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  • 29 December 2014
  • blog

APAC pharma sector comes off age in 2014

As 2014 winds down, from the Asian perspective, it has been a significant year on two counts. First, the aura that surrounded the operations of multinational pharma companies (MNCs) as one of being reproach has been dimmed during the year. Two, a set of home-grown pharma companies in the region have demonstrated that they are rightful partners in the global pharma sweepstakes.

Let me take up the first issue. For long, visiting MNC pharma executives used to talk down to their Asian counterparts during interactions. The message always was that back home their regulators were very stringent and hence ethical business practices were a way of life for them. The implied message was that weak regulatory regimes allowed Asian pharma companies to get away with a lot of practices frowned upon back home and that, somehow, gave undue advantage to local organizations. 
Regulators in China and Japan have effectively broken the myth about MNCs being paragons of virtue in their business practices. Three examples suffice. Chinese government fined GSK a record (by Asian standards) $489 million in early 2014 for the company's many fraudulent sales practices that bribed local doctors and administrators. Johnson & Johnson too received a $3 million fine for some of its illegal trade practices. And Japan pulled up Novartis for submitting highly manipulated clinical trial data for its top selling drug Diovan.

The trend so far has been that either due to ignorance or lack of resources and expertise, Asia's drug regulators winked at such MNC practices. Also, governments did not want to jeopardize foreign investments by antagonizing these powerful MNCs. Looks like the worm has finally turned. The "easy" regulatory regime in Asia was further highlighted by the absence of a crackdown on local pharma companies. Asian pharma companies are routinely pulled up by regulators in the western countries on various counts and local government agencies just looked the other way and overlooked the interests of local consumers of medical products. 
Now it is clear that the sanctimonious approach of MNCs towards local companies has been proved to be just humbug and they are as good or as bad as any organization in Asia and will take their chances with questionable acts. The halo certainly dimmed for MNCs in 2014.

Sovaldi, the $1000 pill to cure hepatitis C infection from Gilead Sciences, is one of the most talked about product of 2014. A 12-week treatment would require a patient to spend $84,000 for a course and is a huge cost even by American standards. No wonder Gilead was subjected to severe criticism on this score in the US and many other nations.

But Gilead did something unthinkable to salvage its otherwise exemplary image. Gilead did not wait for generic companies to file compulsory licensing applications to make Sovaldi in many countries. It just licensed the production of Sovaldi to seven generics manufacturers in India in September, allowed them to decide the prices, and above all sell it in 91 countries where hepatitis C is a major concern. Gilead will just charge a token royalty on the sales. Gilead hopes these Indian companies can spearhead a new wave of pharma sales in the world. Asia has indeed joined the global pharma bandwagon in 2014.

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