Rise of Big Pharma will make drugs dearer

Industry estimates suggest, that by 2015, when the Indian pharmaceutical market would be worth $20 billion, about 15 per cent of total drugs would be patented molecules.

These estimates assume significance especially in the light of Piramal Healthcare selling off its domestic formulations business to US giant Abbott Labs for $3.7 billion. The Piramal sell-off at a valuation nine times the sales of the business is likely to produce a domino effect in the medicine market in India, with more companies looking at selling their businesses to international buyers.

With MNCs gaining in strength, affordability of medicines would be a key concern, say industry experts. Medicines constitute anywhere between 15-50 per cent of total healthcare costs.

“Since this acquisition has happened in the area of medicines, it can have several implications for the common people. Big Pharma dominance would lead to a rise in patented molecules, and less and less challenges by Indian companies to MNC patent applications,” said a New Delhi based patent lawyer.

Though prices of existing medicines may not necessarily go up immediately, there would be a phase wherein more expensive products will start flooding the market.

According to Amit Sengupta, general secretary of All India People Science Network, there will be a stronger push towards expensive innovator brands. Swati Piramal, executive director, strategic alliances and communications, Piramal Healthcare, said that the company would henceforth concentrate on bringing patented products to the market.

Patents grant monopoly to the patent holder, and allow him to charge any amount for the drug. “Patented products keep low cost generics out of the market for a specified period of time and are priced high, thereby making them unaffordable to millions in India,” said BK Keayla, convenor, National Working Group on Patent Laws.

Experts fear a pre-1970 kind of a situation to reappear in the near future, wherein MNCs dominate the India market with high prices, and medicines are outside the reach of millions. After the Piramal deal, Abbott is the No1 drug-maker in India (with a 7% share of the 42,000 crore Indian drug market) and barring Mumbai-based Cipla at No2, the third and fourth slots are also held by MNCs - Ranbaxy (now a subsidiary of Japanese company Daiichi Sankyo) and British behemoth GSK.

The associate director of a professional services firm says that at present, MNC share in India’s $8 billion domestic medicine market is about 25 per cent, but will rise to 50 per cent in the next four to five years. “Now that Abbott has superseded rivals like GSK and Pfizer, they too will get aggressive in pursuing buys in India.”

Moreover, experts say the buy-outs by Big Pharma and strategic alliances between MNCs and domestic players would also limit the role of Indian companies challenging patents of MNCs.
“When Indian companies are cozying up with MNCs, it would be awkward for them to challenge their foreign partners in India,” said Gopal Dabade, co-convenor, All India Drug Action Network.

If wrongly granted patents lie unchallenged, it would imply keeping generic medicines out of the reach of patients, said Dabade.

Industry experts say it is very important that patents are challenged as all of them don’t conform to the Indian patenting criteria. “And we need strong domestic companies to challenge wrongly granted patents of MNCs. If large Indian players are snuggling more and more with MNCs, there won’t be any effective challenges to patent applications,” said the New Delhi-based patent lawyer.