| Globalist Bookshelf >Global Economy Big Pharma’s Eastern Sunset | |
By Pankaj Ghemawat | Monday, November 26, 2007 |
When people think of the pharmaceutical industry, they typically think of “Big Pharma” — a dozen-odd multinational firms headquartered in the United States and Europe that account for about one-half of the worldwide market in terms of value. But as Pankaj Ghemawat explains, Indian pharmaceutical firms — which often specialize in generic drugs — are threatening to erode Big Pharma's dominance.
Big Pharma firms historically generated high returns by developing and marketing drugs protected by patents — particularly blockbuster drugs, defined as ones that generate more than $1 billion in annual revenues.Big problems
In recent years, however, Big Pharma has come under a great deal of pressure. Accenture calculates that the overall
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market value of the pharmaceutical sector — mostly accounted for by Big Pharma — dropped from more than $2 trillion in 2000 to less than $1.5 trillion by 2005. Big Pharma’s problems are various and include declining R&D productivity and general bloat.
But the real challenge may come from generic drugs. They must meet the same quality standards as branded drugs, but are typically sold — after a six-month period of exclusivity for the first generic in the United States — at prices that are 20-80% lower than their branded counterparts.
Generic drugs account for between 10-15% of the pharmaceutical market by value and significantly more by volume. Moreover, they are thought likely to attack another 30% of the current market in the United States alone over the next five years, as key drugs go off patent.
Generic drugs
There are many generic-drug manufacturers worldwide — about 150 significant ones by one count. The largest, Teva of Israel, had $5.3 billion in sales in 2005.
Teva owes its existence to the Arab boycott of companies doing business with Israel. In response, Israel let local companies copy drugs patented overseas if their owners didn’t market them locally — which is how Teva built up its process expertise.
Low-cost manufacturing
The larger
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Indian manufacturers have developed low-cost manufacturing capabilities that have let them build up significant position in generic drugs.
One indication is that Indian companies account for 25% of the Abbreviated New Drug Applications (ANDAs) filed with the U.S. Food and Drug Administration (FDA) to launch generic drugs.
Some Indian firms continue to focus on imitating drugs coming off patent or drugs that are still under patent in some places but can be marketed in other, unregulated markets.
Indian firms
Other Indian firms have started collaborating with Western firms by either licensing the latter’s products — usually with a view to manufacturing and marketing them in India — or manufacturing active pharmaceutical ingredient intermediates that are then marketed by Western firms outside India.
Yet other Indian pharmaceutical firms — such as its largest, Ranbaxy — have come to focus on innovating or, more broadly, pioneering. Like most other Indian firms, Ranbaxy built up overseas sales — now 80% of its total — with generic exports. But in recent years, it has pushed the envelope in a number of ways.
More: http://www.theglobalist.com/DBWeb/printStoryId.aspx?StoryId=6570
If companies could NOT copyright them in order to make a profit, none of them would actually put money into R&D. That would have consequences we don;t even want to go into.
Same goes for other medical equipment, of which i have a little experience. A company I know produces a product which they pored over 300 MILLION into development of... They have the patent on that technology..... Without being able to have that patent protection they would not have been able to pour all that money into research and development, which means the product would never have been produced!
Incidentally, that product was responsible (conservatively quoting figures) for saving the lives of over 1,000 people in 2006.... and was also responsible for keeping alive over 4,000 people with terminal illnesses long enough for them to say goodbye to their families.
In my world that is more than worth the patent and exclusive right to sell. Once the patent has run out the product will save even more lives.
As for as generic drugs are concerned there is a very big competition and the same cannot be patented, if done then a small change in formulation will lead to other party.
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