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Pharmaceuticals before and after TRIPS


... in the pharmaceutical industry in India ... of public investments in manufacturing and R&D, what Indian ... Development programmes of Indian companies ... – PowerPoint PPT presentation

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Title: Pharmaceuticals before and after TRIPS

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 RD
  • Get new drugs patented and charge high prices
  • MNCs consider patents as fundamental for their
    RD efforts

But in Developing countries
  • the patent system did not play much positive role
  • In fact its abolition in India has been highly

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 RD) activities they
    preferred imports to local production in India
  • 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
Source Sudip Chaudhuri, The WTO and Indias
Pharmaceuticals Industry Patent Protection TRIPS
and Developing Countries, New Delhi, Oxford
University Press, 2005.
Indias 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
  • 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
  • Aided by the push programmes of public
    investments in manufacturing and RD, 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 RD 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
    RD for new drugs since the mid-1990s when TRIPS
    came into effect.
  • At present there are about 15 Indian companies
    which are involved in RD for development of new
    drugs ( see Table)

Table RD Expenditure by Indian companies
involved in development of new drugs
Sources Company annual reports and websites.
Status of New Drug Development programmes of
Indian companies
  • Indian companies are not yet ready to undertake
    RD 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
  • 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 RD 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
  • 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 Indias
    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

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