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The union cabinet's decision to introduce a legislation for exclusive marketing rights and the mail-box facility in the winter session of Parliament is an acceptance of what is essentially a fait accompli.
The swadeshi lobby had, in an abrupt volte face, tried to stall the adoption of EMR, and had, rather strangely, wanted to bring forward the date for introducing product patents. This was not on account of a sudden conversion to the new virtues of the product-patent regime, but because of the realisation that the terms for the grant of EMRs left far less to the discretion of the government than the introduction of the product-patent regime.
In the case of product patents, there is some scope for examining the patent domestically, with consequent opportunity for delays. This basically amounts to fighting the introduction of product patents with non-tariff barriers.
However, in view of the fact that there is no getting away from introducing product patents in 2005, the centre should be more concernedwith internal liberalisation rather than worrying about providing protection. How will Indian companies compete internationally unless they are able to get international prices for their products?
Yet, there is a long list of products under the Drug Price Control Order (DPCO), for which companies are paid a pittance. Apart from a few life-saving drugs, there is no rationale for keeping these products under the DPCO. While there is no doubt that any rise in drug prices will be politically opposed, the opposition to some extent could be muted provided the list under DPCO is slowly, rather than abruptly, pruned.
There has been some movement in that direction, but more is required. A few domestic pharma firms have started investing in research, and the costs of research are being kept reasonable by tying up with foreign companies for clinical research, while cash flow is maintained by milestone payments. To be sure, research costs on an international scale are awesome, but they may be vastly reduced oncedomestic, instead of international, costs are considered. In any case, in the long run, there is no alternative to investing in research.
The other need in the Indian pharmaceutical sector is for consolidation. Encouragement must be given to companies to merge and rationalise. This has been the trend worldwide, and given the small size of Indian pharma companies, there is all the more reason for merger and acquisition activity.
It is these factors which need to be considered by the government while assisting the domestic pharma industry to stand up to international competition, rather than trying to resist change.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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