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LATEST NEWS UPDATES | Affordable medicine

Affordable medicine

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published Published on Sep 30, 2011   modified Modified on Sep 30, 2011

-The Business Standard

 

It appears a committee headed by Planning Commission member Arun Maira examining the case for continued unrestricted foreign direct investment (FDI) in the pharmaceutical industry has opted to oppose the move to change the present regime. The only concession it is willing to make to the health and commerce ministries’ demand that approval of such investment be routed through the Foreign Investment Promotion Board is to ask for wider powers for the Competition Commission of India to ensure that competition does not suffer as a result of foreign takeovers. Lobbying on behalf of pharma MNCs, Andrew Witty, CEO of GlaxoSmithKline Plc, told a Mumbai audience that foreign ownership should not be viewed as a barrier to affordable medicine. He refused to buy the “hypothesis” that “foreign ownership would change pricing”. Unfortunately, this is more than a “hypothesis”. For a large number of products, drug MNCs have been forced to bring down prices owing to competition from developing country firms, which has served the interests of weaker sections of society the world over. The health ministry is worried that too many leading Indian companies falling into foreign hands will hinder the availability of cheap medicines, which will be inimical to public health. The counter-argument is that should the need arise the government can always resort to compulsory licensing to make available an essential medicine. Besides, if willing manufacturers are difficult to find, the several dormant pharmaceutical firms in the public sector can easily be revived to manufacture medicines. In fact, India’s inability to cover all its children under essential immunisation programmes even as public-sector vaccine manufacturers remain dormant is a crying shame.

However, large Indian manufacturers have been lobbying for a change on a longer-term issue. Indian generics today pose the biggest challenge to drug MNCs and takeover of leading Indian players will put an end to patent challenging, which lies at the heart of the process of creating space for generics, particularly when MNCs are using ingenuity and influence to take forward their agenda. Much of the innovation in low-cost drugs is driven by domestic companies. So if the good ones no longer remain domestic, then who will do the job? It is also argued that instead of feeding the domestic market with low-cost medicines, MNCs with their Indian acquisitions will be more interested in exports. Also, they will try to keep other Indian manufacturers out of third countries. FDI is commonly associated with innovation and higher R&D spending but recent statistics point to low MNC investment in India in manufacturing and research — hence the plea to restrict automaticity to greenfield investment to bring in new technology for local manufacture of active pharmaceutical ingredients from the basic stage, to indigenous manufacture of patented medicines, and to fund discovery research in India. But investment in existing firms should not be allowed automatically. This is an eminently sensible view. However, if drug MNCs believe this view is unfair, then the onus is on them to convince public opinion and policy makers in India that an MNC takeover will not result in higher prices for drugs or restrict research in low-cost drugs. The track record of western MNCs does not inspire confidence on this score — which is why they need to win the trust of Indian policy makers.

The Business Standard, 30 September, 2011, http://www.business-standard.com/india/news/affordable-medicine/450897/


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