The report’s next three chapters (2, 3, and 4) present the development and production of praziquantel by private pharmaceutical companies in Germany, the Republic of Korea, and Egypt respectively. The following three chapters (5, 6, and 7) of the report analyze the international supply, demand, and pricing for praziquantel. Most of the material in this report represents original research and includes a number of new findings. This introduction reviews the main findings of the report’s six chapters, and draws some conclusions about policies for praziquantel and the broader implications of this case study.
The report begins, in Chapter 2, with a discussion of praziquantel’s discovery and development, focusing on the activities of Bayer and E. Merck, and the interactions with the World Health Organization, particularly in arranging clinical trials. Bayer and WHO worked together in multicentre trials to demonstrate praziquantel’s safety and efficacy, and achieved scientific success.
Chapter 3 presents the development of a different production process for praziquantel, by the Shin Poong Pharmaceutical Co. in the Republic of Korea. This chapter places Shin Poong’s development of praziquantel within the context of several Korean economic policies: the promotion of import substitution, the protection of infant industries, and particularly the national policy of process patents and not respecting product patents. Shin Poong worked with a government research institute and received government financial support to develop an alternative production process for praziquantel for treatment of liver fluke in Korea. For a remarkably low investment of corporate funds-the equivalent of about US$ 14,000-Shin Poong succeeded in creating an alternative, innovative, and cost-saving production process for praziquantel. The company then registered the new product and obtained patent rights to the process in the Republic of Korea and other countries, and followed a business strategy that squeezed Bayer’s share of both domestic and international markets for praziquantel. This form of public-private cooperation in the Republic of Korea resulted in significantly reduced prices for praziquantel in Korea, and in other countries as well after Shin Poong pursued exports from the mid-1980s.
Chapter 4 presents the formulation of praziquantel in Egypt, the largest single-country market for praziquantel (except perhaps for China*). The Egyptian International Pharmaceutical Industries Co., one of Egypt’s few private pharmaceutical companies, formulates the drug, using raw material imported from the Republic of Korea. EIPICO began formulation of praziquantel in 1987, and its strategy, which depended on Egypt’s lack of product patent protection for pharmaceuticals, resulted in major price reductions within Egypt. In 1994, for example, Bayer’s product sold at less than half its entry price in 1983 (in nominal terms). EIPICO also won the government’s tender for praziquantel from 1990 on (at the price of about US$ 0.26-27 per 600 mg tablet in 1992), providing the company with a major source of revenues, as the Ministry of Health purchased huge quantities of the locally formulated product.
* China procured a huge volume of praziquantel in the early 1990s, with a significant proportion apparently designated for treatment of cattle. We were unable, however, to obtain data on human versus veterinary consumption of praziquantel in China. For additional discussion, see Chapters 3 and 6.
Chapter 5 analyzes the international supply of praziquantel, since its introduction into the market in the late 1970s, and provides the first public estimate of total global supply, of 89 million tablets (600 mg.) in 1993, based on our estimates of production firm by firm. The chapter analyzes the major producers and formulators, and discusses global distribution systems, including the role of international agencies. Among international agencies, UNICEF pursued a strategy of globally concentrated bulk buying through its supply and distribution facility in Denmark, in efforts to provide praziquantel at reduced prices to developing countries, successfully pushing its purchase price for a 600 mg tablet from US$ 0.65 in 1985 to US$ 0.22 in 1994, and beginning in the late 1980s to purchase the product from Shin Poong. WHO, on the other hand, in the late 1980s and early 1990s, pursued a strategy of seeking to negotiate an arrangement with Bayer for a reduced price and for donations of the product, without yet achieving an agreement (as of December 1996). The World Bank, meanwhile, provided loans to a number of endemic countries for purchases of praziquantel through open tenders, resulting in significantly increased availability of praziquantel in several countries (especially China, Egypt, and the Philippines). Despite these efforts, in the early 1990s, many poor countries in Africa still lacked access to praziquantel for their schistosomiasis control programmes, with only limited availability in their private markets.
Chapter 6 presents the global demand for praziquantel, based on WHO’s estimates of national “need,” and compares those figures to availability, based on our collection of national data. The analysis shows a major gap between our estimate of international supply (89 million tablets) and WHO’s estimate of global “need” (424 million tablets). The chapter also reviews the availability of praziquantel in several endemic countries, provides a critical analysis of existing cost studies of schistosomiasis control efforts, and examines various problems that affect national distribution.
Chapter 7 analyzes the prices and production costs of praziquantel, showing that the price of praziquantel declined significantly in the late 1980s and early 1990s, as product patents expired in various countries and as the number of generic producers and formulators grew. The chapter examines the market segmentation strategy used by the producers, and the price differentials that existed, especially between developed country markets, the private market in developing countries, and the tender market. In the early 1980s, the retail pharmacy price for praziquantel in West Germany was about US$ 6.50 per 600 mg tablet. At that time, Bayer offered bulk discounts to international agencies at about US$ 0.90 per tablet, which still was beyond the means of most governments in poor countries. The Bayer and E. Merck patent (dated 17 December 1973 in West Germany) began to expire in some countries in 1989, reached expiration in West Germany in December 1991, and expired in most other Western countries in December 1994, with the US patent expiring in January 1994. In late 1994, several reputable producers offered a bulk purchase price of US$ 0.13-14 for a 600 mg tablet, reflecting the increased level of competition in the global market for praziquantel. The chapter analyzes the production costs and pricing strategies used by the major producers (Bayer, E. Merck, and Shin Poong).