INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES
"Pharmaceutical Industry under the rules and regulations of WTO"
Dr. Prof. Nasir B. Shaikh HOD MMCC Pune - 411004 Introduction:
The topic of the research paper is viz. the systematic study of the pharmaceutical industry of India which is threatened, due to the new controls brought by rules and regulations of the WTO region, especially regarding tariff policies, TRIPS (Trade Related Intellectual Property Rights), opening of Indian domestic market to foreign multinationals by adopting liberalization, maintenance of professional standards of business ethics, obtaining the world class quality approvals and accreditions for Indian pharmaceutical exports, adoption of 'product patents' in addition to 'process patents and restrictions on unauthorised imitations etc. Till 1995 Indian Pharmaceutical industry was governed by IPL (Indian Patent Laws) and laws controlling the production and distribution practices. After getting the membership of the World Trade Organization, which has become the apex international permanent body for reorganising and smoothening the World Trade and for bringing ideal International order in the global trade ethics by making the necessary controls mandatory on the part of the member countries, Indian Pharma industry is facing new difficulties and challenges.
Indian pharmaceutical industry was indirectly and remotely governed by the rules and regulations of GATT since 1948 onwards. But there was a sort of lenient and soft approach of the GATT which used to revise and reframe its rules from time to time, per every new round of GATT conferences. As a result there was relatively much more freedom to Indian pharmaceutical industries to grow of their own. Especially after 1970s, Indian pharma industry made a very rapid and amazingly qualitative progress due to the intrinsic strength of cheaper scientific manpower, patronizing policies of the government the excellent competency of Indian manufactures in the field of bulk drugs and generic drugs and especially in cost effective production process by skills of processes and of reengineering of World Class Brands.
Till 1970, India had only 2257 pharmaceutical units. Their number rose to 5156 (more than double) by 1980s, and by 1990s, their number shot up to 16000 units. By the end of the 20th Century India had small, medium and large pharmaceutical units together totaling more than 20,000. Thus there has been 10 fold progress in the number of industrial units, only during last 30 years.
Indian pharmaceutical industry employed only about 2 lakh employees in 1970s. At present it has created employment to more than 30 lakh employees. Indian pharmaceutical industry provides drugs and medicines of competitive quality at very low prices compared to those of advanced countries and dominates domestic trade by about 85 to 90 percent.
India has achieved the Fourth Global Rank in terms of volume of generic market, next to US, Japan and Germany.
Indian Pharmaceutical industry contributes as a 'net foreign exchange earner' by exporting drugs worth Rs. 14000 crores in 2003 as against India's pharma imports worth Rs. 4000 crores only.
It has not only multiplied its Exchange earnings by 20 times in last 3 decades but it has captured the global market by penetrating in new markets of 65 countries in general and markets of US, European Union China and Brazil in particular.
INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES Problem emerged from WTO membership
Against this background of India's rapid progress of the pharmaceutical industry, when India had to accept the membership of WTO; there were partly legitimate and partly exaggerated fears in he concessed quarters of captains of pharmaceutical industry, economists, policy makers, elected law makers from different political parties and the general public
1) Since pharmaceutical industry per se is 'capital intensive' due to requirements of huge fund allocations for activities of R & D. Indian pharmaceutical industries due to their capital deficiency, will be unable to survive in the environment of open business competition.
2) Due to the acceptance of 'patent rights' and the monopoly of MNCs in Global pharmaceutical market, Indian consumers will have to pay exhorbitant prices to foreign companies. Indian Drug manufacturers Association (IDMA) protested that 'prices of all medicines will rise by 5 to 20 times (!) as a consequence of the acceptance of TRIPS and WTO dictates.
3) The general opinion was that acceptance of WTO region will lead to 'country's sell out to foreign multinationals' and causing agony to Indian patients by compelling them to be parties of this total sell out'.
Reason for Choosing the topic
Due to the controversial nature of the burning topic of alleged 'threats to Indian pharmaceutical industry due to membership of WTO', this research was motivated to conduct an objective and unbiased academic research based on the actual facts and figures of this vital issue of public interest.
Since 1995 onwards, the researcher continued his study and gather the secondary data essential for the methodological study. In the meanwhile, India's process patent practices, were officially permitted till the year 2005 because the moratorium of the years was granted by WTO for official acceptance of 'product patent region' which was to commence in India from 2005 onwards.
The researcher therefore decided to fix the transitional period of ten years of 1993 to 2003 for objectively examining the perceived impact of WTO region on Indian pharmaceutical industry in the areas of viability and sustainability of Indian pharma industry, export earnings of pharma industry, employment levels, price levels of drugs and medicines in the domestic market, and general prospects of the Indian pharmaceutical industry.
The last but not the least, is that there are very few research studies done for the Ph.D. Degree, in Indian Universities in general and there is almost not a single research thesis so far to the Management faculty of the Pune University.
Especially during 1993 upto 1997, since the publication of the proposed draft of the Secretary General of GATT Mr. Dunkal a national level debate had reached to very intensely agitative and harsh nature about the dilemma viz. whether to joint WTO or not and the consensus of the political and even economic opinion was not in favour of accepting WTO regime, which according to the antagonists, was certainly detrimental to the budding and prospering Indian pharmaceutical industry. The Swadeshi Lobby of the BJP and its allies the leftist lobby of the ruling Congress and its allies from the so called third front who were ideologically opposed to the entry of multinational giants, the three communist parties including CPI, CPM and forward block and the captains of big Indian pharmaceutical companies, as well as the small scale drug manufacturers who had become nervous due to the threats of the competition from global pharma giants, and finally journalists of national and regional newspapers, all had recorded their opposition to the acceptance of the WTO region. This nation wide
INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES debate continued for a long time, even after India had formally obtained the formal membership of WTO.
The gist of the arguments against the WTO membership can be summed as:
1) Indian pharma industry in general and small 20 thousand units in particular will be totally crashed, destroyed and shattered due to their weakness to stand against the formidable competitive threat of the global MNCs.
2) Due to the Norms and Conditions regarding the proven quality of the durg and hyperstrict conditions of US's Food and Drug Administration about Good Manufacturing Practices (GMP), Indian Pharmaceutical experts will be severely affected which will cause and set back to foreign exchange earnings of Indian pharma companies.
3) Due to the removal or reduction of import tariffs, foreign drugs will become cheaper and affordable to the middle class population of India and Indian small companies will also lose even their domestic markets.
Title of the proposed research
In consultation with my guide, while preparing the synopsis and broad outline of the proposed research, it was decided that the title of the research should be short, precise, specific and logically sharp. Bearing with that view, following title was accepted as a final one.
It is as follows :
"The impact of WTO on Trading in Pharmaceutical Products in India (1993 - 2003)" The title itself identifies and defines the paradigms of the scope and coverage of the study, which consists of following areas.
a) Prevailing strength and weakness of Indian pharmaceutical industry in the total global industry.
b) The nature of various strict and rigorous controls of the apex authority to supervise, monitor and maintain the order of ethics and discipline in the global trade and their direct and indirect impact on the prospects of Indian pharmaceutical industry.
c) The objective assessment of India's Gains and Losses, of opportunities and threats produced by the acceptance of the WTO region.
d) A data based and quantitative exercise of examining the truth and the substance of arguments based on perceived fears and biased prejudices, as well as, emotive overreactions which were against WTO region, vis-a-vis, the facts and actual evidence of the 'state of affairs' concerning particularly with Indian pharmaceutical industry.
e) A broad and exhaustive survey of pros and cons of WTO region affecting Indian Pharmaceutical Business.
f) The study to be logically confined to the period of 1993-2003 being the period of transition and transformation from 'Process patent region' to 'Product patent region'.
Methodology and the sources of data
The entire study will obviously be based on the secondary data and the empirical evidence. The data will be systematically processed, analysed and interpreted so as to derive the logical findings of the research.
Since pharmaceutical industry in India has no independent status since it has been clubbed as a part of the chemical industry; it is very difficult to obtain the separate data of the same. Probably due to that reason, very few researches have been conducted in this area, so far.
INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES The main data sources are following -
1) The U. N. Handbook of statistics
2) The World Development Report published by World Bank.
3) The data published regarding World's Exports and Imports by the U.N. 4) WTO reports, periodical publications.
5) The statistics published by 'the World's Chemical Market'. 6) World Health organisation - reports (WHO)
7) General Agreement on trades and tariffs - GATT - Reports.
8) Economic survey - published by Ministry of Finance Govt. of India. 9) Scrip's year books.
10) Confederation of Indian Industries - Publications, reports, data 11) Federation of Indian chamber of commerce and industries - reports.
12) Centre for monitoring Indian Economy (CMIE) Monthly and special issues. 13) Sector profile of the pharma industry - SOMO
14) Fortune 500 companies - status report 15) Saket pharma handbooks of 1995 to 2007.
16) Statistical outline of India (Tata E. R. Publication) 17) Reports of the Drugs Price Control Committees.
18) India's legislation regarding Drug Controls, Patents, Prices etc.
19) Indian Drug Manufacturer's Association, Reports and Representations
20) Essential reference books, research papers, enquiry committees, journals and periodicals ministry of chemicals and pharmaceutical Govt. of India, Annual reports etc.
Hypothesis
Hypothesis which is to be tested and verified by the analytical data has been categorically stated as follows. viz. "The overall impact of WTO region on the business prospects of Indian Pharmaceutical Industry has been much more benevolent, rather than malignant, since it has factually created for more trade opportunities and benefits rather than the threats and disasters causing serious damages to same.
Objectives of the Research
i) To examine the profile of World's Pharmaceutical Industry and its trade with reference to the dominant players who have sizeable shares in total global market. To find out the dominant regions which make large purchases of drugs and medicines by their respective purchasing powers and the health awareness. To study the trends in the growth of the pharmaceutical trade in the World in the period of the 'cold war' and the current decade of the 21st century.
ii) To study in details the growth and progress of the pharmaceutical industry in India during pre-independence and post independence decades. To account for the total value added by the Indian pharmaceutical industry, the shares of foreign exchange earnings as well as the earnings from the domestic market. To identify the dominant pharma companies and their respective shares in the total pharmaceutical business. To examine the trends of its growth especially is post 1960s as well as during the decade of economic reforms and the membership of WTO. To identify the areas and prospective potential for the progress of Indian Pharmaceutical industries, after adopting the WTO region. To study the composition of India's exports and imports of pharmaceuticals in post 1980s.
INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES iii) To examine the developments in Indian Pharma Policies, Indian laws
governing the practices of the industry and the trade, various controls, quality and pricing policies, patent acts, rules and regulations, changes in Indian legislation and controls during the membership of the WTO.
iv) To study the impact of direct and indirect controls of GATT, WTO and WHO on Indian Pharma business.
v) To make exhaustive study of the positive and negative impact of TRIPs, on India's pharmaceutical business.
vi) To make objective assessment of the pros and cons, advantages and disadvantages, benefits and losses and the opportunities and threats caused by the new region of the WTO.
The importance of this study
The pharmaceutical industry has remained a grey area in academic research especially in the disciplines of Economic Commerce and the Management science. It has emerged as the fourth Foreign Exchange Earner next to Textiles, Gems and Jewellery and Software and IT services. Indian pharmaceutical industry is one of the fastest growing sector especially during last 3 decades having average rate of growth of not less than 15 percent. Due to the availability of highly skilled scientific manpower, innovative and adoptive efficiency and comparative cost advantage, it is going to emerge as one of the Top TEN leading industries of the World in next 2 decades. This research therefore is appropriate and its timing is so perfect that it will enlighten the people engaged in Indian pharma industry such as the policy makers, the government the academics from pharmacy, biotechnology, economic and management, as well as the general public.
The study will explore a number of areas which have been neglected in the mainstream of the academic research and will make an original contribution which will be useful to the practical use and benefit due to its applied nature.
Overview of global pharma sales
1) The overall world pharma sales by 2003-04 stood at US $ 320 billion, which increased upto more than $ 500 billion by 2007-08. More than 84 percent share of the total global pharma trade belongs to the products free from patent protections. As per the WTO directives, more than US $ 8 billion worth of pharma products will go off 'patent restrictions' by 2005.
2) The shares of global pharmaceutical trade are as follows -
a) U.S. 33%
b) E.U. 26%
c) Japan 21%
d) The rest of the world 20%
Total 100%
INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES 3) Annual per capita drug expenditure of selected countries.
Country U.S $ Country U.S $
Japan 412 Turkey 21
Germany 222 Morocco 17
US 191 Brazil 16
Canada 124 Philipines 11
UK 97 China 7
Costa Rica 37 India 5
Chile 30 Bangladesh 2
Mexico 28 Mozambique 2
N.B. For expanding and penetrating into the World's buyer's market, India will have to win the markets of Japan, Germany, US, Canada, UK, Mexico, Brazil as per strategic planning.1
4) In the context of the profile of the global pharma trade, Indian Pharma companies have three options viz.
i) To try to compete with the multinationals by producing their own patented inventions.
ii) To produce patented drugs under license with collaborations of the parent MNCs.
iii) To make generics which are free from patent restrictions because of the comparative cost advantage and larger share of the global market. SWOT Analysis of India vis - a - vis global countries
A) Strengths of Indian pharma industry
1) Cost competitiveness 2) Well developed industry with strong manufacturing base 3) Access to pool of highly trained scientists 4) Strong marketing and distribution network 5) Rich biodiversity 6) Competencies in chemistry and process development.
B) Weakness
1) Low investments in innovative research and development - General Deficiency in Capital Resources 2) Lack of resources to compete with MNCs for New Drug Discovery Research and to commercialize molecules on a worldwide basis. 3) Lack of strong linkages between industry and academia. 4) Low medical expenditure per capita, therefore chronic limitations on domestic market 5) Production of spurious, low quality drugs, fake immitations etc. tarnish the image of the industry at home and abroad. 6) Shortage of medicines containing psychotropic substances
C) Opportunities
1) Significant export potential global market 2) Licensing deals with MNCs 3) Marketing alliances to produce and sell MNC products at home and abroad 4) Contract manufacturing and outsourcing contracts gained by Indian companies 5) Potential for developing India as a centre for international clinical trials 6) Supply of 'generic drugs' to developed and developing markets.
D) Threats
1) Product patent regime and domination of MNCs 2) Restrictions on animal testing in India 3) Drug price control order puts unrealistic ceilings on 'product
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INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES prices' and profitability 4) Lowering of tariff protection due to dictates of WTO 5) The new MRP based excise duty regime has destroyed "small pharma firms" in the state of A.P. and Maharashtra, which were involved in contract manufacturing.2
Table : Word Dev. Indicators – The World Bank – April 2006 Selected countries Researchers in R&D per millian people 1996-04 Sci. Tech. Jounals 2001 Hightech Exports $ bn of manufacture Patent Application filed Trademark Appl. filed % of G D P spent on R &D Australia 3670 14788 312 14 96434 26831 1.63 Canada 3597 22626 25.6 bn 14 102418 19664 1.94 China 663 20978 161.6 30 140910 3210340 1.31 France 3213 31317 64.8 19 160056 58035 2.19 Germany 3261 43623 131.8 17 230066 53817 2.5 India 119 11076 2.8 5 91704 --- 0.8 Japan 5287 57420 124.0 24 371495 100145 3.15 Koreas 3187 11037 75.7 33 76860 126836 2.6 Malaysia 299 494 52.8 55 782 --- 0.6 Pakistan 86 282 150mn 1 58 --- 0.2 Russia 3319 15846 3.4 9 24049 26279 1.2 U. K. 2706 47660 64.2 24 251239 51399 1.8 U. S. 4484 200870 216.0 32 183398 * 2.6
Source – Global Competative Report
The figure in the table reveal very interesting things
1) U.S. is undoubtedly the World's leader in R & D activities, the number of scientific & technical journals publisher, high-tech exports, highest percentage of manufacturing in total exports, the number of patents application filed per year, the no. Of Trademark application s filled and highest percentage of GDP spent on healthcare.
(The No of Journals: 2lakh, The No. of patents about: 2lakh No. of trademark applications: about 2 lakh, the No. of Researcher per million: about 4500.) As a result of this strength, U.S. leads & influences the global pharmaceutical business.
2) Japan is equally strong in these aspects; It has more than 5000 researchers available per million of population, The No. of patent applications filled by Japan is the highest of the world being about 4 lakh. Japan spends the World's highest percentage of GDP on Research.
3) The third influential country is U. K. having 47000 scientific journals, about 2.5 lakh patent applications & 1/2 lakh trademark application. Fourth Rank goes to Germany having more than 3000/ vermilion researchers, about 'l'2 lakh journals, 2 lakh patent application.
4) China is making tremendous progress in recent years having 11/2 lakh patent applications & 3.2 lakh trade mark applications. Korea also is picking up by about 1 lakh patent & 1.2 lakh trade mark applications.
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INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES 5) Both Australia & Canada have large number of researcher (about 3500/ 1
million people), the large no. of scientific journals being about 20000, 1 lakh patent application & about 2000 trademark applications.
Summing up, U. S., Japan, Germany, France, U.K., Russia, China, Australia, Canada, Korea & India are among the leading nations in pharmaceutical business of the world. As per as high-tech export earnings p.a. care concerned. Following countries have their ranks in descending order viz.l) U.S. (216 bn) 2) China (161 bn), 3) Japan $ 64 bn. Compared to them, India Pakistan are on the lowest ranking order.
Pharma Education And Training :
The National Institute of Pharmaceutical Education and Research (NIPER) has been set up by the Government of India as an institute of "national importance" to achieve excellence in pharmaceutical sciences and technologies, education and training. Through this institute, Government’s endeavor will be to upgrade the standards of pharmacy education and R&D. Besides tackling problems of human resources development for academia and the indigenous pharmaceutical industry, the institute will make efforts to maximize collaborative research with the industry and other technical institutes in the area of drug discovery and pharma technology development. Intellectual Property Rights (IPR)
The Indian regulatory system is nowhere close to the sophisticated regulatory systems of developed nations, and because the legislation is much weaker than internationally accepted norms, the entry barrier for developed nations into the Indian market is practically non-existent.
By joining the WTO, India has committed itself to alter its existing Patent Act to offer wider and stronger protection to intellectual property rights of any member nation. The time frame for complete transition to the new law allowed by the WTO is ten years. So far, the new law, although drafted and placed before the Indian Parliament, had been mired in controversy and inaction because most of the legislators were opposed to it in its present form, regardless of their political affiliation.
As per the April 1998 agreement reached between the U.S. and India at Geneva, a patent amendment bill has finally been passed by India's lower house of3 parliament, enabling the country to meet the WTO’s April deadline for complying with TRIPs. The bill replaces the ordinance issued in February after the lower house failed to pass a patent amendment bill before the end of the parliamentary session. The bill gives companies exclusive marking rights in India for patented pharmaceutical products and provides a legal framework for the "mailbox" provisions for new product patent applications, as required under TRIPs.
The introduction of full product patent protection now looks likely to be deferred until 2005, the latest date allowed under the TRIPs provisional arrangements. Although India has now taken the first steps towards strengthening its intellectual property laws in line with WTO agreements, debates within the country show few signs of arrising at consensus. Opinion was sharply polarized between those who would like to see India adopt full product patent protection as soon as possible, with no strings attached, and those who argue that it should be delayed for as long as possible and that measures such as compulsory licensing should be retained to protect the domestic pharmaceutical industry. For the pharmaceutical industry, the new law, whatever be its final form, signifies a transition to product, rather than process patents. There is a
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INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES very strong demand from developed countries that the importation of a patented product be considered on par with working the patent in the importing country, and generally to restrict compulsory licensing of the patent on this ground.
This means that Indian companies would no longer be in a position to introduce new products if they are not the original innovators of those products. However, they would enjoy the same protection in all member countries for new products that they develop.
Although this regression seems to be totally unfair from the point of view of Indian industry, with its limited capabilities with respect to new product development4
The real impact of this provision for the pharmaceutical industry will, at best be marginal over the short to medium term.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provides for minimum norms and standards in respect of the following categories of intellectual property rights: -
1. Copyrights and related rights 2. Trademarks
3. Geographical Indications 4. Industrial Designs 5. Patents
6. Lay out designs of integrated circuits
7. Protection of undisclosed information (trade secrets)
The Agreement sets out minimum standards to be adopted by the parties, though they are free to provide higher standards of protection. A transition period of five years is available to all developing countries to give effect to the provisions of the TRIPS Agreement. This period ended on 1.1.2000. No transitional period is available, however, for grant of national treatment and most-favoured-nation treatment. Countries that did not provide product patents in certain areas of technology as on 1.1.1995, can delay the grant of product patents in those areas for another five years i.e. upto 1.1.2005.
Where a country does not make available patent protection for pharmaceutical and agricultural chemical products as on 1.1.1995, they have to provide a means for accepting applications for such inventions (mailbox), apply applicable priority rights and provide exclusive marketing rights (EMRs) for such products. The EMRs have to be provided in India only if a set of conditions have5 been met, i.e. where a patent application has been filed after 1.1.1995 by any WTO Member, patent and marketing approval granted in that Member country, an application has been filed in the mailbox in India and marketing approval obtained in India. The EMR is available for five years from grant or till the patent is granted or rejected, whichever is earlier. The Patent (Amendment) Act, 1999 was passed in March 1999 to provide for mailbox and EMR facility.
The Direct / Indirect Controls Of WTO, GATT & WHO On Pharma Business The information is given about formation of GATT, key elements of GATT Agreement, formation of WTO, key factors of WTO Agreement, standards and non-tariff barriers of trade, non-tariff reduction and bindings, market access, domestic support, SPS measures, TRIPS, agricultural subsidies, and agreement on antidumping measures etc. After study of these factors the main objective of WTO to flourish globalised trade comes into focus.
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Ibid
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INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES Formation Of GATT.
In 1944, the international community, which was coming out of the shadow of second world war, was emphasizing international co-operation for mutual prosperity and peace. In 1945, 23 members including India signed a protocol, which brought into existence GATT (General Agreement on Tariffs & Trade) on 1st January 1948, with the main objective of bringing order to international trade. By 1994, the GATT membership increased to 136 countries.
Key Elements Of GATT Agreement:
1. The Most Favoured Nations (MFN) Clause 2. Binding commitments
3. National treatment
4. Removal of quantitative restrictions. 5. Transparencies
The MFN Rule provides that the country, which is offered most favourable treatment (like reduction in customs duty), should immediately give the same treatment to other member countries of GATT. Thus there would be no discrimination among GATT members at the hands of one country.
The binding commitments stipulate that the members undertake commitments in which they state the maximum level of import duty or other charges or restrictions they will apply to import of specific goods.
As regards national treatment the member country cannot discriminate between the national product and imported product once the imported product enters the boundaries of the country. Thus the national treatment principle means that the protection of domestic product should be given only through action at the frontier like levying customs duty etc. Once this protection has been offered and once the foreign goods enter the member country these goods are at par with the domestic goods. WTO expects removal of quantitative restrictions (QR) if not immediately at least in a progressive manner as per the schedule. According to WTO the QRs function as Non-Tariff Barriers and hence protection to domestic products be given through customs Tariff.
As regards transparencies it has to be followed when the governmental agencies procure goods and services there should not be any discrimination between domestic goods/ services on the one hand and the foreign goods/ services on the other.
Formation Of WTO
After over 7 years of negotiations the Uruguay Round multilateral trade negotiations were concluded on December 15, 1993 and were formally ratified in April 1994 at Marrakesh, Morocco. The WTO Agreement on Agriculture (AOA) was one of the many agreements, which were negotiated during the Uruguay Round.
The implementation of the Agreement on Agriculture started with effect from 1.1.1995. As per the provisions of the Agreement, the developed countries would complete their commitments of reduction of tariffs within 6 years, i.e., by the year 2000, whereas the commitments of the developing countries would be completed within 10 years, i.e., by the year 2004. The least developed countries are not required to make any reductions.
The products which are included within the purview of this agreement are what are normally considered as part of agriculture except that it excludes fishery and forestry
INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES products as well as rubber, jute, sisal, abaca and coir. The exact product coverage can be accessed in the legal text of the agreement.
Key Factors Of The WTO Agreement
The WTO Agreement on Agriculture (AOA) contains provisions in 3 broad areas of agriculture and trade policy: market access, domestic support and export subsidies. Market Access
Market access refers to the ability of providers of foreign goods and services to sell in a given country. For the purposes of market access negotiations in the WTO context, tradeable items are subdivided into four groups agricultural goods, textiles and clothing, industrial goods, and services.
This includes tariffication, tariff reduction and access to opportunities. Tariffication means that all non-tariff barriers such as quotas, variable levies, minimum import prices, discretionary licensing, state trading measures, voluntary restraint agreements etc. need to be abolished and converted into an equivalent tariff. Ordinary tariffs including those resulting from their tariffication are to be reduced by developed countries an average of 36% with minimum rate of reduction of 15% for each tariff item over a 6 year period6. Developing countries are required to reduce tariffs by 24% in 10 years. Developing countries as were maintaining Quantitative Restrictions due to balance of payment problems, were allowed to offer ceiling bindings instead of tariffication.
Main Findings & conclusion
1) Compared to 1960s, quality of human life and improvement in health & physical fitness, have brought radical changes in longevity and the average life expectancy of the global humanity. In 1960, only 41 countries had life expectation of 65 to 75 years. By 1990s more than 80 countries of the world have average life expectancy increase to 65 to 75 years. Even in the poor & backward countries like Asian & Sub-Saharan African countries; the life expectancy has been improved to the range of 45 to 55 years.
2) This great revolution is the outcome of the progress of hygienic and sanitary conditions of living mass injections & medicines to treat epidemics & infectious diseases had very rapid improvement in the Research & Development of effective drugs & medicines supported by medical infrastructure, equipment and rise in the number of hospital beds, doctors & health workers per capita of country’s population.
3) Among essential wants o f hu man life, med icines have equal impo rtance like food , water & shelter. T he want for m ed icines is statutor y and permanent ther efore p har maceutical industr y never faces ser iou s r ecessio n. As the incomes of all co untr ies have been rising during 2 0t h Centur y ( Comp ared to income level of 19t h Centur y) the o ver all p urchasing po wer also has been rising and due to the spread o f edu catio n and health awar eness, the glo bal d emand fo r d rugs & med icines, has been ver y rapid ly incr easing.
4) Co mpared to 19t h Centur y, human life has beco me not vu lner able to diseases like cho ler a, M alaria, Influeriza, smallp o x, chickenpox, typ ho id, pluracy, T.B, Aneamia etc., but in 20t h Centur y, ther e is a rapid spread of new d iseases like Diabetes, cancer, blood pressure, hear t attack, p aralysis, arthr itis, HIV aid s etc., in both d eveloped & develop ing countries. Ho wever, modern pharmaceutical ind ustr y
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INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES has taken commend able effort in disco ver ing new life saving d ru gs, which can also effectively cure these ser ious & complicated diseases.
5) The Phar maceutical industr y has made tremendous progress b y its R & D in the major advanced eco nom ies of U.S., Germ any, Japan, France, U. K; Switzer land, T hailand, Nether land s and the Giant Multinatio nal Comp anies hare exp and ed their pro ductio n & marketing activities b y co llabo ratio ns Dir ect Foreign Investments Techno lo gy transfer, patent. Sale etc.; which has contrib uted to a gr eat d iffusio n o f med ical exper tise all o ver the wo rld . Like other develop ing countries su ch as China, Br azil etc., Ind ia has also made tremendous & ver y rap id progress in manu factu ring o f especially ‘ gener ic drugs’ and has been successfu l in obtaining market for its phr ma products even in ad vanced eco nomies o f the world .
6) The ‘ Value-added’ co ntr ibution of Ind ia’ s p harm aceutical ind ustr y in the total natio nal income has been o ne of the major facto rs o f Ind ia' s natio nal product. Ind ia p roduces almost all the modern medicine at lower comp arative costs b y retaining the ‘quality’. There is a vast do mestic market of 1 b illio n p lus popu latio n, availab le for Ind ia’ s p harma ind ustr y.
7) Especially dur ing the eco no mic- r efo rm er a of post- 1990 s; Ind ia’ exp ort ear nings per annu m are spo radically r ising b y average incr emental per centage of growth o f mor e than 25 o 40 percent, Pharm aceutical ind ustr y has em er ged as one of the b iggest foreign Exchange ear ners like Softwar e, au tomo biles, gems & jeweller y, marine pro ducts, Textiles, read ymade gar ments & basmati r ice ! With the r ise in b iotech; it is q uite likely that Ind ia will secure the status with in the world’s Top Ten pharmaceutical industr ies. Ind ia has relatively a lar ger manpo wer having access to Scientific & Technical tr aining. Ind igenou s Comp anies like Ranbaxy and Dr. Redd y’ s Lab. have acqu ired outstand ing and r espectable status in the Wo rld ’s p harmaceutical ind ustr y.
8) Cap ital investment in Ind ian Pharma Industr ies has increased b y near ly 18 times during the per iod fro m 1965 to1990 s. (At present it exceed Rs. 3 0, 000 crores.) In 19 65, Ind ia p roduced only 150 0 drug fo rmulatio ns; no w the numb er has gone above 1 ½ lakh. After imp lementing eco nomic r eform s and jo ining WTO; Ind ia’ s pharm aceu tical bu siness has m iracu lously prospered. In 60s, Ind ia produced only 188 bulk drugs but b y the en d of 90s, Ind ia produces abo ut 40 blo ck bu ster s and bu lk drugs. T he cost of b ulk drugs per unit in Ind ia is far less than that of advanced econo mies. Due to the Co mpetitive price / qualit y ad vantage, Ind ia has captured ver y lar ge m ar kets ab ro ad du ring the last 1 and 1/2 d ecades. In 1960s Ind ia u sed to ear n a fair ly sum o f Rs.3 cores b y exp orts; b y the end of 90 s, the amo unt increased b y abou t 2000 times being Rs.6631 cores and in the recent year i.e.,20 04 -5; Ind ia earned U.S. $ 3 billio n ( 30 0 cores dollar s) which is equ ivalent of Rs.150 00 cores. 9) The Ind ian subsidiaries of Giant Phar ma MNCs like Bayer, Par
INTERNATIONAL RESEARCH JOURNAL OF MULTIDISCIPLINARY STUDIES Phillips, Aventis, No var itis, Jo hnso n & Johnson, Lu pin, M erck, Solva y farm, Cipla, Torrent phar m, Wockhart etc. have b rought world class research, patents, techniq ues which have r ad icall y improved the statu s o f Ind ian p harmaceutical industr y within the entir e global mar ket o f p harmaceu ticals.
10) Along with these foreign giants, purely Ind ian enterprise Co mpanies like Ranb ax y, Dr. Redd y’ s Lab , Alembic, Dab ur, Zand u, J B Chem., J k pharma. Ambala l Surabhai, N. Piramal, Aurobindo pharm, Ker ala Aayu rved ic, Amu rtanjan, Him alaya, M cure etc. Co mpanies have also mad e tremendour and equ itab le progress during last 20 years.
10) The imp act of WTO on trad ing in p harma produ cts ther efore has been ver y ver y favorab le r ather than a thr eatening o ne! T he ‘ n’ number of o ppo rtu nities of extend ing p harma produ cts mar ket all over the wo rld; opened u p to boost up India’s export earnings. On the other hand , the process co st of med icines in do mestic mar ket did no t rise b y 15 to 30 times; as was pred icted b y experts, o pinio n makers, political cr itics of WTO & U.S. Lo bb y. The prices of Ind ian M edicines have remained reaso nable & affordab le to the commo n man; b ecause near ly 90% o f Ind ian p harma p ro ducts are gener ic; and remain u naffected b y ‘Global p atent r ight’.
11) There is a remarkable cost-d ifference o f produ ctio n of standard Medicines between U.S. & Ind ia. Ther e is again a vast d iffer ence between pr ices of Glo bal Brand med icines and Ind ian generic sub stitu tes. E. g. Pr iso lec Brand in U. S. cost $3.7 per tablet; wher eas its Ind ian gener ic substitute viz o meprazole hard ly costs abo ut $ 0.0 9 ( or Rs. 4 .50 as against Rs.180 ) Pro zac Br and in U.S. costs $ 2 .2 wher eas its Ind ian generic ‘Flu oxetine’ co sts o nly 0.6 dollar in Ind ia i. e. about Rs.3 0 as against Rs.10 0 ru pees in U.S. Ranitid ine antacid tab let manu factured b y glaxo in Ind ia cost onl y one rupee whereas its co unterpart in U. S. ‘Zantac’ costs abou t Rs.80 in terms of Ind ian rupees. Simvastatine ( Rnbax y’ s gener ic ) in Ind ia costs only abou t Rs.10per tab . Which in U.S. costs abou t US 20.7 do llar s. ( Rs.1 00) The statistical evidence clear ly pro ves that Ind ian drug pr ices r emained comp aratively cheaper in spite o f the acceptance o f the WTO regime. In fact, Ind ian p harmaceutica l industr y; due to globalizatio n, liberalization & WTO regime has improved tremendou sly so much so , that it has gained a ‘real take -off p ositio n’ in the galaxy o f wor ld class pharm aceu tical industr ies of the wor ld. The estimated projectio ns reveal that Ind ia has brigh t prospects to ear n the prestigio us r ank amo ng Word’s To p Fifteen cou ntr ies, as far as, p harmaceutical b usinesses co ncerned .
These find ing cu lminate to form a p rincip al co nclu sio n that ‘The imp act of WTO brought strength, p ro gress and opportunitie s of p ro sp er it y to Ind ian p har maceutical trade rather than creating prob lems and threats.’ The impact, no doub t created challenges of up grad ing the Techno lo gy and competitio n of up hold ing essential qualit y and the wo rd class acceptance; but these challenge s to o worked as disgu ised boons!
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