Investment in Pharmaceutical Production in the Least Developed Countries. A Guide for Policy Makers and Investment Promotion Agencies
(2011; 59 pages)


The global pharmaceutical sector has changed greatly in the last 10 to 15 years. The expiration of patents on some of the blockbuster drugs has meant that the large research and development (R&D)-based transnational corporations in the developed world, which had relied on the sales of these drugs for their profitability, have had to re-examine their business models and adjust accordingly. Many of them have undergone a significant reorganization of their operations. Some firms are forming alliances with major generic manufacturers, both in developed countries and the larger developing country markets. Other are acquiring smaller biotechnology firms with patent applications in the pipeline, while still others are expanding into related fields such as diagnostics and other areas. Meanwhile, developing countries that have heretofore not had to offer patent protection on pharmaceutical products are finding that they must now offer such protection for new chemical entities as part of their commitments under the TRIPS Agreement of the World Trade Organization (WTO). These countries, such as India, had developed a large generic medicines industry based on, inter alia, their ability to reverse engineer medicaments patented elsewhere, and have been important players in providing other developing countries with generic medicines. Now, however, these large generic firms in China and India are becoming increasingly interested in selling their medicaments to developed country markets, and are beginning to partner with R&D-based transnational corporations in the sector.

The backdrop to these changes from an LDC perspective is, however, that much of their population still lacks access to much needed medicines, despite impressive gains in the availability of certain medicines in the last decade.

The above-mentioned changes in the pharmaceutical industry are impacting LDCs in two important ways. First, the larger generic pharmaceutical manufacturers in developing countries have in a number of instances begun to examine the possibility to engage in foreign direct investment in LDCs to produce medicines while they are increasingly aiming at selling their own output in more profitable developed country markets. Second, LDCs are in a good position to take advantage of the fact that, unlike other developing countries that are Members of WTO, they are exempt from having to offer patent protection on pharmaceutical products until at least 1 January 2016, and perhaps longer if WTO Members are able to agree on a further extension of the waiver granted to these countries from having to comply with the TRIPS Agreement.

In order to have a serious chance at benefiting from the current changes and attracting foreign direct investment in the pharmaceutical sector, however, a number of important prerequisites need to be met, many of which are lacking in LDCs. It therefore may not make sense for all LDCs to aspire to be scaling up their local production of medicines. Furthermore, they will want to ensure that such efforts go beyond a mere industrial policy, and that the push to support the local production of pharmaceuticals through foreign direct investment and related technology transfer will address real public health needs in the relevant country and/or region. Finally, such countries will need to have an effective promotion strategy that appeals to potential investors.

This guide outlines these recent trends, the basic prerequisites for the local production of pharmaceuticals and the key points that policymakers and investment negotiators, especially from investment promotion agencies, will need to keep in mind in efforts to support this important sector...

Le Portail d'information - Médicaments essentiels et produits de santé a été conçu et est maintenu par l'ONG Human Info. Dernière mise à jour: le 1 décembre 2019