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Generics can expect to do much better(New Straits Times Via Thomson Dialog NewsEdge) THERE has been some concern that the strengthening of intellectual property protection under the Free Trade Agreement (FTA) with the United States will lead to an increase in the price of medicines and will cause local generic drug makers to lose out to foreign drug companies. We believe that this will not be the case, based upon an historical review of previous FTAs negotiated with the US. In fact, our analysis of the pharmaceutical market in countries that have recently signed FTAs with the US shows that the generics industry has done exceptionally well. Let us look at how, in a number of countries, the generics industry has done extremely well post-FTA. In Australia, where a US-Australia FTA was signed in 2004, the generics industry is experiencing a boom. In 1994, generic medicines accounted for two per cent of the government's spending on drugs. This rose to 15 per cent in 2005 and is expected to rise to 25 per cent in the long term and hit a market value of A$1.5 billion (RM4.5 billion) by 2010. The net profit for one of Australia's newest generics companies, Arrow Pharmaceuticals, grew at 54 per cent in 2004 compared with 39 per cent in 2003. Another generics company, Alphapharm, was the market leader by volume and ranked second in market share by value in 2005 - which placed it ahead of overseas-based companies. In Singapore, after the signing of the US FTA in 2004, the number of generics in the market actually increased from 784 in 2003, to 847 in 2004 and to 941 in 2005, accounting for a 21 per cent increase in the number of generics in 2003-2005. During the same period, the number of branded drugs increased by 15 per cent. This is a clear indication that the generics industry has not been affected negatively by the FTA with the US. In Colombia, it was predicted that enhancing intellectual property (IP) through data exclusivity would cause the generics industry to lose 71 per cent of their market share or wipe them out altogether. In fact, three years after the exclusivity provisions, the volume of drugs by the generics industry increased from 53 per cent to 61 per cent while the volume of branded drugs decreased from 46 per cent to 38 per cent. At the same time, the value of generics increased from 34 per cent to 39 per cent while the value of branded drugs declined from 65 per cent to 60 per cent. In conclusion, all available facts suggest that there is no basis to allegations that the generics industry will decline after an FTA with the US. On the contrary, the generics industries have flourished after an FTA with the US. There are many reasons for this growth - preferential policies towards generics; growth in exports; new product launches; and expiry of patents of innovator drugs. Neither is there any evidence to suggest that the price of medicines will go up with an FTA. Prices are determined by market forces, competition and pricing policies. An enhanced IP environment does not impact on the government's ability to negotiate medicine prices. Malaysia already has high standards of IP rights in the form of patents, trademarks and copyright. Malaysia was ranked 20 among 117 countries in terms of IP protection in the World Economic Forum 2005-2006. However, in view of the nation's drive towards biotechnology and a knowledge-based economy, an enhanced IP environment is timely and necessary. It benefits all stakeholders, local and foreign, who invest in research. Stronger IP protection will also add value and create jobs in attracting clinical research to be done in Malaysia. VINCE LENSNER President American Malaysian Chamber of CommerceKuala Lumpur Copyright 2007 The New Straits Times Press (Malaysia) Berhad. Source: Financial Times Information Limited - Asia Intelligence Wire. |