Pharmaceuticals & Healthcare

World - Outsourcing trend in pharmaceutical industry

Source: Financial Times, 22 February 2010

While outsourcing usually provides a better service at a lower cost, farming out their research function is a risky move for pharmaceuticals companies. Early February, AstraZeneca agreed to pay up to US$1.25 billion to Rigel Pharmaceuticals to license its new rheumatoid arthritis drug. Last July, Sanofi-Aventis bought its way into emerging market vaccines when it spent EUR429 million (US$580.9 million) on a majority stake in Shantha Biotechnics of India.

Morgan Stanley may reckon that an investment in purchased compounds could yield three times the return of that same investment in in-house research. But leading players such as Pfizer and AstraZeneca have maintained a research budget of about 16% of revenue over the past decade. That is because while early-stage research has a low chance of profitability, it is relatively cheap. Buying developed research, with its higher expected return, is far more expensive.

India - Anti-dumping duty on Chinese penicillin

Source: Religare Technova News Service, 23 February 2010

In order to protect the domestic industry from cheap Chinese and Mexican shipments, the Government of India is planning to impose an anti-dumping duty on the import of 2 variants of anti-bacterial drug penicillin. A commerce ministry official said that the provisional anti-dumping duty to be imposed on Penicillin-G Potassium and 6-Amino Penicillanic Acid would range between US$18.54 per billion oxford units (BOU) and US$2.10 per BOU.

In its recommendations, Directorate General of Anti-dumping and Allied Duties (DGAD) has stated that the products have been exported to India below its normal value. In the last few years, some Indian companies which were producing the two products had shut their units, as they could not compete against the Chinese imports. DGAD said the domestic industry has suffered material injury and the damage has been caused by these imports from China.

Australia - Doctors to have own pharmacies

Source: Herald-Sun, 23 February 2010

The Australian Medical Association said that allowing doctors to have chemists in their surgeries would drive down generic medicine prices by A$15 (US$13.3) a script. It would make getting a script filled more convenient for patients and also allow doctors to refer patients with adverse reactions to medicines or drug interactions for a consultation with the pharmacist to sort out the problem, the AMA says.

Only pharmacists can own a pharmacy under existing restrictions and new pharmacies cannot open up within 1.5km of an existing chemist shop. This lack of competition in the industry means consumers are paying too much for generic prescription medicines. The rules have also pushed up the price of a pharmacy licence to more than A$580,000 (US$515,391), made the nation's existing 3000 pharmacy owners millionaires and made it difficult for 18,000 pharmacy employees to set up their own shops.

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