No more cheap drugs for the world's poor?
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Let's look at an example. More than ten years ago, Cipla produced generic drugs for HIV-AIDS treatment that could treat a patient for US$ 300 a year. This was a fraction of the branded product's cost of US$ 10,000-12,000 a patient a year. Today these drugs are even cheaper. India currently produces more than 80% of the world's medicine for HIV, supplying to poor countries in Africa and Asia.
But, will India and the European Union's (EU) latest effort to strengthen trade put an end to the supply of cheap generic drugs for the world's poor?
The EU is India's biggest trading partner. Last year the region accounted for US$ 92 bn in bilateral sales. A trade pact between the two could lift annual sales to US$ 237 bn by 2015. These negotiations between the governments have been going on for four years. However the deal seems to finally be reaching a close. But most campaigners are vehemently protesting the deal. Two provisions on 'intellectual property rights' and 'investor lawsuits' may make it easier for global pharma giants to sue the Indian government, drug producers and distributors.
This move could curtail India's production of a number of lifesaving drugs. Or it could cause prices to skyrocket and reduce affordability. While pharma companies and governments will be able to benefit from higher drug prices, the poor of the world will suffer. Millions of needy patients across the world, including India could be denied treatment at higher costs.
Should billion dollar trade negotiations ignore billions of poor people? Let us know your comments or post them on our Facebook page / Google+ page.
01:40 | Chart of the day | |
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Data source: The Economist Notes: * Based on Facebook's IPO valuation of US$ 100 bn ** Includes family |
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Little wonder, someone has asked for returns on Government bonds to be called as 'return-free risk' rather than 'risk-free returns'. Warren Buffett, the investor par excellence has echoed pretty much the same sentiment. He has argued in an article that current rates, especially in the US, do not come anywhere close to offsetting the purchasing power risk that investors are assuming. Thus, as per Buffett, bonds should come with a warning label. We fully agree. While stocks may always end up beating returns from bonds over the long term, the gap between the two widens further in the environment that we seem to be living in.
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The real estate industry is facing a demand decline and funds to the industry are quickly drying up. In such times, such deals don't seem to make business sense as far as the developers are concerned. However, the exit option is a part of the contract. Further, developers don't have a choice in the matter. If they don't go along with the buy back, chances are that PEs will exercise 'put' option. This will mean a heavy penalty for the developers. All is not negative though. The current trends suggest a rekindled interest of global investors in such assets. This may help facilitate secondary deals. This not only gives exiting PEs an easy exit, but spares the developer as well.
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The Indian stock markets were up by 0.8% during the week. A lower than expected Index of Industrial Productivity (IIP) number at 1.8% in December along with a revised GDP outlook of 6.9% as against 8.4% in the previous year were the reasons of worry during the week. India's trade deficit too has soared to uncomfortable levels of US$ 14.7 bn.
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Source: Yahoo Finance |
04:50 | Weekend Investing Mantra |
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7 Responses to "No more cheap drugs for the world's poor?"
N.M.R.Shreeedhar
Feb 12, 2012Hi, how the India_EU deal will jeopardise the manufacture of life-saving drugs in India or make such drugs more expensive is not clear. If either of these is likely to happen, adequate safeguards need to be built-in. regds
L.Subramanian
Feb 12, 2012While it gives satisfaction to know that our Indian companies will be in a position to earn more than the previous years, it is agonizing to note that the poor people will be deprived of cheap medicine. Any way enlightening article.
dinesh shah
Feb 11, 2012it must be strongly objected to otherwise,more people will die of unavailability of the treatments. The country can ill afford this.
manoharkantak
Feb 11, 2012This situation was expected. The Drug Price Control Committee under the Ministry of Petroleum & Fine chemicals to please the politicians went on bringing drugs under price control and reduced the prices of drugs to such an extent that, it became difficult for Pharma companies to operate profitably. In turn to stay away from the price control the pharma companies launched new drugs that were out of price control. The drugs were expensive but not necessarily superior and the story continued.The time will come when many Pharma companies will shut down and we will either import the medicines or all Indian companies will be taken over by foreigners. This is done by politicians under the influence of foreign lobby and not in the interest of people and nation.
saby chacko
Feb 11, 2012The european union is trying its best to choke all our means to supply cheaper goods and now presently generic drugs so as to benefit their companies and in this case pharma companies!!!
I only hope our govt does not fall into this trap.This will increase the cost of life saving drugs in the market.
subhasis das
Feb 11, 2012History always says the wealthy always exploits the poor and never care for poor which is true but excptions will always be there.....to cite examples
Mohammed Asgharuddin Ahmed
Feb 18, 2012This deal should not go through when it is at the cost of unaffordable treatment of its poor citizens, let alone the world's poor.
When Indians and the rest of the developing and underdeveloped nations get benefited, India shall continue producing generic/cheap drugs without getting under the influence of condtional trade pacts.