BusinessWorld in India reports on a silly fight that has broken out…
The chairman of the world’s third largest drug maker recently slammed Indian and other emerging market pharma companies for exporting cheap medicines to affluent nations. “They make drugs very cheaply and bring them to the North for people who can pay. They are exploiting people in the South. It is a scandal. They should deal with their own countries first,” Jean-Francois Dehecq, chairman, Sanofi-Aventis, told a UK newspaper.
The Indian Pharmaceutical Alliance has responded in kind. In a letter to the [Indian] commerce ministry, Shah says, “(Dehecq’s) statement seems to imply that the western markets are preserves of Big Pharma.” Meeting the drug demand in emerging markets is not an obligation on Indian companies alone, he states.
Could Dehecq’s outrage [have] been sparked by business concerns and not humanitarian ones? Firms like India’s Dr. Reddy’s have launched cut-price versions of Sanofi-Aventis’ allergy drug Allegra in the West. World’s No. 2 brand Plavix could face a similar fate.
There is some evidence that the Indian drug industry is helping build a modular value chain involving several specialist firms. This approach is disruptive to the old school of vertically integrated big pharma firms. Clearly, as this Christian Science Monitor article indicates, they are feeling the pressure.
There is no merit in these accusations. In fact these accusations are not new. The Indian software industry too faced similar accusations in the past and they came out winner. And nobody talks about these things anymore. In fact BIG 5 firms are emulating processes perfected by the leading IT services companies.
One can not underestimate the contributions made by companies such as Cipla in fighting deadly AIDS in Africa and other 3rd world countries.
My take is that unlike software services industry the labor arbitrage is really a small factor in Pharma industry where product innovations, R&D and operational excellence are the key to success. So instead of worrying about these sporadic accusation Indian industry should really concentrate on deliverying better value to our customers.
wicomic