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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?

Of course India shouldn't! Why should they? Why would anyone want to pay for something that cost billions of dollars to be discovered now that it is discovered. We should all steal! </sarcasm>

Just like the US violated European patents during our Industrial Revolution, India, China, and other emerging markets violate our patents and copyrights to fuel their own economic growth. Really, the best we can hope for is that they'll start producing their own worthwhile research which we can license in 10-20 years.

Ah, I like this comment. Very few people realize that progress in other countries actually means that the pie just gets bigger, although that's hard to see in the short run

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.

Oh most definitely! I totally agree with making healthcare accesible to all income groups and at the same time cheaper for everyone.

Don't like to copy-paste but in one of my other comments I wrote: ... Debate about models such as free public healthcare, compulsory insurance, compulsory insurance where the government pays the difference that the less wealthy can't make up for, etc... (http://news.ycombinator.com/item?id=4124317)

Actually back in the days of PSU's like HAL, ITI, BHEL .. etc. These schemes where there.

You could even go to private clinics. I mean you could go to a good private clinic, get yourself good healthcare and it would be paid for with your + company's contributions.

There were even hospitals that ran minimal payment schemes like MS Ramiah Hospital in Bangalore. Where the hospital trust would finance the difference of treatment after your bills. Sai Baba hospital is doing an awesome job, I know many poor people who got their cataract operation done for almost what they could pay. But as you know our country's population is too high for these patch work attempts to work.

The Government of India needs to seriously reflect on

a. Health care reforms.

b. Insurance, and ways of making it work.

c. Cut corruption in government hospitals and other areas.

d. Taxes on essential commodities like medicine and equipment.

By all means tax the alcohol,cigarettes and other luxury stuff, but taxing medicine and things that save people lives. Isn't quite justifiable.

That is awesome kamaal.

Out of interest, what kind of healthcare reforms are you talking about? Something like they have in the US, via paid insurance, or something like they have in the UK with "free" healthcare for all via the NHS?

If it's the latter, with a population of 1.2 billion, this would surely bankrupt India?

No free stuff.

We need to learn to work for the things we get.

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

I don't believe the right answer to solving the cost problem is stealing (super) costly inventions. Cheaper and more widely accessible healthcare would probably be the more apt choice if you ask me. Debate about models such as free public healthcare, compulsory insurance, compulsory insurance where the government pays the difference that the less wealthy can't make up for, etc. would be more apt I feel. Also discussion about how to bring down cost of research can be fruitful.

But without the incentive to invest in the huge cost involved with discovering drugs, you will have nothing to look at the other side, glass or no glass.

I concede to your superior argument. There is a better way to look at this topic but I still don't like the crippling debt cancer treatment leaves with families. Though stealing is a strong word, I'd use copying.

It is in fact stealing, just as "copying" a song is stealing (I know the HN audience won't like that!). "Copying" software is stealing it. Using a euphamism to alleviate your guilt regarding a crime is just self delusion. And I realize this is a difficult subject, and I myself lost a brother to cancer, but the fact is that stealing actually hurts cancer victims in the long run. You might help a few cancer victims right now with some cheaper pills, but what about the thousands or millions in the future who lose out due to the lesser research. And honestly, this pharmasutical giant in India is really just looking at a new way to make money and get some great press. And it's obviously working.

US law distinguishes theft from copyright infringement, not the audience.

It is in fact stealing, just as "copying" a song is stealing (I know the HN audience won't like that!). "Copying" software is stealing it.

This is incorrect. And you're making the same mistake as the one you point out in your next sentence. Using an euphemism to simplify a complex ethical question (possibly incorrectly).

According to this [1] theft involves a component of denying another person with rightful possession of that property its use. When dealing with ideas (and software, algorithms, math etc., etc.) we're dealing with new ethical questions that we shouldn't hurry up and sweep under the carpet by pigeonholing into our previously inadequate understanding of ethics. Doubly so when it deals with life and death as in the case of drug patents.

[1] http://en.wikipedia.org/wiki/Theft#Elements

The only possible incentive is money?

I think you're selling humanity short. There are plenty of ways to have society prioritize researching drug therapies for different diseases that don't hinge on reaping massive profit on the sales of the drug. See: public funding. I don't necessarily mean that through government/taxes, but it should certainly be an option.

The NSF funds a LOT of public university research in medicine. So do the drug companies.

Major drug companies fun a lot of drug trials, but they buy most drug research. That might seem like the same thing to US but if your country does not feel the need for FDA style drug testing you may not feel there is any need to cut them into the game.

We all can take a lesson or two from Dr. Jonas Salk.

A model of selfless research may be appealing to a few individuals, but to get the large amount of research, testing etc. involved in modern medicine, you need an army of professionals. And no money==no army

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.

Good question. Let me break it down for you:

Of 5,000 new compounds, you'll find 250 which are interesting enough to test in a lab (animals or in vitro), 5 which are interesting enough to test on humans, and 1 which gets approved.

It costs peanuts to find the 5,000 new compounds, and a little bit to figure out which ones are interesting (say, $50,000 each, about $250 million). Those 250 interesting drugs will cost a million each to test - subtotal $250,000. The 5 drugs which are tested on humans cost a fair bit (say $50 million each - $250 million for all 5). Getting the final compound approved takes a lot too, because you need a massive trial.

All up, it's about $1 billion per drug.

If you want to reverse engineer it, it's about $10 million dollars for a chemical engineer to read the publicly available formula, figure out how to synthesize it, and set up a small plant.

Whether it's a new drug, or a drug you copied, it costs a few cents labor / materials to make each dose once the factory is built. Yes, India could knock $0.01 off each tablet, by employing cheaper factory techs. But no-one cares about saving $0.01 off a $1 product.

India could do the R&D cheaper, but not a lot cheaper. It's like building an OS - you need experience people who know what they are doing, not just cheap process workers.

Ripping off US companies isn't a bad idea, because it lets Indian workers gain more experience, which will help them create better R&D jobs. In the long run, this might even be good for the US, because Indian R&D could create a lot of good drugs for the US to buy.