The Relevance of Open Innovation for the Generic Pharmaceutical Industry in Developing Countries: Open Innovation to Address Vaccine Divide

Introduction

COVID-19 has had serious and multi-dimensional impacts on all countries irrespective of their socioeconomic status. It is not only a worldwide public health crisis; it has also contributed to an unprecedented global economic crisis. Long-term lockdowns and disrupted international supply chains have affected both manufacturing and service sectors and resulted in job loss and/or significant reductions in income (Pak et al., 2020).

The literature on the economic evaluation of COVID-19 and the optimal strategy to escape the pandemic is still emerging; however, it is argued that mass vaccination has both health and economic benefits (MacIntyre, 2021). In 2021, many developed countries have adopted mass COVID vaccination programs in mitigating the outbreaks of the virus as well as the main strategy towards economic recovery (MacIntyre, 2021; Moghadas, 2021). Accordingly, these countries have been able to reduce uncertainty and panic, thereby open their economies. Unfortunately, only a few selected developing countries have been able to successfully combine lockdowns with mass vaccination. In many developing and least developed countries (LDCs), the vaccination rates have remained extremely low; as a result, the economic impacts of the pandemic have been felt more badly by them.

Attaining self-sufficiency in original vaccines requires a country to have an advanced pharmaceutical and biotechnology sector (consisting of research-intensive firms), which is non-existent in most developing and least developed countries. These countries also do not afford buying a vaccine for every citizen. The statement by the United Nations “No one is safe, until everyone is safe” indicates that since COVID-19 is a global problem, current gaps in the vaccination rates between countries are unacceptable and that to help stop the spread of the disease, vaccines should be equally accessible to people in poor countries. Unless the global community undertakes a wholistic approach in addressing the vaccine divide, the pre-existing economic divide is likely to become further worse (Muro & Austin, 2021).

This paper discusses the relevance of the open innovation model in improving the capability of pharmaceutical and biotechnology firms in the developing world in producing generic versions of vaccines for COVID-19 and other diseases. Chesbrough et al. (2006, p.1) define open innovation as ‘the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively’. At the center of open innovation is the facilitation of research and development (R&D) spillovers, which can be understood as the voluntary and involuntary exchange of commercially viable technological information (Steurs, 1994; Chesbrough & Bogers, 2014). The authors emphasize that a wider availability of vaccines for COVID and other diseases is not achievable unless poor countries develop their capability to produce vaccines locally. The production of generic vaccines needs lesser degree of innovation capability, which is achievable by firms in poor countries given that they receive technological support from multinational companies (MNCs) and international organizations. Essentially, the issue of transfer of technology by MNCs to firms in developing countries is typically a contentious issue as technology development involves huge costs. Nevertheless, the pandemic has also served as an eye opener for all to realize the importance of collective approaches in dealing with global problems.