I. 33.8%, from $733 billion in 2010

I.      IntroductionIn universal health system, pharmaceutical has shown a pivotal function
in terms of diagnosing, healing, handling, and obviating illnesses (Jingyun et
al., 2017).  According to Akkari et.al.
(2016), the multinational firms from the USA and Europe which known as the Big
Pharma has dominated the pharmaceutical sector, but the rise of pharmaceutical
markets, particularly in Brazil and China which consider as the ‘pharmeging
countries’ will also have a significant role in maintaining the pharmaceutical
industry sustainable growth. 
Furthermore, Akkari et al. (2017) also stated that the pharmaceutical
industry has turned to be one of the most lucrative trade sectors according to
its dynamism and innovation.  Moreover,
at the same time, it also can generate the economic growth.The Pharmaceutical Research and Manufacturers of America or PhRMA (2012)
explained that the growth of global pharmaceutical market from 2010 to 2015
will be expected to increase about 33.8%, from $733 billion in 2010 up to $981
billion in 2015.  Subsequently, in context
of Brazil and China, PhRMA (2012) also stated that these two countries which
known as the pharmeging countries will be driven most of the drug sales
increase demand, which are 67% in Brazil and 109% in China during the 2010-2015
period.  This increase determines by some
factors such as health care systems expansion, the rising of income levels, and
aging population.  IMS (2013) categorized
the pharmerging countries, in this case, China and Brazil, in level 1 and 2
respectively regarding their potential of growth share in the future
pharmaceuticals global market.  In
addition, IMS (2013) also mentioned about information that forecasts the
indication of global expenditures medication will achieve US$ 1.2 billion in
2017, which is parallel with the increase in 2012 with the amount of US$
205-235 billion. Akkari et al. (2017) argued the development and the generation of
competitive advantages of the pharmaceutical sector within the pharmeging
countries are depending on their concern regarding two crucial factors which
are
the public innovation policies and the regulatory actions involved in the
development and protection of new drugs and the level of investment in R&D.This paper attempts to compare about the Science, Technology, and
Innovation (STI) policies between Brazil and China in the pharmaceutical sector
based on their similarities and differences which emphasis on the STI policies
within the R&D and Intellectual Property Rights (IPRs) sector.  Finally, based on this similarities and
differences, this paper is trying to elaborate what kind of lesson learned that
can be taken from both countries experiences.II.     
DiscussionA.   
Similarities between Brazil and
China regarding Science, Technology, and Innovation  (STI) policies development and implementation.1)      In
terms of Research and Development (R&D).Both Brazil and China government are conducted certain actions on
Research and Development sector through various policy approaches.  For example, in context of Brazil, according
to a study by Queiroz in 1994 (as cited in Guennif and Rahmani, 2010), Brazil
already started the establishment of public laboratories since the very early
stage.  Public laboratories such as the
Biologic Institute, Bacteriological Institutes, Oswaldo Fiocruz Institute, and
Butanta Institute were established from 1892 to 1927 in order to develop and
produce vaccines and serum to tackle the spreading epidemics within
the urban population.Furthermore, in 1984, the CEME or Central de Medicamentos – a public
procurement agency which created in 1971 – conducted a collaboration project
with the CODETEC (Company for Technology Development) –an organization which created
in 1976 through collaboration between theState University of Campinas
(UNICAMP), the Ministry of industry and trade, and a group of firms, mostly
from the public sector – and some private pharmaceutical firms which focusing
on API (Active Pharmaceutical Ingredient). The project aim was to recognize the
output of research from universities that have potential to be commercialized
and explore how they can be brought into the market.There was $5 million that allocated to fund this project up to 1990, with
60 API development, but merely 13 that accomplish the production stage (Queiroz
in 1994, as cited in Guennif and Rahmani, 2010)The Brazilian Federal Government has an
important role in STI policies implementation.According to studies conducted by
Palmeira and Capanema in 2000 and Capanema in 2006  (as cited in Tigre et al., 2016) The
Brazilian Federal Government had performed a financing innovation through Technological
Fund (FUNTEC) of the National Economic and Social Development Bank (BNDES) and the
Program to Support the Development of the Health IndustrialComplex (PROFARMA),
in order to grant financial support for company restructuring, production, exports,
and innovation. There were around 100 projects that had been agreed or were
under examination since 2013, with overall financial support amount of BRL 3
billion (Tigre et al., 2016).Beside those financial schemes manages by the
federal government above, the Brazilian government also creates some policies
that related to the institutional building, initiatives, and programs to
support Research and Development within the pharmaceutical sector.  For example, in 2000, the Department of
Science and Technology (DECIT) was established based on Decree3496 of June 1,
2000.  The main objective of this institution is to
provide financial research to support the SUS (Sistema Unico de Saude or Unified Health System) principles which
comprise the promotion of integrality, resoluteness, universality, and equity. Furthermore,
in context of pharmaceutical services, DECIT had distributed overall of R$33.5
million to funded 228 studies from 2011 to 2014 through national and state
(Research Program for the Unified Health System: Shared Management in Health) direct
financial support and public notices(Gadelha et al., 2016).In addition, Gadelha et al. (2016) also
mentioned about The formation of the Department for Pharmaceutical Services and
Strategic Health Supplies in 2013 as the national institution that responsible
in developing and coordinating the National Medicines Policy in Brazil. The
duties of this organization such promoting, regulating and coordinating the
procurement and distribution of strategic inputs, at different levels of care;
supporting, monitoring and evaluating the implementation of pharmaceutical care
services and improving the quality of pharmaceutical services in SUS; and cooperating
technically to enhance the managerial and operational capacity of states and
municipalities. Moreover, in order to execute the policies above, and to ensure people’s
right of entry to medicine and pharmaceutical services, the Brazilian
government created diverse initiatives such asthe Brazilian Popular Pharmacy
ProgramorProgramaFarmácia Popular
do Brasil,issued in 2004;the National Policy for Medicinal Plants
and Herbal MedicinesorPolíticaNacional
de PlantasMedicinais e Fitoterápicos, issued in 2006; the
specialized Component for Pharmaceutical ServicesorComponenteEspecializado da AssistênciaFarmacêutica, issued
in 2009; and theNational
Program of Pharmaceutical Services Qualification), within SUS (QUALIFAR-SUS) or
Programa Nacional de Qualificação da AssistênciaFarmacêutica, issued in
2012.  In addition, to support the
implementation of public policies, programs and initiatives,  the Brazilian Ministry of Health also has supply
and increase the funding in pharmaceutical services from around R$2 billion in
2003 to approximately R$15 billion in 2015.Meanwhile, in context of China, there are some examples of STI
policies implementation conducts by the Chinese government within the R
sector such as the
accomplishment of policies in terms of science and technology input and tax
preference to promote technology innovations in the pharmaceutical industry.Subsequently,
the Chinese government also has been gradually raising its financial support
for drug R activities within the domestic pharmaceutical industry. For instance, the Chinese
government expands its support for the large pharmaceutical firms’ R&D
expenses from approximately $125,000 in 2002to $313,000 in 2007. Moreover, the
government also implemented a policy regarding the reduction of tax for the
high technology industry, as well as the pharmaceutical industry.  In this policy scheme, Pharmaceutical firms
have the right to the exclusion of sales and income taxes for their drug
R&D expenditures (Ding et al, 2011).Furthermore, Ding et al. (2011) also
mentioned about one important Chinese government’s national program that
supports the R activities in pharmaceutical sector which known as the
Major New Drug Creation program.  The
goal of this program is to grasp the national strategy of advancing the competence
of independent innovation and constructing an innovative nation.In the context
of pharmaceutical sector innovation, this program intends to build up a chain
of innovative drugs for 10 primary illnesses such as cardiovascular diseases
and vicious tumors by allocating about US$1 billion budget.  This project formally establishes in May 2008
which is comprised of three stages that planned for 12 years duration of
implementation. The approximation of funding regarding this project will boost
from $1 billion to around $4.3 billion per 2020 (Ren, 2009, as cited in Ding et
al., 2011). The Chinese government also conducted a
sequence of main national investment project to support the innovation within
the pharmaceutical industry, for instance, the 863 program and the Spark Plan, and
to provide firms fiscal support for technology innovations.In addition, there
are also some national policies that assist the formation of environment for
pharmaceutical innovations such as the “Provisional Regulations of the National
Hi-tech Industry Development Zone Policies” (1991) which offered tax advantages
to hi-tech corporations, including pharmaceutical firms (Ding et al, 2011).The Chinese
government also provide enormous amount of R financial support for
departments and programs within Chinese universities, particularly in
biopharmaceutical research through all forms of government resources, for
instance the Nature Science Foundation Committee of China, the Ministry of
Health (MoH), the Ministry of Science and Technology, and the State Food and
Drug Administration (SFDA).Moreover, biopharmaceutical industry became one of
China main industries, since ‘The Pharmaceutical Industry Eleventh Five
Development Guidance’ was introduced by the State Development and Reform
Commission in 2006. (Hao and Chung, 2015).2)      In
terms of Intellectual Property Rights (IPRs).Both Brazil and China government conduct some policies related to IPRs
activities.  For instance, in order to
obey the provision of the TRIPS agreement, Brazil issued the Industrial Property Law in 1996.  The law that is also known as the Patent Law
(No 9279/1996) starts to permit the protection of pharmaceuticals products(Palmeira et al., 2012, as cited in Akkari,
2016).  According to Orsi and
Coriat (2006), the TRIPS or Trade-Related Aspects of Intellectual Property
Rights agreement was signed in 1994, in order to compel some rules regarding
the implementation of the international standardization of Intellectual Property
(IP) system for every country that signed the agreement.  As one of the members of World Trade
Organization, Brazil is required to change its intellectual property system due
to the commitments that made under the TRIPS Agreement (Cohen, 2000).Meanwhile, on
April 1, 1985, China introduced its first patent law which follows by the
issuing of the Drug Administration Law and the Trademark Law as the basic
policy system for drug IP protection. 
Moreover, China also amended its Patent Law in 1993 and 2000 successively
and revised the “Detailed Rules for the Implementation of the Patent
Law” due to its preparation for joining the WTO and to meet the terms of
TRIPS agreement.China’s Patent Law provides
protection for health products, process, and products gained by the patented
process.The IP legal system in China comprises patent, trademark and copyright
laws, which one of the most significant
patent law – the new patent law was passed on October 1, 2009 – is on drug
R&D.  In addition, to support the national
pharmaceutical firms to cultivate new medications with autonomous IPR, Chinese
government allocated nearly one billion dollars of the budget plan through Major
New Drug Creation program(Ding et al, 2011).B.     Differences
between Brazil and China regarding Science, Technology, and Innovation policies
development.1)     
In terms of research and
Development (R&D).Compare to China, Brazilian pharmaceutical industry
considered has a low level of technological innovation development.According to Frenkel in 2002 and Palmeira and
Capanema in 2010, as cited in Akkari et al., 2016, this situation occur due to
some factors such as the Brazilian pharmaceutical industry more emphasizes its
activities on marketing and drugs production (particularly products with
expired patents), by ignoring the intensive science technology activities such
as R&D.  In addition, lack of active
policies to support pharmaceutical sector (merely identified pharmaceutical
industry as the strategic segment in 2004), centralized multinational R&D
activities within the firm’s offices and the delicate innovation system due
political and economic situation within the country also contributed to the low
level of innovation within the Brazilian
pharmaceutical industry.In China’s case, According
to Wang et al. (2009), the Chinese government give a robust support for its
pharmaceutical industry, particularly in context of R&D, through public
policies from 1996 to 2005 period (two 5 year plans, 1996-2000 and 2001-2005), such
as the creation of numerous research centers. 
Moreover, the Chinese government also sets the biopharmaceutical segment
as the national first priority in the medium and long-term plan for the
development of Science and Technology (2006-2020).3)      In
terms of Intellectual Property Rights (IPRs).In the context of the number of pharmaceutical patents granted for
residents (locals) and non-residents (foreigners), Brazil is far left behind
compare to China.  According to Akkari et
al. (2016), from period 1996 to 2013 there were 65,785 pharmaceutical patents granted in China, which
around 58% or about 37,967 protections owned by locals, opposed to 27,818
patents that gave to foreigners.  On the
contrary, in the same term, there were 461 patents granted within the Brazilian
pharmaceutical segment, which merely 39 patents belonged to locals, compared to
422 patents or 91.5% of patents that gave to foreigners.  This condition as the result of low
innovative occur mainly because of the low innovative clout within the
Brazilian medication industrial sector.Moreover, Akkari et al. (2016) also
stated that around 87.5% of 321 of Brazilian medication patents origin were
granted in overseas headquarters, mostly in Europe, USA, and China, which from 321
patents of Brazilian origin, merely 39 were granted in Brazil.  In contrast, from 39,460 patents in China, 97%
were granted inside China region, which demonstrated how effective the Chinese
domestic firms can exploit the local medicine marketplace.Furthermore, in
context of global patents granted, the percentage of Brazil patents for
medications products or processes are far behind China.  From period 1996 to 2013, Brazil only
contributes to 0.06% of the total amount of patents granted worldwide (556,122),
compared to China with 7.09%.  China’s
percentages are already exceeded Japan percentage with only 6.03%.  This data reflects the low innovative clout
of Brazilian medication industrial sector, particularly in terms of the
strategy that taken by the Brazilian industry, which mainly emphasizes on
generic pharmaceuticals production (Akkari et al., 2016)Wang et al. (2009)
argued the significant improvement within Chinese pharmaceutical development,
especially in terms of patents granted is mainly determined by strong
intervention and support from the Chinese government through its policies, such
as IP legislation.    III.   Conclusion Based
on both Brazil and China experiences in context of Research and Development
(R) and Intellectual Property Rights (IPRs)within the pharmaceutical
sector, it can be concluded that China has conducted stronger and effective efforts
compared to Brazil in fostering the pharmaceutical sector through its STI
policies to improve the domestic capabilities in terms of R and IPRs
development.  Even though Brazil has more
early experiences in the pharmaceutical sector compared to China, but the
actions or policies that taken by the Brazilian government tends not effective
and hinder the development of the pharmaceutical sector in Brazil.  For example, the policy related to
Intellectual Property Rights (IPRs) protection. 
As explained by Guennif and Ramani (2010), in order to emphasize the
shift from scientific competences into re-engineering or copying competences, Brazil
was implemented a loose IPR regime through a lax patent system which allows
merely process patents between 1945 and 1969 and left all the patent regime from
1969 to 1997.  But, rather than encourage
the learning process within the Brazilian pharmaceutical industry, this policy
creates negative effects on Brazilian pharmaceutical industry such as freely imitating
of new product and processes within the medications industry, the reluctance of
Brazilian pharmaceutical companies to invest in technical skills because it not
profitable compared to investment in commercialization process, particularly
for marketing and advertising, an also makes the domestic firms more prefer to
imitate the Western MNCs strategies or approaches such as importing raw
materials, bulk medicines and API (Active Pharmaceutical Ingredient). Conversely,
in China’s case, even though China government also applies the imitating
process as one of its policies within the pharmaceutical sector development,
but they able to shift from imitating stage to innovating stages
successfully.  As mentioned by (Ding et al, 2011), there are four
phases of China’s drug innovation evolution. 
First is the Pure Imitation Phase (1949-1984), second is the Innovative
Imitation Phase (1985-1993), third is the Imitative Innovation Phase
(1993-2008), and the fourth is the Independent Innovation (2008-present).  From these phases, it is clearly seen that
the policy evolution (from latecomer/imitators to forerunners/innovators) and
policy learning process, which two of the important factors in STI development,
is running very well in China compared to Brazil. IV.  
Lesson
Learned There
are ….. main lesson learned that can be taken and adopt by other countries, particularly
developing countries, related to both Brazil and China experiences in
developing pharmaceutical sector:1)      The role of government in setting a rationale
and appropriate policy framework that can ensure the sustainability of the
priority sector, in this case, the pharmaceutical sector,  is extremely needed; 2)      The government must aware and able to adapt
to all the changes within the domestic and global environment that related to
the development of a specific sector (e.g. the pharmaceutical sector) through
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