SINCE 2000 there has been a rapid growth in developing countries as evidenced by their expanding middle classes.
This has resulted in an attitude shift by drug firms who in the past regarded developing countries as the source of many headaches and little profits.
According to McKinsey Consultancy estimate, the Indian drug market value alone will reach $20 billion next year with China’s market expected to soar even more spectacularly.
Given such prospects for growth, one would expect a stampede as drug firms scramble for their piece of the medical drugs pie.
Unfortunately, most pharmaceuticals denounce this development as a bad investment largely because the drug industry has always been a problem child hence the leeriness of even big firms when it comes to any positive news concerning the industry.
Everyone knows that it cost an immense sum to bring a new drug into the market and that the life of its patent being short, the pharmaceutical company doing so has to recoup its investment and make a profit very quick by means of high prices and that expenditure on research is always a gamble and no guarantee of eventual success.
From 1986 to 2001 the drug industry brought 137 products to the market and in that same period 1 900 products failed their clinical trials despite the billion poured into their development. This has given rise to cheating in the most egregious ways.
The science of drug companies has been more rhetoric than interested inquiry after truth — they have indulged in suppressio veri (suppression of the truth) by disguising or denying the harmful effects of their products and they have indulged in suggestio falsi (statement of a falsehood) by exaggerating the beneficial effects of their products.
They have failed to publish research that found little or no therapeutic benefit from their products while assiduously publishing that which did find such benefit, thereby perpetrating what in essence falsehood without actually lying.
You do not need to be a drugs expert to know that the path from inventing a compound to selling a drug is long and risky; yet surely we are constantly told the next generation of drugs will come from big companies.
They alone have the resources to harness the advances in genetics that will allow designer cures for today’s intractable diseases. History, however, has proved that big drug companies are grossly inefficient spenders of research money.
They may have wonderful technology and very able scientists, but it is the small, agile and narrowly focused companies that are often able to come up with something novel.
Many of the real breakthroughs in pharmaceutical have been made in tiny biotechnology companies and university laboratories.
Developing countries have long been a thorn in the side of the global drug companies. Their vibrant generics industry has often trampled over drug companies, patents and the State-funded researchers have devised some impressive drugs too.
In the past, drug firms either ignored such countries or saw them as charity cases. For much of its history, the pharmaceutical industry focused chiefly on the diseases that afflict people in industrialised countries while largely neglecting research into diseases of the poor.
Today pharmaceutical companies know that they cannot possibly survive without recognising their responsibilities to the poor.
This was consolidated at the 2008 World Health Organisation annual assembly where the industry got a drubbing over patents considered harming “innovation for the poor”, companies that have received a bloody nose from legislators include Britain’s giant drug company GlaxoSmithKline (GSK).
GSK tried vigorously defend its patents on an HIV drug in South Africa and had it succeeded the drug would have been out of reach for the country’s poor.
Swiss firm Norvarts also lost a better battle in India over patent protection for Gleevec, a profitable cancer drug.
Can the drug industry benefit? Without a doubt! If early stage drug discovery is better done by tiny biotechnology companies or even university labs, should big pharmaceutical companies move out of it altogether? Not at all.
The quality of earning from discouraging drugs cannot be obtained simply by unlicensing besides every drug company’s raison detre (reason for existence) is to discover new medicines. However, discovering drugs is a bit like waiting for a bus.
You wait and wait and then three come along together. Therefore, big pharmaceutical companies should concentrate on late stage research only which is akin to nurturing saplings rather than planting acorns.
They have to rely on collaboration and co-promotion with the biotechnology sector for new products while their forte should be on aggressive sales and marketing.
Serving in developing markets will mean building up local expertise and research efforts.
Where drug firms have set up shop in developing markets, it has generally been to cut costs, rather than to cater to the needs of locals.
However, this is changing as some drug firms are now opening research centres in emerging markets and engaging local researchers; an approach that allows them to tap a global network of innovation and also provides insight into local markets.
Drug firms can also adopt differential pricing schemes that use formulas based on average income per head to set lower prices in poor countries.
Although drug companies have argued against differential pricing, citing that there is a danger that cheap drugs intended for the poorest will be pilfered and sold at a profit to the urban middle classes or shipped overseas to rich countries.
The counter argument however is that firms using a tiered pricing can find ways to reduce this danger by simply changing the colour of a pill for example.
So too can after market checks on distributors and pharmacists by drug companies where those selling looted products may be cut off from future distribution.
The emerging markets are the future for drug firms and their success will depend on their approach to these markets.
Some experts assert that only generic makers will provide genuine competition to big pharmaceuticals and insist that they should have no patent rights in poor countries.
This might prove detrimental because R&D is expensive and licensing is the only measure to ensure returns on investments.