Transcript Local Innovation Capability Pharmaceuticals in India before and

Pharmaceuticals before and after
TRIPS
Sudip Chaudhuri
Professor of Economics
Indian Institute of Management Calcutta
BRICS Workshop, Aalborg
12-15 February, 2006
The Context in Pharmaceuticals
• MNCs huge spenders on R&D
• Get new drugs patented and charge high
prices
• MNCs consider patents as fundamental for
their R&D efforts
But in Developing countries
• the patent system did not play much
positive role
• In fact its abolition in India has been highly
beneficial
India provided product patent
protection in pharmaceuticals till
1972
• This did not have any positive effect
because:
– the MNCs, who held the patents were not
keen on manufacturing (and R&D) activities;
they preferred imports to local production in
India and
– prevented the Indian companies from doing
so by using their patent rights.
As a result
– On the one hand, because of lack of
competition, drug prices in India were very
high.
– On the other hand, India was dependent on
imports for many of the essential bulk drugs.
The import dependence constricted
consumption in a country deficient in foreign
exchange and inhibited the growth of the
industry.
But since the 1970s
• Remarkable growth in the pharmaceutical
industry in India
• India and Japan: only two countries where
western MNCs do not dominate
• India: net exporter and self sufficient in drugs
• Drug prices among the lowest in the world
• Source of good quality cheap drugs for the rest
of the world
• India has the largest number of US FDA
approved manufacturing facilities outside USA.
Growth of Exports
3500
$ million
3000
2500
2000
1500
1000
500
2003-04
2001-02
1999-2000
1997-98
1995-96
1993-94
1991-92
1989-90
1987-88
1985-86
1983-84
1981-82
1979-80
1977-78
1975-76
1973-74
0
Source: Sudip Chaudhuri, The WTO and India’s Pharmaceuticals Industry: Patent
Protection TRIPS and Developing Countries, New Delhi, Oxford University
Press, 2005.
India’s transformation
• Using the freedom which countries had before WTO, in
1972, the Patents and Designs Act, 1911 was replaced
by the Patents Act, 1970 and product patent protection in
pharmaceuticals was abolished
• It was not product patent protection but its abolition
which operated as a pull mechanism in India by provided
the Indian companies the space of operations and the
opportunity to develop and innovate
• Aided by the push programmes of public investments in
manufacturing and R&D, what Indian companies
innovated are processes for manufacturing. And it is this
capability which has permitted India to have an
international presence and be a global source of drugs.
But under WTO
• Under the Agreements on Trade Related
Aspects of Intellectual Rights (TRIPS),
mandatory for all countries to provide
product patent protection in all products
including pharmaceuticals
One important argument during
TRIPS negotiations
• Developing countries too would benefit
from stronger patent protection because it
will stimulate private R&D investment for
developing country diseases e.g.,
leishmaniasis, sleeping sickness, Dengue
fever, which are neglected by the Western
MNCs
What is happening in India?
• Indian private sector has started investing
in R&D for new drugs since the mid-1990s
when TRIPS came into effect.
• At present there are about 15 Indian
companies which are involved in R&D for
development of new drugs ( see Table)
Table R&D Expenditure by Indian companies involved in development of new drugs
Company
R&D
expenditu
re in Rs
million,
2003-04
Percentag
e of total
turnover,
2003-04
R&D
expenditure
in Rs
million,
2002-03
Percentag
e of total
turnover,
2002-03
R&D
expenditu
re in $
million,
2003-04
Ranbaxy Laboratories
2761
7.80
1922
6.80
60
Dr. Reddy's Laboratories
2261
12.99
1635
9.92
49
Sun Pharmaceuticals
1077
10.20
658
7.70
23
Cadila Healthcare
882
7.52
383
3.72
19
Wockhardt
604
7.89
462
6.23
13
Nicholas Piramal India
559
3.90
185
1.63
12
Lupin
460
3.90
360
3.49
10
Torrent Pharmaceuticals
397
8.90
312
6.98
9
Orchid Chemicals &
Pharmaceuticals
397
5.56
278
5.13
9
Glenmark Pharmaceuticals
372
9.67
306
9.16
8
Dabur Pharma
182
8.5
175
1.42
4
J B Chemicals &
Pharmaceuticals
69
2.20
50
1.73
2
Total
10021
7.73
6726
5.55
218
Sources: Company annual reports and websites.
Status of New Drug Development
programmes of Indian companies
• Indian companies are not yet ready to undertake R&D
independently
• They do not have all the skills and the resources to do so
• Developing new molecules and license out these to the
MNCs in the early phase of clinical development
• As a result Indian companies are not targeting the neglected
diseases of the developing countries but the global diseases
which interest the MNCs
• While some of the molecules developed at clinical trials
stages, no new drug has yet been approved for marketing.
Thus TRIPS has not led to much
R&D for developing drugs for
necessary for developing countries
and neglected by MNCs
So, what is the future?
A Possible BRICS Research
Project
• Impact of TRIPS
• Response to TRIPS
• Alternatives to TRIPS
Definition of pharmaceutical
Innovation to include
• Developing medicines suitable for the
people
• And also making these available to the
people
Cross country study very important
• Brazil more successful in making drugs available (e.g.,
universal ARVs) and using TRIPS flexibilities (e.g., in
compulsory licensing)
• Russia: ?? (in the past, USSR help was an important
factor in the growth of India’s pharmaceutical industry)
• India more successful as manufacturer of quality drug
formulations and active ingredients
• China more successful as manufacturer of drug
intermediates and tackling USA + ??
• South Africa: The famous Medicines and Related
Substances Control Act and the withdrawal of the law
suit by the MNCs
THANK YOU
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