Saturday, September 17, 2011

Killer Acquisitions

Over the last few weeks, a major topic of discussion has been the spate of acquisition of Indian pharmaceutical companies by foreign giants. The news has generated so much interest that the Government is now considering regulating acquisition of pharmaceutical companies in India.

The main cause of concern is the cost structure of Western companies who deal in life-saving medicines. Most corporations from the West sell their products at steep prices - prices that can prove far too daunting for the poorest people of the world. In comparison, Indian pharmaceutical companies sell generic drugs that have lost their IPR protection at much lower costs - 90% lower, in some cases.

In effect, Indian companies are the developing world's suppliers of drugs. In vast swathes of the world, including Africa and South America apart from Asia itself, Indian generic drugs have made a lasting contribution to saving lives of the poorest people on earth. Indian drugs are seen as safe and affordable, which is why many developing countries are rolling out the red carpet for Indian firms dealing in just IT but also pharmaceuticals.

But with the recent spate of acquisitions by foreign companies, all this could change. Foreign companies have no incentive in keeping the same cost structure as the erstwhile Indian company - in fact, in many cases, the first thing they would do is change that structure. Consequently, for every company acquired, millions are denied access to cheap and life-saving drugs.

Regulation
Should the ability of foreign companies to undertake such acquisitions be curtailed or regulated by the Government? This is a hotly contested topic, with the typical responses being denouncement of Government control on one side and calls for socialism on the other. However, it is important here to look at the issue from a strictly humane point of view.

To make money from a sick man's illness is debasing to humanity. I do not mean that doctors charging fees is immoral - but in that case, it is simply money due for a service, that of saving a life, in this case. But when the a doctor asks his patient to undergo a myriad of unnecessary tests so that he can pocket a commission, it is not acceptable. Similarly, forcing people to buy drugs which are available at much lower prices is immoral and wrong. It is nothing more than exploiting a sick man's illness for profit.

Government across the world, not just India, have a duty to ensure that quality drugs are available to the needy at affordable prices. A system of crony capitalism which perpetuates inequality is simply not acceptable to a large majority of people in this world. Competition and regulation can co-exists and they must.

No comments: