent through the development of contract research organisations (CROs) - and in South Korea, while in South Africa and Russia the number of clinical trials is significant but appears to be declining or steady. In terms of the types of trial, only China, South Korea and India have a significant proportion (over 10%) of Phase I trials.

Investment in early-stage research has increased over the last 10 years, but this is focused on a few more advanced middle-income countries, particularly China, and this is also supported by the clear increase in publications by researchers in this market and in terms of patents, the study notes. They also find more gradual progress in a number of other markets such as South Korea, India and Brazil.

Looking at the countries which have coordinated their health and industrial policies, the CRA researchers point out that in China, the link between the growing market opportunity and the government's objective of developing an innovative sector is working to make the nation a key location for innovation. And in South Africa, there is increasing recognition within government agencies that purchasing strategy needs to be aligned with industrial strategy.

South Korea demonstrates the value of constant, long-term policy, by constantly placing priority on developing a biotechnology industry, initially by investing in basic research and then through policies to encourage commercialisation. Other countries which have long-term policies but inconsistent implementation have not been as successful, they add.

Moreover, the capabilities to undertake different parts of the pharmaceutical industry value chain are different, and so therefore are the policy priorities, the research notes. For example, the medical infrastructure, population and requirements to serve local markets are driving clinical trial activity in India, Brazil and Russia, while the strength of the academic research centres and developing clusters in China and South Korea are seen as key to encouraging early-stage research.

Also, intellectual property appears to be a necessary but not sufficient condition for developing indigenous research and a domestic innovative industry, the study finds, while sustainable innovation requires coordination between public, private and academic centres. Illustrating this latter point, the researchers note that innovative activity in South Korea only developed when private investment was encouraged, while South Africa and Brazil have recognised the need to encourage partnership between academia, public research institutes and innovating private companies. And China has successful examples of public and academic capabilities, such as the Beijing Genomics Institute, supporting private innovation.

Finally, the report points out that the changing global business model is bringing new opportunities for middle-income markets, as demonstrated by the advantages of outsourcing in India, refocusing on growth in China and the opportunities to develop biosimilar competitors in Brazil.