...At the Intersection of Health, Health Care and Policy Cite this article as: Henry G. Grabowski, Joseph A. DiMasi and Genia Long The Roles Of Patents And Research And Development Incentives In Biopharmaceutical Innovation Health Affairs, 34, no.2 (2015):302-310 doi: 10.1377/hlthaff.2014.1047 The online version of this article, along with updated information and services, is available at: http://content.healthaffairs.org/content/34/2/302.full.html For Reprints, Links & Permissions: http://healthaffairs.org/1340_reprints.php E-mail Alerts : http://content.healthaffairs.org/subscriptions/etoc.dtl To Subscribe: http://content.healthaffairs.org/subscriptions/online.shtml Health Affairs is published monthly by Project HOPE at 7500 Old Georgetown Road, Suite 600, Bethesda, MD 20814-6133. Copyright © 2015 by Project HOPE - The People-to-People Health Foundation. As provided by United States copyright law (Title 17, U.S. Code), no part of Health Affairs may be reproduced, displayed, or transmitted in any form or by any means, electronic or mechanical, including photocopying or by information storage or retrieval systems, without prior written permission from the Publisher. All rights reserved. Not for commercial use or unauthorized distribution Downloaded from content.healthaffairs.org by Health Affairs on February 29, 2016 at UNIV OF CALIFORNIA Intellectual Property & Innovation By Henry G. Grabowski, Joseph A. DiMasi, and Genia Long 10.1377/hlthaff...
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...The Pharmaceutical industry in India is the world's third-largest in terms of volume and stands 14th in terms of value. The Indian pharmaceutical industry has become the third largest producer in the world and is poised to grow into an industry of $ 20 billion in 2015 from the current turnover of $ 12 billion The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970.[5] However, economic liberalization in 90s by the former Prime Minister P.V. Narasimha Rao and the thenFinance Minister, Dr. Manmohan Singh enabled the industry to become what it is today. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out. Indian companies carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present. The number of purely Indian pharma companies is fairly low. Indian pharma industry is mainly operated as well as controlled by dominant foreign companies having subsidiaries in India due to availability of cheap labour in India at lowest cost. In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations and bulk drugs. 85% of...
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...CONTE N T S CHAI R M A N ’ S LETTE R DEAR SH AREH OL DERS FY2012 has been a good year for your Company. The key financial results were: ¥ Consolidated revenues increased by 30% to Rs. 96.7 billion in FY2012. ¥ Earnings before interest, taxes, depreciation and amortization (EBITDA)1 rose by 55% to Rs. 25.4 billion. ¥ Profit after Tax (PAT)2 grew by 45% to Rs. 15.3 billion. ¥ Diluted Earnings per Share (EPS) increased from Rs. 64.9 in FY2011 to Rs. 83.8 in FY2012. I am particularly delighted by four developments. First, your Company succeeded in yet another blockbuster generic launch in the USA under 180days marketing exclusivity. Dr. Reddy’s launched olanzapine 20 mg tablets, the generic version of the brand Zyprexa®. Olanzapine is used to treat schizophrenia and bipolar disorder. This product has added around USD 100 million to your Company’s revenues for FY2012. Second, the biosimilars business continues along its impressive growth path. In my letter to you last year, I had discussed the critical importance of developing biosimilars in the years to come. I am happy to note that your Company’s global biosimilars business grew by 45% over last year and recorded sales of USD 26 million. Today, the biosimilars portfolio of Dr. Reddy’s constitutes (i) filgrastim, (ii) peg-filgrastim, (iii) rituximab and (iv) darbepoetin alfa, which have commercial presence in 13 countries among emerging markets. These are helping to treat patients suffering from cancer — and at prices that...
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...Ethical drugs - Generic drugs - Biotechnological drugs - OTC drugs - Vaccine drugs PESTEL : Political : - In the Pharmaceutical market, the government has a huge impact concerning the existence of an universal coverage system in some countries like France (which is concerned as the country with the most efficient health system in the world), this unable to introduce latest treatments but share benefits with people giving the chance to poor people to have access to treatments. The US government is thinking about instoring a system like that. - Stringent government regulation, the government can control the prices, for example in the European Maket. That led to create parallele trade, thanks to the free trade agreement and with with the principle of free move of goods, the distributors can ship low-price drugs in low-price market in order to sell them in high-price market. - There is no formal government price control in the US which create a complete paradoxe with Canada, where the same drugs are cheaper than in the United States. In Canada there’s a stric regulation control, prices are inflexible and Canada has reimbursement criteria. - After the thalidomid tragedy which caused birth defects, the governments had to regulate the market and that led to the increasing of controls on trials. - Limit for the duration of patent protection (20 years from initial filling) that conduce to the appearence of generic drugs which led to...
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...countries on equal terms. Its remarkable growth can be attributed to its ability to rapidly access and adopt new technologies and also to its success in evolving an effective mechanism to strengthen research and development. The industry's advanced manufacturing facilities have earned laurels from global regulatory authorities. As a result, the world today turns to the Indian pharma industry not only for high-quality and low-cost generic drugs, but also for in-licensing and out -licensing of drugs. The robust Indian pharma industry today produces a range of formulations, has the expertise for active pharmaceutical ingredients (APIs) and sees significant opportunities for value-creation. Hence, the theme of the 63rd edition of IPC, ‘Pharma Vision 2020: India: The Pharma Power house’, encapsulates the present stature of the Indian pharma industry. India, the pharma power house India ranks third in terms of manufacturing pharma products by volume and 14th in value terms globally. The Indian industry produces around 20 to 24 per cent of the global generic drugs. The significant changes in the global pharma market offer immense opportunity for Indian pharma industry. Patents around $13 billion in the U.S. revenue of blockbuster drugs expired in 2007 and patents worth $ 60 billion will expire by 2012. As a result, the newly available market will be filled by...
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...Merck and Co. and river blindness MANUEL VELASQUEZ, Business Ethics. Concepts and cases 4th edt., Prentice Hall, Upper Saddle River, New Jersey, 1998 River blindness is an agonizing disease that affects some 18 million impoverished people living in remote villages along the banks of rivers in tropical regions of Africa and Latin America. The disease is caused by a tiny parasitic worm that is passed from person to person by the bite of the black fly which breeds in river waters. The tiny worms burrow under a person's skin where they grow as long as two feet curled up inside ugly round nodules half an inch to an inch in diameter. Inside the nodules the worms reproduce by releasing millions of microscopic offsprings called microfilaria that wriggle their way throughout the body moving beneath the skin, discoloring it as they migrate, and causing lesions and such intense itching that victims sometimes commit suicide. Eventually, the microfilaria invade the eyes and gradually blind the victim. Spraying pesticides to eradicate the black fly faltered when it developed an immunity to the pesticides. Moreover, the only drugs available to treat the parasite in humans have been so expensive, have such severe side effects, and require such lenghty hospital stays that the treatments are impractical for the destitute victims who live in isolated villages. In many countries people have fled the areas along the rivers, abandoning large tracts of rich fertile land. Many of them, however...
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...Herzl, has accomplished anything as remotely as impressive in this country as Hurvitz. It was impossible, a million to one odds at best, and he still did it. He woke up one morning and started walking. — Ori Hershkovitz, equity analyst at Tel Aviv-based Leader & Company The markets had not been kind to Teva Pharmaceutical during the first half of 2006. The stock had plunged nearly 30% from January 1 to June 30, erasing billions of dollars from the company’s market capitalization. Even good news, such as reports in July of Teva’s wildly successful introduction of generic Zocor—the largest blockbuster drug ever to go off-patent—had failed to boost the stock significantly. Since nearly every retirement fund and mutual fund in Israel invested in Teva, this drop had been felt throughout the population, in effect amounting to every Israeli family losing NIS 3000, or $675.1 Teva was more than the world’s leading producer of generic pharmaceuticals (see Exhibit 1 for financials). It represented the gold standard of business in Israel. As the country’s largest public company and first true multinational, it had avoided the traditional conglomerate model of early Israeli enterprises, choosing instead a highly focused approach embraced by later generations of successful Israeli firms. With revenues growing from $91 million in 1985 to an estimated $8.5 billion in 2006, the company had bred a new class of professional...
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...CASE 6.3 ELLY LILLI IN INDIA: RETHINKING THE JOIN VENTURE STRATEGY Summary: The case consists of two major pharmaceutical companies that joint to collaborate their research and pharmaceutical technologies to start a joint venture in India. Both have valuable resources that have benefited both companies during the joint venture. Now both are questioning if there is still any value in maintaining the joint venture in India and will be deciding what will be the best route to take. Ranbaxy Laboratories wants to be bought out, but Eli Lilly is worried of the financial implications of such move. There were two pharmaceutical companies that were looking for ways to expand globally to position themselves in a competitive advantage from their competitors. One was located in the United States, which was Eli Lilly and Company and the other one was located in India, which was Ranbaxy Laboratories. Research and development was crucial to Lilly’s long-term success. Ranbaxy Laboratories was a firm that was evolved into a serious research-oriented firm. With the change, in the government, India was attracting foreign investors in the pharmaceutical industry. Lilly decided to form the joint venture in India to focus on marketing Lilly’s drugs there, and a formal JV agreement was signed in November 1992. The main key issues of this case are as follow. The pharmaceutical industry had come about through both forward integration from the manufacture of organic chemicals and a backward integration...
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...become more innovative and enterprising with more investment in R&D especially since the WTO agreement was signed. Indian drug makers command 10 per cent share in the USD 30 billion US generic drug market and also has the highest (over 150) US Foods & Drug Administration (FDA) approved facilities. US accounts for one-fourth of the Indian drug exports. The share of Indian pharma companies in the total approvals for generic drugs called Abbreviated New Drug Application (ANDA) has risen steadily. From 32 per cent in 2009, it went up to 38.5 per cent in 2013. Increasing share of Indian companies in total ANDAs approved by the USFDA can be attributed to increase spending by them for research and development (R&D) activities. As per CMIE’s database, the industry’s R&D expenses to sales ratio jumped to around five per cent in 2012-13 from around three per cent in 2003-04. The export of drugs from India is expected to grow by 4.2 per cent to USD 15.2 billion in 2013-14. Around USD 16.3 billion of drugs are likely to be shipped from the country in 2014-15. This translates into a growth of 7.3 per cent. In 2015-16, drug exports from India are expected to touch USD 17.5 billion, 7.7 per cent higher than the previous year. Many developing countries like Latin America and Africa have also opened doors for generic drugs due to ageing population, rising income levels, increasing lifestyle diseases and low penetration...
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...Executive Summary: Pfizer-Wyeth Merger Deal Overview: On January 25, 2009, Pfizer and Wyeth entered into the merger agreement, pursuant to which, subject to the terms and conditions set forth in the merger agreement, Wyeth will become a wholly-owned subsidiary of Pfizer. Upon completion of the merger, each share of Wyeth common stock issued and outstanding will be converted into the right to receive, subject to adjustment under limited circumstances, a combination of $33.00 in cash, without interest, and 0.985 of a share of Pfizer common stock in a taxable transaction. Pfizer will not issue more than 19.9% of its outstanding common stock at the acquisition date in connection with the merger. The exchange ratio of 0.985 of a share of Pfizer common stock will be adjusted if the exchange ratio would result in Pfizer issuing in excess of 19.9% of its outstanding common stock as a result of the merger Deal Terms Breakdown: Transaction Value Transaction Consideration Purchase price per WYE share $50.19 Existing Cash Used $22,213 32.7% Cash per WYE share $33.00 New Debt $22,500 33.1% PFE stock value per WYE share $17.19 Total Cash $44,713 65.8% PFE shares per WYE share 0.985 Stock Consideration $23,289 34.2% Premium to 1/23/09 WYE price 29.3% Total Consideration $67,303 100.0% Total WYE shares (MM,diluted) 1,341 Total Equity...
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...presents a study of key pharma industry trends. This report offers an analysis of the impact of those trends, and reforms and regulations, particularly in the U.S. and the EU. Key Trends Explored: - Generic drug manufacturers are gearing up to take advantage of the opportunities presented by the many patent expiries - What trends are impacting the leading generic drug manufacturers such as Teva, Sandoz, and others - What government regulations and policies will effect pharma company bottomlines in 2012 and beyond? - How are pharma companies using mergers and acquisitions to maintain a competitive edge? - What is the state of the current global pharmaceutical industry and where is it growing? - Pharmerging countries contribute approximately half of growth, with China as third-largest market Global Pharma Industry Trends Examined: - Challenge of Patent Expiries - Challenges Facing the Generic Market - Cost-savings with Generics - Enforcing Prescription by INN - Providing Incentives for Pharmacists - Innovation in Existing Reference Pricing Systems - Relation between U.S. Healthcare Reform and Generic Uptake - Change Likely for U.S. Generics' Market Entry - Pharmaceuticals and Biologics - Tough Regulations in the EU - Innovation by Generic Producers - Impact of Price Cuts by...
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...RANBAXY LABORATORIES LIMITED Introduction Ranbaxy was founded in Amritsar in 1937 by Ranjit Singh and Dr Gurbax singh, who distributed vitamins and anti-tuberculosis drugs for a Japanese pharmaceutical company. After the Second World War, Ranbaxy continued as a distributor. After some time his cousin brother Mohan Singh bought the company from his cousins Ranjit Singh and Gurbax Singh. Ranbaxy's name is a fusion of Ranjit and Gurbax's names. Ranbaxy Laboratories Limited, headquartered in India, is an integrated, research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. It is ranked amongst the top ten generic companies world wide. The Company serves its customers in over 125 countries and has an expanding international portfolio of affiliates, joint ventures and alliances, ground operations in 49 countries and manufacturing operations in 8 countries. In 2011, Ranbaxy Global Consumer Health Care received the OTC Company of the year award. The Indian government introduced patent legislation in 1970. However this only protected processes. Competitors were free to imitate products as long as they used a different process. This created a disadvantage for MNCs compared to local imitators, and they were further discouraged by the introduction of price controls on drugs and later (in 1973) by restrictions on the amount of equity they could hold in local...
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...pharmaceutical market in the Asia Pacific region behind Japan, China and South Korea. However, the per capita spending of US$12 is among the lowest in the world, similar to levels in Pakistan and Vietnam. .India accounts for almost 10% of the global market by volume and is rapidly emerging as the leading outsourcing partner of global pharmaceutical companies, strengthened by improving Research and Development (R&D) focus and strategic position in the pharmaceutical value chain. The Industry structure of Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units with severe price competition and government price control. There are about 3,000 pharmaceutical manufacturers, the vast majority of which focus on generic drugs. The major players in the industry are Ranbaxy, Cipla, Dr. Reddy's Laboratories, Lupin, Nicolas Piramal,Aurobindo Pharma, Cadila Pharmaceuticals, Sun Pharma, W Wockhardt Ltd. and Aventis Pharma. The industry encourages international interest because of the growing population and economic improvements . Furthermore, initiatives of the Government such as allowing 100% FDI under the automatic route in drugs and pharmaceuticals including those involving use of recombinant technology act as a catalyst for growth. The main regulatory body in India under the Ministry of Health and Family Welfare is Central Drugs Standard Control Organisation (CDSCO). It is responsible for ensuring safety, efficacy and quality of drugs supplied to the...
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...Pay for Delay Written By: Jed O’Brien Metropolitan State College of Denver at Denver November 24, 2011 For years pharmaceutical companies have been trying to protect their expensive drugs, protected by patents, by paying rivals large sums of money from producing cheaper, alternative drugs. In an article written by Marian Wang, she discusses a particular case in which Pfizer makes “…a deal with certain pharmacy benefit managers … to block generic versions of Lipitor.”(Wang, Pfizer’s Latest Twist on ‘Pay for Delay’) There are a few ethical issues with this: one, the rival companies are infringing on patent laws, two, larger pharmaceutical companies are trying to create as much profit for their company until their patent runs out, and three, Americans in need of the drug are forced to pay higher prices for their drugs. The latter two issues go hand in hand with one another. Patents are used to protect a company’s invention and gives the company exclusive rights to sell that invention. In this case the invention is a drug. But, in the drug business, companies can get a hold of a drug and break down the chemical components making it easy to duplicate. It is not right for competitive companies to be able to easily break down a drug when all the hard work has been done by another and profit. Just because there have been minor adjustments with the chemical structure of the drug gives the rival company the right to market and sell their product. At the same time doesn’t...
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...opportunities for many industries but specifically, the pharmaceutical industry will see much growth. However, one must look at the effect on brand-name and generic drug manufacturers individually to fully understand the ramifications. Overall, healthcare reform is a large growth opportunity for the pharmaceutical industry and research shows a great deal of support for the legislation. In 2009, pharmaceutical interests spent $188 million lobbying for this healthcare reform and are projected to see a $30 billion net gain over the next 10 years. With the help of the Affordable Care Act, pharmaceutical companies have an opportunity to expand their customer base by over 30 million people but the ones paying for the prescriptions will begin to change from healthcare providers and patients to insurers and managed programs (insurance companies and government programs). Due to this change, the payers will become more cost-conscious in order to sustain continued affordability, thereby relying more on generic drugs than before. The pharmaceutical industry is made up of brand-name manufacturers (Phizer) and generic drug manufacturers (Teva) each with their own strategy and tactics. Generic drug companies develop their products to be cost-conscious alternatives to brand-name drugs. Once a drug has been introduced into the market, generic drug companies develop their product to be offered when the brand-name drug’s patent expires (typically 20...
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