Leveraging the Private Sector for Public Health Objectives · 2016. 8. 2. · PPP Public-private...

Issues paper - Access to medicines

Leveraging the PrivateSector for Public HealthObjectivesA Briefing Paper for DFID on Technology

Transfer in the Pharmaceuticals SectorRobert Lewis-Lettington

Cheri Grace

September 2004

Leveraging the Private

Sector for Public

Health Objectives

A Briefing Paper for DFID on

Technology Transfer in the

Pharmaceuticals Sector

Cheri Grace

September 2004

Title: Leveraging the Private Sector for Public Health Objectives: A BriefingPaper for DFID on Technology Transfer in the Pharmaceuticals Sector

Author: Cheri Grace

DFID Health Systems Resource Centre27 Old StreetLondon EC1V 9HLTel: +44 (0) 20 7251 9555Fax: +44 (0) 20 7251 9552E-mail: [email protected]

Copyright: © 2004 by HSRC Designed by: Adkins Design Printed by: Fretwells Ltd

DFID Heal th Systems Resource Centre 2004 3

1 Abbreviations and Acronyms 4

2 Executive Summary 5

3 Background 7

4 Purpose and Scope of the Briefing Paper 94.1 Methods 104.2 Format of the paper 10

5 International Obligations and Programmes to Encourage Technology Transfer 115.1 Technology transfer obligations in TRIPS 115.2 Initiatives to foster TT 11

5.2.1 Working Group on Trade and Transfer of Technology 125.2.2 Incentives offered by WTO member governments 125.2.3 Initiatives involving multi-laterals and non-profits 13

6 Technology Transfer Experiences 156.1 Goals of TT 156.2 Basic conditions conducive to TT 156.3 Scope of TT experiences investigated 166.4 Private sector incentives to engage in technology transfer 166.5 The impact of changing IP on technology transfer: theory and practice 216.6 Scope for further work 23

Annex A: Summary of Technology Transfer Experiences 24

References 37

Contents

API Active pharmaceutical ingredientARV AntiretroviralDFID Department for International DevelopmentDNDi Drugs for Neglected Diseases InitiativeEU European UnionFDI Foreign direct investmentGMP Good manufacturing practiceGSK GlaxoSmithKlineHIV/AIDS Human immunodeficiency virus/acquired immunodeficiency syndromeICH International Conference on Harmonisation of Technical

Requirements for Registration of Pharmaceuticals for Human UseINTECH Institute for New Technologies of the United Nations UniversityIP Intellectual propertyIPR Intellectual property rightsIPTT Initiative on Pharmaceutical Technology TransferJPMA Japanese Pharmaceutical Manufacturers AssociationLDCs Least-developed countriesMDR TB Multidrug-resistant tuberculosisMMV Medicines for Malaria VentureMNC Multinational corporation NIH National Institutes of HealthOECD Organisation for Economic Co-operation and DevelopmentPPP Public-private partnershipR&D Research and developmentTB TuberculosisTDR Tropical Diseases Research Department, World Trade OrganizationTRIPS Trade-related aspects of intellectual property rightsTT Technology transferUNCTAD United Nations Conference on Trade and DevelopmentUS United StatesVL Voluntary licensingWHO World Health OrganizationWTO World Trade Organization

4 DFID Heal th Systems Resource Centre 2004

1 Abbreviations andAcronyms

DFID Heal th Systems Resource Centre 2004

Technology transfer (TT) is defined here as the dissemination of knowledge andexpertise in the pharmaceutical sector from developed country organisations toorganisations in developing countries. Recognising that technology transfer ispotentially a very important activity for the international community to encourage,particularly when such transfers further public health objectives, this briefing paperdocuments a variety of TT experiences and analyses the motivations behind theenabling agreements. These experiences range from those that occur spontaneously,sometimes between relatively equal partners engaging in more of a technologyexchange, to those taking place in countries with industries in more nascent stages ofdevelopment, as well as those where public bodies sometimes impose obligations oroffer incentives, including through public-private partnerships (PPPs), to bring partiestogether.

On the obligation side, the TRIPS agreement is weak on imposing technology transferobligations in developed countries as a legal requirement, although the statementsreferring to TT as an objective may be used as an interpretative device, either to informthe application of other parts of the TRIPS Agreement, or as the basis for politicalobjection to the manner in which the Agreement is being interpreted and applied bydeveloped members. On the incentive side, developed country examples wheregovernments have offered incentives to industry to engage in TT are limited. However,non-governmental and international organisations have been active in this field, andtheir engagement well noted in the examples.

Regardless of where the TT experience fits within the ‘spontaneous/purely commercial’versus PPP continuum, sustainable arrangements have required a solid businessrationale for engaging in any such technology transfers. Many of the technology transferexperiences have involved an element of public funding or technical support that serveto ‘sweeten’ the deal, making it a sound business investment for the technology donorand/or recipient.

It is difficult to generalise about the kind of incentives that can be offered to bringtogether such TT deals, since the appropriate incentive and the business case itsupports, will differ according to such (usually difficult to uncover) factors as theparticular company’s history and past investments, perceived competitive advantagesand future strategic goals. In some instances, the business case for the participatingfirms may be immediately obvious, short-term, and easily attributable to the TTexperience. Alternatively, the business case may be more subtle and long term – forexample, a response to public pressure or a desire to fulfil overall company strategicobjectives.

5

2 Executive Summary

As for how changing intellectual property (IP) can be expected to impact TT, as long asthe institutional and governance structures are aligned with increasing protection of IP,then we might expect to see more willingness of firms to license and contract outincreasingly important/proprietary technologies to developing country firms.1 However,the opposite argument has also been made – that strong intellectual property protectionis liable to stifle technology transfer as technology owners exploit their market power.The technology/patent-holder will no doubt need to consider all types of costs andbenefits when choosing the most appropriate contractual/ownership mode and thedegree of technology that can be successfully transferred.


Leveraging the Pr ivate Sector for Publ ic Health Object ives

This briefing paper is part of a series of studies commissioned by the UK Departmentfor International Development. It focuses on answering emerging policy questionsrelated to access to medicines and is aimed at documenting technology transferexperiences between developed and developing country firms in the pharmaceuticalsector, and unpacking the motivations behind such agreements.

Definition of TT

The NIH defines TT as ‘the exchange of information, materials or intellectual propertyrights between (and among) government, academic, or industry laboratories, to facilitatefurther research and commercialisation’. The United Nations definition is more processorientated, and talks of a ‘process of sharing knowledge, skills, expertise and know-how’, divided into four categories: Technoware, including physical objects andequipment; Humanware, including skills and human aspects of technology managementand learning; Infoware, including designs, blueprints, and document-embodiedknowledge on information and technology; and Orgaware, including organisationalknowledge needed to operate a given technology. The TT experiences covered in thisreview are primarily limited to firm-to-firm transfers, but often involving a non-profit orinternational organisation as a third party.

Technology transfer and access to medicines

Why the focus on technology transfer? Proponents of TRIPS argue that, by aligning withthe prevailing IP protection standards in the world’s developed countries, developingcountries stand to gain through increased trade and investment with the multinationals(and presumably, technology transfer and technological development that comes withthis). Opponents of TRIPS argue that technology transfer is not automatic withincreased multinational corporation (MNC) interaction, and anyway, multinationals haveneither by incentive nor obligation been compelled to delocalise their activities to thesouth.2

Yet, technology transfer is potentially a very important activity for the internationalcommunity to encourage. As a potential source of technological catch-up and growth indeveloping countries, such transfers can encourage economic development. Whenthey occur in the pharmaceutical sector, and particularly for drugs for diseases of thepoor, they can also contribute towards public health objectives. This briefing paperfocuses on TT experiences that have the potential to encourage capacity developmentin the pharmaceutical sector of developing countries and/or the potential to deliverproducts that meet public health objectives. The goal is to help understand how to


3 Background

create an environment where such transfers can occur spontaneously, and in thosecases where they do not occur spontaneously, how to develop obligations and/orincentives for technology suppliers and recipients to engage with one another.



The purpose of this briefing paper is to begin a process whereby technology transferexperiences that either benefit public health or have the potential to encourage industrialcapacity development can be documented and better understood. Specifically, itaddresses the questions: What types of obligations or incentives have caused MNCsand firms in less developed countries to engage with one another? How can donorscapitalise on these incentives, or develop such incentives, where the technology transferwould benefit public health? What effect is changing IP likely to have on the incentivesfor technology transfer?

The Terms of Reference did not call for an exhaustive analysis of all the componentsthat influence or result from technology transfer. The scope of the paper is also primarilyconfined to firm-to-firm technology exchange and transfers, which inevitably limitsdiscussion of all the TT forms that can help facilitate technological development andcontribution to public health. However, it was decided that this briefing paper shouldscope out those experiences that can be easily documented, without the need forconducting more expensive in-country case studies.3

The paper also does not extensively cover the enabling environment that is conduciveto technology transfer and technology spillovers. Similarly, it only briefly touches uponthe role of IPRs, technology transfers and technology spillovers in economicdevelopment. Extensive reviews on this subject can be found on the United NationsConference on Trade and Development (UNCTAD) website and recent empiricalresearch can be found on the website for DFID’s Development Research Centre at theLondon Business School Centre for New and Emerging Markets, for example.4

This briefing paper does not rely on country-level empirical data collection, althoughextensive interviews were conducted with informants in order to confirm and supplementinformation gleaned from written reports. It was primarily a desk-based exercise,focused on a cost-effective means of gathering information from available reports,studies, and interviews to answer a set of specific questions posed by DFID. What isnew about this paper is the way that it brings together and analyses these pieces ofinformation, from quite varied sources, to answer these specific questions.


4 Purpose and Scope ofthe Briefing Paper

4.1 Methods

Methods included a literature review, including academic, press, and equity analystreports from the major investment banks. The research assistance of Kate Hurtig andRabiya Hussain was helpful in gathering this literature. Interviews were held with thefollowing categories of people: academics, pharmaceutical equity analysts, individualswithin research-based MNCs, the International Federation of PharmaceuticalManufacturers’ Association, an individual from the US National Institutes of Health,individuals from the World Health Organization (WHO) and from non-profits whoparticipate as brokers and technology donors in technology transfer deals, andindividuals from other UN agencies who are knowledgeable in the subject areascovered. A conference on the subject of technology transfer sponsored by theInternational Federation of Pharmaceutical Manufacturers Associations provided usefulinformation as well.

Helpful comments were received on an early draft of this paper in May/June 2004 from:Nel Druce, Deputy Director of the Institute for Health Sector Development; ProfessorLynn Mytelka, Director of INTECH; Maciej Gajewski, Policy Research Analyst,International Federation of Pharmaceutical Manufacturers Associations; and AndreasSeiter of the World Bank. A second draft went through a formal review process,benefiting from feedback submitted by Hannah Kettler of the Gates Foundation; AndrewCreese at WHO; Abdul Barkat, Professor of Economics, University of Dhaka; ProfessorRichard Mahoney, University of California, San Diego; and Krisana Kraisintu, formerDirector of Government Pharmaceutical Organization of Thailand and currently workingin three African countries to transfer technology for antiretroviral (ARV) drug production.

4.2 Format of the paper

The paper begins with a discussion of the technology transfer obligations on developedcountry signatories to the World Trade Organization, as stipulated in the TRIPSagreement. The initiatives that developed country governments, international and non-profit organisations have put into place to foster technology transfer are described.Since the best prospects for encouraging more TT may lie in recognising where TTalready works and in capitalising on these successes, the majority of the paper focuseson documenting existing agreements and uncovering the motivations that have led totheir development. Finally, the impact of IP on the prospects for increased technologytransfer is discussed. Annex A provides a detailed mapping of the technology transferexperiences from which the paper’s findings have been drawn.



5.1 Technology transfer obligations in TRIPS

The principal provisions of the TRIPS Agreement relevant to technology transfer includethe Preamble, Articles 7 and 8, and Article 66.2 and its reaffirmation in Paragraph 37 ofthe Doha Declaration.

In its statement of objectives in Article 7 of the TRIPS Agreement, the transfer oftechnology is established as a core value of the Agreement, along with the promotion ofinnovation: ‘The protection and enforcement of intellectual property rights shouldcontribute to the promotion of technological innovation and to the transfer anddissemination of technology’. However, this statement refers to the effects of theoperation of the TRIPS Agreement, and not to specific obligations. Since the generalobjectives are not made more concrete by the imposition of specific obligations ondeveloped members or technology holders, legal enforceability is a problem. However,the statement of objectives may be used as an interpretative device, to inform theapplication of other parts of the TRIPS Agreement. It may also be used as a basis forpolitical objection to the manner in which the Agreement is being interpreted and appliedby developed members.

Article 66.2 of the TRIPS Agreement is the most concrete manifestation of an expressobligation on developed members to encourage technology transfer in favour only ofleast developed members through the establishment of incentives to private enterprises.However, even the language used in Article 66.2 is ‘soft’, talking of non-specific‘incentives’ to ‘promote and encourage’ and to ‘enable’.5

5.2 Initiatives to foster TT

Technology and its transfer can be thought of like any economic market with agents onthe demand side and on the supply side. Under perfect market conditions, nointervention would be necessary. However, market conditions for some types of TT areoften not perfect. For example, there may be information asymmetries or hightransaction costs acting as barriers (especially information and seek costs).


5 International Obligationsand Programmes toEncourage TechnologyTransfer

Governments, international bodies and non-profits can help facilitate TT by reducingmarket failures or by providing incentives to engage.

5.2.1 Working Group on Trade and Transfer of Technology

At the World Trade Organization (WTO) Ministers meeting in November 2001 in Doha,a Ministerial Declaration provided for the establishment of a Working Group on Tradeand Transfer of Technology, with a mandate to examine the relationship between tradeand technology transfer, and to make recommendations on steps that might be takenwithin the scope of the WTO to increase flows of technology to developing countries.The Working Group has held several meetings, and the Secretariat has prepared tworeports for members. The reports seem to view the solution to lower rates ofdevelopment as dependent upon a stable investment and IP climate, an environmentinto which foreign direct investment (FDI) will flow, along with improved education andtraining, with the assumption that FDI is the best means for transferring technology.Given the lack of consensus and/or concrete proposals coming from this WorkingGroup, it has been suggested that the Group, while reflecting a concession todeveloping country demand, may be a largely symbolic act.6

5.2.2 Incentives offered by WTO member governments7

The developed members of WTO have provided modest incentives to the private sectorto promote technology transfer in the pharmaceuticals and public health sector,including tax advantages that may accrue from participation in public-privatepartnerships and direct or indirect government financial participation in clinical testingprogrammes, such as in relation to human immunodeficiency virus/acquiredimmunodeficiency syndrome (HIV/AIDS) vaccines.

Canada

The government of Canada has a variety of programmes in place to encourage thecommercial export of Canadian technology abroad; two examples are the CanadianInternational Development Agency’s (CIDA) Industrial Cooperation Programme andCanada’s contribution to the International Model Forest Network (IMFN). CIDA’sIndustrial Cooperation Programme provides financial support to Canadian businessesplanning sustainable business activities in developing countries in a variety of sectors.It reduces the risks to Canadian firms by sharing the costs unique to doing business indeveloping countries and those associated with providing training, the participation ofwomen, and a clean environment. Canada also exports its knowledge of forestrymanagement to the rest of the world through the IMFN.




EU

The European Communities submitted a paper to the Working Group on Trade andTransfer of Technology on the subject of ‘Transfer of Technology to developing andleast-developed countries’. In this submission, the EU points to the importance ofcreating incentives to encourage FDI and foster business partnership (thereby puttingtechnology owners and recipients in contact). The paper states,

In parallel, developed countries can help improve the overall capacity of LDCsand create an enabling environment for FDI by means of appropriate domesticpolicies and capacity building programmes. Developed countries authorities also have a role to play through cooperation activities, support to joint research initiatives, expertise on public utility sectors, and support to regionalintegration.8

The presentation only points to these suggested activities; it does not detail how andwhether the EU has implemented or will implement any of them.

IPTT

The South African government is planning to launch the Initiative on PharmaceuticalTechnology Transfer (IPTT) to promote the production of off-patent pharmaceuticals totreat disease endemic to the developing world. It is expected that the government wouldenter into contracts to buy the resulting products, which would ensure that prices werekept low. The IPTT has its roots in the Doha Declaration, which includes an undertakingthat developed countries would promote TT to least-developed counties. IPTT is acooperative partnership with the industry, under which the government would negotiateTT arrangements and encourage local companies to use the technology to upgrade theirproduction facilities.

5.2.3 Initiatives involving multi-laterals and non-profits

UNCTAD

UNCTAD’s work on TT spans several decades, and includes case studies andnormative work, as well as analytical work on the relationship between investment andTT. UNCTAD has also developed concepts of technological capacity-building andtechnology partnerships. UNCTAD’s Compendium of existing measures contains aselection of 35 multilateral and 25 regional and interregional instruments that makeprovisions related to technology transfer and capacity-building. When bilateralagreements are included, the number exceeds 80. UNCTAD’s current work includesextensive policy analysis embracing global trends, particularly in the UNCTAD WorldInvestment Report, which examined the question of linkages between foreignenterprises and backward linkages with the domestic economy through affiliates.

Inter nat ional Obl igat ions and Programmes to Encourage Technology transfer

13

UNCTAD is involved in a joint project with UNIDO on evaluating the impact of TRIPS ontechnology transfer issues in developing countries.9

WHO (TDR), MMV and DNDi

The Tropical Diseases Research Department of WHO and the Medicines for MalariaVenture are not explicitly set up to transfer technology. However, their contribution inthis area, in the context of ensuring access to drugs for neglected diseases, has beensubstantial, as documented in Annex A.

Similarly, the Drugs for Neglected Diseases Initiative (DNDi) is a $250 million initiativebegun with Médecins Sans Frontières and a group of developing countries to researchdiseases ignored by western drugs companies. Technology transfer and exchangeoccurs at the research stage. The six founding partners include the Indian Council ofMedical Research, L’Institut Pasteur (France), the Kenya Medical Research Institute,Médecins Sans Frontières, the Ministry of Health of Malaysia and the Oswaldo CruzFoundation (Brazil). WHO/TDR will participate in the meetings of the Scientific AdvisoryCommittee of DNDi as an observer to provide expert scientific and technical advice asrequired.




This section documents a wide range of TT experiences, from those that have occurredon a spontaneous commercial basis as well as those that have been facilitated by somesort of broker – usually a government, international organisation, or non-profit – whomay also provide finance and technology transfer (e.g. technical assistance) as well.

6.1 Goals of TT

TT goals of various partners in the arrangement will differ. When the WHO, governmentbodies or non-profits are involved, goals may include: benefiting public health; ensuringpublic availability of new technologies; utilising intellectual property rights (IPR)appropriately as an incentive for commercial development of technologies; attractingnew research and development (R&D) resources; obtaining return on publicinvestments; and stimulating technological and economic development. The privatesector partners may share some of these goals, but in all the examples covered in thisreview except for one,10 there was also a definite business case. Without a strongbusiness case, the sustainability of the TT deal may be at risk as soon as other moreprofitable opportunities arise.

6.2 Basic conditions conducive to TT

There are some common preconditions that affect the willingness of MNCs to enter intotransfer of technology agreements. First of all, firms will not want to enter into anyarrangement that will expose them to major legal or technology risks. Secondly, therealso needs to be a supportive business and scientific environment in the recipientcountry that is conducive to such arrangements. That environment should includeskilled workers, economic and political stability, IP protection, a supportive regulatoryenvironment (e.g. customs), market size and potential, and a well-developed nationalinfrastructure of natural resources and transport.11 Although it has been suggested thatthe ability of developed world governments to influence decisions in this area throughgeneral incentives will be limited,12 clearly the examples in this section demonstrate thatwell-targeted and well-designed incentives, such as those that include tailored financingand skills transfer, can direct specific partners towards joint realisation of access tomedicines objectives.

6 Technology TransferExperiences

6.3 Scope of TT experiences investigated

Pharmaceutical companies have been involved in numerous programmes focusing ontransferring health technologies and know-how to developing countries. Theseprogrammes cover a wide spectrum of the value chain,13 including: R&D alliances todevelop new medicines; clinical trials programmes; transferring technology forproduction to domestic manufacturers (involving quality assurance, processmaintenance, or regulatory compliance, for example); training activities in diseasemanagement and control strategies for physicians, pharmacists and other medicalprofessionals; and creating healthcare systems and structures in developing countries.

Annex A summarizes the TT experiences investigated for this paper. Only those TTexamples involving developing country firms have been included. Thus, for example,the Lapdap partnership for a malaria drug will not be touched upon in this paper, as it isa PPP involving GlaxoSmithKline (GSK), WHO, DFID and others, but has no developingcountry component (apart from as the beneficiary of the eventual product). However,the Aventis partnership, also a PPP involving WHO and a research based MNC, iscovered, since this PPP has an explicit goal to transfer technology to developing countryfirms.

6.4 Private sector incentives to engage in technologytransfer

Motivations for engaging in technology transfer agreements will vary by company,according to the particular product portfolio, company history and resources andcapabilities, for example. These motivations are also likely to change over time.

However, there are some generalisations that are typically true for all private companies.Although the company and its employees may hold a philanthropic interest in helpingachieve access to medicines, employees are also under significant pressure to meetearnings expectations, and this leads to assessing TT deals in the same way as theywould a commercial deal, i.e. whether the deal has the potential to earn a reasonablereturn for the company. This return may be immediately obvious, short-term, and easilyattributable to the TT experience. Alternatively, it may be more subtle and long-term –for example, a response to public pressure or a desire to fulfil overall company strategicobjectives.

Business case examples uncovered during the course of this paper, fromthe perspective of the technology donor, (usually a research-based MNC)are cited below.

• Historically, many countries had regulations regarding ‘local contentrequirements’ or ‘local presence’ of one sort or another, in order to be able to sellin the country. This was the rationale for Eli Lilly setting up domestic




manufacturing operations in Egypt, for example.14 However, such requirementsare questionable under WTO rules, and consequently some MNCs have pulledout of domestic manufacturing in some countries, while other facilities remainbecause the business prospects have become attractive over time.

• Similarly, some domestic manufacturing has historically been established as away to ingratiate the MNC with a local government/regulator. This was aconsideration in Novartis’ decision to use the malaria drug, Coartem, as abeachhead into China.15

• MNCs may choose to locate production in a developing country in order to createa strategic location, such as one that is proximate to other countries it wants toserve in the region.16

• Another MNC rationale for transferring manufacturing technology to developingcountry manufacturers is to provide for a source of contingency supply.Manufacturing partners can help out when the research-based MNCs’ capacitycannot meet demand. In the example of Eli Lilly’s decision to transfer technologyto developing country suppliers, the need for contingency supply was linked to theneed for speed. Lilly needed to get supply from firms who had existing vacantcapacity that could be easily converted for the purpose of making tuberculosis(TB) drugs. Lilly could not have met the timescales required to satisfy the WHOdemand projections.17

• Patent holders may choose to engage in TT as a response to public pressure. Forexample, in 1995, Aventis (then Hoechst Marion Roussel) abandoned productionof the sleeping sickness drug, eflornithine, because it was not making a profit. Ittook years of international pressure to find a way to restart production of the drug.When this international pressure coincided with the media attention around thelaunch of Bristol-Myers Squibb’s (BMS) Vaniqa, an eflornithine-based productintended to remove women’s facial hair, Aventis and BMS became involved withWHO, in a deal that includes TT to developing country firms to manufacture drugsfor sleeping sickness, including eflornithine.18

• Investor pressure provides a similar motivation. Calpers, the world’s largestpension fund, put pressure on GSK to allow more generic companies to producecopies of its AIDS drugs for patients in developing countries. The fund askedGSK to evaluate potential licensing deals for its AIDS drugs and report back toshareholders within three months.19 The Calpers letter echoed many of theconcerns also raised by a group of leading European investors. Motivation for theletter was reported to be a concern as to whether a popular backlash about AIDSin Africa would limit the industry’s ability to charge high prices in rich countries.

Technology Transfer Exper iences

17

• A choice to engage in TT may also be made in order to appease a domesticregulator. For example, in October 2003, South Africa’s Competition Commissionissued a statement saying that Glaxo and Boehringer Ingelheim had brokencompetition rules by charging excessive prices for AIDS drugs in the country. TheCommission said it would recommend that generics companies be allowed to makecopies of the drugs and that the two companies be fined 10 per cent of the sales oftheir AIDS drugs in South Africa.20 This was likely to be one of the reasons why GSKchose to make its ARV licences available to multiple companies.

• Companies can get a tax write-off if they donate patents.21

• Technology transfer arrangements can be driven by a desire to reduce costs orreduce taxes. For example, clinical trials costs for Elli Lilly’s TB drugs have beenreduced through a clinical trials technology transfer in Tomsk, Siberia. Similarly,Singapore is a popular location for pharmaceutical production partly due to taxadvantages.

• Technology donors may also transfer technology as part of an obligation forreceipt of IPR from a publicly funded programme. For example, technologyrecipients from NIH programmes, who have licensed compounds made fromnatural materials, are required to go back to the originating country and reach anagreement with government authorities to share benefits arising from thecompound. For example, the NIH isolated the anti-cancer compound, calanolideA, from the bark of a tree found in Malaysia. It then licensed the rights to thistechnology to the private firm, Medicam, and required Medicam to reach anagreement with the national government from where the resources came to sharethe benefits arising from the technology. Medicam and the Malaysian governmentsubsequently agreed that Medicam would enter into a joint venture with aMalaysian firm, Sarawak, transferring technology for production of the product.22

• Research-based companies may be incentivised to engage in TT with developingcountry firms as part of the larger trend towards outsourcing non-core activities.23

Since the development or manufacture of a non-core product would not be fullymainstreamed strategically or functionally, then the additional cost of conductingthe activity in-house might be high relative to the transaction costs of transferringthe activity to another company. This is the motivation for many of the companiesworking with the TDR division of WHO.

• The above is closely related to the idea of how products are handled during theirlife-cycle. Research-based MNCs want to keep tight control over the entiresupply chain of a blockbuster drug during its high growth phase, from R&Dthrough to manufacturing, as highly proprietary blockbuster drugs are consideredto be key to the company’s competitive advantage and profits. However, onceproducts have reached maturity, production may be outsourced to other firms. Eli




Lilly has an entire product division that develops the global strategy for theirportfolio of older products, for example.

24

• MNCs may be motivated to use TT of a commercially unimportant product ortechnology as a low-risk way of testing out a new market or new partner firm. Thiswas part of the motivation when Novartis chose to use the development andmanufacturing of the malaria drug, Coartem, as a first step to working withChinese firms.25

• Finally, NGOs assert that a motivation for some PPP projects (which are also TTprojects) has sometimes been the development of products that will benefit richcountries as well as poor ones – the tuberculosis vaccine, for example. Andalthough a vaccine and better treatment for kala azar (leishmaniasis) will helppeople in developing countries, it is also of strategic interest to Western countries,the US in particular, because of the risk to military personnel. (The cutaneousversion of the disease, dubbed ‘Baghdad Boil’, has infected 150 US soldiersserving in Iraq, according to newspaper reports.)26

From the perspective of both technology donor andrecipient

• From the perspective of a research-based MNC, out-licensing for products thatare mature or less commercially interesting frees up management time and focusfor higher priority products. Since all the major research-based companies arepublicly listed, they have the incentive to optimise their R&D pipeline andportfolios, because the market judges them on this basis. Drugs with limitedmarket potential in developed countries are therefore not attractive to them,whereas a developing country-based firm, with a potentially lower cost base andlower required return to shareholders, may have more freedom and desire topursue such niche opportunities. GSK

has an important programme of ‘know-how’ transfer to local manufacturerswhereby we outsource production of products as part of a carefully managedproduction cycle aimed at freeing up GSK production capacity for thedevelopment of new drugs. Transfer of production traditionally occurs post-patent expiry for products which local operating units consider of strategicand/or commercial importance in local or regional markets. They continueto be GSK branded products and sold and marketed by the company.Production, however, is handled by a third party contractor, with thenecessary regulatory and technical support from GSK to ensure compliancewith local and international standards.27

• The Director of Medicines for Malaria Venture also stated that this was a commonmotivating factor for the firms they work with. For example, development and


19

production of malaria products is usually not commercially interesting to majorpharmaceutical companies, but it may be interesting to developing countryproducers, especially if they receive help in deferring development costs, receivehelp with registration and with bringing the dossier up to an international level –this is the TT that MMV provides.28

• Any technology transfer partnership that can have a positive impact on the valuechain of both companies will have good prospects. Benefits may includeincreased access to scientific centres of excellence, to funding, or to developingtechnology and new skills; and potential access to targets or final products forglobal distribution.

• Any partnership that reduces risk would also be of value, for example, providingup-front funding of early research, fixing profit margins or guaranteeing salesvolumes, reducing expenses by sharing costs, or speeding up drug registrationthrough government partners.

Developing country firms may be motivated to enterinto technology transfer arrangements for:

• Funding

• Assets other than funding, such as raising the firm’s profile, demonstration/proofof technology, access to data, training, know-how, introduction to new markets.For example, Shanghai Desano (China) received the know-how of producingARVs from Cipla (India). Shanghai Desano’s motivation is to increase theirinternational profile, consistent with their goal to develop their export base inAfrica and Latin America.29

• The need to utilise excess capacity – increasingly likely as Indian firms mustswitch from their role as technology copiers, and must find ways to re-employscientists and production capacity. For example, the brochure distributed by EliLilly describing their TT partnerships for production of TB drugs, states that Lillywill give manufacturing firms in S Africa, China & India the technology to ‘convertexisting facilities’ for the production of these drugs.

• Access to new machinery, training, know-how and business partnerships that canbe useful for more profitable drugs. For example, Eli Lilly is providing aliophilization machine for freeze-drying the injectable TB drug solution.Production of injectables is more difficult than oral forms.30 The liophilizationmachine itself, plus the know-how for producing injectables, is a valuable skill thattechnology recipients can use for other, more profitable, product categories.

Similarly, technical assistance provided to developing country firms in order to bring the




registration dossier of a new, neglected disease product up to the standards set by theInternational Conference on Harmonisation of Technical Requirements for Registrationof Pharmaceuticals for Human Use (ICH) can be helpful to the firms when developingdossiers for other disease areas. Help with bringing manufacturing quality up to goodmanufacturing practice (GMP) certification can be helpful in a similar way. Thesebenefits were mentioned specifically as those that MMV can offer to firms who partnerwith them to develop and manufacture malaria drugs.

6.5 The impact of changing IP on technology transfer:theory and practice

Transaction cost theory predicts that, other costs being equal, a patent owner wouldchoose to keep research, development and production of more proprietary productsand/or technologies completely in-house, particularly in an environment of insecure IPprotection.31 If keeping everything in-house is not possible, then the patent owner’s firstchoice would generally be to engage with other firms via very tight relationships (whereequity/ownership arrangements and duration of the working relationship are structuredto align the incentives of all parties). The contractual tendencies observed during thecourse of this paper do seem to support transaction cost theory.32 For example, thehepatitis B medication, lamivudine, is a commercially and strategically important productfor GSK in China, reaching number two in Glaxo’s sales revenues in China for 2002.With sales growth averaging 18 per cent per year, it is now the leading product on theChinese market for hepatitis B. Rather than license out production of this importantproduct in what can be argued is a relatively insecure IP environment, GSK has built agreenfield GSK-owned site in the eastern Chinese province of Jiangsu which conductsall stages of the manufacturing process. Similarly, it should not be surprising that manyof the R&D facilities (dealing with sensitive and proprietary products) set up by MNCs indeveloping countries are owned (rather than contracted).

As illustrated in the figure below, this ownership structure contrasts with the relativelyloose arrangements being sought by Aventis for production of commercially unattractivesleeping sickness drugs, and Roche for production of the drug for Chagas disease, forexample. Aventis is looking for partners willing to manufacture the drugs and essentiallylooking to contract with these firms ‘at arm’s length’, transferring the technology over tothe partners completely, with no residual ownership. Similarly, following Roche’sdonation, the Brazilian government will set up a manufacturing plant in the state of Acre(Amazone region) and start producing Bezonidazole with the know-how of Roche. Allrights related to benzonidazole have been handed over to the Brazilian government.


21

Although transaction costs are an important consideration in determining contractualmodes and degree of technology transfer, the technology/patent holder will no doubtneed to consider all types of costs and benefits when choosing the most appropriatecontractual/ownership mode for such transfers. As for the influence of IPR oncontractual modes, other costs being equal, we might expect to see more willingness offirms to license and contract out technologies to developing country firms, as the IPRsituation in developing countries becomes increasingly secure. However, some haveargued the opposite – asserting that strong intellectual property protection is liable tostifle technology transfer as technology owners exploit their market power.33 The answerto this dichotomy of views may be found in market conditions. Large countries with ahigh level of pre-existing technological capabilities are more likely to attract licensingopportunities as the IPR environment is enhanced, whereas smaller and medium-sizedcountries, and those with lower technological capabilities, are unlikely to be able toattract licensing regardless of the IPR situation. Another factor to consider is the degreeto which the institutional environment – that is, the formal laws as well as the informalnorms that guide behaviour – are supportive of enhanced IP protection. For example,despite the presence of patent law since 2002, China has been criticized by MNCs as acountry having poor supporting institutions for IPR.34 Thus, IP laws are only one of manyfactors that may influence contracting modes and degree of technology transfer.



Mapping of TT Experiences: Contractual Trends

Low High

Tight

Loose

Co

ntr

act

Ter

ms

But other factors relevant to cost/benefit of contractingstructure as well: IPR environment, proximity to markets, size,

growth, competitive conditions, human capital basis,governance, infrastructure

Importance of the product/technology

Keep in-house/Export product

GSK, Suzhou (GSK-owned manufacturing facility)

Roche, Shanghai (Roche-owned R&D facility)

Willingness todo arm’s

lengthtransactions

Aventis, various locations to be determined (sleeping sickness drug manufacturing)

Roche, Brazil (Chagas disease drug manufacturing)

Eli Lilly, various locations (TB drug manufacturing)

GSK, Tianjin (JV for manufacturing)

AstraZeneca, India (AZ-owned R&D facility)

Novartis, Singapore (Novartis-owned R&D facility)


6.6 Scope for further work

This briefing paper provides a wide and relatively shallow mapping exercise oftechnology transfer experiences in the pharmaceutical sector, focusing on thoseexperiences that further public health objectives or have the potential to encourageindustrial capacity development. More detailed case study work would be needed tounderstand whether these arrangements have actually benefited public health and haveencouraged capacity development in the pharmaceutical sector in developing countries.Such a study would need to:

• uncover the contractual basis/ownership structures through which the agreementhas been concluded

• analyse the characteristics of the market where the technology is destined,including substitutability with other technology in the domestic market, pre-existence of subsidies or other forms of protections, the degree of competition inthe product market and the effect on competitor entry

• look at the characteristics of the firms offering and receiving the technology, e.g.minimum quality requirements of the technology recipient

• identify any trends/patterns in ownership structures, product types, or part of thevalue chain in which these relationships operate.


23


The technology transfer experiences documented in this section fall into four categories.The following diagram shows the relationship of the first three categories, and the fourthcategory are those where the TT is more skills-based and is not being transferred firm-to-firm, but by other means. (Thus, these experiences do not fit very well in this paper,but they are provided for the sake of showing the range of TT experiences.)

Notes:

• The categorisation of the TT into ‘manufacturing, R&D and other’ is perhaps over-simplified, but it is meant to represent the general focus/thrust of the TT initiative.

• An attempt has been made to be comprehensive, but inevitably there will be

Annex A: Summary ofTechnology TransferExperiences

Mapping of TT Experiences: Organisation of Annex A

Examples 1 - 15:where the technology ‘recipient’ firm

is dealt with ‘at arm’s length’and usually involves an intermediary

as broker, funder or additionaltechnology donor

Examples 16 - 21:where the technology donor owns

or part-owns the firm to whichthe technology is transferred andwhere no intermediary is involved

(commercial transaction)

Examples 22 - 27:where firms are contracted ‘at

arm’s length’, but need nointermediary assistance and are

more appropriately called technologyexchange rather thantechnology transfer

(commercial transactions)

Receives public assistance Purely private funding

Ownedor

large equity stake

Contracted

Co

ntr

act

Ter

ms

Funding mechanism


missing examples, as the TT experiences which involve some kind ofassistance/collaboration with international or government organisations arebound to get more press and be easier to track down than those relationships thatare purely commercial or those that are more limited in scope, for examplemultitudes of packaging arrangements between MNCs and local firms indeveloping countries.

Annex A: Summar y of Technology Transfer Exper iences

25



1. In

dia

(firm

s ha

veno

t yet

bee

n fo

und)

Ave

ntis

35P

enta

mid

ine,

mel

arso

prol

and

eflo

rnith

ine

– al

l for

trea

ting

slee

ping

sick

ness

Man

ufac

turin

gan

d ot

her

On

May

3, 2

001,

WH

O a

nd A

vent

is a

nnou

nced

a p

artn

ersh

ip to

com

bat A

fric

an tr

ypan

osom

iasi

sor

sle

epin

g si

ckne

ss.

Ave

ntis

has

com

mitt

ed $

25 m

illio

n to

sup

port

ing

WH

O’s

act

iviti

es o

ver

a fiv

e-ye

ar p

erio

d. T

he p

roje

ct in

volv

es th

ree

rela

ted

effo

rts

– dr

ug d

onat

ion,

dis

ease

man

agem

ent

and

cont

rol,

and

rese

arch

and

dev

elop

men

t. A

vent

is w

ill a

rran

ge fo

r th

e pr

oduc

tion

of th

ree

of th

e fiv

e dr

ugs

used

to tr

eat s

leep

ing

sick

ness

, in

the

amou

nts

fore

cast

ed b

y W

HO

. W

ith th

efin

anci

al s

uppo

rt o

f Ave

ntis

, WH

O in

tend

ed to

con

trol

act

iviti

es a

nd a

ccel

erat

e di

seas

e su

rvei

llanc

ein

Afri

can

coun

tries

mos

t affe

cted

. A

lso,

Ave

ntis

will

fund

new

rese

arch

into

Afri

can

trypa

noso

mia

sis.

By

the

end

of th

e fiv

e-ye

ar p

erio

d, A

vent

is h

as c

omm

itted

to tr

ansf

er th

e pr

oduc

tion

tech

nolo

gyfo

r th

ese

prod

ucts

and

pro

vide

tech

nica

l ass

ista

nce

to d

evel

opin

g co

untr

y fir

ms,

who

wou

ld fi

ndsu

ch a

nic

he o

ppor

tuni

ty c

omm

erci

ally

attr

activ

e, a

nd w

ith th

e go

al o

f hel

ping

to p

rovi

de a

sust

aina

ble

sour

ce o

f sup

ply

for

thes

e dr

ugs.

2. In

dia,

Chi

na, S

.A

fric

aE

li Li

lly36

Mul

tidru

g-re

sist

ant

tube

rcul

osis

(M

DR

TB

)

Man

ufac

turin

gT

he L

illy

MD

R-T

B P

artn

ersh

ip is

a u

niqu

ely

com

preh

ensi

ve in

itiat

ive

with

the

Gre

en L

ight

Com

mitt

ee o

f the

Wor

ld H

ealth

Org

aniz

atio

n, th

e U

.S. D

epar

tmen

t of H

ealth

and

Hum

anS

ervi

ces’

Cen

tres

for

Dis

ease

Con

trol

and

Pre

vent

ion

(CD

C),

Brig

ham

and

Wom

en’s

Hos

pita

l(B

WH

), a

n af

filia

te o

f Har

vard

Med

ical

Sch

ool,

the

Inte

rnat

iona

l Cou

ncil

of N

urse

s (I

CN

) an

dP

urdu

e U

nive

rsity

to in

crea

se th

e nu

mbe

r of

trai

ned

pers

onne

l and

dru

gs a

vaila

ble

to tr

eat t

heex

pand

ing

cris

is o

f MD

R T

B.

Lilly

has

inve

sted

in it

s ow

n fa

cilit

ies

to e

nabl

e it

to d

oubl

e its

cur

rent

pro

duct

ion

of c

apre

omyc

in,

one

of th

e es

sent

ial d

rugs

use

d to

trea

t MD

R T

B. F

inal

ly, L

illy

is p

rovi

ding

bot

h ca

preo

myc

inan

d cy

clos

erin

e at

a fr

actio

n of

thei

r co

st to

WH

O G

reen

Lig

ht C

omm

ittee

-app

rove

d D

OT

S-

Plu

s37

trea

tmen

t pro

gram

mes

aro

und

the

wor

ld.

Lilly

has

sig

ned

tech

nolo

gy tr

ansf

er a

gree

men

ts w

ith c

ompa

nies

in In

dia

(Sha

sun

Che

mic

al a

ndD

rugs

, Ltd

.) a

nd S

outh

Afr

ica

(Asp

en P

harm

acar

e H

oldi

ngs,

Ltd

) an

d is

neg

otia

ting

a si

mila

rag

reem

ent i

n C

hina

(Z

hejia

ng H

isun

Pha

rmac

eutic

al C

o., L

td.)

. In

addi

tion

to m

akin

g av

aila

ble

the

nece

ssar

y m

anuf

actu

ring

know

-how

, Lill

y is

pro

vidi

ng fi

nanc

ial a

ssis

tanc

e fo

r th

e pu

rcha

seof

equ

ipm

ent (

lioph

iliza

tion

equi

pmen

t, ne

cess

ary

for

the

free

ze-d

ryin

g st

ep o

f inj

ecta

ble

prod

uctio

n) a

nd/o

r co

nver

sion

of m

anuf

actu

ring

faci

litie

s an

d te

chni

cal t

rain

ing

for

vario

us s

tage

sin

the

man

ufac

turin

g pr

oces

ses.

Cur

rent

ly, t

he c

ompa

nies

are

in v

ario

us s

tage

s of

faci

lity

conv

ersi

on a

nd in

itial

pro

duct

ion.

The

firs

t val

idat

ed p

rodu

ctio

n co

uld

occu

r w

ithin

the

next

six

mon

ths

with

shi

pmen

ts fo

r di

sbur

sem

ent t

o W

HO

-app

rove

d M

DR

TB

DO

TS

-Plu

s pr

ogra

mm

esoc

curr

ing

befo

re th

e en

d of

200

4.

Pos

sibl

e in

cent

ives

for

tech

nolo

gy r

ecip

ient

s to

eng

age

are:

acc

ess

to k

now

-how

and

gra

nts

for

equi

pmen

t for

pro

duci

ng in

ject

able

dru

gs (

know

-how

and

equ

ipm

ent t

hat i

s us

eful

for

othe

rpr

oduc

t cat

egor

ies)

; dem

onst

ratio

n of

abi

lity

to w

ork

with

an

MN

C (

usef

ul fo

r ot

her

prod

uct

Dev

elo

pin

gco

un

try

& f

irm

tech

no

log

yre

cip

ien

t

Tec

hn

olo

gy

Do

no

rP

rod

uct

TT

typ

e(M

anu

fact

uri

ng

, R&

Do

r o

ther

)

Des

crip

tio

n

Exa

mpl

es w

here

the

tech

nolo

gy ‘r

ecip

ient

’ firm

is d

ealt

with

‘at a

rm’s

leng

th’ a

nd u

sual

ly in

volv

es a

n in

term

edia

ry a

s br

oker

, fu

nder

or

addi

tiona

l tec

hnol

ogy

dono

r



27

cate

gorie

s); u

sing

exc

ess

capa

city

. P

ossi

ble

ince

ntiv

es fo

r Li

lly to

eng

age,

as

tech

nolo

gy d

onor

:di

vest

ing

from

com

mer

cial

ly u

nint

eres

ting

busi

ness

; (si

mila

rly)

avoi

ding

the

need

for

furt

her

inve

stm

ent i

nto

capa

city

; get

ting

spee

dy a

cces

s to

con

tinge

ncy

supp

ly fr

om fi

rms

who

had

‘vac

ant s

uppl

y re

ady

to g

o’ (

whe

reas

Lill

y co

uld

not h

ave

met

the

times

cale

s fo

r m

atch

ing

supp

lyw

ith W

HO

’s p

roje

cted

dem

and,

whi

ch w

ould

hav

e be

en b

ad fr

om s

ever

al r

espe

cts,

incl

udin

gP

R).

Eli

Lilly

has

sub

sequ

ently

wor

ked

with

thes

e fir

ms

to s

ourc

e ot

her

prod

ucts

(ac

tive

phar

mac

eutic

al in

gred

ient

(A

PI)

and

form

ulat

ions

). I

mpl

icat

ion:

usi

ng th

e T

B d

rugs

as

a te

stca

se fo

r w

orki

ng w

ith th

e fir

ms

wou

ld h

ave

been

a r

elat

ivel

y lo

w-r

isk

way

to b

egin

a w

orki

ngre

latio

nshi

p.

In D

ecem

ber

2003

, Pur

due

Uni

vers

ity b

roke

gro

und

for

its n

ew m

anuf

actu

ring

faci

lity,

the

Alle

nC

hao

Cen

ter

for

Indu

stria

l Pha

rmac

y, w

hich

will

pro

duce

Ser

omyc

in (

cycl

oser

ine)

. U

nive

rsity

offic

ials

als

o vi

site

d Li

lly’s

man

ufac

turin

g pa

rtne

rs in

Indi

a an

d C

hina

to d

eter

min

e tr

aini

ngre

quire

men

ts fo

r bo

th fa

cilit

ies

and

to m

eet w

ith lo

cal u

nive

rsiti

es in

thos

e co

untr

ies

to d

iscu

sspo

ssib

le c

olla

bora

tive

effo

rts.

In

May

, Pur

due

Uni

vers

ity w

ill b

e ho

stin

g its

firs

t tra

inin

g fo

r fiv

eem

ploy

ees

of Z

hejia

ng H

isun

Pha

rmac

eutic

al C

o., L

td. (

Chi

na),

and

four

em

ploy

ees

from

Sha

sun

Che

mic

al a

nd D

rugs

, Ltd

. (In

dia)

, in

Wes

t Laf

ayet

te, I

ndia

na.

The

uni

vers

ity w

ill tr

ain

empl

oyee

sin

Goo

d M

anuf

actu

ring

Pra

ctic

es a

nd p

rope

r re

gula

tory

doc

umen

tatio

n.

Lilly

has

als

o es

tabl

ishe

d a

Cen

ter

of E

xcel

lenc

e fo

r th

e tr

aini

ng o

f med

ical

per

sonn

el in

the

trea

tmen

t of M

DR

TB

to h

elp

prev

ent f

urth

er s

prea

d of

the

dise

ase

and

is le

adin

g an

effo

rt to

esta

blis

h a

com

preh

ensi

ve s

urve

illan

ce p

rogr

amm

e to

mon

itor

deve

lopm

ent o

f res

ista

nce

agai

nst

the

antib

iotic

s us

ed to

trea

t MD

R T

B.

3. C

hina

Nov

artis

Coa

rtem

Dev

elop

men

t and

Man

ufac

ture

Coa

rtem

is a

n an

timal

aria

l lic

ense

d by

Nov

artis

from

a C

hine

se fi

rm.

Nov

artis

alw

ays

reco

gnis

edth

at th

is p

rodu

ct w

ould

hav

e lim

ited

com

mer

cial

pot

entia

l and

this

mad

e it

idea

l for

th e

com

pany

’sfir

st e

xper

imen

t in

wor

king

with

Chi

na, w

here

it h

as s

ince

bec

ome

one

of la

rges

t mul

tinat

iona

lsin

ope

ratio

n. T

he c

apac

ity a

nd r

elat

ions

hips

bui

lt th

roug

h th

e de

velo

pmen

t of C

oart

em a

re n

owbe

ing

used

for

othe

r pr

oduc

ts N

ovar

tis m

anuf

actu

res

and

mar

kets

in C

hina

. N

ovar

tis r

ecei

ves

publ

ic r

elat

ions

ben

efits

from

the

deal

. A

lso,

WH

O p

rovi

des

tech

nica

l sup

port

and

fund

ing

(for

deve

lopm

ent)

, dem

and

fore

cast

ing

and

a cr

edit

line

for

gove

rnm

ents

to p

urch

ase

the

prod

uct.3

8

4. B

ihar

Sta

te,

Indi

a –

Inst

itute

for

One

Wor

ld H

ealth

(IO

WH

)

Far

mita

lia (

take

nov

er b

y P

harm

acia

)Le

ishm

ania

sis

Dev

elop

men

t and

even

tual

lym

anuf

actu

re

With

littl

e m

ore

than

$10

mill

ion

from

the

Gat

es F

ound

atio

n, T

he In

stitu

te fo

r O

ne W

orld

Hea

lthha

s ju

st s

tart

ed a

larg

e an

d pi

vota

l hum

an e

xper

imen

t in

Bih

ar, I

ndia

, tha

t’s te

stin

g a

drug

totr

eat k

ala

azar

. K

now

n m

edic

ally

as

leis

hman

iasi

s, k

ala

azar

is c

arrie

d by

the

sand

fly

and

kills

an e

stim

ated

200

,000

peo

ple

annu

ally

. T

wel

ve m

illio

n pe

ople

are

thou

ght t

o be

infe

cted

, mai

nly

in In

dia.

In th

e 19

90s

the

Wor

ld H

ealth

Org

aniz

atio

n re

ceiv

ed a

don

atio

n of

par

omom

ycin

from

Far

mita

liath

e Ita

lian

phar

mac

eutic

al fi

rm h

oldi

ng th

e lic

ence

. F

arm

italia

was

not

inte

rest

ed in

dev

elop

ing

the

drug

on

its o

wn

beca

use

of p

arom

omyc

in’s

lack

of p

oten

tial t

o be

com

e pr

ofita

ble,

giv

en th

e

Dev

elo

pin

gco

un

try

& f

irm

tech

no

log

yre

cip

ien

t

Tec

hn

olo

gy

Do

no

rP

rod

uct

TT

typ

e(M

anu

fact

uri

ng

, R&

Do

r o

ther

)

Des

crip

tio

n



expe

nse

of c

ondu

ctin

g cl

inic

al tr

ials

and

the

poor

eco

nom

ic s

tatu

s of

peo

ple

mos

t in

need

of

it. W

HO

beg

an w

ith P

hase

I an

d II

tria

ls o

n th

e dr

ug, b

ut r

an o

ut o

f fun

ds a

nd h

ad to

sto

p.IO

WH

cam

e to

WH

O, l

ooki

ng fo

r a

proj

ect.

WH

O s

ugge

sted

they

take

ove

r th

e tr

ials

and

cont

inue

to P

hase

III,

whi

ch th

ey d

id.

5. S

hang

hai

Des

ano

Cip

laM

anuf

actu

ring

Sha

ngha

i Des

ano

(Chi

na)

rece

ived

the

know

-how

of p

rodu

cing

AR

Vs

from

Cip

la (

Indi

a).

Sha

ngha

i Des

ano’

s m

otiv

atio

n is

to in

crea

se th

eir

inte

rnat

iona

l pro

file,

con

sist

ent w

ith th

eir

goal

of d

evel

opin

g th

eir

expo

rt b

ase

in A

fric

a an

d La

tin A

mer

ica.

39

6. A

eras

Glo

bal T

BV

acci

neF

ound

atio

n

Var

ious

inst

itute

s in

deve

lopi

ng c

ount

ries

and

a S

outh

Afr

ican

vacc

ine

man

ufac

ture

r

TB

vac

cine

sR

esea

rch

and

man

ufac

turin

gA

eras

ann

ounc

ed in

Feb

ruar

y 20

04 th

at it

wou

ld b

egin

Pha

se II

tria

ls o

f tw

o ne

w v

acci

nes

agai

nst t

uber

culo

sis.

The

pro

ject

has

enl

iste

d pa

rtne

rshi

ps w

ith s

cien

tists

, aca

dem

ic in

stitu

tions

,go

vern

men

ts, a

nd c

ompa

nies

in E

urop

e, in

Sou

th A

fric

a an

d ot

her

deve

lopi

ng c

ount

ries,

and

in th

e U

S.

A c

linic

al r

esea

rch

site

is a

lread

y in

ope

ratio

n in

Cap

e T

own,

Sou

th A

fric

a, w

here

mor

e th

an 9

000

volu

ntee

rs a

re e

nrol

led

in a

clin

ical

tria

l. O

ther

site

s ar

e be

ing

cons

ider

ed in

Per

u an

d In

dia.

Aer

as is

als

o pa

rtne

ring

with

The

Bio

vac

Inst

itute

in C

ape

Tow

n to

man

ufac

ture

vacc

ines

for

futu

re P

hase

I an

d II

clin

ical

tria

ls.

7. V

ario

us,

prim

arily

Indi

anm

anuf

actu

rers

Wye

thP

harm

aceu

tical

s,va

ccin

es, c

onsu

mer

heal

th

Clin

ical

tria

l and

man

ufac

turin

gex

pert

ise

Ove

r 10

0 W

yeth

pro

duct

s ar

e m

anuf

actu

red

in d

evel

opin

g co

untr

ies;

som

e su

pply

ent

ire r

egio

ns.

The

re a

re 1

6 ph

arm

a pl

ants

, 3 v

acci

ne p

lant

s an

d 2

biop

harm

pla

nts

– so

me

of th

ese

are

owne

daf

filia

tes

and

som

e ar

e th

ird p

arty

sup

plie

rs.

Mai

n ar

eas

of T

T: p

rodu

ct/p

roce

ss k

now

-how

(tec

hnic

al d

ocum

ents

); k

now

ledg

e of

pro

duct

s an

d pr

oces

ses;

sci

entif

ic k

now

ledg

e; tr

ansf

erof

equ

ipm

ent;

regu

lato

ry a

nd q

ualit

y re

quire

men

ts; t

rain

ing

of p

erso

nnel

. E

xam

ples

incl

ude

Gha

na, w

here

Wye

th is

spo

nsor

ing

clin

ical

tria

ls fo

r tr

eatm

ent o

f riv

er b

lindn

ess

at H

ohoe

Hos

pita

l (in

par

tner

ship

with

WH

O)

in w

hich

Wye

th p

rovi

des

the

reso

urce

s fo

r pr

e-cl

inic

alan

alys

is, d

ata

man

agem

ent,

med

ical

writ

ing,

reg

ulat

ory

filin

gs, e

tc.

In G

ambi

a W

yeth

is p

rovi

ding

a ne

wly

dev

elop

ed p

neum

ococ

cal c

onju

gate

vac

cine

for

a fiv

e-ye

ar c

linic

al tr

ial.

In S

outh

Afr

ica

the

com

pany

is s

pons

orin

g a

clin

ical

tria

l with

40,

000

child

ren

to a

sses

s th

e pu

blic

hea

lth v

alue

of a

pne

umoc

occa

l con

juga

te v

acci

ne in

pre

vent

ing

pneu

mon

ia th

at r

esul

ts in

hos

pita

lisat

ion.

In In

dia,

Wye

th h

as n

ine

third

par

ty s

uppl

iers

and

two

owne

d pl

ants

, bot

h of

whi

ch p

rodu

ceho

rmon

als.

8. T

B A

llian

ceC

hiro

n C

orp.

TB

Man

ufac

turin

g rig

hts

Chi

ron

dona

ted

mos

t of t

he c

omm

erci

al r

ight

s to

the

drug

com

poun

d du

bbed

PA

-824

to th

e T

BA

llian

ce.

Chi

ron

didn

’t ha

ve a

ny r

easo

n to

take

this

forw

ard

and

thei

r go

al w

as to

get

that

dru

gde

velo

ped,

sai

d A

llian

ce s

poke

swom

an G

wyn

ne O

oste

rbaa

n. ‘

Chi

ron

had

ever

y in

cent

ive

toha

nd it

ove

r to

us.

’40

9. M

edic

ines

for

Mal

aria

Ven

ture

41

R

anba

xy &

Roc

heM

MV

&K

orea

n fir

m

Var

ious

mal

aria

prod

ucts

Man

ufac

turin

g &

R&

DV

ario

us R

&D

pro

ject

s ta

rget

ing

new

mal

aria

med

icin

es w

ith r

esea

rche

rs a

nd s

cien

tists

from

deve

lopi

ng c

ount

ries,

as

wel

l as

biot

ech

and

phar

mac

eutic

al c

ompa

nies

from

Chi

na a

nd S

outh

Kor

ea.

MM

V m

ay o

ffer

the

follo

win

g to

the

part

ners

hips

: offs

et c

osts

of d

evel

opm

ent;

prov

ide

acce

ss to

‘bio

logy

of d

isea

se’ m

alar

ia e

xper

tise;

pro

vide

tech

nica

l ass

ista

nce

rela

ted

to b

ringi

ngre

gist

ratio

n do

ssie

r up

to in

tern

atio

nal s

tand

ards

, inc

ludi

ng

Dev

elo

pin

gco

un

try

& f

irm

tech

no

log

yre

cip

ien

t

Tec

hn

olo

gy

Do

no

rP

rod

uct

TT

typ

e(M

anu

fact

uri

ng

, R&

Do

r o

ther

)

Des

crip

tio

n



29

IC

H-le

vel c

linic

al tr

ials

and

GM

P c

ertif

icat

ion.

In K

orea

, WH

O id

entif

ied

a sm

all f

irm in

tere

sted

in g

row

ing

thei

r A

fric

an p

rese

nce.

The

re is

also

a s

mal

l ant

i-mal

aria

l mar

ket i

n K

orea

, but

big

eno

ugh

that

a s

mal

l com

pany

may

be

inte

rest

ed.

The

re w

as a

lso

an in

cent

ive

for t

he K

orea

n co

mpa

ny to

lear

n ab

out d

rug

deve

lopm

ent

and

the

deve

lopm

ent o

f the

reg

ulat

ory

doss

ier.

In th

e R

anba

xy d

eal,

Ran

baxy

get

s th

e de

velo

ped

wor

ld m

arke

t and

MM

V g

ets

the

deve

lopi

ngw

orld

. T

he n

ew h

ead

of R

&D

at R

anba

xy w

as in

stru

men

tal t

o ge

tting

the

deal

don

e. M

MV

offs

ets

the

cost

of R

&D

. In

the

pres

s re

leas

e, th

e C

EO

sai

d ‘C

olla

bora

tive

rese

arch

is o

ne o

fth

e id

entif

ied

grow

th d

river

s of

Ran

baxy

. D

evel

opin

g a

new

med

icin

e fo

r M

alar

ia a

fford

s R

anba

xyan

opp

ortu

nity

to p

rovi

de b

ette

r he

alth

car

e op

tions

in th

is s

egm

ent.

We

are

delig

hted

to jo

inha

nds

with

MM

V in

this

ven

ture

to e

nhan

ce o

ur s

ocia

l res

pons

ibili

ties

caus

e.’

A r

ecen

t agr

eem

ent w

as s

igne

d be

twee

n C

hong

qing

Hol

ley

Hol

ding

, a C

hine

se p

harm

aceu

tical

com

pany

, Sig

ma-

Tau

, an

Italia

n ph

arm

aceu

tical

com

pany

, MM

V a

nd th

e U

nive

rsity

of O

xfor

dfo

r th

e in

tern

atio

nal d

evel

opm

ent o

f the

ant

i-mal

aria

l dru

g, d

ihyd

roar

tem

isin

in-p

iper

aqui

ne(A

rtek

in).

Unl

ike

the

conv

entio

nal c

hlor

oqui

ne a

nd s

ulfa

doxi

ne-p

yrim

etha

min

e tr

eatm

ents

arte

mis

inin

, fro

m w

hich

the

drug

is d

eriv

ed, h

as n

ot y

et p

rodu

ced

any

know

n ca

ses

of r

esis

tanc

e. ‘N

ot o

nly

shou

ld th

is a

ntim

alar

ial b

e ef

fect

ive,

’ sai

d D

r C

hris

toph

er H

ents

chel

, CE

O o

f Med

icin

esfo

r M

alar

ia V

entu

re, ‘

our

goal

is a

lso

to b

e ab

le to

mak

e it

avai

labl

e at

a c

ost t

hat’s

affo

rdab

lefo

r pe

ople

livi

ng o

n le

ss th

an a

dol

lar

a da

y.’

A m

eflo

quin

e ar

tesu

nate

fixe

d-do

se c

ombi

natio

n is

bei

ng d

evel

oped

by

the

Far

Man

guin

osfa

ctor

y (g

over

nmen

t fac

tory

) in

Bra

zil,

with

ass

ista

nce

from

DN

Di a

nd th

e T

DR

div

isio

n of

WH

O.

DN

Di/T

DR

faci

litat

es th

e de

al a

nd th

e de

velo

pmen

t pro

cess

and

has

pro

vide

d m

anuf

actu

ring

tech

nica

l ass

ista

nce

as w

ell.

The

tota

l mal

aria

mar

ket i

s w

orth

app

roxi

mat

ely

$200

-300

mill

ion

per y

ear.

Thi

s is

not

com

mer

cial

lyin

tere

stin

g to

maj

ors,

but

may

be

inte

rest

ing

to d

evel

opin

g co

untr

y pr

oduc

ers.

esp

ecia

lly if

they

rece

ive

help

in d

efer

ring

deve

lopm

ent c

osts

, with

reg

istr

atio

n an

d w

ith b

ringi

ng th

e do

ssie

r up

to a

n in

tern

atio

nal l

evel

– th

is is

the

TT

that

MM

V p

rovi

des!

Lea

rnin

g ho

w to

brin

g th

e do

ssie

rup

to IC

H s

tand

ards

can

be

help

ful t

o th

e fir

m in

oth

er d

isea

se a

reas

. GM

P c

ertif

icat

ion

(gai

ned

thro

ugh

wor

king

in a

ccor

danc

e w

ith M

MV

sta

ndar

ds)

can

help

as

wel

l. M

MV

can

als

o of

fer

mal

aria

exp

erts

. T

he C

hine

se h

ave

mal

aria

exp

ertis

e, b

ut In

dian

s an

d K

orea

ns d

o no

t.

10. V

ario

usU

.S. N

atio

nal

Inst

itute

s of

Hea

lth(N

IH)4

2

Var

ious

Var

ious

- dd

I _ P

RO

TE

IN, S

.A. d

e C

.V.,

Mex

ico

- Men

ingo

cocc

al v

acci

ne –

Pro

gram

me

for A

ppro

pria

te T

echn

olog

y in

Hea

lth a

nd W

HO

, pro

duce

dby

Ser

um In

stitu

te, I

ndia

for

sub-

Sah

aran

Afr

ica

Dev

elo

pin

gco

un

try

& f

irm

tech

no

log

yre

cip

ien

t

Tec

hn

olo

gy

Do

no

rP

rod

uct

TT

typ

e(M

anu

fact

uri

ng

, R&

Do

r o

ther

)

Des

crip

tio

n



- T

hym

osin

B, L

ee’s

Pha

rmac

eutic

als,

Hon

g K

ong

- C

alan

olid

e A

, Sar

awak

– M

edic

am, M

alay

sia.

NIH

isol

ated

the

anti-

canc

er c

ompo

und,

cala

nolid

e A

, fro

m th

e ba

rk o

f a tr

ee fo

und

in M

alay

sia.

It t

hen

licen

sed

the

right

s to

this

tech

nolo

gy to

the

priv

ate

firm

, Med

icam

, and

req

uire

d M

edic

am to

rea

ch a

n ag

reem

ent w

ith th

ena

tiona

l gov

ernm

ent f

rom

whe

re th

e re

sour

ces

cam

e to

sha

re th

e be

nefit

s ar

isin

g fr

om th

ete

chno

logy

. M

edic

am a

nd th

e M

alay

sian

gov

ernm

ent s

ubse

quen

tly a

gree

d th

at M

edic

am w

ould

ente

r in

to a

join

t ven

ture

with

a M

alay

sian

firm

, Sar

awak

, tra

nsfe

rrin

g te

chno

logy

for

prod

uctio

nof

the

prod

uct.

- R

otav

irus

vacc

ine,

Bha

rat B

iote

ch, I

ND

IA

- O

ther

neg

otia

tions

for

com

mer

cial

isat

ion

licen

ces

with

com

Leveraging the Private Sector for Public Health Objectives · 2016. 8. 2. · PPP Public-private...

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Transcript of Leveraging the Private Sector for Public Health Objectives · 2016. 8. 2. · PPP Public-private...