On the other hand: the rest of the world has benefited a lot from the Indian pharma industry's growth. The same companies that you're criticizing are actually subcontracted by Bayer, etc. to produce their products so they can be sold in the developing world. If Indian did not produce these medicines, they would not be available to the poor at all. So at least they're saving lives that the developed world wasn't interested in saving.

Secondly: historically, Indian pharma growth was stunted due to old British laws. Once the industry was unshackled, it grew at a breathtaking rate, mostly by building generic variants of well-known drugs. This has allowed the Indian pharma industry to develop enough local expertise about formulation, manufacturing and distribution. Now they're moving up the food chain by patenting new drugs. Ranbaxy Labs, for example, is busy filing patents[1].

You can't expect the domestic industry to just sprout up organically. The Indian government never spent much money on R&D, so there wasn't much local drug research. But now that they're under the same patent regime, the Indian industries will have to figure out a way to survive.

Having said all this: please don't assume that Western drug companies' hands are clean. They are busy trawling the jungles of Amazon (among other places) to find new compounds, often taking knowledge from local shamans, etc. without any respect for their "IP".

[1] http://www.financialexpress.com/news/ranbaxy-tops-third-worl...

Yes, it is smart. On many levels, even the long run.

I think you might not be aware that a very large percentage of drugs in the West emerge from publicly funded research... sometimes even 'basic science' research. While pharma does do its own R&D, it mostly just farms promising leads from academic research.

Where they do shell out big bucks is in the cost of performing clinical trials. This is a regulatory cost. While I think trials are a critical step, I'd be surprised if costs here couldn't come down substantially through means that don't involve R&D. Maybe India could offer something in this regard?

India's pharma companies might be a lot more 'innovative' if their academic science and government spending on science were stronger. This might just be a matter of time.

Finding a different way of manufacturing a drug can be very innovative work. Trust me, the chemists that come up with these organic syntheses all too often consider themselves geniuses.

>Do you really think this is smart?

Of course it is. This has easily brought India trillions of dollars worth of benefits. Is there any benefit to India at all of paying billions of dollars per year to the United States for.... nothing?

I get the feeling that there is simply no way to get exorbitantly priced drugs to the masses without bankrupting any kind of fund that provides for this (govt/national agency etc). The mistake in your argument is that you assume pharmas are losing out from the market in poorer countries like India. While this may be true to a certain extent, the sales of such drugs would be significantly low if they were bought at the original price. Also, the Indian govt./private sector doesn't provide any kind of healthcare benefits, AFAIK most healthcare is self-sponsored, which is different from US where big insurance companies handle much of the costs. There is a grey area here. It isn't simply that you try to protect your IP at all costs or try to be over-zealously righteous. As another commenter mentioned, this kind of idea stealing happens all the time, and although it may not be strictly legal, it has done much more good to us than sticking to laws would have.

>>I'm an Indian citizen and have the right (luckily) to dissent.

Oh! I am an Indian too.

Cost reduction is innovation too. Its like what Telecommunications companies have done to call rates here. Remember the days when getting a telephone connection required recommendation letters from ministers? These days you can get one for 100 rupees with a address proof in 20 minutes.

Pharmaceutical patents at most act like software patents sooner or later some one discovers them. But to act like 'I discovered first, so pay me eternally or suffer mercilessly and die' attitude will only do damage.

You are also right in the sense that we must incentivize research. But for that we need larger health care reforms especially in the areas of health insurance. Every Indian must have a means of affording health insurance and pay for quality health care. I like Narayana Hrudayalays's schemes in Bangalore, for farmers and alike.

Regarding when that will happen, your guess is as better as mine.

I understand and mostly agree with your sentiment. R&D is important.

However, I do feel it's important to bring up the point of making generic drugs more accessible to the masses. Sure, cancer is a big beast, but the masses out there mustn't die of tuberculosis, malaria, pneumonia, etc. just because the drugs are too expensive.

It seems like there just isn't a one-size-fits-all kind of solution. Officially licensing drugs for cheaper sales in developing countries might be a reasonable road to go down.. got any other solutions ?

The article also quotes that this has changed in the last 7 years and adds more subtlety to the issue.

"But in 2005, India brought its law in line with World Trade Organization (WTO) rules recognising 20-year patents, pushing up the prices of newly launched drugs.

Cipla, India’s fourth largest pharmaceutical company by sales, has been pressing the government to allow widespread use of “compulsory licences”, which are permitted under WTO rules.

The licences allow companies to make existing life-saving drugs to sell in countries where they are otherwise priced out of reach."

While product design is important, availability of a strong manufacturing supply chain is also important. India's role in pharma is similar to what China provides for regular manufacturing.

What cipla is doing can be considered as a legal innovation .And it seems like a legal practice that does very little damage to drug companies , and great benefit to consumers.

In a world rich with technology innovation, marketing innovation, distribution innovation(amazon fulfillment services, etc),organizational innovations(open source,etc) and manufacturing innovation the biggest barriers left in many industries are legal and regulatory issues.

There's immense value to be unlocked using regulatory innovation in education(khan academy in k-12 schools), healthcare(almost everything about it), energy(new nuclear power tech), hotels(the whole airBNB legal questions) and other fields.

Shouldn't we even try ?

Also speaking as someone who's lost friends to cancer, I'd not like it if the drug was there but out of my reach because it was too expensive. It's like looking through glass, you can see the other side but you can't get through

It's a very smart approach during the catching up phase. Basically, it's an unstoppable free-riding mechanism.

cost to invent drugs = identifying compounds (90%, say) + determining manufacturing process (10%)

^ Where are you getting these numbers from? They seem way too simplistic, and your argument essentially falls apart without them.

Real 'invention cost' would be determined by far more factors - cost of raw materials

- labour cost (I bet it's cheaper for pharmaceutical companies to pay workers much lesser in India too.),

- whether your competitors are targeting the same market (if these companies stopped researching said drugs, Cipla would come up with a cheaper way to do the R&D required, and then make a killing, even with their low rates, since they would have cornered the market.)

Plus the goodwill of Govts of developing countries that are offered these medicines at low rates may lead to fruitful collaboration with national research institutes in those countries, thereby lessening the need for enormous profit margins anyway.

As someone said below, the fact that there is more money to be made selling iPads rather than bread does not mean that everyone switches to making iPads.

They don't do much R&D. Most of their drugs are copies of drugs that have been developed in western countries. The drugs are just reverse engineered and reproduced. This is pretty legal under Indian patent law and hence carries on, while Cipla, makes massive amounts of money by being just a drug manufacturer.

They do save lives though :P

From what I have heard from people who work in pharma companies in India, the main reasons drugs are cheaper when manufactured in India are:

- not much R&D costs to design new drugs (however they do spend on designing the manufacturing process) - cheap labor for manufacturing, including a good supply of chemical engineers. - environmental regulations for chemical manufacturing are stricter in Western countries.

This argument is demonstrably false.

Look at any commodity market, with no barriers to entry, no IP protection, thin margins, say: making bread. The logic that everybody will stop making bread because there's more money to be made in making iPads is false.

The general rule is: as long as there is money to be made, people will compete for this money.

There's a lot of money to be made in drugs and as long as it's true, companies will compete for this money, even if the margins won't be as great as they are today.

Look at http://en.wikipedia.org/wiki/List_of_pharmaceutical_companie...: the top pharma company makes $12bn profit on $62bn of revenue with $7bn spent on R&D.

The $12bn is a lot of wiggle room and twice the amount they spend on R&D. They are making profits hand over fist.

The $7bn total spent on R&D also puts your $1bn per drug into question - does the biggest pharma company can only do 7 new drugs per year (and I'm really generous in assuming all of that R&D goes into developing new drugs)?

Maybe the US is simply a poor market to launch new drugs into, if it costs that much to get it to market. It might be better to launch in other countries, like India, and then work towards a US launch after extensive use data is available.

Whatever the complexities of the system, the bottomline is that for-profit corporations should not be allowed to milk medical "consumers" the way they are allowed in the US. If the US can bail out the banksters with trillions of dollars (yes, the Federal Reserve printed trillions and gave it to corporations, not just American banksters and corporations but to corporate buddies all over the world), why must an American patient pay 10-100 times the price charged by the same company in Mexico? That for a medicine that is more than a decade old?!

The US government (read taxpayers) paid milions to GM in bailout money in the last week of September 2008, GM opened a new plant in St. Petersburg, Russia in the first week of October 2008.

How is it all not as simple as good vs evil? Could the trillions of dollars of taxpayer bailout money not be spent on providing healthcare to all Americans and their generations to come?

When they fail we all need to chip in, when they succeed (say their drug is successful) we all have to pay for their profits.

Anyone remember the millions of dollars Rumsfeld made over the bird flu scam? Remember Tamiflu? Bird flu killed a fraction of the number of people routinely killed by common cold and malaria around the world but the UN rushed to declare it a pandemic and that translated into billions of Dollars of purchases of medication from governments around the world. The medication did not even provide the defense it claimed to provide any way.

and I am afraid that India has a shady counterfeit drugs industry where they are selling drugs with less than the required amount of the active ingredient which leads to resistance to say aids drugs.

And when the BBC World Service investigated they people who talk to them had to have their identity & voices disguised because they did not want to end up dead

Wow, that's a really smart policy on several levels. Besides not stifling competition regarding individual drugs, it encourages companies to develop new methods of synthesis, which has potential side benefits like making the market less fragile against shortages of raw ingredients.

From the article

"But in 2005, India brought its law in line with World Trade Organization (WTO) rules recognising 20-year patents, pushing up the prices of newly launched drugs."