by Naren Karunakaran
December 26, 2009
from OutlookIndia Website
Satish Gujarathi, a veteran gynecologist who runs a 12-bed hospital here, recalls he couldn't charge more than Rs 5 per patient who visited his OPD even two decades ago.
Child delivery was done for Rs 50. Today, Rs 2,500 is the norm.
Note: Rs = Rupees (1 US$ = 46 Rupees - July 2010)
Dairying as a supplementary activity to irrigated agriculture has apparently spread affluence across the belt.
Such growing affluence is perhaps why Novartis, the $41.5 billion, Switzerland-based pharma major, chose Manchar as one of the sites to reach out to patients in rural India. Its 18-month-old rural health initiative, Arogya Parivar (healthy family), is directed from the company's headquarters in Basel.
Such is the importance assigned to it.
It's an attempt to establish and increase Novartis' presence across
swathes of rural Uttar Pradesh, Bihar, Madhya Pradesh, Maharashtra
and Rajasthan. The focus is on three treatment areas: tuberculosis,
allergies and nutrition.
The educators fan out into the hinterland, generate awareness on health issues, and marshal patients into the waiting arms of Arogya Parivar's networked stakeholders.
The company claims it has covered 25 million villagers and that it hopes to reach 50 million by 2010.
GlaxoSmithKline created a patent pool with universal access.
But it deftly avoided putting in patents related to HIV/AIDS.
This focus on addressing diseases of the poor and the unmet healthcare needs of the bottom-of-the-pyramid lends Novartis a human face usually not associated with it, or others of this breed called Big Pharma.
After all, this is the same company that
is accused of being a profiteer by resorting to ‘evergreening' - a
ploy adopted by Big Pharma to make minor changes to existing drug
molecules with a view to extend patent monopolies, and thus retain
high profit margins.
Arogya Parivar brings in more
villagers into the health ecosystem, but it sells them drugs at the
same prices that urban consumers are charged. That dilutes the
nobility and purpose of a rural initiative, and gives an impression
of a program that is an image and revenue builder for the company,
rather than a disease killer for the masses.
So far, it has fiercely guarded and propagated its drug patents in order to make more profits, even if it was at the cost of public health. Now, it is beginning to explore another model - selling drugs to the world's poor at lower prices and lower profits.
And even as it takes its first tentative
steps towards a new, more humane identity, its old nature often
overwhelms its new quest.
It's a paradox.
Novartis' rural health program wants to reach out to villagers,
but it sells them drugs at urban prices.
GSK's argument to include the last bit is because it believes access has more to do with lack of healthcare infrastructure than patents.
Of the 325 medicines on the WHO's essential medicines list, 95% are off-patent, and yet, one-third of the world's population has no access to them.
Since then, GSK has contributed 800 patent filings to populate its pool. A few months ago, Alynlam Pharmaceuticals contributed 1,500 patents to the GSK-promoted pool.
A patent pool is a mechanism by which a number of patent
rights, held by different owners - companies, universities and
institutions - are brought together and made available to anyone on
a non-exclusive basis.
Bernard Pecoul of the Drugs for Neglected Diseases Initiative (DNDi), says a lot depends on what companies are willing to put into it.
DNDi, created in 2003, is a
collaborative, virtual, not-for-profit drug R&D organization, with a
significant presence in India in malaria and visceral leishmaniasis
(kala azaar) research.
As for reinvesting revenues in poor countries, the numbers are rather small. Its current profits from poor countries are around $43 million, which means the money to be reinvested would be less than 0.1% of its overall 2008 net profit of £4.7 billion.
Sanofi-Aventis is going ground up.
Sushma Dhakras is one of the 6,000 diabetics in Mumbai on Lantus,
its insulin product, and free
However, GSK is moving on with implementing its ‘tearing down the barriers' policy, which takes a flexible view of intellectual-property rights.
Recently, it signed a voluntary license agreement with Simcere, a Chinese company, allowing it the right to manufacture products containing Zanamivir (Relenza) and selling it across a swathe of developing countries.
Meanwhile, innovations in
emerging-market business models and approaches that Big Pharma is
fostering are seeing a spurt.
All along, it was focused on the
high-margin Western markets. It didn't lend much corporate mind
space to markets like India, with the lowest drug prices in the
world. But then, the rules of the game changed.
Big Pharma is desperate for new revenue
streams and greater social acceptance.
Corporations cannot look at drugs only as business and trade,
and close their eyes to public health concerns.
Action International, Asia-Pacific
The complexities of developing country markets, it now seems, do not deter Big Pharma anymore, because its very survival is now dependent on these markets, which it had disparagingly ignored.
For Big Pharma, it's almost a do-or-die
situation, as it faces daunting challenges today.
Then, there are
a host of patent drugs, each of which brings in a few hundred
million dollars. Trouble is, in the next five years, products with
global sales of over $135 billion will go off-patent and face
Dr Reddy's alone is planning to launch
around seven new generics in the US market.
The industry continues to define itself as a product-producer.
The challenge is to become a healthcare provider.
The problem for Big Pharma is that there isn't anything big in their research pipeline that will replace their blockbusters.
In 2007-08, only 38 new chemical and biological entities were commercially launched in the US and their cumulative sales were a measly $3 billion. During the same period, products with sales of $26 billion faced loss of patent protection.
Sidney Taurel, the Chairman of Eli Lilly, famously remarked last year:
As a percentage of revenues, global R&D spend has halved in the last few years - from 13% to 6%. By 2007, jittery investors had begun questioning the industry's very sustainability and its ability to grow.
One analysis calculated that the
pharmaceutical industry had lost $1 trillion of enterprise value (a
measure of a company's value; theoretically, it's the takeover price
of a company).
Recently, Pfizer was asked to cough up
$2.3 billion, the largest US criminal fine in history, to settle the
US Justice Department's claim that the firm had violated marketing
regulations by promoting its painkiller Bextra. Earlier this year,
Eli Lilly paid $1.4 billion for illegal marketing of Zyprexa, an
The law was intended to make medicines more affordable by parallel imports, enforcing generic substitution and price controls.
It led to public outrage, as South
Africa was and continues to reel under an
HIV/AIDS epidemic, and a
facilitating legislation was deemed necessary to enhance access and
affordability of medicines.
Even if the organizational intent is there,
it takes time for things to show up.
It's like an oil tanker turning on the high seas.
Jai Shankar Krishnan
President and CEO, Danaher India
Branded as insensitive profiteers who put money before the lives of the poor, Big Pharma had to beat a hasty retreat under intense global public pressure.
There are numerous cases that betray such insensitivity.
A case in point is Novartis' stand in
India on its anti-cancer drug Glivec. After a long legal battle
through the lower courts and the Intellectual Property Appellate
Board, the company recently moved the Supreme Court to review the
patentability of Glivec.
Lately, it had even tried to turn normal life experiences into new diseases like ‘social anxiety disorder'.
The dream of a former CEO of Merck was not only to sell to people afflicted with diseases, but to all healthy people.
If this desired mindset change happens, it will truly be a big-bang change not only for Big Pharma, but for the world.
Sanofi Aventis, the French multinational pharmaceutical company, is pushing a dual pricing strategy - a low price for the public-health system and a higher price for the private market - to market its new, fixed-dose malaria drug, artesunate amodiaqine (ASAQ) in India.
ASAQ has been developed under DNDi.
Emerging markets are growing at 13-14% a year,
while developed markets are stagnating at 3-4%.
Indian Pharmaceutical Alliance
Another Sanofi-Aventis initiative targets delivery. Its beneficiaries include Sushma and Shankar Dhakras, who have lived a forlorn, retiring life for years, mostly confined to their small flat in the middle-class suburb of Vile Parle in Mumbai.
This February, their quietude turned into turmoil. Sushma, listless for months, had to be carried to a neighborhood physician. Her blood glucose had risen alarmingly.
After a short, futile oral medication regime, she consulted a diabetologist, who suggested injectable insulin therapy. It was then that her helplessness hit her.
Sushma just couldn't handle the insulin
syringe on her own. Her frail husband was of little help. Their only
child, a daughter, married to a naval officer in Vishakapatnam,
Swapnil Kothawade, the Sanofi counselor who trained Sushma and several of her relatives on the use of the syringe and put her on a closely monitored diet, is now a regular at the household and is seen as family.
A tiered pricing approach
ensures prices are tailored to patient resources
and there are sources of profit also.
, Access to Medicines, Group Sanofi-Aventis
Sushma is one of the 6,000 diabetics in Mumbai on Lantus, a Sanofi-Aventis insulin product, and also on free counseling from Saath7.
A Lantus kit costs around Rs 2,400, and
the recurring monthly expense for insulin ampoules is around Rs 480.
Saath7 already has over 44,000 diabetics enrolled for free
counseling across India.
It's strange for the company to be speaking this language.
Over 75% of the revenue of the €27.6 billion Sanofi, Europe's largest pharma group, comes from Europe and the US. India was always peripheral. Why then is it waking up to diabetes in India with an innovative, yet painstakingly slow, method of building a market, ground up? That too when it can't hope to make the margins it gets elsewhere on diabetes drugs.
This particular category is regulated
under a government price control mechanism in India, leaving
companies with little pricing freedom.
According to the International Diabetes Federation (IDF), about 9% of India's adult population will be diabetic by 2030.
It's borne out by sales trends. In the first half of 2009, Sanofi-Aventis recorded maximum sales growth of Lantus in developing countries (43.2%), not in the US or Europe. Increased incomes and changing lifestyles engender the situation.
The numbers are indeed staggering.
IMS Health, a drug-industry forecasting
firm, validates the trend and indicates that the global
pharmaceutical industry will grow 4-6% this year to $825 billion -
its lowest levels of growth in a decade.
If money is put in the right place,
it can significantly bring down world mortality and morbidity.
Manager-India, Medecins Sans Frontieres
A McKinsey report indicates that spending on healthcare in India will record the highest growth among all spending categories over the next decade.
Healthcare spending increased from 4% of average household income in 1995 to 7% in 2005, and is expected to rise to 13% by 2025. The Indian pharmaceutical market is expected to grow to $40 billion by 2015 ($6.3 billion in 2005).
The accent of
Big Pharma now is not only to increase its presence in urban India
with a baggage of lifestyle drugs in cardiovascular, obesity and
metabolic categories, but also to tap the rural market.
However, conflicting reports are emanating from the field. Novartis' Manchar foray is tepid.
The company's engagement with the
medical fraternity has also been thin, reluctant and ad-hoc.
Drugs from the stable of Novartis, and also its generic division, Sandoz, are therefore not exactly flying off the shelves of chemists as expected.
Varhadi presides over a network of 450
chemists and has a turnover of Rs 90 lakh a month.
...are in the throes of a root-to-branch shake-up like never before.
They are transitioning from a token presence in emerging markets to one of deep entrenchment. Their aggressive strategies have met with varying degrees of success.
These are still early days for the innovations
being thrown up and it will take years of hard work, as the doctors
from Manchar insist, for any company to make a lasting impact.
Grameen Health, an affiliate of
Grameen Bank, the world's largest microfinance institution, has
announced independent partnerships with Pfizer, the world's largest
pharmaceutical company, GE Healthcare, another global giant, and
Mayo Clinic, the US-based non-profit, .
And, it's not to be limited to Bangladesh alone; the model is to be replicated across,
The endeavor, initially, is to expand the number of clinics for which Pfizer has invested manpower, as well as a small kitty of $200,000.
Each GC has a physician, two paramedics, a laboratory technician and six community-health workers. A GC, typically, caters to 50,000 villagers living within 10 km. For the three partners, there are paybacks: drug sales for Pfizer, medical equipment sales for GE Healthcare.
Mayo Clinic pitches in with best practices in
If and when in full play, the Grameen
Health initiative will indeed be transformative.
Muhammad Yunus of Grameen Bank was also present.
It finally culminated in the creation of
the International Council for Mining and Metals (ICMM), a CEO-lead
initiative that helps the sector grapple with sustainability issues.
Of the 1,556 new drugs approved between 1975
and 2004, only 21 or 1.3% were specially developed for tropical
diseases and tuberculosis.
The archaic drug used to treat VL is highly toxic, arsenic-based and ineffective.
Malaria, TB and Chagas are some of the diseases that merit immediate attention.
The Geneva-based humanitarian medical organization has channeled its Nobel Prize money into DNDi. The Bill & Melinda Gates Foundation is also pumping big money into drug research.
For Big Pharma, all this can mean a new lease of life, but can it give up its old ways?