A New Indian Challenge to Big Pharma

Posted by: Bruce Einhorn on February 29, 2008

Just when Thailand shows signs of backing down in its confrontation with global drugmakers, Big Pharma may be facing an even bigger Asian challenge, this time in India. The Thais infuriated pharmaceutical companies last year by invoking a WTO provision to break the patents on some HIV/AIDS drugs and threatening to break several more cancer drugs. However, a few days ago the new Thai health minister, part of the civilian government that took office in January, abruptly demoted the Thai official behind this challenge to Big Pharma. (More on that in this story from Reuters.)

But the multinational pharma companies now have to deal with a new Indian problem. An Indian drugmaker, Natco Pharmaceuticals, yesterday asked the government to break the patents on several cancer drugs. (More in this AFP story.)

India, of course, has long presented problems to the big drug companies. Last August, for instance, I wrote here about the setback that Novartis faced when a court ruled against its attempt to preserve a patent on a leukemia drug.

For the multinationals, getting India to fall into line, as the Thais seem to have done, probably won’t be easy. In a poor country with over 1 billion people and a democratically elected government, the government has lots of pressure to hold the line against the drug companies. AFP quotes an activist explaining the need to break the patents: “ ‘If compulsory licensing is not resorted to, 98 percent of India’s population will not be able to afford any of the patented drugs,’ said Y.K. Sapru, the president of the non-profit Cancer Patients Aid Association.” And in one of those doing-well-by-doing-good situations, there are plenty of Indian drugmakers that figure they can build a good business by making low-cost versions of expensive drugs and making them available in developing countries.

India does have lots of drug companies with big ambitions of becoming more than just makers of generics, though. Just last week, for instance, Ranbaxy announced its plan to spin off its drug-discovery division. The new subsidiary, to be called Ranbaxy Life Science Research, will “establishes a robust structure to carry out pathbreaking research at the cutting edge of modern medicine,” the Economic Times quoted Ranbaxy CEO Malvinder Mohan Singh explaining. “It will also enable RLSRL to create intellectual property at a faster pace while positioning it for the future.”

Other Indian drugmakers - Sun Pharma, for instance - are taking similar moves. With companies like Ranbaxy hoping to become more important global players in the drug-discovery business, preserving the strength of the patent system is not just an us-versus-them, Indians-versus-Westerners argument.

Reader Comments

Interconnect

March 1, 2008 3:42 AM

What Tata has done with Nano $2500 car almost cost of popular European luxury car DVD. Markets, consumer will rule business. With major markets in developing countries as sub-continent India/Pakistan, Thailand, Afghanistan. With average daily wage millions will not afford the dinosaur, unless a Nano comes up in the pharma industry from India. Congratulations Mr. Malvinder Mohan Singhm Mr. Y.K Supru, Mr Ratan Tata and all in India, Thailand. We don't want charity, aid for AID's. We will pay for our sicknesses. The great people will one day be Nobel Laureates to save dying humanity with sickness, and poverty. Please do all your research with India, Pakitan, China, Thailand. Cheers haroon.rashid@akunet.org

JOHN ROBERTS

March 1, 2008 1:12 PM

The EXTORTIONIST prices charged by Big Pharma make drugs unaffordable to at least 47 million americans (and this is a big underestimate). That is the reason why honest folks turn to Canada (where the same drugs are sold way cheaper) to get their prescriptions filled. Big HMO's like Kaiser cannot afford them either, that is why they go in for Generics in a big way, as a matter of policy. You open any magazine or turn to any TV channel and what do you get most. Ads for handling ED (erectile dysfunction) or baldness or things like that, repeated ad nauseum. That is how the "cost of research" gets bloated. Big Pharma has also been accused of deceptive practices like suppressing evidence of their drug's ineffectiveness or worse. this is the biggest cash cow after cigarettes that is why big tobacco cos. are so much into it also.

A Reader

March 2, 2008 10:38 AM

Instead of the (usual) sulking why cannot MNC pharma companies like Pfizer and Novartis come up with $ 10 AIDS or CANCER vaccines. I am sure they can look up to Tata NANO for inspiration. Now that's what I call Innovation. Countries like India must not pay for Pfizer's and Novartis's 'Innovation at any Cost' policies.

And Bruce, it would be prefered if you get your facts right and instead advice the Pharma companies to fall in line. India is far too big (compared to Thailand) to fall in line. Secondly, India is not a poor country, it is large country with many poor people. I hope you understand the difference.

Midwest

March 2, 2008 10:46 AM

Welcome to the other side of globalization. It's not just about getting cheap labor or innovation, it's also about upstart companies and governments that will not slowly chip away at profits levels but rather bring them down in a heartbeat.

When U.S. CEOs realize that they underwrote the building of a monster that will consume them rather than help them, it will be far too late.

Sambit Chakraborty

March 3, 2008 12:31 PM

Pharma Companies are all about profits. Yes they have long cycle times to come to the market with R&D and trials etc, but, once they have brought a drug successfully to market - they really have huge profit and operating margins. Its silly to think they will think of the world's poor or sick - its not about charity - they usually dont care about that except in branding and goodwill campaigns - its about profits. Thats the hard reality since they have to answer to shareholders q on q.

Squeezebox

March 3, 2008 12:55 PM

It does no good to spend millions of dollars (or Euros) to develop a new drug if nobody can afford to buy it. What good does it do to cure cancer if you must financially ruin your family to get it?

sanja

March 5, 2008 5:49 PM

One mistake is to underestimate India’s potential. From my experience dealing with Indians, I found out they are highly intelligent with math, science and technologies orientation. They invented number Zero; Indian descendents dominate in our elite schools; they are highest income ethnic group; 55% of our doctors are Indians; 60% NASA scientist are Indians; they started 40% of our high-tech companies; CEOs of Sun, Adobe, CitiBank and Pepsi are all Indians; HP GM/CEO is an Indian; Intel CPU is invented by Indian; 50% of Microsoft are Indian; 60% of IBM are Indians. Bill Gates once said he owes his fortune to Indian Engineer. America’s science/high-tech dominance will collapse without them. A lot reports predict that India will be #1 in 20 year that I do not have any doubt. They are highly intelligent!

Uday Baldota

March 6, 2008 12:08 AM

Dear Bruce

It appears from your article that Sun Pharma is following in the footsteps of other companies. Just wanted to correct this notion. Sun Pharma, the largest Indian pharma company by market capitalisation now valued at over USD 6 billion , was the first Indian pharma company to begin this separation of generic and innovative business in Feb 2006. In fact, Sun Pharma Advanced Research Company Ltd (www.sunpharma.in) is the first pure pharma research company to be listed on the Indian stock exchanges (since July 2007), now valued at close to USD 500 million. Other Indian pharma companies are now following. Also, ours has been the only separation that has no cross ownership (the two companies have no ownership of each other). Further, in our case, the separation has been driven by purely strategic rationale of creating better focus for each business while for others it appears to be a P&L compulsion.

Just thought it appropriate to bring this to your notice.

Uday

Megh

March 6, 2008 12:40 AM

The greater problem for may of the writers is, India's emergence; the second problem which many of the so called writers seem to be articulating is India being poor and 3rd world. well guys you guys need to wake up; times have changed. and the worst thing is, india is an independent startegically thinking nation. India will not be towing western line of thinking and probably thats what is bothering most of the guys writing here. so, good luck, and probably think of ethiopia or sudan as a greater cause; im sure if you do compare the % of poverty in US and India, most of it would look very similar, with half of the US population homeless and jobless.

hahaha

March 9, 2008 4:30 PM

@ Sanja


This is what you said


" From my experience dealing with Indians "


But aren't you an Indian yourself ?

fred

April 2, 2008 6:43 AM

The reason that Pfizer can't come up with a $10 aids vaccine is that it costs over a billion dollars to bring a drug to market due to the number of compounds that fail to be of any use whatsoever. In order to recoup the costs of research the price of the drugs that do work must be high. Anyway, like the common cold aids is a complex disease.

Singha

August 10, 2008 4:40 AM

Ranbaxis is sold to the Japanese and I wonder which Indian company will be next.
Right now with the world economy going south, expect more India companies to be owned by foreign companies.

jcage

August 13, 2008 4:58 PM

An article about pretty much about nothing since Ranbaxis is already owned by Japan.
The biggest and strongest India pharmacy company is already foreign owned by now.

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