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News blog21 November 20225 min read

Reverse Innovation: How Innovations Fostered in Developing Countries such as India May Conquer Western Markets

Cutting-edge innovations shape our day-to-day lives in multiple ways, even more so in the 21st century. Such innovations often embed a bundle of intellectual property rights that aim to protect and reward the efforts of the innovators who committed their time and resources to develop a specific invention. However, often both the products and the manufacturing process of these innovations are only commercially viable in higher-income countries. Plus, traditionally the main R&D facilities of innovating companies are also nested in these countries.

Yet, designing cutting-edge innovations from and for high-income countries has inherent limitations when we enter a global economy scene: where organisations aim to reach as many markets as possible, they often end up facing the challenge that the price ranges of those products are not viable in a majority of developing countries.


Introducing the concept of “Reverse Innovation”

In recent years a new trend has gained momentum which Vijay Govindarajan and Chris Trimble, Professors at Dartmouth College’s Tuck School of Business, have coined “Reverse Innovation”. This process describes the generation of innovative goods and services produced in emerging markets, before spreading to established markets – often provided as lost-cost innovations for Western consumers.

This strategy has proven particularly relevant to India as it has numerous, highly-qualified, and cost-efficient R&D hubs in many sectors. For example, Samsung’s largest R&D facility outside Korea is based in Bangalore (Samsung R&D Institute of Bangalore). It has been highly active in the IP panorama, having registered over 7,500 patents in the last four years.

Moving the research and development facilities to these countries has shown multiple benefits. Physically moving to these markets has allowed companies to better understand the local consumer’s habits and preferences. Furthermore, producing their products through a well-implemented reverse innovation approach has also encouraged and nurtured the creation of better and more cost-efficient designs. In the past, many organisations were not able to achieve satisfying results when adapting their products to lower-income countries. Some practices, such as attempting to lower the cost of a product by removing some of its features, or commercialising lower-tier variants turned out to be pitfalls to be avoided.

Additionally, other benefits have emerged from decentralising the research engines of multinational corporations. For instance, it has substantially increased the number of research lines, not only for novel, standalone technologies but also for taking-up existing technologies and fostering international cooperation. These collaborative research initiatives have produced incremental improvements that also allowed cheaper access to key technologies through cross-licensing: in return for sharing the improvements with the first innovator, follow-up researchers could access the base technology at a much lower cost, hence facilitating its commercialisation at lower-income countries. This phenomenon can be observed in some of today’s major breakthrough innovations such as 5G, 6G, and high-end IoT solutions, which were developed through truly multi-continental collaborations.

Some of the largest companies in the world are embracing reverse innovation as a viable strategy for many research branches. As Carl Horton, Chief Intellectual Property Counsel for General Electric, mentioned in an interview with WIPO Magazine, innovating in developing countries helped the company design products better fitted to specific local needs and resulted in higher demand than initially expected. In addition, decentralising research efforts forced the corporation to adopt a global IP infrastructure, optimally matching the geographical spread of their business.


Innovations rooted in developing countries: the example of the “paperfuge”

Innovation is a cornerstone for social and economic progress and in some cases, a source of inspiration. Reinventing products in sectors such as healthcare and reducing the cost of specific treatments can be a game-changer for regions in need. The story of the two bioengineers from Stanford University, Manu Prakash and Saad Bhamla, who developed a 20-cent, hand-powered blood centrifuge, is extraordinary. While working as an assistant professor in Uganda, Manu Prakash noticed that a state-of-the-art medical centrifuge was actually acting as a bottleneck in a rural clinic where there was no electricity to operate it. Centrifuges are a fundamental tool for the diagnosis and, consequently, also the treatment of a wide range of diseases, such as Malaria.

In search of a better solution to this problem in developing countries, assistant professor Prakash and professor Bahmla came up with a game-changing idea inspired by an old toy: a whirligig. The toy, familiar to many of us is made from threading string through a button and rhythmically pulling on the ends to coil and uncoil the string, provoking the button in the middle to rapidly spin. This simple design and a follow-up publication led to the creation of the “paperfuge”, a 20-cent hand-operated device that could spin at 125,000 rpm and exert up to 30,000 Gs of centrifugal force. The simple tool has the potential to save millions of lives, providing a cheap and simple diagnosis method for diseases such as malaria, tuberculosis, HIV, and the African sleeping sickness among others.

This is only one of many fascinating examples of innovative solutions born in the developing world that may also fuel the creation of low-cost innovations in India with significant societal and economic impact, which may ultimately also succeed in the global market.

Expanding your business, lowering costs, and reaching a larger client base is jargon which should not be familiar only to large corporations. EU SMEs who aim to expand their business abroad, and in particular in India must take into account that a well-framed, global IP strategy and infrastructure, and the will to commit resources in other countries can be key for their growth and potentially an important step towards creating a better, more sustainable future for all of us.



Publication date
21 November 2022