Local production and access

to medicines in low- and

middle-income countries
A literature review and critical analysis

Property and Trade

Intellectual
Innovation
R&D,
Transfer
Technology
Improving Access
Financing
Reporting
Monitoring and
Local production and access
to medicines in low- and
middle-income countries
A literature review and critical analysis
 Prepared for the WHO Department of Public Health, Innovation and Intellectual Property by
Warren A. Kaplan (Center for Global Health & Development, Boston University, United States).

This report forms part of the project entitled: Improving access to medicines in developing
countries through technology transfer related to medical products and local production. It is
implemented by the Department of Public Health Innovation and Intellectual Property of the
World Health Organization (WHO/PHI) in partnership with the United Nations Conference on
Trade and Development (UNCTAD) and the International Centre for Trade and Sustainable
Development (ICTSD) with funding from the European Union (EU). The overall objective of the
project is to increase access – especially for the poor in developing and least developed countries
– to medicines, vaccines and diagnostics.

All reports associated with this project are available for free download from the following website:
http://www.who.int/phi/en/

This publication has been produced with the assistance of the European Union. The contents of
this publication are the sole responsibility of the World Health Organization and can in no way be
taken to reflect the views of the European Union.

Editing and design by Inís Communication – www.iniscommunication.com

WHO Library Cataloguing-in-Publication Data

Local production and access to medicines in low- and middle-income countries : a literature review and
critical analysis.

1.Pharmaceutical preparations - supply and distribution. 2.Drug compounding - utilization. 3.Health

services accessibility. 4.Drug industry - trends. 5.Drug utilization review. 6.Meta-analysis. 7.Review
literature. 8.Intellectual property. 9.Developing countries. I.World Health Organization.

ISBN 978 92 4 150243 6 (NLM classification: QV 736)

All rights reserved. Publications of the World Health Organization are available on the WHO web site
(www.who.int) or can be purchased from WHO Press, World Health Organization, 20 Avenue Appia, 1211
Geneva 27, Switzerland (tel.: +41 22 791 3264; fax: +41 22 791 4857; e-mail: bookorders@who.int).

Requests for permission to reproduce or translate WHO publications – whether for sale or for
noncommercial distribution – should be addressed to WHO Press through the WHO web site (http://
www.who.int/about/licensing/copyright_form/en/index.html).

The designations employed and the presentation of the material in this publication do not imply the
expression of any opinion whatsoever on the part of the World Health Organization concerning the legal
status of any country, territory, city or area or of its authorities, or concerning the delimitation of its
frontiers or boundaries. Dotted lines on maps represent approximate border lines for which there may
not yet be full agreement.

The mention of specific companies or of certain manufacturers’ products does not imply that they
are endorsed or recommended by the World Health Organization in preference to others of a similar
nature that are not mentioned. Errors and omissions excepted, the names of proprietary products are
distinguished by initial capital letters.

All reasonable precautions have been taken by the World Health Organization to verify the information
contained in this publication. However, the published material is being distributed without warranty of
any kind, either expressed or implied. The responsibility for the interpretation and use of the material
lies with the reader. In no event shall the World Health Organization be liable for damages arising from
its use.

Photo: WHO Thailand

Printed in France

© World Health Organization 2011

Contents
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
List of abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Balancing industrial and health policies . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose of this report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3.1 ‘Local production’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3.2 ‘Low- and middle-income countries’ . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3.3 ‘Access to medicines’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Search strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Databases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2.1 Peer-reviewed articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2.2 Grey literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.3 The primary objective: Inclusion criteria . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.4 The secondary objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 A note on the search strategy and results . . . . . . . . . . . . . . . . . . 7
3.2 Barriers to local production in LMICs . . . . . . . . . . . . . . . . . . . . . 7
3.2.1 Protection of local producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 The linkages between local production and access to medicines . . . . 9
3.3.1 Other illustrative themes highlighted by the review . . . . . . . . . . . . . . . 10
4. Discussion and conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Methods employed in the literature are insufficient to prove
a robust relationship between LP and access . . . . . . . . . . . . . . . 28
4.2 Factors limiting understanding of the link between LP and
access to medicines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.2.1 Conclusory and contradictory statements with little corroboration . . . . . 30
4.2.2 The dynamic relationship between LP and access to medicines: . . . . . . . 31
4.3 A framework for evaluating LP and access to medicines . . . . . . . . 34
4.3.1 Static vs. dynamic experimental designs: an introduction . . . . . . . . . . . 34
Appendix 1: Search terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
PUBMED search terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
POPLINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Acknowledgements
This paper would not have existed without the time and helpful comments
from Zafar Mirza, Padmashree, Gehl Sampath and Robert Terry (World Health
Organization, Geneva). Thanks are also extended to Marie Vitello and Lindsay
Sarah Ritz (Boston University School of Public Health).

List of abbreviations
API active pharmaceutical ingredient
ARV antiretroviral
CQS chloroquine-sensitive
CQT chloroquine tablets
FDI foreign direct investment
FTA free trade agreement
GNI gross national income
GTZ Deutsche Gesellschaft fuer Technische Zusammenarbeit,
HAART Highly active antiretroviral therapy
IPR intellectual property rights
LDC least-developed countries
LMIC low- and middle-income countries
LP local production
MOH ministry of health
NEML national essential medicines list
NGO nongovernmental organization
OECD Organization for Economic Co-operation and Development
OTC over-the-counter
PAHO Pan-American Health Organization
PPP public–private partnership
R&D research and development
SEC Securities and Exchange Commission
TB tuberculosis
UN United Nations
UNCTAD United Nations Conference on Trade and Development
UNDP United Nations Development Programme
UNIDO United Nations Industrial Development Organization
WHO World Health Organization
WHO/PHI World Health Organization Department of Public Health
Innovation and Intellectual Property
WTO World Trade Organization

iv
1. Introduction
1.1 Balancing industrial and health policies
For the pharmaceutical sector, policy-makers around the world continually
struggle to balance health policy objectives (e.g., access to affordable and
essential medicines) with those of industrial policy in the pharmaceutical
sector (e.g., promoting innovation and local research and development (R&D)
activity).1 Tensions particularly arise over pricing and reimbursement. Limited
health care budgets – and competing demands for scarce resources – force
governments to set limits on which medicines to provide or subsidize, for
whom and at what price. What ministries of health and/or health plans view
as necessary to maintain equitable access to medicines, industry may view as
detrimental to R&D and innovation.

1.2 Purpose of this report

This report explores the interface between industrial and health policies. Based
on a literature review in the field, the report summarizes previous theoretical
and empirical work on local production (LP) of biomedical products, and its
potential impact on access to medicines. By ‘products’ we mean medicines
and devices, including diagnostics. The report:
• Assesses to what extent the linkages between LP and access were explored in
previous studies;
• Critically analyzes whether the methods employed in the literature were sufficient
to suggest a robust relationship between LP and access;
• Evaluates whether results obtained could be directly applied to LP conditions in
low- and middle-income countries (LMICs).

It is not primarily a review of LP, nor is it an extensive policy discussion on

improving LP in LMICs.

1.3 Definitions

1.3.1 ‘Local production’

Jurisdictional component
Local production can take several forms:

1 As an example of the balancing required, Australia has implemented a range of generic

programmes and policies to promote, attract and support domestic investment in R&D. Key
components of the industry development agenda include direct government support for
basic science, research infrastructure and higher education through a combination of grants,
tax concessions, venture capital and import/export programmes. Between 1988 and 1999,
the government allowed medicine manufacturers undertaking new R&D or value-added
production in Australia to receive premium prices under their reimbursement scheme (PBS).
Premiums were to be valued at a maximum of 25% of the additional research or production
activity. Between 1999 and 2004, firms were required to undertake additional manufacturing
and R&D activity in Australia in exchange for higher prices for medicines listed on the PBS
(Morgan et al., 2008).

1
1. Local subsidiary of, or joint venture with, a multinational pharmaceuti-
cal company selling branded medicines in local and regional markets (i.e.
Glaxo Smith-Kline, Pfizer, etc.);
2. Generic manufacturer producing medicines for the local and global mar-
kets (i.e. Ranbaxy, Cipla, etc.);
3. Generic manufacturer producing medicines for predominantly the local
market; and
4. Locally–owned, small-scale manufacturers serving a portion of the
domestic market (Mercurio 2009).

Some manufacturers cut across more than one of the categories, as branded
medicine companies now operate their own generic companies and successful,
large-scale generic companies are also developing branded medicines. For the
purposes of the current review a jurisdictional definition has been adopted,
rather than one based on ownership. If production occurs within a country to
produce one or more of the materials listed below (see Product component),
this is regarded as ‘local production’. Most foreign direct investment (FDI) in
low-income countries remains in the non-productive sectors. Hence, this form
of multinational corporation subsidiary activity will tend to be minimal in the
case of LMICs.

Product component
The focus of this review is on biomedical products including pharmaceutical
products, vaccines and medical devices, for example. With regard to
pharmaceuticals, primary LP is the manufacture of active pharmaceutical
ingredients (APIs) and intermediates from basic chemical and biological
substances. Secondary LP includes the production of finished dosage forms
from raw materials and excipients (inactive substances). Tertiary LP is limited
to packaging and labelling finished products, or repackaging bulk finished
products. In relation to vaccines and LP, many vaccines are currently derived
from viral particles developed in eggs. Technology is specific for each vaccine
product and may include isolating viral particles, producing vaccine ‘seed’
viruses, bulk manufacture, and assembling polyvalent vaccines. With regard
to medical devices, the product component can be extraordinarily complex
as a medical ’device’ can be anything from a bed to a magnetic resonance
imagery machine.

1.3.2 ‘Low- and middle-income countries’

According to United Nations (UN) nomenclature, there is no established
convention for the designations ’developed‘ and ‘developing’ countries. The
World Bank classifies countries according to income, although it should be
noted that classification by income does not necessarily reflect development
status. Significantly, countries defined as LMICs by the World Bank are
considered to be ‘developing’ under the UN classification. For the purpose of
this report, countries have been classified according to the World Bank system,2

2 How we classify countries. World Bank website: http://data.worldbank.org/about/country-

classifications

2
which divides countries according to 2009 gross national income (GNI) per
capita, as follows:
• Low-income: GNI of US$ 995 or less;
• Lower-middle-income: GNI of US$ 996–3945;
• Upper-middle-income: GNI of US$3946–12 195.

According to the World Bank system, all other countries are considered to be
high-income countries (GNI per capita US$ 12 196 or more).

Some Central and Eastern European countries are not classified as LMICs by
the World Bank nor are they considered ‘developing’ by the UN system. Some
are high-income countries, for instance Hungary. Middle-income countries
such as Brazil, India, Mexico South Africa and Taiwan, China have been
called ‘emerging markets’ using other classification systems, however, the
classification based on income is more widely used.

Aggregating LMICs in this way masks differences in the unique social, economic,
political and health characteristics and contexts of countries and their effects
on industrial and health policy. However, for the purpose of this report we
use this approach to separate LMICs from those that are characterized by
more resources, a longer tradition of promoting and evaluating industrial and
health policies, and organizational structures – such as insurance systems –
that facilitate policy.

1.3.3 ‘Access to medicines’

The linkages between LP and ‘access to medicines’ may initially appear to be
relatively simple connections between production, competition and lower
prices for medicines, implying that LP provides lower prices through: increased
competition, increased economies of scale and/or simple geographical access.
However, access is a broader and more complex phenomenon, influenced by
more factors than lower prices. In the early stages of the production operations,
manufacturers in LMICs might not be able to capture essential economies
of scale, which are often only realized in the medium term. Hence a more
dynamic medium-term perspective of local production may be required.

Moreover, ’access to medicines’ is multi-faceted and includes:

• lower prices (and greater affordability);
• greater availability through the presence of local branded generic
medicines;
• local adaptation of pharmaceutical products by local firms (through
incremental innovation efforts of local firms);
• new forms of innovative medicines and medical products developed by
local firms that may/not be tailored to the local population(s);
• greater availability through better distribution networks of local firms (e.g.,
in some LMIC settings, local firms may be able to improve penetration of
rural markets).

3
2. Methodology
2.1 Search strategies
Building on the experience of a previous literature review on local production
(Kaplan and Laing, 2004), the search strategy was founded on two main
assumptions:
• Studies showing a robust relationship between ‘local production’ and access
to medicines would be sparse or even non-existent, so capturing different
aspects of the issue as possible was essential.
• Much of the local production-related literature occurs in the grey literature.
Issues related to local production of biomedical products are often cryptically
labelled since ‘local production’ is not a term in common academic use.
Because of its cross-cutting nature, reference to local production may be
found in relation to innovation capacity, science and technology, industrial
and pharmaceutical policy, IPR analysis and health economics.

As a result, local production is a wide-ranging and challenging subject to

search systematically using relatively standard search terms.

Literature searches were performed using keywords and their common

synonyms (i.e., ‘local’, ‘national’, ‘regional’ and ‘domestic’ variously combined
with ‘production’, ‘manufacturing’ and ‘pharmaceutical’, ‘medicine’, ‘diagnostic’,
and searching in both title and/or abstract fields. Search terms also varied
according to keywords and search terms permitted by respective databases
(Annex 1). Specifically, medical subject headings (MeSH) were used for PUBMED
and major subject headings were used for EMBASE, CSA/PAIS and POPLINE.
The search strategies were intended to identify information regarding high
income countries as well as LMICs.

In addition, there is a large literature comparing multinational corporations

and local producers in various countries in relation to finances, foreign direct
investment and labour productivity. Local production is not an economic
term, so further searches were completed within literature on comparative
economics and related performance. Databases were searched using
combinations of terms such as ’comparison’, ‘foreign’, ‘multinational’, ‘domestic’,
‘local’, ‘performance’, ‘price’, ‘pharmaceutical’, ‘emerging market’ etc. This
particular search was neither systematic nor exhaustive.

We further distinguished the literature into different categories depending on

the kind of study identified (e.g., case studies, econometric models, surveys
etc.) and the subject matter (e.g., access, IPR, innovation, supply chains etc.).

2.2 Databases

2.2.1 Peer-reviewed articles

Literature reviews were conducted using various databases:

4
AfricaWide Information; PUBMED (including the Health Services sub-category;
CINAHL; EMBASE; Thomson Reuters (formerly ISI); Web of Science; EconLit; CSA
International Bibliography of Social Science; International Network of Rational Use
of Medicines (INRUD); PAIS International; POPLINE (One Source); Google Scholar.

2.2.2 Grey literature

To search the grey literature more specifically the following websites were
reviewed: the Organisation for Economic Co-operation and Development
(OECD); the World Bank; the World Health Organization (WHO); the Pan
American Health Organization (PAHO); the Medicines Transparency Alliance
(MeTA); the United Nations Industrial Development Organization (UNIDO),
the United Nations Development Programme (UNDP); LexisNexis; e-medicine
archives; Google; and Google Scholar.

For the Google searches, we also looked for specific countries: Argentina,
Bangladesh, Brazil, Egypt, Ghana, Jordan, Mexico, South Africa and the United
Republic of Tanzania. We reviewed the most relevant articles up to the first
20 search results. The most relevant search result was then searched for all
hyperlinked related articles. We repeated this search twice, once for ‘medicines’
and again for ‘diagnostics’ (see Appendix 1).

For all Google searches that were not specified to a given country, the total
number of initial results was enormous, and active review was limited to
the first 100 references identified. All databases and searches that retrieved
relevant references are listed in Appendix 1.

UNCTAD case studies on local production and technology transfer

The United Nations Conference on Trade and Development (UNCTAD) recently
completed a series of case studies examining the transfer of technology
and local production of pharmaceuticals in different regions, highlighting
characteristics such as firm structure, the means by which they obtained and
developed the technological capacity to produce medicines, and the types
of products handled (UNCTAD, 2011). These case studies were searched to
identify the terms ’access’, ’availability’ and in order to answer the question:
“What kinds of evidence exist in these documents that technology transfer
improves access to biomedical products?”

2.2.3 The primary objective: Inclusion criteria

The primary objective of this review was to identify operational or
implementation/analytical studies identifying linkages between local
production and access to biomedical products in LMICs.

The nature of evidence that would clearly satisfy this objective is summarized
below, in Table 1.

5
Table 1 Criteria for robust evidence regarding local production and access to
biomedical products in LMICs
Criteria Explanation
Study objective Define the relationship between local production and access
to biomedical products (medicines and/or diagnostics)
Study designs Interrupted time series analysis; and/or
Repeated measures studies; and/or
Controlled or uncontrolled studies before and after local
production.
Study sites LMICs
Public and/or private health care institutions; and/or
Pharmaceutical retail sector; and/or
Public or private biomedical manufacturing sites.

2.2.4 The secondary objective

A secondary objective of this review was to identify descriptive literature
and case studies summarizing the general benefits of local production of
pharmaceuticals or diagnostics. The purpose was to gain inferences about the
kinds of information that might be needed to satisfy the primary objective.

6
3. Results
3.1 A note on the search strategy and results
It cannot be unequivocally stated that the sources identified in the current
review are the only potentially useful and reliable sources of information
on the subject. Although an attempt was made to implement a systematic
search strategy, additional materials could almost certainly be identified
using a free form search. The search strategy employed has not covered the
entire literature on local production, given its cross-cutting nature, but covers
sufficient ground to provide a substantive starting point.

3.2 Barriers to local production in LMICs

In most of the LMICs under consideration in this review, local production
operates in the context of the following key factors that often tend to
disfavour innovation and access to medicines.

• Human resource constraints

In the United Republic of Tanzania, senior management posts in the entirely
private local producer (i.e., Shelys) are filled with overseas staff, while the
middle and lower tiers of management are filled with local personnel. Both
of the local producers (i.e., TPI and Keko), which operate under public–
private partnerships (PPPs), are staffed almost entirely by local personnel
(Chaudhuri, 2008; Mhamba and Mbirigenda, 2010).
• Inadequate infrastructure
Poor roads, poor communication infrastructure and lack of transport.
• High operating costs
Due, in part, to poor infrastructure to support development. In many cases,
there is a lack of industrial zones where utilities could be easily provided for
all businesses.
• Weak links between local and international suppliers
Such linkages could reliably source ingredients and raw materials, obtain
relevant packaging, access support for specific equipment that requires
regular servicing and calibration, and help obtain spare parts for equipment
and machinery.
• High cost of local commercial capital
Including limited access to commercial credit.
• Poor price controls
policy framework and government structures so that systems and processes
do not guarantee any particular price to the consumer
• Industry fragmentation
This leads to weak competition and poor economies of scale. For
example, sub-Saharan African manufacturers generally produce at a cost
disadvantage to larger Asian generics manufacturers. Scale efficiencies

7
 generally plateau around 1.0–1.5 billion tablets in blister packaging per
year. Production at most sub-Saharan African formulation sites is far below
that level. For example, it is estimated that a third of the 30–40% cost
disadvantage that a leading Ghanaian manufacturer suffers versus high-
scale Indian manufacturers is attributable to scale.
• Low production quality standards
Because of low production quality standards, local producers may only
be granted market authorization for one or two years, while imported
medicines are generally granted market authorization for four or five years.
As a result, transaction costs for importing wholesale traders are likely to be
much lower than the costs for the local producers.

Various binding constraints on innovation exist in many countries, including

not creating incentives for productive entrepreneurship, lack of provision
of adequate skills to the work force, poor transmission of information
and ideas, and weak financing opportunities for start-ups, upgrades and
commercialization.

3.2.1 Protection of local producers

Disadvantaged by one or more of the above factors in most LMIC settings,
local producers can potentially benefit from regulatory support in one or
more of the following forms: (1) preferential policies for public tenders (price
advantage); (2) tax benefits on raw materials, intermediates and final products;
and (3) import bans on selected essential medicines (for example, in Ghana
and Nigeria, imports of the seven largest volume products are banned).

More particularly, the Government of Nigeria has previously used

pharmaceutical import bans to support increased production by domestic
manufacturers. While the medicines banned are those currently manufactured
locally, if there is not enough capacity to meet aggregate demand, prices
for any available medicines will be prohibitively high. In Pakistan, as of
2002, all importing firms in the private sector had to resister as importers
with the government. US-based pharmaceutical manufacturers also faced
differential application of the internal sales tax between some of the imported
pharmaceutical raw materials (taxed at 15%) and the same domestically-
produced raw materials (exempt from taxation). (US Government Printing
Office, 2002).

In the Philippines, investors in certain industries were subject to specific laws

that required local sourcing. Some laws have required that pharmaceutical
firms purchase semi-synthetic antibiotics from a specific local company, unless
they could show that the landed cost of imported semi-synthetic antibiotics
is at least 20% less than that produced by the local firm (US Government
Printing Office). Finished products that compete with locally-produced goods
faced high tariffs of 15–30 %. As one last example, in Malaysia the level of
tariff protection was generally lower on raw materials and increased for those
goods with value-added content or that had undergone further processing. A
sales tax of 10% was also levied on most imported goods.

8
In general, these protectionist policies aid the competitive position of local
producers. As local manufacturers increase their production capabilities, it
is possible that governments will extend this support to new products or
segments of the supply chain (International Finance Corporation, 2011).

3.3 The linkages between local production and access to

medicines
A study by Chen et al (2010) clearly illustrates the tension between industrial
and health policies, and the complexities of isolating the factors that determine
how local production impacts on access to biomedical products.

Chen et al. (2010) investigated the manufacturing, purchasing and prescribing

of essential medicines in two provinces in China. In 2007, they conducted
surveys of all manufacturers (n=253), and of 59 purposely selected retail and
63 hospital pharmacies, in Shandong and Gansu provinces in order to assess
production and supply of products on the 2004 National Essential Medicines
List (NEML), as well as factors underlying decision-making about production
and supply. They also reviewed prescriptions (n=5456) in health facilities to
calculate standard indicators of appropriate medicines use.

Local manufacturers in Shandong and Gansu produced only 62% and 50%,
respectively, of the essential medicines they were licensed to produce. Of a
randomly selected 10% of NEML products, retail pharmacies stocked up to
60% of imported products. Apparently, manufacturer and retail pharmacy
managers based their decisions about medicines production and stocking
on economic considerations, while hospital pharmacy managers cited clinical
need. Many essential medicines are not perceived as profitable because of low
demand, as well as price and mark-up controls. The Chinese pricing authority
strictly controls the price of generic medicines, while allowing higher prices
for branded generics and much higher prices for originator products. To
avoid price controls, manufacturers have shifted registration and marketing
to branded generics. In addition, hospitals and doctors have few incentives
to use relatively inexpensive generic essential medicines. Health facilities
generate greater profits through prescribing of medicines with high mark-ups
that are not subject to price control. The more medicines doctors prescribe,
the higher the income hospitals and doctors receive.

The authors of the study concluded that there were competing interests
between the pharmaceutical industry profit orientation and the government
objective of securing access to affordable essential medicines for the public.
Over the past three decades, provincial and municipal governments have
promoted the pharmaceutical industry as a pillar for economic growth and
job creation without emphasizing its responsibility in helping to secure access
to essential medicines.

If that this apparent disconnect between industrial and health policies exists
elsewhere, no specific, measurable link should be observed between local
production and access to medicines.

9
3.3.1 Other illustrative themes highlighted by the review
As part of the review, three further observations were made:
a. There is extensive business and economics literature covering the
comparative economics and strategic planning of multinational
corporations and domestic firms. There are fewer references with regard to
emerging markets or LMICs, and even less in relation to comparing local
and multinational pharmaceutical corporations.
b. The series of UNCTAD case studies on technology transfer as a useful
resource base; and
c. The relatively sparse, and mostly descriptive literature on the benefits of
local production.

a. Comparing the behaviour of domestic and foreign producers in-

country
There is an extensive literature providing evidence that multinational
corporations (MNCs) and local firms are different, primarily based on the fact
that the former tend to be relatively more intensive in R&D and advertising
than domestic producers (see Dunning, 1988, 1993; Markusen, 1991). The fact
that MNCs possess these firm-specific, ownership-based assets in relatively
large amounts implies that they are likely to be relatively efficient compared
to non-MNC. Correspondingly, MNCs are also likely to be relatively more
profitable than other firms if they face similar demand-related conditions.
In addition, the marketing networks of MNCs are often more concentrated
in international marketing than those of non-MNCs, making it easier for the
former to exploit international trade opportunities.

There are two rather distinct areas of economic literature relevant in this
regard. One stems from the theoretical aspects and attempts to explain why
MNCs exist despite their disadvantage relative to local firms due to inferior
knowledge of domestic markets. In addition, economic theories focus on how
MNCs overcome these disadvantages as a result of two major factors: they
possess relatively large amounts of firm-specific proprietary and knowledge-
based assets, as well as generally intangible ones related to production
techniques and processes, marketing networks and/or management ability.

Kirim (1986) assessed the comparative performances of MNCs and local

pharmaceutical firms in Turkey. Five main issues were reviewed: (i) technologies,
(ii) marketing practices, (iii) products, (iv) prices, and (v) the relative export
performances of MNCs and local firms.

Comparison of the product structure of MNCs and that of local firms with the
prevalent national pattern of disease burden – as well as with the pattern of
drug consumption by specific groups of medicines – indicated no significant
difference between the two groups of firms in terms of the products they
produce and market. Significantly, both the MNCs and the large comparable
local drug firms similarly relied more heavily on the production of medicines
that do not provide cures for the major causes of mortality in Turkey. The
authors could not conclude that the presence of local firms in the Turkish

10
pharmaceutical industry had been beneficial, because “ …all the negative
aspects of pharmaceutical production and exchange which the critics have
attributed solely to MNCs have been similarly reproduced by local firms in
the pharmaceutical industry in Turkey.“ Local firms were equally involved in
overpricing activities. It was argued that, due to the existing pricing legislation,
all firms in the industry were motivated to inflate their costs, and hence,
final product prices, The available evidence indicated, however, that MNCs
overpriced to an even higher extent than local firms.

Additional analysis and conclusions of comparative studies of domestic firms’

and MNCs’ behaviour are summarized in Table 2. Interestingly, most of the
available comparative information of this kind is not from the pharmaceutical
sector.

Table 2: Comparative behaviours of local firms and multinational corporations

Country Context of Analytical Conclusion(s) Reference
study method
India Pharmaceutical Firm-level data Domestic firms, Saranga
from National most of which and Phani
Statistics Office: are controlled (2009)
Econometric by family-based
study structures, enjoy
higher efficiencies
(operating profit
margins, net profit
margins, fixed asset
turnover, working
capital, inventory
holding period, and
many others) than
affiliates of MNCs.
Bangladesh Pharmaceutical/ Stock Domestic production Ahmed
Chemical exchange data: cost advantage over (2008)
Econometric large MNCs gives
study local products a
price advantage.
MNCs have more
advantageous
infrastructures,
technology, finances
and administration.
Continues…

11
Continued from previous page

Country Context of Analytical Conclusion(s) Reference

study method
Viet Nam Pharmaceutical Literature Local companies Simonet
review and enjoy a low-cost (2008)
interviews advantage: locally-
produced drugs are
less expensive that
those imported from
the West, Malaysia or
Thailand. Antibiotics,
cold remedies,
painkillers and
vitamins make the
bulk of the domestic
production.
China Electrical Qualitative: Strategic choices of Luo and
industries questionnaire foreign and local Tan (1998)
firms differ even
Quantitative:
when they directly
correlations
compete. MNCs
have superior
technological and
organizational skills
and local firms a have
more favourable
institutional
environment.
Thailand Automobile Firm-level data Foreign plants Ito (2002)
industry from National have high labour
Statistics Office: productivity, but
Econometric this is not due to
study ownership but
to other factors.
Small size of the
Thailand automobile
market prevents
both foreign
and local plants
from exploiting
economies of scale.
Viet Nam All industries Firm-level data Foreign MNC were Ngoc and
from National larger with higher Ramstetter
Statistics Office: labour productivity, (2004)
Econometric capital intensity,
study wage levels,
investment and
trade than local firms.
Results regarding
profitability were
mixed.
Continues…

12
Continued from previous page

Country Context of Analytical Conclusion(s) Reference

study method
Malaysia All industries Firm-level data No significant Khalifah
(mining, from National difference in and Adam
manufacturing, Statistics Office: labour productivity (2009)
utilities) Econometric between wholly
study foreign-owned
and locally-owned
establishments.
MNCs have
significantly lower
levels of labour
productivity than
locally-owned
establishments in
Malaysia.
Global Various Reviews and Performance gaps Bellak
industries summarizes arise in such fields (2004a)
the results as productivity,
of selected profitability, wages,
empirical skills and growth but
studies on foreign ownership
performance per se, is not a factor
gaps between in this.
MNCs and
their domestic
counterparts
Pakistan Various Firm-level data Foreign firms use Mahmood
industries from National more skill and and
Statistics Office: technology intensive Hussain
Econometric techniques than (1991)
study local firms, leading to
a labour productivity
advantage.
Spain Various Firm-level data Subsidiaries of Un and
industries from National MNCs invest less in Cuervo-
Statistics Office: external R&D than Zazzura
Econometric domestic firms. Both (2008)
study kinds of firms have
similar internal R&D
investments.
Continues…

13
Continued from previous page

Country Context of Analytical Conclusion(s) Reference

study method
Thailand Food, electronic, Supply chain Supply chain Yaibuathet,
automobile, surveys operational Enkawa
chemical performance and Suzuki
and textile is significantly (2006)
industries influenced by
industry type
and ownership
conditions. MNCs
have a higher supply
chain 'score' than
locals. Chemical
industry score was
near the bottom.
Local and foreign
chemical firms had
the same supply
chain "score".

b. Technology transfer and local production: UNCTAD case studies

Some of the information derived from the eight UNCTAD case studies,
including use of the terms ‘diagnostic’, ’access’, ’afford’ and ’avail’ (and their
various versions as noted by the wildcard ‘*’) are summarized in Table 3. Several
examples were also noted in these case studies of assertions that could not
be substantiated. This illustrates the difficulties in identifying corroborating
evidence in studies based mostly on interviews.

Table 3: UNCTAD case studies on technology transfer

Country ’Access’ and/or ‘diagnostic’ Examples
’availab*’ and or
’afford*’ (# related
to biomedical
products)†
1 15 (3) 5 (0) The relationship with MNC has
provided Y with early access to
therapeutics that are new to
the country or regional market
or have few competitors.
Some firms have attained
a level of sophistication
and technical capacity that
contributes to greater access to
medicines through discovery
and development of new
medicines and vaccines.
Continues…

14
Continued from previous page

Country ’Access’ and/or ‘diagnostic’ Examples

’availab*’ and or
’afford*’ (# related
to biomedical
products)†
2 25 (3) 0 A competitive market with
a large number of medium-
and large-sized companies
is theoretically sufficient to
provide ample space for price-
based competition that is
essential for greater access to
medicines. This does not seem,
however, to be the case.
From an access to medicines
perspective, the study
shows that both long- term
and short-/medium-term
considerations have to be
taken into account.
Access to affordable and
quality medicines through
local production depends on
the availability of scientific and
technological capacities.
3 14 (3) 4(0) Implementation of a universal
health care system has allowed
the creation of a public market
for generic products that
dramatically expanded access
to medicines.
Rise of local generic production
and the complementary
importation of other drugs
by multinational firms have
resulted in 86% of population
having access to medicines.
4 10 (0) 1(0)  
5 11 (2) 0 Locally manufactured non-
branded generic medicines are
the most affordable.
A decree mandating all
medicines be produced locally
is problematic from an access
viewpoint as high cost, low
volume imports may be barred.
6 7 (1) 6(0) Company X facility elsewhere
in Africa operates as a going
concern, and contributes to
providing access.
Continues…

15
Continued from previous page

Country ’Access’ and/or ‘diagnostic’ Examples

’availab*’ and or
’afford*’ (# related
to biomedical
products)†
7 24 (3) 0 Presently, the drugs
produced by company X are
approximately 20% more
expensive than other branded
drugs that are available in the
local market for the treatment
of the HIV.
8 20 (0) 0  

† . Total number of times the word appeared in the document (total number of times the word
was related to a biomedical product).

c. The putative benefits of local production

In our attempt to identify linkages between local production and access to
medicines, we can also look at its putative benefits. In principle, these benefits
may be able to provide: 1. a framework for the types of information that could
be collected in a robust monitoring and evaluation project, in order to quantify
these links; and 2. a way to assess the gaps that exist in other countries with
regard to their technical, financial and regulatory contexts.

We have obtained a document summarizing these presumed benefits in

some detail. It is a 2010 filing with the United States Securities and Exchange
Commission (SEC) 1 of a company (Vantage Health) wishing to build a facility
to manufacture APIs in South Africa. Other examples from the literature are
shown that also address these benefits.

Direct benefits
a. Potential cost savings. According to the Vantage Health (SEC) document,
a dedicated ARV–API facility in South Africa would be competitive against
the lowest cost international producers on the basis of improved process
technology, continuous (as opposed to batch) processing, and better
economies of scale. The extent of the cost saving depends on which APIs are
being manufactured and what processing steps are required.

However, the following general comments can be made about this potential
benefit: 1. Most APIs are produced in batch chemical plants that are highly
inefficient from an asset utilization perspective. Such plants are generally
oversized for the required capacity and operate according to long batch
processing cycles. A dedicated facility, which has been explicitly designed
to manufacture only a few APIs, would likely provide a lower cost platform
for ARV–API production. 2. Secondly, the process technology itself has been
considerably improved over the last few years through innovative technology.
Many of the established producers are constrained by old processes and
3 The US Government authority that maintains fair and efficient financial markets and
facilitates capital formation (see http://www.sec.gov/about/whatwedo.shtml)

16
technologies; new entrants have greater flexibility to innovate and select
more efficient process routes.

The United Republic of Tanzania: Mackintosh and Mujinja (2008) surveyed four
rural districts in the United Republic of Tanzania and found that nearly half
(46%) of recorded observations of various tracer medicines were locally made;
the most widely available basic medicines, including paediatric suspensions,
basic antibiotics and antimalarials, and analgesics, were all available and
widely stocked in Tanzanian versions. Only four companies – Shelys, TPI, Keko
and Zenufa – produce antibiotics (simpler ones such as amoxicillin, ampicillin,
chloramphenecol, and not the more advanced ones such as cepholosporins).
The Shelys product range consists mainly of simple antibiotics, cough and cold
preparations, analgesics and antipyretics, sedatives, nutritional supplements
and/or treatments, anthelmintics and antimalarials. TPI has started producing
fixed-dose combinations of three ARVs (Chaudhuri, 2008). Only the injectable
antibiotics, some chronic illness medicines, and one antibiotic were solely
available as imports. First-line combination ARVs were just beginning to be
locally produced and were found in some hospitals. India supplied a larger
proportion (27%) of the items recorded than Kenya, the other major import
source (20%), and India was the sole non-European source of the injectable
antibiotics. There were no significant differences between prices of medicines
from the three main countries of origin, suggesting a competitive pricing
process among the three suppliers with no apparent advantage given to the
Tanzanian products Mackintosh and Mujinja (2008).

• The United Republic of Tanzania: Chaudhuri (2008) found that local

production supplies approximately 30% of private and public markets.
These authors assert that “...this figure underestimates the importance of
local manufacturing for sustaining access to medicines in Tanzanian rural
areas.” Various tracer medicines included in their qualitative survey in four
rural districts were widely available in shops and nongovernmental facilities.
Of these medicines, an average 66% were locally made by Tanzanian
manufacturers. In rural health facilities, paediatric suspensions, basic
antibiotics, antimalarials and analgesics from Tanzanian suppliers were all
widely stocked. Only injectables, some chronic illness medicines and one
antibiotic were available solely as imports. Many Tanzanian products had
wide familiarity and labels that included information in Kiswahili. These
authors concluded that “… local production is currently a key contributor
to access to essential medicines in rural Tanzania.”
• Modelling study: Guimier et al. (2004)) created an economic model to test
whether domestic production of a variety of medicines could have a modest
impact on medicine affordability. By ‘modest’ the authors meant between a
1–26% reduction in ex works price. The higher range may seem impressive
but this price reduction was found to be very sensitive to increases in
API prices or a loss of (or failure to reach) market share and could easily
negate price reductions. The size of the mark-ups that are subsequently
added during distribution in both the public and private sectors is likely
to outweigh the reduction in ex works prices in a large proportion of

17
 sub-Saharan African countries. This could diminish the primary contribution
of domestic production to access if the distribution system does not pass
on the savings. This may be less of a risk in the case when medicines bought
by the government are distributed by public networks, but mark-ups are
also added in the public sector and can still add significantly to medicine
prices (Guimier 2004).
• Brazil: Nunn et al. (2007) compared Brazilian prices for locally-produced
generic ARVs to the lowest international prices meeting global
pharmaceutical quality standards. They found that as of 2006, prices for
Brazil’s locally-produced generic medicines were generally much higher
than corresponding global prices, and noted that these prices have risen
in Brazil while declining globally. They estimated the total excess costs of
Brazil’s locally produced generics totalled US$ 110 million from 2001 to
2005.
• India: Chaudhuri et al. (2006) used an econometric model with detailed
product-level data on monthly pharmaceutical prices and sales of
antibiotics in the Indian market (the fluoroquinolone segment of systemic
antibacterials). Their basic theoretical scenarios all involve the withdrawal
of one or more of the locally-produced product groups from the market
because of patent protection. The idea was that had patents for, e.g.,
ciprofloxacin, been recognized in India, all domestic products containing
ciprofloxacin would not be present in the market, leaving only the foreign
ciprofloxacin product group in the market. Using such a model, the authors
simulated prices and market shares and were able to calculate the additional
expenditure that Indian consumers would incur in light of the domestic
product withdrawal(s) and accompanying price and market share changes.
Empirically, the component of the consumer welfare loss attributable
to the withdrawal of locally- produced fluroquinolones turned out to be
significant and was considered an impact on access due to “ …differences
in the marketing and distribution networks, domestic products being more
readily available to Indian consumers than products produced by foreign
subsidiaries.” Nonetheless, the estimated loss of consumer welfare from the
simultaneous withdrawal of all four domestic product groups was more
than two times the sum of the estimated losses from scenarios where only
one domestic product group is withdrawn. In absolute terms, the authors
estimated that in the absence of any price regulation, the prices of foreign
patented products would rise between 100% and 400% if local production
ceased.
• Malaysia: Shafie and Hassali (2008) compared prices of innovator and
generic medicines in Malaysia. Some of the generic medicines were made
locally and some of them were considerably more expensive than imported
counterparts. The authors assumed that retail mark-ups were identical
across products and suggested that the local producers may not be
“efficiently producing affordable medicines” and are passing the high costs
on to the consumer. Figure 1 has been prepared using data from their study.
• The patterned bars show the average price of the listed generic medicines
(US$ per pill) for the Malaysian local producers (MY) and the foreign
counterparts (DE= Germany, CY= Cyprus, IN=India, CA=Canada, IT=Italy).

18
 The solid bars are the percentage (x100) difference in price between the
foreign and locally-produced generics. For all but one of these medicines,
at least one foreign generic was somewhat cheaper than the locally-
produced version. In particular for atenolol, loratidine and amoxicillin, the
foreign versions were significantly less expensive than the locally-produced
medicines.

Figure 1 Comparison of prices of innovator and generic medicines in Malaysia

2.50
IT

MY
2.00
CA

1.50

1.00
DE MY
TH
IN MY MY
TH MY MY
CA
0.50 CA DE CY MY
MY CY
TH MY DE
0.00
Glicazide Ticlopidine Glibenclamide Na Diclofenac Enalpril Cetrizine
60mg tab 250mg tab 5mg tab 50mg tab 20mg tab 10mg tab
-0.50
Atenolo Loratidine
50mg tab 10mg tab
Amoxlillin 500mg cap
-1.00

• Bangladesh: Chowdury and Kabir (2009) studied pricing differences

of 35 essential medicines between local producers and multinational
pharmaceutical companies in Bangladesh. Local pharmaceutical
production in Bangladesh mostly comprises formulation as the majority
of APIs and other raw materials are imported. A few active ingredients are
being produced by local companies. Only two products (Aspirin 300 mg,
Chlorpromazine 25 mg) of the 35 essential medicine products studied
had locally-produced unit prices higher than the corresponding imported
products. The prices of various locally-produced dosage forms of ibuprofen
and paracetamol were only slightly less than foreign versions. All these
medicines studies are very common over-the-counter (OTC) products. As
most OTC products are used in low doses and generally for short periods,
per-pill profits are expected to be high. A higher price can ensure some
degree of profitability, for local producers as well as foreign producers.
• The majority of locally-produced anti-infectives, however, were clearly less
expensive than their imported counterparts. This may mean that the actual
costs of raw materials and production technology for the local producers
are less than the foreign producers, but obtaining actual data is likely to
be difficult as this would probably be considered proprietary information.

19
 Multinational corporation managers have asserted that their pricing
policies in Bangladesh are restricted by parent companies and that they are
bound to import raw materials from sources (i.e., European) that are more
expensive than the sources of local producers (i.e., Asian). In addition, when
asked, managers of the foreign companies stated that the other reasons
for their higher prices were their “exclusive production capabilities and
exclusive marketing policies” as well as “more expensive and exceptional”
promotional campaigns. Five essential medicine products for chronic
conditions (Atenolol 50 mg, Glibenclamide, Amitriptyline, Griseofulvin and
Salbutamol) had exactly the same prices for locally- and foreign-produced.
There may be less of a need for a high per-pill profit when considering
medicines for chronic conditions (Chowdury and Kabir, 2009).
• Viet Nam: Kuanpoth (2007) studied ARV prices in Viet Nam. Locally-produced
ARVs are priced considerably lower than imported ARVs, currently on the
Vietnamese market, they are five to seven times higher than the current
best offer on the international market. This is caused, at least in part, by the
fact that the market for ARVs is very small.

b. Reliability of supply. According to the United States Securities and Exchange

Commission (2010) document, local production in South Africa would improve
the security of supply, and extend procurement options for ARVs.

• We note that various authors have asserted that increased local production
can mitigate the inflexibility of supply created by high dependence on
imports. In the United Republic of Tanzania, the government procurement
agency obtains supplies through one large annual tender (Chaudhuri et al.
2010). For unanticipated requirements, there are provisions for emergency
purchases, which presumably can be made rapidly from local producers.
However, floating international tenders and arranging supplies from foreign
manufacturers can take a substantial time. Particularly in public health crises,
this is a bottleneck to ensuring access to medicines. In principle at least,
supplies can be more reliable and secure, although empirical evidence for
this is difficult to obtain.
• The concept of a ‘supply chain’ originated in an industrial context, implying
the management of process of supply to manufacturers. This is now part of
the much wider discussion of supply of medicines to individual consumers/
users/patients (Mackintosh 2010). These concepts exist in countries where
most people struggle to buy medicines In Tanzania,, there appear to be
several competing ‘supply chains’ (Mackintosh 2010): a ‘delivery chain’ of
mostly ARV and tuberculosis (TB) medicines from only international firms
to facilities treating free at point-of-use; the supply chain from local firms
and Indian importers to public/nongovernmental organization (NGO)
facilities for essential out-of-pocket payments; and a private market without
a controlled supply chain, selling both subsidized imports and local and
imported commercial supplies.
• The ARV/TB supply chain is probably the most treatment-based and
equitable, although there is a high international subsidy and it excludes
local suppliers. The private market supply chain is the least equitable as it

20
 is payment based, not treatment-based, although the subsidies do reduce
patient exclusion to some extent.
• The supply chain for public/NGO facilities tends to encourage local suppliers,
and could lead to upgrading of local industrial capabilities and employment.

c. Quality standards. According to the United States SEC (2010) document, local
production in South Africa with regular surveillance on quality control issues,
in conjunction with health authorities, “would guarantee quality standards”
without compromising on cost.
• Maponga and Ondari (2003) conducted a pilot study to assess the quality
of antimalarial medicines (chloroquine and sulphadoxine/pyrimethamine)
in seven selected African countries, and to determine whether the quality
of these products was related to the level of the distribution chain at which
the samples were collected. There were failures of 56% (27/48) among
locally made products, compared to 47.2% (17/36) for foreign products for
chloroquine tablet active ingredient content, and 28% (7/25) versus 13%
(3/23) chloroquine-syrup active ingredient content. Further investigation
of this phenomenon will be important since it is easier for national drug
regulatory authorities to act and correct problems that involve domestic
manufacturers. No clear relationship between the quality of products and
the level of the distribution chain was observed. There were failures in
quality of antimalarials regardless of whether the product was taken from a
teaching hospital, district hospital, pharmacy or household. The reasons for
these failures in quality vary: some are due to storage, some to poor quality
of imported medicines and others to poor quality of locally-produced
medicines.
Indeed, there was no apparent difference in quality between locally/
manufactured and imported products and one might infer that locally/
produced and imported antimalarials were of equal quality.

d. Foreign import savings. According to the United States SEC (2010) document,
the average price for the first-line ARVs required to treat HIV/AIDS is US$ 950
to US$ 1100/kg. By 2012, the total annual import bill for the estimated South
African ARV procurement programme will be about ZAR4.9 billion (0.68 US$
billion, at 2007 prices; this figure assumes 1.75 million patients are on ARV
and based on a fully imported API that is locally formulated). Local production
may, to an extent, offset in part this foreign exchange exposure and import
deficit. It is estimated that the cost of importing the relevant raw materials is
about 55% of the API cost (depending on the API) and hence implies a foreign
import saving of at least ZAR2.4 billion (0.33 US$ billion) per annum. The latter
figure excludes any foreign currency earnings through the export of ARV APIs
to other countries.

• We could find no reference for another country to support this although

this supposition could be tested (See Section 4).

21
Indirect benefits:
a. Development of further innovation capacity. The need to diversify the
pharmaceutical manufacturing sector, and in particular to stimulate production
of more profitable, high technology products, has been emphasized by many
different countries. Over the past 20 years there has been strong growth within
this sector, to the extent that it now forms a major part of the high technology
activities of many developed countries, alongside telecommunications and
information technologies.

The literature on general knowledge ‘spillovers’ is relevant in this regard. These

are intellectual gains through exchange of information for which a direct
compensation to the producer of the knowledge is not given (Kesidou and
Romijn, 2008).

Many policy/makers, particularly those in LMICs, have competed rigorously

in attracting foreign direct investment (FDI). A common justification for this
incentive-based competition is the argument that FDI provides not only capital
and additional employment but also new knowledge to recipient economies.
The hope is that the new knowledge, transferred from multinational companies
to their subsidiaries for example, may spill over entire recipient economies
and increase the economic performance of domestic firms. This knowledge
spillover has recently been regarded as an important source of productivity
growth for LMICs.

In LMICs, dependence on foreign production explains the large number of

studies emphasizing the importance of accessing and absorbing international
knowledge for acquiring competitiveness and fostering economic growth
in these countries, and in particular the important role that international
knowledge spillovers could play in that process. The literature is vast and
determinants of knowledge spillover vary from sector to sector in line with
determinants of technological capacity.

• Uganda: Haakonsen (2009 looked at the Ugandan pharmaceutical industry

from the viewpoint of global pharmaceutical value chains and found that
it operated only in ‘downstream’ activities; namely, in the local importing,
assembly, production and marketing areas. The products are simple, and
this strand of the pharmaceutical value chain is price-driven. Inputs for
production are obtained from abroad, mainly from industry contacts in India.
Likewise, information, technology and machinery for product and process
upgrading are facilitated by their upstream linkages. The pharmaceutical
industry in Uganda has upgraded during the past 20 years, and did so
from imports of finished pharmaceuticals to packaging and assembly. This
upgrading took place even though the Ugandan companies were never
engaged as suppliers to lead firms in the pharmaceutical value chain.
The upgrading was facilitated by a combination of their upstream vertical
linkages to suppliers, their existing linkages downstream in the chain as
importers and retailers of pharmaceuticals for the domestic market, and
as a result of government policies. Ugandan companies have upgraded
by importing finished technologies and knowledge, not by learning

22
 production methods as such. Production is at a low level technologically
and has not increased the companies’ technological capabilities in terms of
higher prospects for further upgrading.
The machinery and technology for more efficient production are those
found in small- and medium-sized companies in other developing countries,
primarily India, as there is a huge technology gap between the Ugandan
industry and companies in industrialized countries. The market consists of
relatively poor people in need of basic medicine, and there is no scope for
producing high-value products in Uganda. Likewise, the producers are not
introducing new products into the market, but are replacing imports with
local production. However, the companies do upgrade their products; for
example, by improving packaging materials and product quality.
The notion that Ugandan companies are not introducing ‘new’ products
points to another challenge in this field, namely the definition of innovation.
It is unclear what ‘new’ means in the context of the Ugandan pharmaceutical
industry although one might infer that it means development of a novel
product.

b. Exports. A local API producer could also become a significant exporter.

Although the initial intention of a ‘local producer’ would be to develop itself
as a local supplier of a highly strategic product, ultimately this could assist
in building a regional production capacity that may benefit, for instance
neighbouring countries. From a macroeconomic viewpoint, this may
help improve trade imbalances. But this will also depend on the products
themselves, their patent cover and the scope of any voluntary license
agreements addressing patent issues.

• We found no evidence to support this, for instance in Sub-Saharan Africa,

although the supposition could be tested (see Section 4).

c. Development of human capital. Most of the essential skills for a successful API
manufacturing sector may already be well developed in certain countries (e.g.,
India, Thailand and South Africa) and within academic institutions (organic
chemistry, chemical engineering, mechanical engineering, pharmacology, etc.).
At the same time, it may be that experienced professionals with knowledge
of pharmaceutical manufacturing within an industrial environment are very
limited. The main reason for this gap would be the lack of a local API industry.
India is a major exception. In Hyderabad, India, much of the impressive growth
of the API manufacturing sector can be linked to the initial commitment of Dr
KA Reddy and the establishment of his company ’Dr Reddy's Laboratory’ in
1984. The history of the API industry in Hyderabad is an interesting example of
how an initial activity went on to snowball into a highly developed, populated
and profitable industrial sector.

The United Republic of Tanzania: In 2007, Losse, Schneider and Spennemann

conducted a situation analysis of Tanzanian local producers and included
a study of a major producer whose staff comprised mainly of Indian and
British expatriates. Tanzanian staff were still the minority and it was

23
mentioned by the CEO that this was “... a major problem.” The company
would prefer to employ Tanzanian staff, but the competency needed for
pharmaceutical production is simply not available in the country. In total
the company employs 800 people in the United Republic of Tanzania. The
Tanzanian employees are unskilled and work in the packaging area, whereas
the Indian and British staff are skilled.

24
4. Discussion and conclusions
The arguments linking access to medicines with domestic production of
biomedical products in high income countries were not reviewed because
such arguments tend not to be explicitly stated. The linkages are assumed
to exist in the United States and other OECD countries. Such linkages are a
complex function of health care and industrial policy, including insurance,
generic medicine policies, pricing and reimbursement policies. They are based,
at least in part, on the unique characteristics of the pharmaceutical market and
products, and the recognized weaknesses in the way this market functions. It
has been argued that to remedy these defects, the state (i.e., national/local) in
developed countries plays a specific and critical role in establishing controls
and regulatory mechanisms designed to overcome information imbalance,
moral risks and adverse choices, seeking to guarantee quality of – if not access
to –medicines. Innovation in relation to products, services and processes,
fuels economic growth through enhancements in productivity. As some share
of innovation comes from health-related applications, there is an economic
agenda closely tied to innovation in life sciences and health, that is linked to
the ability of producers to rapidly disseminate new technologies.

The pursuit of improved access to medicines often coincides with the pursuit of
industrial policy in the pharmaceutical sector; the latter relates to the support
for the pharmaceutical industry in terms of providing explicit or implicit
incentives to locate within national boundaries and invest in innovation. In
the United Kingdom, for example, industrial policy is explicitly pursued
through supply-side regulation by the Pharmaceutical Pricing Regulation
Scheme, which combines free-pricing subject to profit control and R&D
incentives. In Germany, industrial policy is implicit through free-pricing of
medicines and the implementation of targeted initiatives in certain areas such
as biotechnology by the relevant government agencies. In France, industrial
policy considerations (such as employment, manufacturing value added,
research and exports) are discussed during reimbursement negotiations and
are, therefore, linked to reimbursement decisions. In Spain, the government has
an agreement with industry to attract investment in certain priority research
areas and contributes by channelling funding to these areas. (Kanavos, 2011).

Of the various putative advantages of local production of biomedical products,

these advantages exist, at best, in some countries (mostly larger ones such as
India and Brazil) and are either not borne out or the impact is unclear in other
countries . Table 4 provides examples of each of these.

25
Table 4: Literature review: Examples of positive, negative and uncertain benefits
of local production
Potential benefit of local Positive impacts Unclear/negative
production impacts
Potential cost savings Some locally produced Some locally produced
medicines are less medicines are more
expensive than foreign- expensive than foreign-
made counterparts made counterparts
(Bangladesh, India, (Turkey, UNCTAD
UNCTAD study, study, Tanzania, Brazil,
Palestine) Malaysia, Vietnam)
Reliability of supply Literature on medicines Surprising little direct
regulation and quality in evidence one way or the
high-income countries other for this in LMICs
support this as a
positive benefit
Improved quality Literature on medicines Surprising little direct
standards regulation and quality in evidence one way or the
high-income countries other for this in LMICs
support this as a
positive benefit
Foreign import savings Little direct evidence Little direct evidence
from this literature from this literature
search search
Increased local innovation A vast literature on Little clear evidence
capacity ‘knowledge spillovers’ in from sub-Saharan Africa
high-income countries
especially, but also in
South-East Asia
Development of export Indian and South So far, little clear
capacity African companies are evidence from sub-
major exporters of ARVs Saharan Africa

Development of human Essential skills for R&D Preponderance of

capital and manufacturing expatriate staff in
capacity already Tanzanian firms
developed in Brazil,
China and India

Indeed these putative advantages exist primarily in high-income countries

as the bulk of biomedical products are made there, with India as a major
manufacturing hub for generic products and China as a key source of API.
More than four-fifths of pharmaceuticals sold globally – totalling about $773
billion in 2008 – are geared towards satisfying the needs of the high-revenue
markets of North America and Europe (UNIDO 2010b).

There is no reason, a priori, to expect that such advantages of local production

would not eventually accrue in LMICs. It has been said that the development
of a strong pharmaceutical industry in India may offer some suggestions
as to how to build a high-quality manufacturing industry in LMICs (UNIDO
2010b). In brief, there exists in India detailed quality requirements with a firm

26
timelines. Companies also received time-limited incentives such as working
capital credits, interest subsidies and export incentives, which enabled them
to invest in the necessary upgrades while remaining competitive. India has
a sizeable pool of skilled human resources, a large domestic market, and
capabilities to produce many of the inputs within the country.

The barriers to development of a local biomedical product industry are context-

dependent in other countries. Challenges are interrelated and their solutions
require cooperation and coordination. These barriers have been articulated by
others (Kaplan and Laing, 2004; UNIDO 2010a).

We can summarize our main conclusions as follows:

• We note the predominance of case studies and surveys and the relative lack
of econometric and time series studies linking local production and access.
• Our brief review of the UNCTAD technology transfer literature does not
suggest any robust attempt to link local production and access to medicines
but this may not be surprising as technology transfer may be considered
industrial rather than health policy, and the case study methodology is not
strictly applicable to investigate such a link.
• The business and economic literature that we have seen also is concentrated
on the upstream side (e.g., supply side, industrial policy, knowledge
spillovers, innovation etc.) with seemingly little information on the
downstream issues of local production and access to medicines.
• The public health literature on the subject of local production is directed
predominantly towards the issue of intellectual property rights and access
to medicines.
• It seems quite remarkable that many of the pricing surveys do not distinguish
the price of local versus foreign producers on a product-by-product basis.
• There is an almost complete absence of information on the link between
local production and access to medical devices. The reason for this may not
be difficult to discern. Modern technology is producing an overwhelming
abundance of medical devices at a rate that soon makes even the latest
device obsolete. Furthermore, there is an extreme diversity of the medical
device arena – diverse in terms of types of devices, degrees of complexity,
applications, usage, users and categories. Just as for pharmaceuticals,
research in medical devices often not based on public health needs. (WHO
2010) Furthermore, almost all medical devices present in developing
countries have been designed for use in industrialized countries. Although
beyond the scope of the present document, it is necessary to frame
medical devices as part of an agenda to improve global access so that it
does not just focus on upstream innovation efforts but also on choosing
which medical devices to procure in a rational way, responding to the
needs, and in ensuring that they are used as effectively as possible to best
improve health. Whether local production of medical devices contributes
to improved access to devices is an open question.

27
4.1 Methods employed in the literature are insufficient to prove a robust relationship
between LP and access
Table 5 lists the references cited in the text (as well as some others not cited) and the type of study
upon which the paper was based.

Table 5 References identified and corresponding study types

Reference Econometric Case study Time series Survey/Qualitative

Samira Guennif Brazil, India, Thailand

Shyama V. Ramani

Anil Hara Brazil, Cuba, India

Haakonsson Uganda

Anil Hara LAC

Nejla Yacoub Tunisia

Nunn et al. Brazil

Teixeira, Bastos Brazil

Veira Brazil

deOliveira Brazil

Chang et al. China

Semin Turkey

Thomas India, China

Orwa Kenya

Kisa Turkey

Chaudhuri et al. India

Losse and Schneider United Republic of United Republic of Tanzania

Tanzania

Flynn Brazil

Dinarvand Iran

Maponga and Ondari 8 African countries

Chaudhuri et al. United Republic of Tanzania

Mackintosh and United Republic of Tanzania

Mujinja

Kesidou and Romijn Uruguay Uruguay

Pradhan India India

Kuanpoth Thailand

Greco and Simao Brazil

Chaudhuri India

Chaudhury and Kabir Bangladesh

Mhamba and United Republic of

Mbirigenda Tanzania

Shafie and Hassali Malaysia

28
Table 6 lists the references (as in Table 5) but with a different focus. Keeping in mind the presumed
benefits of local production as it relates to access to medicines,2 those aspects of ‘access’ that are the
major focus of these papers are summarized. We note the preponderance of papers directed to IPRs.

Table 6 References identified and corresponding access to medicines criteria

Country Affordability/ Availability/ Innovation Availability/ IPRs Other Reference
Price Generics Distribution

India, % LP and
Thailand, imported Guennif,
X
Brazil medicines Ramani
inThailand

India, Brazil,
X (Brazil only) X Hara
Cuba

Uganda Haakonsson

LAC X Hara

Tunisia X Yacoub

Brazil X X Nunn et al.

Brazil X X Teixeira, Bastos

Brazil X-MOH
Veira
spending

Brazil Survey of LP deOliveira

China X X Chang et al.

Turkey X X Overview Semin

India, China X Thomas

Kenya Quality of
Orwa
medicine

Turkey Overview Kisa

India Chaudhuri
X X
et al.

United
Losse and
Republic of X Overview
Schneider
Tanzania

Brazil Overview Flynn

Iran Overview Dinarvand

Africa Maponga and

Quality
Ondari

United
Chaudhuri
Republic of Overview
et al.
Tanzania
Continues…

2 E.g., (a) lower prices (and greater affordability); (b) greater availability through the presence of local branded generics; (c) local
adaptation of pharmaceutical products by local firms (through incremental innovation efforts of local firms); (d) new forms
of innovative medicines and medical products developed by local firms that may, or may not be, tailored more or less to the
population(s); (e) greater availability through better distribution networks of local firms (as in the case of some LMICs where local
firms are indeed able to penetrate rural markets better).

29
Continued from previous page

Country Affordability/ Availability/ Innovation Availability/ IPRs Other Reference

Price Generics Distribution
United
Mackintosh
Republic of X
and Mujinja
Tanzania

Tanzania X Overview Chaudhuri

Uruguay Kesidou and

X
Romijn

India X Overview Pradhan

Thailand X Kuanpoth

Brazil Greco and

X X
Simao

India Overview Chaudhuri

Bangladesh Chaudhury
X X
and Kabir

United
Mhamba and
Republic of Overview
Mbirigenda
Tanzania

Malaysia Shafie and

X X
Hassali

Perhaps the best we can do at the present time is to draw inferences about the links between LP and
access to medicines.

There are certain other countries, such as Iran and Bangladesh (where domestic manufacturers
dominate the Bangladesh pharmaceutical industry with local companies enjoying an 80% market
share (Chowdury and Kabir, 2009) where there is also a very strong inference that LP has improved
access to medicines. This information does not take into account geographic heterogeneity of
access, however, and this could be extremely important. We should be able to find ways of robustly
monitoring and evaluating the link between LP and access to biomedical products.

4.2 Factors limiting understanding of the link between LP and access to medicines
Notwithstanding some national policies in LMICs that support local production, for the most part
‘access to medicines’ is not a precondition for a local factory to be built. The business and industry
pressures to create a local producer will usually overshadow health policy concerns. Also, the links
between LP and access to medicines have not been explored because it is harder to make access
to medicines a particular concern for individual firms, and at the collective level, accountability is
hard to enforce. There are likely to be some observable links between LP and access to medicines,
and the absence of evidence is not evidence of absence.

4.2.1 Conclusory and contradictory statements with little corroboration

One key limitation of the both the peer-reviewed and grey literature is that the putative benefits of
LP are sometimes referred to in conclusory statements with little supporting evidence. In some cases,
the information is contradictory (see Boxes 1 and 2).

30
Box 1. Quality Chemicals Ltd. in Uganda: One point of view

The Quality Chemicals Limited Company in Uganda was established in 2007

in conjunction with technology transfer from Cipla, Ltd. Its purpose is to
locally produce generic ARV medicines and WHO pre-qualified the facility
in March 2010 so the factory can now both legally manufacture and market
generic ARV medicines locally and internationally, and make them available in
bulk to charitable or donor organizations. Local production of generic ARVs
directly benefits patients, as medicines are produced at a lower cost, especially
compared to patented ARV medicines imported from foreign pharmaceutical
companies. In an interview, the managing director of this facility indicated
that locally-produced ARV medicines will be around 30% cheaper than
imported versions, which means that the monthly cost of triple combination
therapy would become available at around approximately US$ 9 per person:
a substantial saving. Thanks to local production, patients will be able to
take one tablet twice a day, containing three medicines in one, instead of a
cocktail currently consisting of 12 ARV medicines. The factory aims to prevent
potential problems associated with the limited availability of ARV medicines
by producing 2 million tablets per day, and increasing this amount to 6 million
tablets per day or 1.8 billion tablets annually when operating at full capacity
(Vermuelen, 2010).

Box 2. Quality Chemicals Ltd. in Uganda: Another point of view

Despite expectations that locally-produced medicine will be cheaper than

imported ones, a Ugandan medicine maker has stated the contrary. Locally
produced essential pharmaceuticals, including ARVs, are around 15% more
expensive than those imported from abroad.* ARV makers in Uganda have no
shortage of demand. However, there have been reports of closures by some
suppliers, although reasons have been withheld. Quality Chemical Industries,
which opened for production in January 2009, states that it has to add a 17.9%
margin on medicine sales to include the interest rates and development costs
from construction of the Ugandan facility. When factored into medicine costs,
Quality Chemicals claims that it makes consumer prices relatively higher than
the imported medicines (Business Monitor International, 2009).
* Confirmed by UNCTAD Uganda case study

Even if certain medicines are made exclusively by domestic manufacturers or even

domestic subsidiaries of multinational companies, it does not necessarily follow that
the population has access to affordable, quality-assured medicines.

4.2.2 The dynamic relationship between LP and access to medicines:

The changing context in Brazil
Brazil is exemplary in that it has created a viable public health response to
AIDS, which serves as an encouraging example of pooled demand power in the
developing world. The Brazilian Government fully subsidizes ARV medicines
through the Ministry of Health. Free distribution of AIDS medicines became
a reality, supported by law, in 1996. Fully 47% of ARV medicines are obtained
from national production. Brazil has also resisted pharmaceutical companies,

31
threatening temporarily to break Roche’s patent on an AIDS medicine in 2001,
for example, until the company reduced its price (Galvao, 2002).

As of early 2007, the Brazilian strategy to guarantee medicine supply included

domestic production of off-patent ARVs and the threat of compulsory licensing
for patented medicines. Thus, three factors were critical to this success:
legislation for free access to treatment; public sector capacity to manufacture
medicines; and strong civil society action to support government initiatives
to improve access (do Lago and Costa, 2009). In Brazil, a public agency (i.e.,
the government) created a pooled demand for free distribution. From 1997
to 2003, AIDS mortality dropped by 40% to 70%, morbidity decreased by 60%,
there were 360 000 fewer hospitalizations, and 58 000 thousand new AIDS
cases were avoided (Ford et al., 2007).

Were these declines between 1999 and 2001 due to domestic production of
off-patent ARVs, despite an increase in the number of patients? This is not
categorically provable, but there is a very strong inference that this is the case.

Since 2005, there has been a major increase in expenditure on ARVs. In part,
this was due to the emergence of viral resistance, which requires treatment
with expensive second- or third-line products. These are patent protected.
Imported ARVs now account for a substantial fraction of total Brazilian ARV
expenditure (do Lago and Costa, 2009). Nunn et al. (2007) found that prices
for Brazil’s locally-produced, generic ARVs are generally much higher than
corresponding global prices, and noted that these prices have risen in Brazil
while declining globally. They estimated the excess costs of Brazil’s locally-
produced generics to be US$110 million from 2001 to 2005.

The growing need to import high-cost medicines, production of which is

protected by patents, imposed a new agenda on the Brazilian state in relation
to the sustainability of drug production. This is quite different today than even
five years ago. The reality is that the Brazilian pharmaceutical market is presently
dominated by a handful of multinational companies. Large manufacturers
exert pressure on price formation and wield sufficient power to affect national
policies. The market in Brazil contains barriers to entry in the form of patent
protection, the need for high investments in R&D, control of the supply of active
ingredients, and brand name loyalty to the leading laboratories. (do Lago and
Costa, 2009). The share of total ARV supply relegated to Brazilian government
laboratories (Far Manguinhos) has decreased continuously between 2001 and
2006 in comparison to the share supplied by private companies.

Several additional factors make the connection between access to ARVs

and their local production somewhat problematic in Brazil. It may seem
remarkable, but production of APIs and intermediate products for synthesis
or use in manufacturing is limited. Nearly all of the intermediate products
used by government laboratories are imported from China or India (do Lago
and Costa, 2009) Only a few domestic private pharmaceutical companies
produce active ingredients for ARVs. The experience of the Brazilian HIV/AIDS
Programme shows that the government has assumed the role of providing

32
“public goods”. However, the market position of transnational companies in
ARV production is being strengthened.

Demographic transition in Brazil, characterized by the rapid ageing of

the population and increasing disposable income, correlates with higher
incidences of lifestyle-induced and age-related diseases such as hypertension
and diabetes. To the extent that government supply of biomedical products
requires that private sector interests and social/health interests be mutually
compatible, this balance is being challenged in Brazil.

LP and access to medicines in India: Weak links between industrial and health policies
Since India’s independence more than 60 years ago, the government’s two major
objectives have been to: (i) ensure availability of reasonably priced high-quality
medicines; and (ii) promote the growth and development of a strong domestic
pharmaceutical industry. Indian pharmaceutical companies are major exporters
not only to other LMICs, but also to high-income markets. Indian companies
contribute to the affordability of medicines in the U.S. Are Indian companies
contributing to the affordability of medicines in India? For a host of complex but
well documented reasons, India has been able to develop its industry but has
difficulty in ensuring availability of medicines (Chaudhuri, 2007).

Government policy has been a key ingredient of its industrial success. Where
India differs from other countries is that currently the large firms dominating
the industry are not multinational companies but local producers. A distinctive
feature of the pharmaceutical industry in India has been the close collaboration
between the government laboratories and the private sector (Chaudhuri,
2007). Almost all the top pharmaceutical companies in India – for example,
Cipla, Ranbaxy, Lupin, Nicholas Piramal. Wockhardt, Unichem, Torrent, Cadila,
Neuland, Sun Pharmaceuticals and Orchid – have used the services of the
Indian governmental laboratories (Chaudhuri, 2007). The model that the
Indian companies have adopted is to develop new molecules and license
out the molecules to multinational companies at early stages of clinical
development. As a result the Indian companies are effectively not targeting
neglected diseases, but diseases which interest multinational companies
(Chaudhuri, 2005). Locally-produced medicines are available, however, for
many other diseases that afflict Indian people. What has been a problem has
been distributing the medicines to those who need them and ensuring that
these are of proper quality. In this regard, there are two main issues:
1. Paradoxically, while multiple sellers for even new medicines have driven
down prices to a low level compared to the prices of the patent holders
abroad, the result has not been a competitive retail medicines market in
India, where substantial price differentials exist. With trimethoprim com-
binations, for example, there are 53 sellers, but the largest controls 46%
of the market and the top four firms control 76.8% of the market (Chaud-
huri, 2005). These firms have the market power to set the prices at levels
higher than other local firms.

33
 In India, given the absence of product patent protection for most of the
most essential medicines, the entire industry might be considered an
entirely generic market, yet the larger firms use brand names to create
product differentiation. Like the multinational companies, the Indian
generic companies target marketing at doctors to prescribe their brands
and directly at consumers for non-prescription purchases, spending
substantial amounts on sales promotion. Brands of reputed companies sell
at substantially higher prices because the products are considered reliable.
2. Most Indian states do not have a proper medicine procurement and dis-
tribution system. In India thousands of brands are available in the market.
But the vast majority of these are considered to be therapeutically irra-
tional, resulting in tremendous wasteful expenditure. A weak medicine
control administration is considered the major reason for such a problem.

4.3 A framework for evaluating LP and access to medicines

A first step towards an evidence-based framework describing the links
between LP and access to medicines would be to make a simple distinction
between two kinds of methodologies.

4.3.1 Static vs. dynamic experimental designs: an introduction

A static group comparison design (i.e., cross-sectional study) is a ‘snapshot’ of
relevant variables (price, affordability, availability) at one point in time. The
data are all collected at the same time (or within a short time frame). The
surveys of prices described in this document are all examples. It is very difficult
to rule out rival hypotheses and determine causality with this approach.

Dynamic methods (i.e., longitudinal) may be useful to provide more robust

evidence.

Panel data, also called longitudinal data or cross-sectional time series data, are
data where multiple cases (e.g., several local and multinational producers) are
observed at two or more time points/periods. This should include nationally
representative samples of local producers and multinational subsidiaries, or a
sample of pharmacies and clinics etc., each surveyed repeatedly over multiple
years.

There are two kinds of information in panel data: the cross-sectional information
reflected in the differences between subjects (i.e., differences between local
producers and multinational companies, between public and private sectors
etc. at one point in time) and the time-series information reflected in the
changes within subjects over time (changes in ARV production over time from
a local producer etc.).

Standard econometric comparisons of domestic firms and multinational

companies providing medicines locally could use firm- or plant-level data to
model a given activity. Comparisons could be made between the groups of
firms or plants. For example, medicine production can be compared between
two groups to confirm differences, and the differences can be examined if

34
they are found to be statistically significant. Another approach is to model the
activity in question (e.g. production of medicine, price levels of the produced
medicine, extent of local innovation in local producers and multinational
companies, availability of medicine produced by each firm etc.) directly as a
function of related variables (e.g. size of firm, age of firm, kind of medicine)
and a set of dummy variables identifying firms belonging to the group(s) of
interest. The significance of the differences in dependent variable among
groups, after controlling for differences in the other relevant independent
variables, is then revealed.

Unfortunately, there may be very poor access to firm- and/or plant-level data.
In short, rigorous comparisons require models that allow relevant control
variables and their effects to be identified and isolated before comparisons
are made. Small sample size and lack of data on relevant variables often make
such modelling impossible.

In such cases, a more appropriate approach is to look at time-series variations

in indicators of performance. A time series design collects data on the
same variable at regular intervals (weeks, months, years, etc.) in the form
of aggregate measures of a population. For example, unemployment rates
among local producers, ARV production, consumer price indices etc.

The primary drawback of this time series methodology is that a lack of good
quality data may make it impossible to separate the various factors that
may be influencing performance. For example, if a region dominated by
local producers is observed with a time series showing lower prices than an
adjacent ’control’ region dominated by multinational producers, lower prices
may reflect differences in capital and technology intensity, and prices may
be more comparable if differences in capital intensity could be controlled for.
In many cases, comparisons of multinational companies and local firms are
further complicated by the fact that countries may have severe policy biases
that favour state-owned enterprise.

Moreover, from a business perspective, the “firm/establishment” is actually

not an economic unit per se. It is an accounting unit, quite unlike an individual
factory (Bellak, 2004b). A typical “firm” may include plants of different sizes
and different ages. With relatively frequent compositional changes over time
this makes it difficult to undertake certain types of analysis in a economically
meaningful way. This may be less true in reality as in LMICs where the “firm” is
likely to consist of a single factory.

A special form of time series, called an interrupted time series (Soumerai et al

(2008) may be more useful in studying the linkage between LP and access to
medicinesbecause the effect of an intervention on an outcome variable can
assume a variety of forms over time. In such circumstances, the intervention
is made by someone other than the researcher and it is not normally made
for experimental purposes, although the researcher makes use of it for causal
analysis. In that sense an interrupted time series can be considered a “natural
experiment”. Data for evaluating the impact of the intervention usually

35
comes from existing archives: collections of data gathered routinely across time for
administrative purposes.

To give a hypothetical example, in April 2011, country X granted a compulsory license

for an important ARV to ELP SA, a local producer of generic pharmaceuticals. Providing
such administrative data exists on ARV production, or price or volume, market share etc.,
a time series can be created beginning from well before the intervention and continuing
through and after it. Time-series data can change level and direction for many reasons,
some related to the intervention and others due to other factors. Separating potential
influencing factors into those essentially related to the intervention and those only
coincidentally related is the principal task in analyzing time-series experiments. Having
detailed expectations about how the relationship should change in response to an
intervention is the best protection against erroneous interpretation of extraneous
influences and chance occurrences. In this hypothetical scenario, the ARV price and/or
various access markers would change at some point after ELP SA started producing. A
‘control’ group in country X (i.e., one lacking the intervention) would be ideal.

Table 7 Summary of static and dynamic experimental designs

Lower prices Greater Local Innovative Better
(and greater availability adaptation products distribution
affordability) (e.g., more of products developed by networks of
local branded by local local firms local firms
generics firms (more
incremental
innovation)

Static Prices of locally Market share/ Patent

produced vs. surveys of local vs. filings/R&D
foreign-produced foreign-produced expenditures/
generics/branded generics/branded of local
generics on a generics on a producers vs.
product-by- product-by- Importers/
product basis. product basis. in-country
multinational
subsidiaries

Dynamic Price of various Market share/ Patent

local/imported surveys of various filings/R&D
Time/panel
products prior to, local/imported expenditures
longitudinal
during, and after generic products of local
Analyses/ a major financial prior to, during, producers/
investment/a and after a multinationals
interrupted
policy change/ major financial prior to,
time series
factory going “on investment/a during, and
line” policy change/ after a major
factory going “on financial
line” investment/a
policy change/
factory going
on line

36
Appendix 1: Search terms
Database(s) Search term key words for Number of initial hits
database(s)
Lexis Nexis Local, production, pharmaceutical, 997
medicine diagnostic
Google/Google Scholar Local, innovation, pharmaceutical, >1000
medicine, diagnostic, access
Google 54
Peter Singer Abdallah Daar ethics,
local production pharmaceutical,
medicine, diagnostic
AfricaWide Information Local production pharmaceutical,
CINAHL medicine diagnostic
OECD Local production 68
Health services subset of Local production 4
PUBMED
POPLINE medicine / pharmac* / diagnostic & 21
production / manufacture
ECONLIT 32
medicine / pharmac* / diagnostic &
ECONLIT 1127
production / manufacture
Comparative AND (foreign OR
multinational) AND (domestic OR
local) AND performance OR price AND
“pharmaceutical”
CSA Local production pharmaceutical 13
medicine diagnostic
ISI Web of Knowledge 429
Local production pharmaceutical
CSA 818
medicine diagnostic
38
Comparative AND (foreign OR
multinational) AND (domestic OR
local) AND performance OR price
Same as immediately above AND
“pharmaceutical”
BioOne Abstracts and (local or domestic or national) and 12
Indexes AB=production
12
PAIS International and AB=(pharmaceutic* or medicine
8
or diagnostic)
Worldwide Political
Science Abstracts local or domestic or national) and
AB=production
and AB=(pharmaceutic* or medicine
or diagnostic)
International AB=(local or national or domestic) and 22
Bibliography of the AB=production
Social Sciences
and KW=(medicine or pharmaceu*)
Continues…
AB= abstract; KW= key words

37
Continued from previous page

Database Search term key words for database(s) Number of initial hits
Google Scholar 1. Specific country AND pharmaceutical
country-specific
AND with the exact phrase: “production”
AND with at least one of these words:
“local domestic national regional
diagnostic”
2. Specific country AND diagnostic
AND with the exact phrase: “production”
AND with at least one of the words:
“local domestic national regional
pharmaceutical”

38
PUBMED search terms
1. (domestic[All Fields] AND ("economics"[MeSH Terms] OR "economics"[All Fields] OR
"production"[All Fields])) AND ("pharmacy"[MeSH Terms] OR "pharmacy"[All Fields]
OR "pharmaceutical"[All Fields] OR "dosage forms"[MeSH Terms] OR ("dosage"[All
Fields] AND "forms"[All Fields]) OR "dosage forms"[All Fields])
2. "medicine industry"[Mesh] AND "medicine"[Mesh]
3. (Medicine[ti] OR Pharmaceutical[ti] OR Diagnostic[ti] OR "Medicines, Essential/sup-
ply and distribution"[MAJR]) OR "Medicines, Essential/economics"[MeSH Terms])
AND (Production[tiab] OR Manufacture[tiab]) AND (Local[tiab] OR regional[tiab] OR
national[tiab] OR domestic[tiab]) NOT (("cells"[MeSH Terms] OR "cells"[All Fields]
OR "cell"[All Fields]) NOT clinical[All Fields])
4. Limits – Humans
5. Developing Countries
"Developing Countries"[Mesh] OR Africa[Mesh] or "Africa South of the Sahara"[Mesh]
or Asia[Mesh] or "South America" [Mesh] or "Central America"[Mesh] OR Africa[tiab]
or Asia[tiab] or "South America"[tiab] or "Latin America"[tiab] or "Central
America"[tiab]

"American Samoa"[tiab] or Argentina[tiab] or Belize[tiab] or Botswana[tiab] or

Brazil[tiab] or Bulgaria[tiab] or Chile[tiab] or Comoros[tiab] or Costa Rica[tiab]
or Croatia[tiab] or Dominica[tiab] or Equatorial Guinea[tiab] or Gabon[tiab] or
Grenada[tiab] or Hungary[tiab] or Kazakhstan[tiab] or Latvia[tiab] or Lebanon[tiab]
or Libya[tiab] or Libia[tiab] or Libyan[tiab] or Lithuania[tiab] or Malaysia[tiab]
or Mauritius[tiab] or Mexico[tiab] or Micronesia[tiab] or Montenegro[tiab] or
Oman[tiab] or Palau[tiab] or Panama[tiab] or Poland[tiab] or Romania[tiab] or
Russia[tiab] or Seychelles[tiab] or Slovakia[tiab] or South Africa[tiab] or "Saint Kitts
and Nevis"[tiab] or "Saint Lucia"[tiab] or "Saint Vincent and the Grenadines"[tiab] or
Turkey[tiab] or Uruguay[tiab] or Venezuela[tiab] or Yugoslavia[tiab] or Mayotte[tiab]
or "Northern Mariana Islands"[tiab] or "Russian Federation"[tiab] or Samoa[tiab] or
Serbia[tiab] or "Slovak Republic"[tiab] or "St Kitts and Nevis"[tiab] or "St Lucia"[tiab]
or "St Vincent and the Grenadines"[tiab]

Albania[tiab] or Algeria[tiab] or Angola[tiab] or Armenia[tiab] or Azerbaijan[tiab]

or Belarus[tiab] or Bhutan[tiab] or Bolivia[tiab] or "Bosnia and Herzegovina"[tiab]
or Bosnia[tiab] or Cameroon[tiab] or China[tiab] or Colombia[tiab] or Congo[tiab]
or Cuba[tiab] or Djibouti[tiab] or "Dominican Republic"[tiab] or Ecuador[tiab]
or Egypt[tiab] or El Salvador[tiab] or Fiji[tiab] or "Georgia (Republic)" [tiab] or
Guam[tiab] or Guatemala[tiab] or Guyana[tiab] or Honduras[tiab] or "Indian
Ocean Islands"[tiab] or Indonesia[tiab] or Iran[tiab] or Iraq[tiab] or Jamaica[tiab]
or Jordan[tiab] or Lesotho[tiab] or "Macedonia" [tiab] or "Marshall Islands"[tiab]
or Micronesia[tiab] or "Middle East"[tiab] or Moldova[tiab] or Morocco[tiab] or
Namibia[tiab] or Nicaragua[tiab] or Paraguay[tiab] or Peru[tiab] or Philippines[tiab]
or Samoa[tiab] or "Sri Lanka"[tiab] or Suriname[tiab] or Swaziland[tiab] or
Syria[tiab] or Thailand[tiab] or Tonga[tiab] or Tunisia[tiab] or Turkmenistan[tiab] or
Ukraine[tiab] or Vanuatu[tiab] or "Cape Verde"[tiab] or Gaza[tiab] or Georgia[tiab]
or Kiribati[tiab] or Macedonia[tiab] or Maldives[tiab] or Palestine[tiab] or "Syrian
Arab Republic"[tiab] or "West Bank"[tiab]

39
 Afghanistan[tiab] or Bangladesh[tiab] or Benin[tiab] or "Burkina Faso"[tiab] or
Burundi[tiab] or Cambodia[tiab] or "Central African Republic"[tiab] or Chad[tiab]
or Comoros[tiab] or "Democratic Republic of the Congo"[tiab] or "Cote d'Ivoire"
[tiab] or Eritrea[tiab] or Ethiopia[tiab] or Gambia[tiab] or Ghana[tiab] or
Guinea[tiab] or Guinea-Bissau[tiab] or Haiti[tiab] or India[tiab] or Kenya[tiab] or
Korea[tiab] or Kyrgyzstan[tiab] or Laos[tiab] or Liberia[tiab] or Madagascar[tiab]
or Malawi[tiab] or Mali[tiab] or Mauritania[tiab] or Melanesia[tiab] or
Mongolia[tiab] or Mozambique[tiab] or Myanmar[tiab] or Nepal[tiab] or
Niger[tiab] or Nigeria[tiab] or Pakistan[tiab] or "Papua New Guinea"[tiab]
or Rwanda[tiab] or Senegal[tiab] or "Sierra Leone" [tiab] or Somalia[tiab] or
Sudan[tiab] or Tajikistan[tiab] or Tanzania[tiab] or East Timor[tiab] or Togo[tiab] or
Uganda[tiab] or Uzbekistan[tiab] or Vietnam[tiab] or Yemen[tiab] or Zambia[tiab]
or Zimbabwe[tiab] or Burma[tiab] or Congo[tiab] or Kyrgyz[tiab] or Lao[tiab] or
"North Korea"[tiab] or "Solomon Islands"[tiab] or "Sao Tome"[tiab] or Timor[tiab]
or "Viet Nam"[tiab]

"developing country"[tiab] OR "developing countries"[tiab] OR "developing

nation*"[tiab] OR "less* developed country"[tiab] OR "less* developed
countries"[tiab] OR "under developed country"[tiab] OR "under developed
countries"[tiab] OR "poor* country"[tiab] OR "poor* countries"[tiab]

"middle income country"[tiab] or "middle income countries"[tiab] or "low income

country"[tiab] or "low income countries"[tiab]

lmic[tiab] or lmics[tiab]

(#1) OR (#2) OR (#3) OR (#4) OR (#5) OR (#6)

Japan[tiab] OR "United States"[tiab]

40
POPLINE
Developing Countries:
Developing countries / Afghanistan / Bangladesh / Benin / Burkina Faso /
Burundi / Cambodia / Central African Republic / Chad / Comoros / Democratic
Republic of the Congo / Cote d'Ivoire / Eritrea / Ethiopia / Gambia / Ghana
/ Guinea / Guinea-Bissau / Haiti / India / Kenya / Korea / Kyrgyzstan / Laos
/ Liberia / Madagascar / Malawi / Mali / Mauritania / Melanesia / Mongolia
/ Mozambique / Myanmar / Nepal / Niger / Nigeria / Pakistan / Papua New
Guinea / Rwanda / Senegal / Sierra Leone / Somalia / Sudan / Tajikistan
/ Tanzania / East Timor / Togo / Uganda / Uzbekistan / Vietnam / Yemen /
Zambia / Zimbabwe / Burma / Congo / Kyrgyz / Lao / North Korea / Solomon
Islands / Sao Tome / Timor / Viet Nam / Albania / Algeria / Angola / Armenia
/ Azerbaijan / Belarus / Bhutan / Bolivia / Bosnia and Herzegovina / Bosnia /
Cameroon / China / Colombia / Congo / Cuba / Djibouti / Dominican Republic
/ Ecuador / Egypt / El Salvador / Fiji / Georgia Republic / Guam / Guatemala /
Guyana / Honduras / Indian Ocean Islands / Indonesia / Iran / Iraq / Jamaica
/ Jordan / Lesotho / Macedonia / Marshall Islands / Micronesia / Middle East
/ Moldova / Morocco / Namibia / Nicaragua / Paraguay / Peru / Philippines /
Samoa / Sri Lanka / Suriname / Swaziland / Syria / Thailand / Tonga / Tunisia
/ Turkmenistan / Ukraine / Vanuatu / Cape Verde / Gaza / Georgia / Kiribati /
Macedonia / Maldives / Palestine / Syrian Arab Republic / West Bank / American
Samoa / Argentina / Belize / Botswana / Brazil / Bulgaria / Chile / Comoros
/ Costa Rica / Croatia / Dominica / Equatorial Guinea / Gabon / Grenada /
Hungary / Kazakhstan / Latvia / Lebanon / Libya / Libia / Libyan / Lithuania
/ Malaysia / Mauritius / Mexico / Micronesia / Montenegro / Oman / Palau /
Panama / Poland / Romania / Russia / Seychelles / Slovakia / South Africa /
Saint Kitts and Nevis / Saint Lucia / Saint Vincent and the Grenadines / Turkey
/ Uruguay / Venezuela / Yugoslavia / Mayotte / Northern Mariana Islands /
Russian Federation / Samoa / Serbia / Slovak Republic / St Kitts and Nevis / St
Lucia / St Vincent and the Grenadines

Title and Abstract:

medicine / pharmac* / diagnostic & production / manufacture

41
Bibliography
Abbott F (2010). Latin American Dialogue on Technology Transfer for Local Manufacturing Capacity On
Drugs And Vaccines, 18-19 March 2010, Buenos Aires, Argentina. Available at: http://frederickabbott.
com/uploads/Abbott-Local_Production_and_Transfer_of_Technology__BA__rev_2.pdf
Ahmed S (2008). Financial Performance and Characteristics of Pharmaceutical and Chemical Industry
in Bangladesh: Multinational versus Domestic Corporations: An Interim Report Presented in Partial
Fulfilment of the Requirements for the Degree Bachelor of Business Administration, Independent
University, Bangladesh. Available at www.sb.iub.edu.bd/Internship_Report_by_Shoeb_Ahmed.pdf
Alfaro L et al (2004). FDI and economic growth: the role of local financial markets. Journal of
International Economics; 64:89–112.
Attridge CJ and Preker A (2005). Improving Access to Medicines in Developing
Countries, World Bank HNP Series, Washington, D.C. Available at: http://siteresources.
worldbank.org/HEALTHNUTRITIONANDPOPULATION/Resources/281627-1095698140167/
AttridgeImprovingAccessFinal.pdf
Bellak C (2004a). How Domestic and Foreign Firms Differ and Why does it Matter? Journal
of Economic Surveys; 18(4): 483–514. Available at: http://onlinelibrary.wiley.com/
doi/10.1111/j.0950-0804.2004.00228.x/pdf
Bellak C (2004b). How performance gaps between domestic firms and foreign affiliates matter for
economic policy, Vienna University of Economics, Department of Economics, Vienna, Austria, 23pp.
Available at: http://www.unctad.org/en/docs//iteiit20045a3_en.pdf
Business Monitor International (2009). Middle East and Africa Pharma and Healthcare Insights, August
2009. Available at: http://www.pharmaceuticalsinsight.com/file/99384/local-manufacturing-moving-
forward.html
Borensztein, E, Gregorio JD and Lee JW (1998). How does foreign direct investment affect economic
growth? Journal of International Economics; 45:15–135.
Caves RE (2007). Multinational Enterprise and Economic Analysis, Cambridge University Press, New York.
Chen W et al (2010). Availability and use of essential medicines in China: manufacturing, supply, and
prescribing in Shandong and Gansu provinces. BioMed Central Health Services Research; 10:211–219.
Chaudhuri S (2005). The WTO and India's pharmaceuticals industry: Patent protection, TRIPS, and
developing countries. New Delhi ; New York: Oxford University Press.
Chaudhuri S, Goldberg PK and Panle J (2006). Estimating the Effects of Global Patent Protection in
Pharmaceuticals: A Case Study of Quinolones in India. The American Economic Review; December
2006:1477–1514.
Chaudhuri S (2007). The Gap Between Successful Innovation and Access to its Benefits: Indian
Pharmaceuticals. The European Journal of Development Research; 19(1):49–65
Chaudhuri S (2008). Indian generic companies, affordability of drugs and local production in Africa with
special reference to Tanzania. IKD Working Paper No. 37. Open University Research Centre on Innovation
Knowledge and Development, Milton Keynes. http://www.open.ac.uk/ikd/documents/working-
papers/ikd-working-paper-37.pdf
Chaudhuri S et al (2010). Indian Generics Producers, Access to Essential Medicines and Local
Production in Africa: An Argument with Reference to Tanzania. European Journal of Development
Research; 22 (4):451–468.
Chowdury N and Kabir ER (2009) Per pill price differences across therapeutic categories:
A study of the essential drug brands marketed by multinational and local pharmaceutical companies in
Bangladesh. African Journal of Marketing Management; 1(9):220-226. Available at: http://www.
academicjournals.org/ajmm
Correa, CM (2000). Integrating Public Health Concerns into Patent Legislation in Developing Countries.
South Centre, Geneva. Available at
http://www.southcentre.org/publications/publichealth/publichealth.pdf
Correa CM (2007). Intellectual property in LDCs: Strategies for enhancing technology transfer and
dissemination. UNCTAD: The Least Developed Countries Report, Background Paper No.4. Available at:
http://www.unctad.org/sections/ldc_dir/docs/ldcr2007_Correa_en.pdf

42
Dinarvand R (2009). New National Drug Policy in Iran leading to Expanded Pharmaceutical Market and
Extended Access of Public to Medicines. Iranian Journal of Public Health; 38(Suppl. 1):158–161.
Dunning JH (1988), The Eclectic Paradigm of international production: a restatement and some
possible extensions. Journal of International Business Studies; 19(1):1–31.
Dunning JH and Lundan SM (2008). Multinational Enterprises and the Global Economy, Second Edition.
Edward Elgar Publishing, London and Massachusetts.
Ford N et al. (2007). Sustaining access to antiretroviral therapy in the less-developed world: lessons
from Brazil and Thailand. AIDS; 21 (suppl 4):S21–S29.
Flynn M (2008). Public Production of Anti-Retroviral Medicines in Brazil, 1990–2007. Development and
Change; 39(4):513–536.
Galvao J (2002). Access to Antiretroviral Drugs in Brazil. The Lancet; 360 (7 December):1862–1865.
Grace C (2004). Leveraging the private sector for public health objectives: A briefing paper for DFID on
technology transfer in the pharmaceuticals sector. DFID Health Systems Resource Centre, London.
available at http://www.hlsp.org/LinkClick.aspx?fileticket=uKdz_fHjItM%3D&tabid=1643
Grangeiro A et al (2006). Sustentabilidade da política de acesso a medicamentos anti-retrovirais no
Brasil. Revista de Saúde Pública; 40:60–9.
Greco D and Mariangela S (2007). Brazilian policy of universal access to AIDS treatment: sustainability
challenges and perspectives. AIDS; 21:S37-S45.
Guennif S and Ramani SV (2008). Catching up in the pharmaceutical sector: Lessons from case
studies of India, Thailand and Brazil. Paper presented in the VI Globelics Conference at Mexico City,
September 22-24 2008. Available at http://smartech.gatech.edu/jspui/bitstream/1853/35080/1/
Samira_Guennif_Catching_up.pdf
Guimier J-M, Lee E and Grupper M (2004). The evidence base for domestic production and greater access
to medicines. The DFID Health Systems Resource Centre (HSRC), London. Available at:http://www.unido.
org/fileadmin/user_media/Services/PSD/BEP/Guimier-ProcessesIssuesImprovAccessMed-Sep2004.pdf
Haakonsson SJ (2009). ‘Learning by importing’ in global value chains: upgrading and South to South
strategies in the Ugandan pharmaceutical industry. Development Southern Africa; 26(3):499–515.
Hira A (2009a). The political economy of the global pharmaceutical industry: Why the poor lack access
to medicine and what might be done about it. International Journal of Development Issues; 8(2):84–101.
Available at: http://www.emeraldinsight.com/1446-8956
Hira A ( 2009b). Learning from the Tigers- Comparing Innovation Institutions in Rapidly Developing
Economies within Latin America. Revista Latinoamericana de Economia; 40 (156):125–129. Available at:
http://www.aeaweb.org/annual_mtg_papers/2007/0106_1015_1103.pdf
The Business of Health in Africa; Annex 3 Examples of Successful Business Models in Life Sciences
Manufacturing and Innovation. 2011, International Finance Corporation, Washington DC. Available at
http://www.ifc.org/ifcext/healthinafrica.nsf/Content/FullReport
Ito K (2002). Are Foreign Multinationals More Efficient? Plant Productivity in the Thai Automobile Industry?
The International Centre for the Study of East Asian Development, Kitakyushu, Japan. Working Paper
Series Vol. 2002-19. Available at www.icsead.or.jp/7publication/workingpp/wp2002/2002-19.pdf
Kanavos P (2011). Policy Approaches to Pharmaceutical Pricing and Reimbursement in European
Countries at http://www.allhealth.org/briefingmaterials/kanavosbackground_fnl_062106-357.doc
Kaplan W and Laing R (2004). Local Production of Pharmaceuticals: Industrial Policy and Access to
Medicines: An Overview of Key Concepts, Issues and Opportunities for Future Research. World Bank Health,
Nutrition and Population (HNP) Discussion Paper 54 pp, available at http://www.who.int/medicines/
technical_briefing/tbs/KaplanLocalProductionFinal5b15d.pdf
Kesidou E and Romijn H (2008). Do Local Knowledge Spillovers Matter for Development? An Empirical
Study of Uruguay’s Software Cluster. World Development; 36 (10):2004–2028.
Khalifah NA and Adam R (2009). Productivity Spillovers from FDI in Malaysian Manufacturing: Evidence
from Micro-panel Data. Asian Economic Journal; 23(2): 143–167.
Kirim AS (1986). Transnational corporations and local capital: Comparative conduct and performance
in the Turkish pharmaceutical industry. World Development; 14(4):503–521. Available at:http://www.
sciencedirect.com/science/article/pii/0305750X86900665

43
Kuanpoth J (2007). Patents and Access to Antiretroviral Medicines in Vietnam after World Trade
Organization Accession. The Journal of World Intellectual Property; 10(3/4):201–224.
do Lago RF and Costa N do R (2009). Antiretroviral manufacturers and the challenge of universal access to
drugs through the Brazilian National STD/AIDS Program. Cadernos de Saúde Pública; 25(10):2273–2284 .
Losse K, Schneider E and Spennemann C (2007). The Viability of Local Pharmaceutical Production in
Tanzania. Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH. Available at: http://
www.unido.org/fileadmin/user_media/Services/PSD/BEP/Tanzania.pdf
Luo Y and Tan Luo JJ (1998). A comparison of multinational and domestic firms in an emerging market:
A strategic choice perspective. Journal of International Management; 4:121–40.
Mahmood Z and Hussain J (1991). Performance of Foreign and Local Firms in Pakistan: A Comparison.
The Pakistan Development Review; 30(4):837–847.
Mackintosh M (2010). Essential medicines supply chains and inequality The Need for New Indicators
from Pharma and Beyond Sant' Anna School of Advanced Studies, Pisa, Italy 15–16 May 2010 (18 pp).
Available at: http://www.innovation-equity.eu/file_upload/maureen-mackintosh_presentation.pdf)
Mackintosh M and Mujinja PGM (2008). Pricing and competition in essential medicines markets: the
supply chain to Tanzania and the role of NGOs. IKD Working Paper No. 32. Open University Research
Centre on Innovation Knowledge and Development, Miltom Keynes. Available at http://www.open.
ac.uk/ikd/projects_lowcostdrugs.shtml
Maponga C and Ondari C (2003). The quality of antimalarials: A study in selected African countries.
World Health Organization, Geneva (WHO/EDM/PAR/2003.4). Available at: http://whqlibdoc.who.int/
hq/2003/WHO_EDM_PAR_2003.4.pdf
Markusen JR and Maskus KE (1991). Discriminating among Alternative Theories of the Multinational
Enterprise , available at http://www.columbia.edu/~dew35/PDF%20files/Markusen%20and%20
Maskus%20Text1.pdf (last accessed 29 June 2011)
Mercurio B. (2009) Health in the Developing World: The Case for a New International Funding and
Support Agency. Asian Journal of WTO & International Health Law and Policy; 27:1–29.
Mhamba RM and Mbirigenda S (2010). The pharmaceutical industry and access to essential medicines
in Tanzania. EQUINET Discussion Paper 83; July 2010 25 pp. Available at: http://equinetafrica.org/bibl/
docs/DIS83TZN%20medicines%20mhamba.pdf
Milstien JB, Gaule P and Kaddar M (2007). Access to vaccine technologies: Brazil and India. Vaccine;
25(44):7610-7619.
Morgan S, McMahon M and Greyson D (2008). Balancing health and industrial policy objectives in the
pharmaceutical sector: Lessons from Australia Health Policy; 87:133–145.
Musungu S. and Oh C (2005). Use of flexibilities in TRIPS by developing countries: Can they promote access
to medicines? Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH), Study
4C. Available at http://www.who.int/intellectualproperty/studies/TRIPSFLEXI.pdf
Ngoc PM and Ramstetter ED (2004). Foreign Multinationals and Local Firms in Vietnam’s Economic
Transition. Asian Economic Journal; 18(4):371-404.
Nunn AS et al (2007). Evolution of antiretroviral drug costs in Brazil in the context of free and universal
access to AIDS treatment. PLoS Medicin;e 4(11):1804–1817. Available at: http://medicine.plosjournals.
org/perlserv/?request=get-document&doi=10.1371/journal.pmed.0040305&ct=1
de Oliveira AE, Eliana ML and Bermudez J (2006). Public production of medicines in Brazil: an overview.
Cadernos de Saúde Pública; 22(11):2379–2389.
Orwa A et al (2004). Influence of Manufacturing Practices on Quality of Pharmaceutical Products
Manufactured in Kenya. East African Medical Journal; 81(6):287–292. Available at: http://www.ajol.info/
index.php/eamj/article/view/9177
Pradhan JP (2006). Global Competitiveness of Indian Pharmaceutical Industry: Trends and Strategies.
Institute for Studies in Industrial Development, Working paper 2006/05 , 68 pp. Available at http://
mpra.ub.uni-muenchen.de/12340/1/MPRA_paper_12340.pdf
Rodrik D and Rosenzweig M (ed) (2009). Handbook of Development Economics; Vol. 5, 1072 pp.
Saranga H and Phani BV (2009). Determinants of operational efficiencies in the Indian pharmaceutical
industry. Intl. Transactions in Operational. Resresearch; 16:109–130. Available at http://onlinelibrary.
wiley.com/doi/10.1111/j.1475-3995.2009.00668.x/pdf

44
Semin S and Güldal D (2008). Globalization of the pharmaceutical industry and the growing
dependency of developing countries: the case of Turkey. International Journal of Health Services;
38(2):379–98.
Shafie AA and Hassali MA (2008). Price comparison between innovator and generic medicines sold by
community pharmacies in the state of Penang, Malaysia. Journal of Generic Medicines; 6:35–42.
Simonet D (2008). The Vietnamese pharmaceutical market: a comparison of foreign entry strategies.
International Journal of Business and Emerging Markets; 1(1):61-79.
Soumerai SB et al (2008). Use of atypical antipsychotic drugs for schizophrenia in Maine Medicaid
following a policy change. Health Affairs; 3:w185–w195.
Sweileh WM (2003). Substitution of Foreign Prescribed Medicines by Community Pharmacies in
Palestine: A Legal and Pharmaco-Economic Analysis. An-Najah University Journal of Natural Sciences;
17(1):35–41. Available at http://www.najah.edu/page/2147
Sweileh W, Jaradat N and Mustafa A (2004). Antibiotic Drug Cost Variations in Palestine: Physicians and
Patients Dilemma. An-Najah University Journal of Natural Sciences; 18(1):73–79.
Thomas JJ (2008). Innovation in India and China: Challenges and Prospects in Pharmaceuticals and
Biotechnology. Madras School of Economics, Working Paper 35/2008. Available at: http://www.mse.
ac.in/pub/working%20paper%2035.pdf
Un AC and Cuervo-Zazzura A (2008). Do subsidiaries of foreign MNEs invest more in R&D than domestic
firms? Research Policy; 37:1812–1828. Available at: http://www.sciencedirect.com/science/article/pii/
S0048733308001546
The Local Production of Pharmaceuticals and related Technology Transfer in Selected Developing
Countries. 2011, United Nations Conference on Trade and Development (UNCTAD), Geneva.
United Nations Industrial Development Organization (UNIDO 2010a). Informal Sub‐Group Meeting on
Local Pharmaceutical Production; 30 September 2009. Available at: http://www.unido.org/fileadmin/
user_media/PMO/IDB38/idb38_15e.pdf
United Nations Industrial Development Organization (UNIDO 2010 b). UNIDO support in fostering local
pharmaceutical industry in developing countries, with special regard to essential health products. Report
by the Director-General Industrial Development Board . Thirty-eighth session Vienna, 24–26 November
2010, 16 pp. Available at http://www.unido.org/fileadmin/user_media/PMO/IDB38/idb38_15e.pdf
United States Government Printing Office (2002): Country Reports on Economic Policy and Trade
Practices. Available at: http://ftp.resource.org/gpo.gov/prints/107/s_77259.txt
United States Securities and Exchange Commission (2010) Registration Statement under the
Securities Act of 1933 [for] Vantage Health. Available at: http://www.faqs.org/sec-filings/100819/
Vantage-Health_S-1/
Vermuelen N (2010). Uganda’s Luziria Drug Factory: Quality generic ARVs versus patents and their
promoters. CAI HIV & AIDS in Africa Newsletter Consultancy Africa Intelligence 5pp. Available at:
http://www.consultancyafrica.com/index.php?option=com_content&view=article&id=405:ugand
as-luziria-drug-factory-quality-generic-arvs-versus-patents-and-their-promoters&catid=61:hiv-aids-
discussion-papers&Itemid=268.
World Bank Country Classification system. World bank, Washington DC. Available at: http://data.
worldbank.org/about/country-classifications.
World Health Organization (2003). Rapid Assessment of Access to HIV/AIDS Medicines in Vietnam.
World Health Organization Vietnam, Hanoi.
World Health Organization ( 2010). The Priority Medical Devices Project: Medical Devices: Managing the
Mismatch. Geneva, 2010. Available at: http://whqlibdoc.who.int/publications/2010/9789241564045_eng.pdf
Yacoub N (2010). National Innovation Systems and Economic Development. The 5th Globelics Academy
Ph.D. School on 2–14 June, 2008, Tampere – Finland, ”Is patent protection an incentive for innovation?
Literature and case study of the Tunisian pharmaceutical Industry. Available at: http://www.
globelicsacademy.net/2008/2008_student_presentations/Yacoub_GA08.pdf
Yaibuathet K, Enkawa T and Suzuki S (2006). Supply Chain Operational Performance Analysis: Thai
Manufacturing Sector. Proceedings of the 7th Asia Pacific Industrial Engineering and Management
Systems Conference, 17–20 December 2006, Bangkok, Thailand. Available at: http://www.knu.edu.tw/
lecture/%E8%AA%B2%E7%A8%8B%E8%B3%87%E6%96%99/APIEMS-2006/Paper/T1C3.pdf
Zhang F et al. (2009). Methods for estimating confidence intervals in interrupted time series analyses of
health interventions. Journal of Clinical Epidemiol; 2:143–148.

45
ISBN 978 92 4 150243 6