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| ARTICLE Reproduced here form the Report of the General Secretary placed at the General Council Meeting held at Bangalore 3-5 FebruaryPharmaceutical
Industry: There
have not been much of mergers in the year. German Remedies was taken over by
Zydus Cadila and the management change has effected the field workers. By this
time, aftter takeover of Rhone Poulenc, Nicholas Piramal had sold out its head
office and two factoreies at Bhandupa and Python offering VRS to all workers and
employees. Dr. Reddy’s Laboratory hastaken over Group Pharma. Though the
merger process of Glaxo and SKB has not been completed here, but in the
marketing area, the company is functioning in fully merged form. Somilarly Parke
davis and Pfizer merger process in India has not yet been completed but the
Parke Davis has forced the field workers to sign for opting to become PSOs.
There is every chance that these field workers may face pressure for VRS or many
bay be kept out of the company. The
experience that Indian pharmaceutical has gathered in joint venture are
disappointing. Now this joint ventures are breaking up. It is now understood
that the type of joint ventures they entered keeps the Indian companies as
junior partners where terms are dictated by the multinationals. As a result
Nicholas Piramal withdrew from joint venture with Reckit and Ranbaxy group
withdrew from Max GB, Lilly-Upjhon. Each break up of joint ventures have caused
unemployment in the field. Performance of
the Industry: Growth of the pharmaceutical
industry is further sliding. It could not remain in the two digit growth but the
performance of the last nine months this year has been agonisingly slow to the
tune of near two percent only. This shows that the industry growth had first
stagnated and the started downhill sliding. In fact considering the price raise
in introduction of large number of new products of high price, it may be
concluded that unit wise de-growth is substantial. This fact is affecting all
and the drug companies are rushing more to pressurise sales at the cost of
anything possible. Only with high pressure marketing top Indian companies have
registered some growth. Though the overall growth in sales trend of the drug
industry is negative, but profit of the 50 Indian industry during the period of
April-September, 2001 grew from Rs.616.38 crores to Rs.913.7 crores which is 48% increase. In comparison, the
growth of profit of top 10 multinational companies have been 11% only. Some data
in this regard comparing the performance upto September,01 is given below.
Though sales decline of Glaxo was 33% and operating profit also declined to 45% but the company could increase revenue by selling their property of Rs.39.35 crores. Success
story of the top Indian companies can be attributed to the hard work of the
sales promotion employees in establishing large number of new drags introduced
this year. Average 10 to 30 new drugs are introduced by these companies and for
Cipla this number goes up to 103 new drugs. There
has been substantial change in the market pattern. By aggressive marketing
practices, the type of prescription has changed. Simple remedies and confining
of therapy within a few drugs for ordinary ailment is no longer followed. For a
headache, standard dose of Aspirin is very difficult to get where expensive but
not so beneficial drug has replaced aspirin. Thus the cost of therapy now has
increased manifold. This has further disabled common people to buy medicines. To
overcome this situation the industry is involved in dumping of sales and by
increasing of work pressure on the field workers. As a result, Glaxo has
admitted that they had to write off Rs.9 crores in six months to compensate
breakage and expiry. It is doubtful that this has not happen suddenly. There is
every chance that is amount has been spent to compensate their dumping sales. Franchise
Marketing: Brand selling in previous years has affected the job
security of the workers. Now brand selling has taken a back sit, but the
franchise marketing is widely practices now. Large and medium scale companies
have now started to shift their established brands for marketing through
franchise. Sales promotion work is conducted through this franchise who appoint
salesmen at a minimum wage/commission. These companies have not yet understood
that by this process their representation before the prescribes become low
standard and degrades company’s good will. On the other hand, franchise
marketing has posed a challenge to the regular sales promotion employees. the
other problem that has emerged out of this, that a large fleet of sales
promotion employees remaining in the unorganised sector has seriously unstable
job security and worse working condition. This General Council meeting should
decide future course of action in this area. Branded
Generics: The issue of branded generics was raised in the last Conference of FMRAI and it was suggested that a study in this respect should be initiated. A priliminary study shows that large number of companies are now marketing branded generic drugs. These drugs are sold in the market at the same price of branded drugs, but he price to the wholesalers/retailers are abnormally low. We are giving below prices of some such drugs.
It is beyond imagination that these drugs, despite
sold at such low prices yet provide to the companies. Such benefit of the low
price never reach the consumers, but the enormous profit goes to the middlemen.
It also establishes that drug prices can be kept much low. The immediate problem
posed by the branded generics is the sales of purely branded drugs. For example,
a company may shif their established to branded generics section but the low
price and high trade mergine of the drug would push away other company’s
brands. It is required that study should be done as to how it is affecting the
sales of the branded drugs which are regulary promoted through existing field
workers. It should also be studied as to how the branded generics are marketed. Simaultenouslywe should also pursue the Govt. with
the instance of the low prices offered by the manufactures to reduce price of
all these drugs so that consumers get real benefit. Change in the
Drug Policy: The government of India has started to make all
efforts for changing drug policy. Through a secret document titled as
‘Pharmaceutical Policy-2001’, the Govt. have shown their real intention to
serve the interest of the multinational drug companies more vigorously. The
document has been kept secret so that in opportune moment this can be turned
into a policy in haste. It is necessary to expose this move of the Govt. The
document was prepared on the basis of the report of the two Committees formed
earlier by the Govt.-Drug Price Control Review Committee and Pharmaceutical
Research and Development Committee. Therefore it is obvious that the future
policy will remain confined to these area only. It
was mentioned at the very beginning of the document that in the era of
globalisation, regulatory control of the Govt. in the pharmaceutical industry
would deter growth. The document admitted that many decisions have already been
taken by the Govt. which affects drug policy. They are- ·
Abolition
of industrial licensing:
No Industrial licensing would be required for bulk drugs, their intermediates
and formulations if cleared by Drug Controller General. This decision has
affected drug industry adversely. Withdrawing of industrial license has forced
the country to import more. Reservation of certain drugs for production in the
public sector has been withdrawn and its consequences are already felt. Now any
one, multinational or Indian sector would be allowed to manufacture any drug or
intermediates in our country. ·
Foreign
Investment:
The decision that foreign direct investment with 100 percent equity in
pharmaceuticals industry was taken sometime back. Earlier only 39 percent
foreign equity was allowed. Instead of attracting foreign investment the
industry experienced a wave of de-industrialisation. Nearly all multinational
companies have closed their production plants in India. But all of them had
maintained their activity. Now with the given chance of 100 percent foreign
equity investment without any compulsion of production activity, these companies
will happily import drugs from their parent county. ·
Imports:
Earlier drug policy had put some embargo on free import of finished
formulations. The Govt. has withdrawn all restriction on import of formulation.
This has allowed a sharp rise of import of drugs in our country in the last
three years. There will be further jump in this figure in the near future. ·
Foreign
Technology Agreement:
There will be automatic approval for foreign technology agreement in the cases
of bulk drug production. There has been no response from the multinationals in
technology agreement following this liberalisation. On the contrary, import of
bulk drugs have increased to such extent that the Indian inustry is now
demanding for imposition of dumping duty on several imported bulk drugs. It is recommended in the
document that a corpus fund would be formed with Rs. 150 Crores which will
provide funds for research. It was not clearly spelled as to from here this fund
would come. It is obvious that this fund would be generated through tax on the
people. This fund will be given to all private companies-national and
multinationals. It means that people will pay for research but the drug invented
would remain patented for which people will have to pay high prices. There is no
similar system in any other countries. For managing this fund formation of Drug
Development Promotion Foundation has been proposed. Nothing has been proposed to
fund the Govt. drug research units which have invented process technology for
production of largest number of essential drugs so far. It shows that the Govt.
is no longer interested to encourage these premier institutions. In the document
definition of research based industry is kept in such a manner that virtually no
Indian drug industry would be able to utilise such scope. For example, in order
to enable such facility a company must have 100 Indian research scientists and
should have ten patents to their credit. Ultimately, this advantage would be
utilised by the multinational companies only. Most of the recommendations in the document have been made in the area of drug prices. The document in the tune of the industry stated that it aims ‘to remove rigors of Price Control particularly in view of the ongoing process of liberalization.’ Drug prices Control Order (DPCO) is now applicable to a meagre 63 drugs only. The spate of price rise has now become enormous. The document also spelled that any abnormal rise of prices would be kept on watch. But how the prices of drugs beyond price control could be performed has not been thought of. The document mentioned that the price control on drugs will remain vey notional only. The other process of the existing DPCO was that price of the single brand are controlled if its sale goes more than Rs. 4 crores in a year. The document recommends that this limit should be raised to Rs.20 Crores. With this immediately about 40 top selling brands would go out of price control. Anxiety was expressed in the
document about the high prices of the imported formulations. It recommended that
not more than 50% profit to the landed cost of the imported drugs would be
allowed. It is paradoxical since the largest amount of formulations are imported
from the multinationals, the prices would be kept high much before importation.
The multinational drug companies in number occasions were caught for inflating
prices through transfer pricing system. It was admitted in the document
that the manufacturers provide a large amount of commission to the wholesalers
which should be controlled. There is no process so far evolved by the Govt. to
control the unannounced sales commission given by the drug companies. Apart from
the declared commission drug companies provide excess goods as undeclared
commission where no documents are maintained. No measure has so far been
recommended in this regard. There is very little mention in the document about quality control. It was proclaimed that the Ministry of Health and Family Welfare would progressively benchmark the regulatory standard against those adopted in developing countries, for manufacturing. With the present inadequate machinery, it is impossible to assure quality control watch. The large amount of fund required for developing testing laboratories and the drug control structure in the sates, it is beyond imagination that how the Govt. can think of benchmarking the standard to those of the developed countries. The ‘Pharmaceutical Policy-2001’ envisaged in the document is simply a devise to provide more advantages for the multinationals and complete destruction of self-reliance of the drug industry. This policy by all means should be opposed. Interestingly, the document made its recommendations with a conjecture that Indian Patents Act has been changed totally as envisaged in the Patents Amendment (Second) Bill. The fact is that the global opinion against the IPR chapter of WTO agreement had forced the Doha Ministerial meeting to agree to reconsider changing certain provision for the shake of people’s health. Full
report about the General Council Meeting shall be published in the next FMRAI
NEWS Recent Publication: A 32 pages campaign booklet Titled as ‘Access to Essential Medicine’ published on January.2002 shall also be available on-line For More Information Contact: |
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