In 2013 two landmark judgement were given out by the Supreme Court of India that had the potential to change the global healthcare sector. So important was this judgement that big pharma companies from across the world sat up and took notice. It would affect their bottom line and could finally break through their global pharma monopoly.
In 2013 the SC ruled out a Novartis patent on the grounds that it was a simple tweaking of an earlier formulation. Before that, the compulsory licensing of a cancer drug by another pharma giant Bayer was upheld. Both the decisions marked major blows on the revenues of big pharma companies.
While the first meant that big company could no longer make 10 times jump on drug prices by small changes, the second ensured that generic firms could keep making copies of a generic drug. Both the decision were cheered by many in health activism who had accused both companies earlier of needlessly hiking prices, thereby endangering the health of the poor.
What is remarkable about the decision is the fact that these decisions were made after India became a signatory to the WTO agreement on Trade-Related Aspects of Intellectual Property Rights. In other words, these decisions were perfectly legal and could be replicated in any other country even if it was a signatory to the WTO intellectual rights.
So, it was not just the decision that would act as a major blow to the big pharma. It was also the implications of this decision, the fact that it could be imposed in other countries as well. Predictably the protests poured in from the big corporations as well as the developed countries who feared a loss of revenue across board.
Breaking the Monopoly Globally
This is just the tip of the iceberg. While the court decisions have hit the big pharma revenue directly, Indian firms are not far behind. With low production and operation costs, India has gained an edge where generic drugs are concerned. In fact, India leads in the export of generic drugs worldwide.
Even in branded drugs, India has broken the pharma monopoly of giant global organizations by honing its own local production. 70-80% sales in the pharma sector comes from the branded generic drugs. There are many reasons why the Indian pharma sector has gone from strength to strength:
1. Rising incomes
This has increased the demand in the local market for quality products. This demand is regarding well tested products and the latest formulations. Along with pharmaceuticals, the requirement for better medical equipments, tools and patient care has also gone up.
2. Medical infrastructure
The growth of the Indian pharma market has been an organic process where demands and a strengthening infrastructure has engineered its growth and development. Behind its success story is the supply of qualified lab technicians, labs, doctors and hospitals.
3. Ready finance
The investment in the pharma sector has also steadily gone up with both local and global investors. Not only are they putting in their money in drugs, they are also investing in medical supplies and patient care. There is also the presence of State and private insurance company, making sure that there medical care can be paid for and the pharma companies get their revenue.
4. Low costs
India’s main advantage over the big pharma is the low costs it has managed to maintain. With lower operational costs, Indian firms can keep their prices considerably lower. This has enabled them to ward off pharma monopoly by big giants that typically price their drugs much higher.
5. Global markets
The opening of global markets has further added to the growth of the Indian markets. The low costs of Indian drugs means that it has successfully broken through the global hegemony of big pharma groups and created a global dominance of its own, especially in generic drugs. Today India is the leader in generic drugs worldwide. Although its branded dug market is yet to make an impact, the generic drugs has successfully created a massive global presence. India leads in volume, if not in value!
India is seen as the best bet in breaking big pharma monopoly. Not only has its courts shown the way to do this legally, its companies are taking over the global generic drugs market with affordable quality drugs.