Sellout syndrome

US pharma company Abbott Laboratories bought the domestic business of Piramal Healthcare for US $ 3.7 billion, continuing the buyout trend that saw Ranbaxy being acquired by Japan’s Daiichi Sankyo, Shantha Biotech by US-based Sanofi Aventis, and Dabur Pharma by Germany’s Fresenius Kabi, writes Sanchita Sharma. Price wars: Brand versus Generics

US pharma company Abbott Laboratories bought the domestic business of Piramal Healthcare for US $ 3.7 billion (Rs 17,000 crore), which is nine times its market value, continuing the buyout trend that saw Ranbaxy being acquired by Japan’s Daiichi Sankyo, Shantha Biotech by US-based Sanofi Aventis, and Dabur Pharma by Germany’s Fresenius Kabi.

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Here’s why. Medicines worth over $ 80 billion are going off patent at the US Patent and Trademark Office between 2011 and 2013, making it lucrative for global pharma majors to increase their presence in India, which is the largest producer of generic medicines after the US and European Union.

“Ninety-five per cent medicines used in India are generics made in the country. If such acquisitions continue, multinationals will gain market supremacy and people in India may have to pay through their nose for essential medicines,” said Health Minister Ghulam Nabi Azad, who has called a meeting with pharma heads to address the issue.

This would make healthcare unaffordable for many, as private spending accounts for 72 per cent of healthcare expenditure in India.

Azad’s concern is shared by the Department of Pharmaceuticals in the Ministry for Chemicals and Fertilisers, which has opened 44 jan aushadhi stores (JAS) to sell cheaper, generic medicines easily.

In a letter to Prime Minister Manmohan Singh dated May 13, 2010, the minister of state for chemicals and fertilisers, Srikant Kumar Jena, requested that JAS stores be opened in all government hospitals in the country to lower medicine bills, which account for 79 per cent of total healthcare expenditure in rural India.

Unbranded generic drugs can cost four to six times less than branded ones. Popular pain-reliever Diclofenac Sodium, for example, costs Rs 39.60 when sold as Voveron by Norvartis but costs Rs 5.05 in JAS and costs between Rs 8 and Rs 15 when sold as a branded generic product.

Export bonus Low production cost has made India the global hub for manufacturing affordable, generic medicines. “With many developing countries looking at India for good quality, affordable drugs and vaccines to treat their people, such acquisitions will not just impact public health in India but also in many developing countries,” said Azad.

India’s Rs 1,00,000 crore pharma industry exports about 40 per cent – worth Rs 39,000 crore in 2009 – of its products. The country accounts for 8 per cent of global production and 2 per cent of the world drugs market.

Azad, who took up the issue with the WHO in its annual meeting Geneva last week, said: “Generic drugs are safe and effective but increasingly, there have been commercially-motivated efforts to discredit them by labelling them counterfeit, substandard and fake by quietly modifying the World Health Organisation (WHO’s) definition of counterfeit in a footnote to include ‘history’, which includes the process of manufacture. Under this definition, all generics, however safe and effective, became counterfeit.”

Under pressure from India, Brazil and the South African Union with the exception of Nigeria, the WHO agreed to focus on public health issues such as quality, safety, efficacy and availability of medicine, instead of tackling trade and copyright issues last week.

Azad calls it a victory for public health. “Take the flu drug Tamiflu (oseltamvir), which costs Rs 800 for a strip of 10. The price for the generic version of the same salt is Rs 350, which is less than half, which makes it is accessible to millions more,” he said.

Luckily for India and the developing world, experts at the WHO agreed. The next step is to ensure domestic pharma doesn’t sell out India’s generic edge.