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Ahmedabad May 27, 2011

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DR. NARENDRAN’S DILEMMA
It was early January 2011. Dr. Narendran, the director of Indian Medicine College (IMC) in the
south Indian city of Chennai, carefully studied the report before him; perhaps it would help

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clarify an issue that had cropped up, quite unexpectedly, three months earlier. 1 He could still
vividly recall his meeting with Dr. Ramkumar, associate professor and head of the
Pharmacology Department of IMC in October 2010. Dr. Ramkumar informed him that he had
developed a herbo-mineral Siddha 2 cardiovascular product for coronary atherosclerosis, which
reduced the need for commercial stents and other interventional methods. 3 The product was not
only non-invasive, but cost-effective as well, he added. Dr. Ramkumar’s next words caught him
off guard. “Now, IMC has to ensure the intellectual property (IP) protection of the research and

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commercialize the formulation,” Dr Ramkumar said. He then gave Dr. Narendran a preliminary
note prepared by a legal firm and a form that he had filled out in response (see Exhibit 2). He
also added that the firm had told him that there was a 90% chance that IP protection would be
granted.

Dr. Ramkumar’s request took Dr. Narendran by surprise. Although IMC had been conducting
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research in Siddha medicine since 2008, the question of protecting its IP had never come up.
This was unfamiliar territory. He asked Dr. Ramkumar what the process would cost. Dr.
Ramkumar was not sure, but estimated that it might require an outlay of INR 25,000. Dr.
Narendran did not have funds for this purpose, but he did have access to a development fund
of INR 100,000, which he could use. However, he was not sure how to handle such a request.
IMC did not have a department or cell that could deal with a demand of this kind.
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Dr. Ramkumar added that it was possible that the potential returns through commercialization
would be significant, and that IMC could benefit financially as well as academically. He told the
director that research institutions usually made arrangements with private agencies for the
commercialization of their research.

Dr. Narendran realized that he was being asked to explore new areas; he had never before
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given much thought to commercializing or protecting his own or the institute’s research. He
briefly wondered what IMC’s research mandate had to do with such matters. In a career
spanning 32 years, he had done some research, but his research had ended with a report to the
sponsor and the publication of the results in a journal or in conference presentations. This
approach had served him and the institutions at which he had worked well. He went through
the information Dr. Ramkumar had given him, but found it difficult to interpret. His immediate
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1 The names of individuals and the name of the institute have been disguised to protect confidentiality.
2 Siddha is an ancient system of medicine associated with Tamil Nadu. See Exhibit 1 for more details.
3 Atherosclerosis is a medical condition in which an artery’s walls thicken due to deposits of fatty materials. A stent

is an artificial tube inserted into an artery to counteract the constriction in blood flow due to the thickening of the
artery.

Prepared by Professor Vijaya Sherry Chand, Indian Institute of Management, Ahmedabad.

Cases of the Indian Institute of Management, Ahmedabad, are prepared as a basis for class discussion. They
are not designed to present illustrations of either correct or incorrect handling of administrative problems.
© 2011 by the Indian Institute of Management, Ahmedabad.
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thought was that whatever he decided had to be guided by IMCs’ mandate; at the same time, he

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realized that he had to give Dr. Ramkumar a suitable answer, since the other faculty members
would be watching him closely.

Dr. Ramkumar had joined IMC in mid-2008 with a good record as a practitioner-cum-
researcher. However, he did not mix very well with his colleagues. Dr. Narendran observed: 4

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His personality is that of a loner. He is often perceived as secretive and unwilling to
share his knowledge. But he has good formulations, which he had developed before
joining IMC. All his formulations are fundamentally sastric, 5 but he has made many
modifications; he is an experimenter. His cardiovascular formulation for
atherosclerosis must have been developed before he came here. He has not done the
work here; neither has he published this formulation in any journal. He generally

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does not discuss his experiments or results with me or his colleagues, though he
maintains all the necessary records. He is reported to have developed a reasonably
successful formulation for some kinds of infertility, for which he charges fairly
heavily. He is very secretive about this, and no one else knows what this
formulation is.

EDUCATION AND MEDICAL CARE AT IMC

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IMC had been set up as a center for excellence in Siddha medicine with three objectives: to
impart postgraduate education in Siddha and provide medical care through Siddha; to research
various aspects of Siddha; and to develop, promote and propagate the science and art of
Siddha. It was affiliated to a medical university and its curriculum was framed in accordance
with the norms prescribed by the Central Council of Indian Medicine, New Delhi. As of 2010,
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IMC admitted 46 students every year into its six departments; one seat was set aside for Siddha
graduates from other countries. 6 Although IMC was launched in 2004 with staff members
deputed by the state government, recruitment of full-time faculty took place only in 2008 and
research activities began after that. IMC set up an Ethics Committee, an Animal Ethics
Committee and a Research Committee, in line with Indian Council of Medical Research
guidelines, by the middle of 2008. Teaching and hospital practice, however, had been significant
from the institution’s inception.
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IMC began operations with a small number of experts from the state government, who initially
concentrated on education and on strengthening its outpatient department (OPD) and inpatient
department (IPD) services. 7 IMC started its OPD services in October 2004. Within a period of
three months, it had set up six OPD rooms, one for each department. As of early 2011, the OPD

4Excerpted from an interview with the case author.

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5Sastric preparations are those that are based on formulations prescribed in ancient texts or manuscripts. Since they
have been in use for a long time, their effectiveness in treating various prescribed ailments is taken for granted.

6 Prior to the implementation of statutory reservations (affirmative action) for Other Backward Classes (OBCs), IMC’s
intake was 30. The six departments are Medicine, Special Medicine, Pediatrics, Diagnostics, Pharmacology and
Toxicology.
7 By 2011, IMC had 107 staff—23 academic staff, 23 administrative staff and 61 hospital staff. Many of the hospital/

administrative staff worked on contracts.

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catered to an average of 1,100 patients a day. The IPD opened in June 2005 with 20 beds. By

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2008, it had 120 beds divided among the six departments. The IPD was in great demand; it had
an occupancy rate of 100%. Patients admitted to the IPD received free treatment and dietary
services; however, special pay wards were also available. The medical care mandate had also
resulted in weekly geriatric OP services, a yoga OP program and other special OP programs
that were conducted as and when a need arose. For example, IMC conducted a special
chikunguniya 8 OP program from September 2006 to April 2007 for nearly 6,000 patients.

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The development of the hospital had taken considerable effort, and Dr. Narendran was
convinced that as a postgraduate teaching institute, IMC’s hospital was a key element in
training its students and should be developed further. He observed, “Siddha education and
providing Siddha medical care are key objectives of the institute; we need to set up additional
facilities for these.” He also knew that the shortage of manpower, especially for external

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therapies, and the congested consultation rooms, were areas of growing concern.

RESEARCH ACTIVITIES AT IMC

Research activity at IMC began in 2008. The institute approved seven research studies in
October 2008. New research guidelines issued by the government around this time made it
mandatory for new formulations to be subjected to safety (preclinical) studies before clinical
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studies on humans could be undertaken. Since IMC did not have the necessary laboratory
support to conduct preclinical studies, it entered into memoranda of understanding with two
universities. The Research Committee of IMC ultimately approved four projects and secured
INR 3 million from the government for these studies in May 2010. In addition, IMC decided to
conduct observational studies on sastric preparations, as prescribed in the traditional texts of
Siddha medicine, for which safety analysis was not needed.
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Dr. Narendran recalled a discussion he had had in August 2010 with the heads of the six
departments, in which the group had identified a few challenges in research capacity building.
The group had unanimously agreed that textual authority had to be supplemented with
research that validated the therapies and drugs used in Siddha as this would promote the
acceptance of Siddha among other systems of medicine. It also noted that in the dominant
mainstream medicine system, many doctors and pharmaceutical companies were involved in
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drug research. These drugs cost a lot of money to develop, and the companies were granted
exclusive rights to exploit their discoveries commercially, through patents. Siddha and other
parallel systems of medicine would have to learn from these developments and change the way
they looked at drug development.

The group also felt that Siddha still had some way to go in developing globally-acceptable
research designs and defining appropriate outcomes of treatment, which would convert a
holistic treatment system like Siddha into objective and quantifiable end-points. Once this was
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done, other systems of medicine could examine what Siddha had to offer them. One department
head pointed out that in the context of globalization, reliable and validated Siddha products
were neither visible nor available to patients in other countries and doctors in other systems of

8 An infection caused by a mosquito-borne virus leading to illness characterized by severe joint pain.

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medicine. How relevant were these concerns to the commercialization implied by Dr.

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Ramkumar’s request, Dr. Narendran wondered.

Dr. Narendran felt that research at IMC was geared towards validating sastric procedures and
formulations, but, as he noted, “adding value to the work of good faculty members will
definitely motivate them.” He recalled that two other faculty members were working on
formulations to reduce aneurysm risk (localized widening of a blood vessel) and support the

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treatment of septal defects (defects in the walls of the heart). Both were similar to Dr.
Ramkumar’s research in terms of their importance.

MARKET STUDY

In order to better understand Dr. Ramkumar’s request, Dr. Narendran had asked a friend who
was associated with a management education institute to study what Dr. Ramkumar’s idea

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meant in terms of commercialization. The report, prepared by a pair of students, was now in his
hands. It said that IMC’s first step should be to patent and register the formulation with the
state’s Food and Drug Administration. A patent would give IMC a monopoly right over the
exclusive commercial use of the formulation for the time period specified by the patent. The
patent was also an asset that could be sold during the exclusivity period. IMC could also grant a
license to another party to use the patent, thereby earning income from it. The patenting process
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required full disclosure of the formulation; in return, IMC retained the right to exploit it
commercially for a specified period of time. By not patenting the formulation, IMC ran the risk
that another researcher might discover a similar formulation and patent it, thus preventing IMC
from using its own formulation. The chances of this happening were not that remote, Dr.
Narendran thought, since it would be difficult to keep the composition secret. A research
institute was expected to share the outputs of its research through journals and newsletters.
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Any entrepreneur could borrow these results, make suitable modifications to derive an
invention, and then go through the patenting process. However, Dr. Narendran intuitively felt
that this would not prevent IMC from continuing to use its original formulation on its own
patients.

The report stated that IMC could take one of three routes as far as licensing out was concerned.
Outright transfer to a third party for a one-time license fee paid at the time of transfer was the
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first option. The second option was that IMC could use a registered pharmaceutical unit to
manufacture the formulation, but do the marketing itself. Dr. Narendran was concerned about
this option, since he knew that his staff did not have the necessary marketing skills to exploit
the opportunity. The third option was for IMC to enter into an agreement with an entrepreneur,
under which the latter would pay annual royalties on sales of the formulation. The report
mentioned that royalties at six percent of gross sales were being paid by various manufacturers
for similar herbal formulations. This option appealed to Dr. Narendran, but he was not sure
how trustworthy the partner would be. The first and the third options required IMC to engage
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in a search for a suitable partner. The study also presented its estimates for the three options
(see Exhibit 3).

It struck Dr. Narendran that the patent, by itself, would have some value. No Siddha college, as
far as he knew, had ever obtained a patent. But moving towards patenting had a number of
implications—for the research and education mandate of the institute and the incentives and

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rewards for faculty members. If the patent were to be exploited, the institute and the faculty

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member would benefit financially. But he doubted whether practitioners or surgeons in, say,
the allopathic system of medicine, would refer their patients to Siddha doctors so that they
could be treated with Dr. Ramkumar’s medicine. Perhaps interested people outside India
would look at the formulation favorably, but he could not be sure. As he reflected on the
teaching and research experience of IMC and on the report, Dr. Narendran wondered what he
should do about Dr. Ramkumar’s request. Three months had passed since Dr. Ramkumar had

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approached him and he owed him a response, but he also had to examine the broader context in
which this decision had to be made.

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EXHIBIT 1: SIDDHA: A BRIEF BACKGROUND

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Siddha is an ancient system of medicine associated with Tamil Nadu. The term refers to “Siddhars,”
sages who had attained perfection in life, and who, according to legend, were given medicinal knowledge
by Lord Shiva. It is believed there were 18 Siddhars, the first being the sage Agasthya. This knowledge
was transmitted orally for generations, and during medieval times, it was transcribed onto palm leaves.
These manuscripts are regarded as the main repositories of Siddha knowledge.

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Traditionally, the guru-shishya (teacher-disciple) approach was used to train Siddha practitioners. In
addition to the traditional literature, much of which is still to be scientifically researched, there are many
formulations and treatment techniques that are known only to practitioners. The organized and systematic
teaching of Siddha medicine is a recent phenomenon. Education in Siddha medicine was formally
introduced in India only in 1964. As of 2011, there were seven institutions in India offering undergraduate
programs in Siddha medicine; three of these also had postgraduate programs. All except one were
located in the south Indian state of Tamil Nadu. Four of the undergraduate colleges were private sector

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institutions. The total annual intake of the institutions (prior to the implementation of statutory
reservations, i.e., affirmative action, for other backward classes) was 350 at the undergraduate level and
110 at the postgraduate level.

Siddha therapeutic procedures depend primarily on herb and mineral formulations and certain massage
procedures. Siddha, Ayurveda, Unani (the modified Greek medicine system brought in by Arabian and
Persian scholars) and Sowa-Rigpa (a Tibetan system of medicine) are the main components of
indigenous medicine in India. Yoga, Naturopathy and Homeopathy are often added to this list when
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referring to Indian systems of health and medicine.

Source: Author.
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EXHIBIT 2: PRELIMINARY ADVICE FROM LEGAL FIRM

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The relevant passage from the legal firm’s note is reproduced below:

The subject invention is an herbal composition, which reduces the requirement for stents in
the conventionally performed angioplast procedure. We believe the inventive composition
claims its novelty in being able to reduce the need for stents in an angioplast procedure for

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cardiovascular applications. Since the extensive usage of stents in conventional angioplasty
procedures has certain disadvantages such as generating blood clots, the said inventive
composition may expedite the healing time and also may enable the patient to recover and
function with minimum discomfort. In the context of the Indian Patents Act, we need to
examine the invention under each of the following criteria: (i) Novelty; (ii) Non-obviousness;
(iii) Utility/ Industrial application. To examine the invention with respect to each of the criteria,
we require a write-up on the invention as per the details given in the attached information
sheet. Once the write-up is received, we do a preliminary screening to ascertain if the

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invention satisfies the above said criteria and accordingly conduct a prior art search in the
records of all major patent databases (including the United States, the European Union,
India, etc.) to check if any similar invention is filed/ granted in the state of the art. If no similar
records are available in the prior art and if the above three criteria are fulfilled, we move to
the next step of drafting the patent specification and filing the application before the Patent
Office.

Information Sheet
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Information requested by patent firm Information supplied by Dr. Ramkumar
Nature of Invention: [Whether product/ process/ Product and process
business method or other category]
Field of the invention Siddha medicine: Non-invasive cardiovascular
product for stenosis and atherosclerosis
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Synopsis of invention: Herbo-mineral product intended for coronary

[Please give a brief write-up of the invention,
specifically describing the technical problem
which it seeks to solve (or) the novelty features]
Components/ Composition
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atherosclerosis and preventing the use of vascular
stents. It solves both problems and has no side
effects, strengthens blood vessels, prevents vessel
narrowing and is site specific; also expeditious
action; economical
Charaka asoka, guggul, aloe, allotropied bentonite

etc.
Drawing/ charts/ flow charts (if any) Animal toxicity study report prepared

Closest prior art/ field of invention known (if any) Formula prepared and tried on 45 patients with
encouraging results
Stage at which the invention is at present, i.e.: Fully developed
(a) Fully Developed
(b) Partially Developed
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Source: Dr. Ramkumar’s records.

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EXHIBIT 3: EXTRACTS FROM REPORT SUBMITTED TO IMC

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Option 1: One-time license fee

Our survey indicates that there is a probability of 0.7 that INR 50,000 may be obtained, and a probability
of 0.3 that a higher value of INR 75,000 may be received.

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Option 2: Job work to be done by registered pharmaceutical unit (sales and costs in INR)

Year 1 Year 2 Year 3 Year 4 Year 5

Sales 100,000 80,000 65,000 40,000 32,000
Costs 96,000 60,000 45,000 30,000 28,000
Sales (−) Costs 4,000 20,000 20,000 10,000 4,000

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Notes:
1. Marketing is to be done entirely by IMC. Our study indicates that sales will not be as high as in the case of a
private entrepreneur taking up manufacture.
2. We have estimated the sales on the basis of sales of comparable products and the estimates of experts in the
industry.
3. We are assuming that most of the sales will be within the Siddha system; 10% of the sales may be outside the
system. We also assume all sales are within India.
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Option 3: Royalty on gross sales at 6% (INR)

Year 1 Year 2 Year 3 Year 4 Year 5

Gross Sales 250,000 220,000 200,000 150,000 100,000
Royalty at 6% 15,000 13,200 12,000 9,000 6,000
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Notes:

1. Manufacturers who are likely to take up the formulation will have a much better reach, and hence, the sales
include possible sales to other medicine streams. We are assuming that most of the sales will be within the
Siddha system; 20% of the sales may be outside the system. We also assume all sales are within India.
2. We have estimated the sales on the basis of sales of comparable products and the estimates of experts in the
industry.

Source: Internal Report prepared for IMC.

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