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Pharma’s March Into Emerging Markets Hits Yet Another Rough Spot

Last month, the Indonesian government took what patient advocates are calling an “exceptionally important” step to expand access to various needed medicines by authorizing use of patents for seven HIV and hepatitis B treatments. The decree was made on September 3, but until now has generated virtually no public notice.

The decree may represent the broadest single instance in which pharmaceutical patents were overridden by a government since the 1995 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property, according to Public Citizen, which released the decree. “Indonesia’s action sets a powerful example for other countries and a critical precedent for global public health,” the group says in a statement.

The drug patents belong to GlaxoSmithKline (GSK), Merck (MRK), Gilead Sciences (GILD), Bristol-Myers Squibb (BMY) and Abbott (ABT). Among the drugs are Glaxo’s Abacavir and Abbott’s Kaletra, which are both useful combinations, as well as Gilead’s Viread, which also treats hepatitis B. The order says the companies will receive a 0.5 percent royalty.

Big Pharma’s aggressive push into emerging countries is in part due to stalled revenue growth in the U.S. and other developed economies. The companies are suffering fro a shortage of new blockbuster drugs and the expiration of patents on existing blockbusters.

GSK Revenue TTM Chart

GSK Revenue TTM data by YCharts

If the decree, which was signed by Indonesian President H. Susilo Bambang Yudhoyono, is implemented, the measure is expected to introduce what advocates believe would be “widespread generic competition and generate potentially massive cost savings in the world’s fourth most populous country.”

The move comes amid a growing international struggle between the pharmaceutical industry, poor countries and patient advocates over access to medicines that often are priced out of reach for many people. Although drug makers often maintain patient-assistance programs, these efforts have been dwarfed by calls for lower prices and compulsory licenses to ensure drugs for such ailments as cancer and AIDS are accessible to those who are unable to afford them.

To read the remainder of this article, go to Pharmalot.

Ed Silverman is the editor of Pharmalot and a contributor toYCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.

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