Don't see ghosts where there aren't any, seems to be GlaxoSmithKline Plc Chief Executive, Mr Andrew Witty's response to concerns on whether foreign ownership of Indian drug-makers would impact medicine prices.
There is no good case made between foreign ownership and medicine pricing, he told representatives at an industry function in Mumbai, on a day when a Government committee debated that very issue in the Capital.
“I don't buy the hypothesis that foreign ownership would change pricing,” Mr Witty said, adding that India was one of the most competitive marketplaces. In reality, a vast majority of the Indian system remains unchanged, he said, at the annual OPPI (Organisation of Pharmaceutical Producers of India) event.
Domestic pharma acquisitions by foreign companies are “pin-pricks”, he said, adding that it would be an “over-reaction” to change legislation as a result.
“People see ghosts where there are no ghosts,” he said, adding that if Indian drug-makers want to go up the value chain, they need to compete and be challenged in the local market by multinationals.
Mr Witty's observations assume significance against the backdrop of the Planning Commission's Arun Maira committee meeting, on Tuesday. The Committee discussed its draft report on domestic pharma acquisitions by overseas companies and whether laws needed to be changed to control such buy-outs.
Innovative research
The pharma industry, too, on its part, needs to “metamorphose” to strike a “balance” in delivering affordable and innovative medicine, Mr Witty said. It is “unacceptable” to hear of the $1-billion cost to develop a drug, he said, adding that it included the cost of failure. “We need to fail less often and succeed more often,” he said, urging the industry to be focussed on developing medicines relevant to patients.
The OPPI President, Mr Ranjit Shahani, too said that research needs a fresh look to reduce cost of innovation without compromising patient safety.
On the other side of the “bargain”, companies need “certainty” in their environment, Mr Witty said, making a strong case for protecting intellectual property (IP). “It does not matter whether it is patents, data exclusivity or any other mechanism – but there needs to be a certainty,” he said. But that does not allow one to have a high price, he said, adding that price and IP protection were different issues.
Scouting for buys
GlaxoSmithKline's appetite for acquisitions has not abated in the emerging markets, Mr Witty said.
The objective was to gain market access or products that GSK does not have, he said, indicating that they would be in the range of $1- 2 billion. However, given the sky-high valuations in India, he said, GSK was under no pressure to go in for an acquisition, as it already had two establishments in the country.