Demand Policy Instruments for R&D: Procurement, Technical Standards and The Case of Indian Vaccines

Abstract

What impact do demand-side policy instruments have on technological learning and R&D in the industrial sector? The number of private vaccine suppliers in advanced industrialized countries is shrinking, and firms in developing countries must pick up some of this slack for various diseases. National and international public health procurement policies act as one form of demand instrument and establish standards for vaccine development and manufacture. The thesis of this paper is that procurement should be revisited as an instrument for inducing both adequate supply, but also for technological advance. This paper explores the case of process technology advances in Indian vaccines. The paper shows that as a demand policy instrument for R&D, international rather than national procurement, affords a special opportunity for both technology and institutional improvements in an age when developing countries face greater constraints on industrial development. However, continued gaps in capability exist.