India firm shakes up cancer drug market with price cuts

On the other hand: the rest of the world has benefited a lot from the Indian pharma industry's growth. The same companies that you're criticizing are actually subcontracted by Bayer, etc. to produce their products so they can be sold in the developing world. If Indian did not produce these medicines, they would not be available to the poor at all. So at least they're saving lives that the developed world wasn't interested in saving.

Secondly: historically, Indian pharma growth was stunted due to old British laws. Once the industry was unshackled, it grew at a breathtaking rate, mostly by building generic variants of well-known drugs. This has allowed the Indian pharma industry to develop enough local expertise about formulation, manufacturing and distribution. Now they're moving up the food chain by patenting new drugs. Ranbaxy Labs, for example, is busy filing patents[1].

You can't expect the domestic industry to just sprout up organically. The Indian government never spent much money on R&D, so there wasn't much local drug research. But now that they're under the same patent regime, the Indian industries will have to figure out a way to survive.

Having said all this: please don't assume that Western drug companies' hands are clean. They are busy trawling the jungles of Amazon (among other places) to find new compounds, often taking knowledge from local shamans, etc. without any respect for their "IP".

[1] http://www.financialexpress.com/news/ranbaxy-tops-third-worl...

Yes, it is smart. On many levels, even the long run.

I think you might not be aware that a very large percentage of drugs in the West emerge from publicly funded research... sometimes even 'basic science' research. While pharma does do its own R&D, it mostly just farms promising leads from academic research.

Where they do shell out big bucks is in the cost of performing clinical trials. This is a regulatory cost. While I think trials are a critical step, I'd be surprised if costs here couldn't come down substantially through means that don't involve R&D. Maybe India could offer something in this regard?

India's pharma companies might be a lot more 'innovative' if their academic science and government spending on science were stronger. This might just be a matter of time.

Finding a different way of manufacturing a drug can be very innovative work. Trust me, the chemists that come up with these organic syntheses all too often consider themselves geniuses.

>Do you really think this is smart?

Of course it is. This has easily brought India trillions of dollars worth of benefits. Is there any benefit to India at all of paying billions of dollars per year to the United States for.... nothing?

I get the feeling that there is simply no way to get exorbitantly priced drugs to the masses without bankrupting any kind of fund that provides for this (govt/national agency etc). The mistake in your argument is that you assume pharmas are losing out from the market in poorer countries like India. While this may be true to a certain extent, the sales of such drugs would be significantly low if they were bought at the original price. Also, the Indian govt./private sector doesn't provide any kind of healthcare benefits, AFAIK most healthcare is self-sponsored, which is different from US where big insurance companies handle much of the costs. There is a grey area here. It isn't simply that you try to protect your IP at all costs or try to be over-zealously righteous. As another commenter mentioned, this kind of idea stealing happens all the time, and although it may not be strictly legal, it has done much more good to us than sticking to laws would have.

>>I'm an Indian citizen and have the right (luckily) to dissent.

Oh! I am an Indian too.

Cost reduction is innovation too. Its like what Telecommunications companies have done to call rates here. Remember the days when getting a telephone connection required recommendation letters from ministers? These days you can get one for 100 rupees with a address proof in 20 minutes.

Pharmaceutical patents at most act like software patents sooner or later some one discovers them. But to act like 'I discovered first, so pay me eternally or suffer mercilessly and die' attitude will only do damage.

You are also right in the sense that we must incentivize research. But for that we need larger health care reforms especially in the areas of health insurance. Every Indian must have a means of affording health insurance and pay for quality health care. I like Narayana Hrudayalays's schemes in Bangalore, for farmers and alike.

Regarding when that will happen, your guess is as better as mine.

I understand and mostly agree with your sentiment. R&D is important.

However, I do feel it's important to bring up the point of making generic drugs more accessible to the masses. Sure, cancer is a big beast, but the masses out there mustn't die of tuberculosis, malaria, pneumonia, etc. just because the drugs are too expensive.

It seems like there just isn't a one-size-fits-all kind of solution. Officially licensing drugs for cheaper sales in developing countries might be a reasonable road to go down.. got any other solutions ?

The article also quotes that this has changed in the last 7 years and adds more subtlety to the issue.

"But in 2005, India brought its law in line with World Trade Organization (WTO) rules recognising 20-year patents, pushing up the prices of newly launched drugs.

Cipla, India’s fourth largest pharmaceutical company by sales, has been pressing the government to allow widespread use of “compulsory licences”, which are permitted under WTO rules.

The licences allow companies to make existing life-saving drugs to sell in countries where they are otherwise priced out of reach."

While product design is important, availability of a strong manufacturing supply chain is also important. India's role in pharma is similar to what China provides for regular manufacturing.

What cipla is doing can be considered as a legal innovation .And it seems like a legal practice that does very little damage to drug companies , and great benefit to consumers.

In a world rich with technology innovation, marketing innovation, distribution innovation(amazon fulfillment services, etc),organizational innovations(open source,etc) and manufacturing innovation the biggest barriers left in many industries are legal and regulatory issues.

There's immense value to be unlocked using regulatory innovation in education(khan academy in k-12 schools), healthcare(almost everything about it), energy(new nuclear power tech), hotels(the whole airBNB legal questions) and other fields.

Shouldn't we even try ?

Also speaking as someone who's lost friends to cancer, I'd not like it if the drug was there but out of my reach because it was too expensive. It's like looking through glass, you can see the other side but you can't get through

It's a very smart approach during the catching up phase. Basically, it's an unstoppable free-riding mechanism.

cost to invent drugs = identifying compounds (90%, say) + determining manufacturing process (10%)

^ Where are you getting these numbers from? They seem way too simplistic, and your argument essentially falls apart without them.

Real 'invention cost' would be determined by far more factors - cost of raw materials

- labour cost (I bet it's cheaper for pharmaceutical companies to pay workers much lesser in India too.),

- whether your competitors are targeting the same market (if these companies stopped researching said drugs, Cipla would come up with a cheaper way to do the R&D required, and then make a killing, even with their low rates, since they would have cornered the market.)

Plus the goodwill of Govts of developing countries that are offered these medicines at low rates may lead to fruitful collaboration with national research institutes in those countries, thereby lessening the need for enormous profit margins anyway.

As someone said below, the fact that there is more money to be made selling iPads rather than bread does not mean that everyone switches to making iPads.

The problem is that if these drugs end up entering the grey market in the developed world, it disincentives investment in the next generation of drugs.

Huge amounts of money have to be raised to make a new drug. The cost of bringing a new drug to market is typically $800m-$1.2bn (i.e more than exit value of Instagram or Yammer is required just to get to launch).

With treatments for viruses it gets even more problematic, in developing countries where regulations and medical practices are lax, a large number of people taking drugs in an uncontrolled manner can allow viruses to mutate making the drugs ineffective for everyone.

The issue isn't as simple as good vs evil as the article makes out. There are complex ethical, economical and medical issues here and this article completely ignores that.

I would also give credit to Indian patent laws that allow people like him to shake things up.

"In 1972, India made only the process for making drugs patentable, not the drugs themselves."

Compare this to the US where I believe you can patent the active ingredients of a drug, allowing pharmaceuticals to charge more for lifesaving medicine for a longer period of time.

They don't do much R&D. Most of their drugs are copies of drugs that have been developed in western countries. The drugs are just reverse engineered and reproduced. This is pretty legal under Indian patent law and hence carries on, while Cipla, makes massive amounts of money by being just a drug manufacturer.

They do save lives though :P

From what I have heard from people who work in pharma companies in India, the main reasons drugs are cheaper when manufactured in India are:

- not much R&D costs to design new drugs (however they do spend on designing the manufacturing process) - cheap labor for manufacturing, including a good supply of chemical engineers. - environmental regulations for chemical manufacturing are stricter in Western countries.