Date: 18 February 2011
Much-hyped tie-ups between Indian and multinational drug companies have not
improved domestic research and development
(R&D) capabilities, according to a study.
But they have raised fears of a steady loss of domestic manufacturing capacity
for the cheap drugs needed in the rest of the developing world.
Some Indian drug companies have acquired foreign firms in the past decade or agreed
marketing deals to promote the products of foreign companies in India.
Meanwhile, foreign companies have bought Indian firms, including Ranbaxy, Nicholas Piramal India and Shantha Biotech.
An analysis by India`s National Institute of Science, Technology and Development Studies (NISTADS) shows there has been no
improvement in the R&D capacity of domestic companies, nor any significant
technology transfer from abroad. The analysis will be published in the July 2011 special issue of the International Journal of
Institutions and Economies.
India`s clinical research organisations, which
specialise in carrying out drug trials more cheaply than can be done abroad,
also largely failed to improve technologically. A closer look at their annual
growth of 2025 per
cent shows that 80 per cent of this was in their capacity for conducting trials,
with only 20 per cent in their capacity for drug
discovery, mostly aimed at Western markets.
NISTADS scientist Dinesh Abrol, who led the analysis, told SciDev.Net that one
cause for concern was the loss of domestic manufacturing capacity for cheaper `generics`
versions of a drug made by alternative chemical processes and thus free from
licensing restrictions.
The international medical non-governmental organisation Médicins Sans Frontières,
which relies on India to supply 80 per cent of
the generic HIV drugs it distributes in developing
countries, describes India as the
"pharmacy of the developing world".
Abrol said that foreign companies bought Indian ones that had large markets in
several developing countries as well as India. The Indian firms will no longer
be able to make cheaper versions of new drugs owned by the foreign firms
reducing the supply of cheap drugs to other countries.
International patent laws allow countries to issue compulsory licences to make
or buy generics during a national health emergency.
But if India were to declare a national health emergency in the future, there
would be few domestic firms left to make generics in sufficient amounts, Abrol
pointed out.
A discussion paper by India`s commerce ministry in November 2010 cautioned: "There
is a concern that their [Indian drug firms`] take-over by multinationals will
further orient them away from the Indian market, thus
reducing domestic availability of the drugs being produced by them. This may weaken
competition leading to headroom for increase in domestic drug prices."
The ministry said such alliances had also been seen in Brazil, Egypt and Pakistan, indicating a "consolidation in developing country markets" that could "alter
the pharmaceutical landscape".
Abrol said that Indian drug firms often challenged multinational drug companies`
patent applications in India. "Buying the domestic firms would lead to
fewer irksome patent challenges," he said.
Another problem is the intellectual property rights
for Indian technologies that fall into foreign hands through takeovers. Indian
companies have benefited from tax incentives, technology
transfers and patent waivers on
the products of research from Indian publicly funded institutes. The Council of Scientific and Industrial Research alone
gave out the rights to 50 new processes and 50 new reactions for 100 essential
drugs from 1965 to 1980.
The goal of these waivers has been to boost domestic Indian industry but, after
a takeover, the final beneficiaries of such technologies are foreign firms.
Such firms are also now the ultimate beneficiaries of market
access privileges enjoyed by under bilateral agreements between developing countries,
including Brazil.
"What happens to such agreements is at stake," said Sachin
Chaturvedi, a senior analyst with the Research and Information
System for Developing Countries.
Keywords: India / Generic Drugs / Supply
|