Pharmaceutical TNCs
GlaxoSmithKline
Health matters in a globalising world
• TNCs – Transnational Corporations are companies that operate in at least
two countries (and often many more).
• Headquarters and research facilities tend to be located in MEDCs whilst
manufacturing plants have increasingly been located in LEDCs to take
advantage of cheaper labour costs.
Pharmaceutical TNCs
GlaxoSmithKline is the UK’s largest
pharmaceutical company and one of the
biggest in the world.
It had sales in excess of $37 million in
2006.
Where might you see GlaxoSmithKlein products
on the High Street?
Apart from drugs, GlaxoSmithKline owns
products such as Aquafresh toothpaste,
Beechams Cold & Flu and Lucozade.
GlaxoSmithKline
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Mission: to improve the quality of human
life by enabling people to do more, feel
better and live longer.
Research based pharmaceutical company.
Employs over 100,000 people in 117
countries
Every hour Glaxo spends more than
£300,000 to find new medicines.
Only pharmaceutical to tackle the three
‘priority’ diseases identified by the WHO:
HIV/AIDS, tuberculosis, malaria.
In 2006 Glaxo shipped 206 million tablets
of their HIV treatments (Combivir and
Epivir) to developing countries
Many consumer brands are household
names: Ribena, Horlicks, Lucozade,
Aquafresh, Sensodyne, Panadol.
• GSK was 1 of the 39 pharmaceutical
companies involved in the South Africa legal
case.
• GlaxoSmithKline, has now changed its tactics
completely and has granted permission (called
a voluntary licence) to major South African
generics producer Aspen, to share the rights
to their drugs without charge.
• http://www.gsk.com/infocus/world-aidsday.htm video clip/propaganda?!/good PR
Branded and generic drugs
• The generic name of a drug is its
chemical description.
• Brand names of drugs are the ones
people recognise due to marketing
and they are often shorter and
catchier than the generic names.
• Branded drugs are 3 to 30 times
more expensive than generic drugs.
Have you heard of Fluoxetine
hydrochloride?
How about Prozac?
Prozac is the branded drug. Fluoxetine
hydrochloride is the generic name.
The Name Game
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A pharmaceutical company discovers a new generic drug to treat or prevent a
condition,
They put it through a series of clinical trials in order to gain approval for marketing
from the Medicines and Healthcare products Regulatory Agency (MHRA).
the MHRA approves the drug and gives it a licence.
the pharmaceutical company can then market the generic medicine under a brand
name.
The company then has exclusive rights to market the medicine for the licensed
uses for a certain period of time, usually about 10 to 12 years.
This is known as a patent, and allows the drug company to recoup the costs of
research and development of the new medicine, before other drug companies are
allowed to produce it as well.
Other drug companies are likely to be able to produce and sell the medicine at a
cheaper rate, because the research and development has already been done.
Once a patent expires, other drug companies then have the right to manufacture
and market the generic drug. However, they must market it under a different
brand name, or under its generic name.
• For example, sildenafil (Viagra) is still under patent and so can currently
only be marketed by Pfizer to treat impotence. Once the patent expires,
we can expect to see other pharmaceutical companies marketing
potentially cheaper versions of the generic medicine sildenafil, either
under different brand names, or simply as the generic sildenafil.
• Ibuprofen on the other hand is a much older medicine and can already be
bought under various different brand names, eg Nurofen (made by Reckitt
Benckiser), and Anadin ultra (made by Wyeth Consumer Healthcare), to
name but a few. All of these contain ibuprofen as the generic medicine.
Ibuprofen can also be bought simply as ibuprofen tablets, made by various
different manufacturers who market it without a brand name.
Branded vs. generic
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Generic drugs are cheaper. The NHS could
save up to £85 million by prescribing
generic statin drugs to patients with high
cholesterol.
A which report sites medicines such as
paracetamol and ibuprofen can be bought
for a fraction of the price of branded
medicines if shoppers seek out less
prominent labels.
It cites Panadol, which costs £1.85 for 16
tablets but contains the same amount of
the active ingredient as Sainsbury's ownbrand paracetamol, which costs 26p for
the same size pack.
Drug manufactures put large amounts of
money into research and development of
new and existing drugs and need to
recuperate this through sales.
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Epilepsy medication: Anecdotal studies
and small scale research report that
switching epilepsy suffers from branded
medicine to generic medicine can mean
seizures return.
The placebo effect. Marketing makes
people think branded drugs work better,
so they believe they do.
How do Pharmaceutical TNCs develop
new drugs?
• It is estimated that new drug costs $500 million to bring to market.
• Most money is spent targeting diseases of affluence as MEDCs can pay
high sums for treatments.
• Much less money is spent on those diseases like HIV / AIDS and malaria
that affect millions in LEDCs.
• This figure includes the R&D in labs, clinical trials, marketing (especially to
doctors) etc.
• Patents make it illegal to copy the drug and for rival companies to make a
generic version for 20years.
Brief History of AIDS drugs in Africa
• In 1996, HAART - an effective combination therapy that
delays the onset of AIDS - became available in MEDC’s.
Within four years, death rates for people with HIV/AIDS in
developed countries had dropped by 84%.
• At a cost of US$10,000-15,000 per person per year, these
antiretroviral drugs (ARVs) were far too expensive for the
majority of HIV infected people in resource poor countries.
• Five years after HAART therapy was introduced in the
West, fewer than 8,000 people in sub-Saharan Africa were
receiving the life-saving drugs.
• Big Pharma companies refused to lower prices saying there
would be no money for research and development (R&D),
no innovation, and thus more and more people would die
from AIDS and other deadly diseases.
In 2001 an attempt was made by thirty-nine major pharmaceutical
companies to prosecute the South African government for passing a law that
allowed easy production and importation of generics.
Brief History of AIDS drugs in Africa
• In the Year 2000 an Indian pharmaceutical company called Cipla
started to produce generic antiretrovirals that were exactly the same
as brand versions made by large pharmaceutical companies, but
significantly cheaper.
• This sparked a price war between branded and generic drug makers,
which forced the large pharmaceutical companies to lower the price
of their AIDS drugs.
• This competition, coupled with pressure from activists, organizations
- such as the Clinton Foundation - and governments of poor countries
with severe AIDS epidemics, dramatically reduced the price of ARVs
for developing countries.
• By the middle of 2001, triple combination therapy was available from
Indian generic manufacturers for as little as $295. By 2007 the most
common antiretroviral combination (3TC/d4T/NVP) available for only
US$87 per patient per year
GSK and AIDS
• The global community is aware of the scale of the problem. For its part,
the pharmaceutical industry is working hard to find new and more
effective treatments for HIV, which can lead to AIDS.
• A lot of emphasis is placed on anti-retroviral treatments.
• GlaxoSmithKline is helping with an array of initiatives including improving
the convenience of delivering anti-retroviral therapy, developing
molecules that address drug-resistant HIV.
• In addition, the company is carrying out research into a vaccine against
HIV infection.
• The search is one for a cure, although there is a huge local demand as well
as an international demand to help reduce the spread and impact of HIV
and AIDS.
• Various community-based groups provide a wide range of information,
counselling, care and other support services. These groups form the
backbone of the fight against HIV/AIDS in many countries where
governments are unable or unwilling to combat the effects of the
epidemic.
• GSK works with these groups through its Positive Action programme.
Pharmaceutical companies: heroes or
villains?
GSK is directly responsible for numerous deaths due to its patents held, and
drug pricing strategies
GSK is at the forefront of developing immunisations and treatments for
diseases in developing countries. Profits are ploughed back in to research.
HIV AIDS treatments are sold at cost in many countries
GSK share price is declining, they are not reaching the expected 55p and
profits are slightly down from the £22.7 billion made last year.
• Who might have said the statement, does it make GSK a hero or a villain?
Globalisation:
Medical Imports and
Medical Exports
Worldmapper.org
Medical exports
Earning from exports of Medicines and medical equipment. Territories in
Western Europe receive 74% of all earnings from exports of medicines. These
territories account for 91% of net medicine exports (US$).
Non-European net exporters include China, India, Mexico and Singapore.
India is a major source of medicines. Indian medicines are sold more cheaply
than European medicines, therefore India’s export earnings are lower, so
India appears smaller on this map.
Medical imports
Nearly 90% of the territories mapped are net medicine importers. There is huge variation
in the spending per person on imported medicines. The highest spending per person is in
Luxembourg, where US$ 406 is spent on net imports of medicines per person, per year.
At the other extreme, in Tajikistan, only 9 US cents are spent per person on net imports of
medicines. This does not necessarily mean that there is very little medicine in Tajikistan,
because there might also be domestic production of medicines and even exports of these.
But for this territory that is not significant.
What might this map show?
Research and development
1. Describe the distribution of research and development.
2. Explain how some countries will benefit and others will
suffer. Use the words Patent, generic and Transnational in
your answer.
Research and development
• In 2002, US$289 billion was spent on research and
development in the United States; in the same year
there was practically no research and development
spending in Angola. It is thus unsurprising that the
number of patents granted and the value of royalty
and license fees received are also vastly different
between these places.
• Many people, most of them in tropical countries of
the Third World, die of preventable, curable
diseases.… Malaria, tuberculosis, acute lowerrespiratory infections—in 1998, these claimed 6.1
million lives. People died because the drugs to treat
those illnesses are nonexistent or are no longer
effective. They died because it doesn’t pay to keep
them alive.
• — Ken Silverstein, Millions for Viagra, Pennies for
Diseases of the Poor, The Nation, July 19, 1999
Definitions
• Generics: The generic name of a drug is its chemical description.
• Off patent medicine: medicines where the patent no longer applies. Other
companies are allowed to produce copies of that drug and can charge
lower prices. Drugs produced by a variety of different companies are
called generic drugs.
• Transnational Companies: A company that operates in at least 2
countries. Usually with its HQ and R&D department in the country of
origin and manufacturing plants overseas.
• Globalisation : the integration of economic social cultural and political
systems across geographical boundaries.
• Lobbying: presenting a case to the government and legislators on behalf
of a client. Legislators in the UK are MPs; legislators in the USA are
representative and senators.