Thesis 1 The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy

The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy Chapter 1 – Problem And Its Background

PROBLEM AND ITS BACK GROUND INTRODUCTION Research and discovery are the essence of the pharmaceutical industry, and its successes have, over the past forty years, played a crucial role in maintaining the pre-eminent position of the pharmaceutical industry in the world today. But such activities demand a sustained rate of huge investment over a long period. No other manufacturing industry devotes more resources to R&D annually than the pharmaceutical industry. This rise reflects not only the long-term commitment of the industry in maintaining a strong and competitive research base world-wide, but also the growing intensity of R&D in the human pharmaceutical sector. Recent figures show that while R&D intensity in every major manufacturing industry has shrunk, those reported in the pharmaceutical and the chemical sectors have risen notably. Pharmaceutical research is essentially a highly risky business. Out of 5,000 or so compounds discovered and investigated, on average only one reaches the prescription market. In many instances very large sums have been spent only to have the research project abandoned subsequently. The increasing sophistication of medical and research instruments and of computers for molecular modeling has opened up important new medicine developed opportunities. But they are expensive and have added to the

Newport University (USA) ISMS Karachi Campus

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The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy Chapter 1 – Problem And Its Background

overall research costs as well as volume of investigation being undertaken by the pharmaceutical industry. It is estimated that it takes on average 12 years from parent filing to the launch of a major innovative medicine at a total cost of around US $400 million, as compared with US $100 million reported in 1985. Even so there is no guarantee of success in a highly competitive market where novel products are constantly and rapidly made obsolete or entirely replaced by new innovations - New Chemical Entities (NCEs). Competition in the pharmaceutical industry is fierce, perhaps more so than in any other high technology industry. For example, in the United Kingdom, of the leading ten products in 1982, only one was placed in the top ten of 1992; five in the top 50 were out of the top 80 positions. By comparison, there were eight products remaining in the top 50 at the beginning. Within major therapeutics group’s product competition has also intensified during the past decade, with the great majority losing at least seven products out of the top ten. As a result, only five of the top ten companies in 1982 remained in that group by the end of 1992. Modern antibiotics, anesthetics, muscle relaxants and immunosuppressent compounds have all made new surgery possible today, while successes in pharmaceutical research have brought about effective treatment for such diseases as diabetes, hypertension, bronchitis, asthma, mental illness and arthritis. More significantly, the advent of novel medicines means that more patients can now be treated effectively in the community without the need for costly hospital treatment. Although such medicines are generally more expensive than those they replace; they generate real savings that more than pay for themselves by reducing other health care costs. Newport University (USA) ISMS Karachi Campus

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The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy Chapter 1 – Problem And Its Background

Although pharmaceutical innovation has generated enormous economic benefits, the real savings do not show up as a reduction in total health spending. Rather, they released resources to increase the total amount of treatment to be used elsewhere in the health services. But the long term benefits of medicines to the national economy as a whole, in terms of reduced premature deaths, sickness, absence and hospital admissions, are generally ignored by those concerned only to limit overall pharmaceutical spending. Health managers under pressure on costs often overlook the impact of the shift away from improved health and avoidable medical conditions that can be obtained by investing in an optimum level of pharmaceutical expenditure today. There can be no doubt that the continuing pharmaceutical revolution will, in time, generate a wide range of eve more effective therapies for many conditions which today are incurable or only partially treatable. Most of these new medicines will probably be made available at the primary care level. But the effective use of any new treatment is dependent on the availability of comprehensive and cost-effective health care services to all those in need. There is little purpose in achieving therapeutic innovations if those who stand to gain most from new treatment (many of whom are older, poorer, physically and mentally less able than the average person) cannot gain access to them. By limiting the choice or even prohibiting the use of modern medicines simply on grounds cost may not necessarily be in the best interest of the taxpayer either, particularly if the short-term savings results in a long-term cost burden to the average consumer.

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The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy Chapter 1 – Problem And Its Background

THEORETICAL FRAME WORK The researcher has primarily targeted the concern towards the following bifurcated points to evaluate and analyze the multinational pharmaceutical companies their standings, comparison, problems, advantages and influence towards customers. This study is targeted on the working, production and serving rendered to the customers based on the above mentioned points. For that we must keep in mind a critical point that the role of multinational pharmaceuticals towards the Pakistan’s market and economic. The pharmaceutical industry in Pakistan includes both multinational and domestic companies. Multinationals have an upper hand in a way that they possess worldwide advertising facility and can spend allot of money on their research programs. On the other hand local pharmaceuticals basically rely on licensing for their core business, as they are unable to match the advertising budget and expertise of their multinational competitors. Competition in pharmaceuticals industry is fierce, perhaps more so than in any other technology industry. No other manufacturing industry devotes more resources to R & D than the pharmaceuticals industry. Pharmaceutical research is essentially highly risky business. Out of 5000, or so compounds discovered and investigated, on average only one reaches the prescription market.

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The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy Chapter 1 – Problem And Its Background

STATEMENT OF THE PROBLEM The study is focused to discover the “ The contribution of Multinational Pharmaceutical companies in the development of Pakistan economy” (A Feasibility Study) The researcher attempt to answer the following questions: • What is the scopic value of pharma industry in terms? Sales value Market demand (Current & future) Expenditure on health Per capita consumption of drugs and medicines • What are the exports and imports values of pharma products? • What are the government incentives for pharma industry? • What is the competitive structure?

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The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy Chapter 1 – Problem And Its Background

SIGNIFICANCE OF THE STUDTY The research study is catered to provide acumen to those who are directly and indirectly related to pharmaceutical industry. Therefore, researcher had to work hard so as to gets different opinions from directors and executives of major pharmaceutical companies. Furthermore, different written materials pertaining to the study also extends a great help for not only understanding the problems faced by the industry but also coming up with different valuable suggestions to solve them. Hence, after studying this thesis the reader would easily be able to understand the following points: 1. To

make

the

confirmation

for

the

growth

of

multinational

well-known

multinational

pharmaceuticals. 2. To evaluate

the

comparison

of the

pharmaceuticals. 3. To find out the problems faced by the multinational pharmaceuticals. 4. To find out the future for the multinational pharmaceuticals.

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The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy Chapter 1 – Problem And Its Background

LIMITATIONS OF THE STUDY Researcher has faced very serious constraint in gathering of published material regarding Multinational pharmaceutical companies. Since much research work has not been done on this particular field. Therefore, author relied and considered the only published material of multinational pharmaceutical companies as a reference, although almost all companies didn’t cooperate in disclosing the required information for this research study because of their policy matters. .

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The Contribution of Multinational Pharmaceutical Companies In the Development of Pakistan Economy Chapter 1 – Problem And Its Background

DEFINATION OF TERMONOLOGY NCEs

New chemical entities

Immunosuppressent

A type of drug

MNCs

Multinational companies

BMR

Balancing, modernization and replacement

ECC

Economic coordination council

Essential Drugs

Life saving drugs

BHUs

Basic health units

RHCs

Rural health centers

MCHCs

Maternity and child health centers

TB

Tuberculosis

Trimethoprim

A drug used to treat infections

O.I.C.C. & I

Overseas investors chamber of commerce & industry

Semi-essential Drugs

Antibiotics

Non-essential Drugs

Vitamins and food supplements

Vial

Injection (liquid drug)

Agri-business

Agriculture business

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