Bitter Pills:Medicines & The Third World Poor | Page 62

As this suggests, research-based manufacturers are not going out of their way
to push generics at the expense of their brand name products. In 1980, the value
of the world generics market was only 4-6% of the total drug market and brand
name products accounted for an estimated 90% of total UK drug exports. (64) A
publication of the British industry-funded Office of Health Economics (Brand
Names in Prescribing) indicates that many research-based companies see no role
for themselves in responding to the growing demand for inexpensive generics.
It states: "Older unbranded medicines which are by now long- established in the
various national formularies can usually be adequately and cheaply manufactured
in even the less developed local world markets. International trade in these
unbranded products is consequently negligible." |651
This statement obscures the very real difficulties that developing countries face
in setting up local production. To start with they must obtain the necessary
technology and technical know-how. These may be available from other
developing countries that have already set up local production. But rapid
technological refinements in the rich world can leave local production vulnerable
to price undercutting. Third World producers also remain heavily dependent on
rich world producers for supplies of bulk drugs and chemical intermediates.|661
Not all countries are in a position to set up local production. Those attempting
to break the monopoly of traditional suppliers by buying bulk drugs on competitive
tender, have other problems to overcome. Many Third World countries lack both
skilled administrators and the necessary market intelligence to operate an efficient
purchasing system. In some cases patent laws may debar them from buying from
cheaper generic suppliers or obtaining technology to produce the drugs themselves.
It is open to patent-holders to attempt to enforce their monopoly rights, even when
they have no intention of producing a drug locally themselves. <67)
A further major obstacle is the high cost of quality control facilities essential to
test drugs produced locally or imported from unknown suppliers. Lack of quality
control can enforce dependence on the market leaders especially if promotion
exacerbates fears about the reliability of products from generic imitators. Some
countries with chronic foreign exchange shortages may be forced to go on buying
from the leading companies, and paying high prices, because cheaper suppliers
cannot give them credit. |68)
But manufacturers cannot be expected to want to relinquish their existing markets.
Even research-based companies that have diversified into generics production like
Ciba will of course not wish to threaten the market power of their brand name
products. They wait for governments to make the first move. A Ciba document
explains the strategy:' 'This policy of ours is deliberately of a reactive type, which
explains why we refrain from entering into the generic business in markets where
such products are still of no great significance." |69 '
The research-based companies attach considerable importance to their exclusive
trademarks as a source of market success. This is borne out by the results of a
survey conducted by the Office of Health Economics. Twenty-eight companies
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