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Issues
Big Pharma down,
not out, after
India patent blow
By Ben Hirschler and Kaustubh Kulkarni
by a landmark patent defeat, Western drugmakers
will be wary about launching new products in
India, but they cannot afford to quit a country tipped
to be the world’s eighth largest market for medicines by
2016. Makers of patented drugs will in future have to get
more creative about doing business in India, including
striking deals with local firms to sell cheaper versions of
their drugs, industry experts believe. The decision by
India’s Supreme Court on Monday not to allow a patent on
Novartis AG’s cancer drug Glivec angered but did not surprise
US and European drug companies, given past intellectual
property (IP) setbacks. And it is unlikely to send
them rushing for the exit. “India is too big to ignore,” said
Amit Backliwal, who heads South Asian operations for
leading healthcare information provider IMS Health.
“Companies will definitely get cautious, and it definitely
means a change in their business model, but I don’t think
they will pull out.”
On paper, there is huge potential in India’s rapidly
growing $13 billion-a-year drugs market, which is driven
these days by chronic diseases such as diabetes as well as
infections. So far, though, it has failed to become a moneyspinner
for the world’s top pharmaceutical companies,
despite a new law in 2005 allowing drug patents for the
first time. Innovative patented drugs make up no more
than 5 percent of sales, according to IMS, and they have
been under siege after a series of rulings allowing generics
firms to over-ride patents for cancer drugs like Bayer AG’s
Nexavar.
New Delhi has pulled no punches in its fight with Big
Pharma, both by raising the bar for patents and being
ready to issue so-called compulsory licences that open the
door for cheap generics when patented drugs are deemed
unaffordable. In the face of such hurdles, some companies
are already building new business models. Roche Holding,
for example, plans to offer cut-price versions of two blockbuster
cancer drugs Herceptin and MabThera under an
alliance with Indian generics firm Emcure Pharmaceuticals.
It is a scheme that Ajay Kumar Sharma, associate director
of the pharmaceutical and biotech practice at business
consultancy Frost & Sullivan, believes other drugmakers
could now emulate.
India’s stance on IP has long been a thorn in the side of
Western business, prompting calls by Pfizer Inc and other
US firms last month for more pressure on the country to
reform policies that can block US exports. The argument
cuts little ice in India, where officials see differential pricing
- steep discounts for less well-off markets - as an obvious
option for Western companies. “It is up to them to
decide on India. Don’t forget, India is a large market, a
country of 1.2 billion,” said Raghunath Mashelkar, former
director general of the Council for Scientific and Industrial
Research and an architect of India’s IP policies.
With differential pricing common in industries from
autos to mobile phones, he argues pharmaceutical firms
must find new ways to make products affordable for lower-income
groups. “Drugmakers will have to work out
strategies for the lower sections, to give affordable access
to medicines and make money by large volumes and
smaller margins,” he told Reuters. “And then they will look
at the middle and the upper sections and make money
through smaller volumes but higher margins.”
It is a calculated risk, yet a number of drugmakers are
already coming around to the view that trading volume
for price is the way forward. One of those is
GlaxoSmithKline Plc, which has a large footprint in India
and has just invested $900 million to raise its stake in its
consumer healthcare subsidiary. GSK’s diversified
approach to healthcare is shared by a number of rivals,
including Novartis, that also have big interests in over-thecounter
(OTC) remedies and branded generics, in addition
to innovative medicines.
It is this non-prescription sector that is set to dominate
in India, driving double-digit percentage growth in a market
that IMS has forecast will reach $24-34 billion by 2016,
vaulting the country to eighth from 14th in the global
league table. PricewaterhouseCoopers puts sales by 2020
at $49 billion. Much of the new business will still come
from cheap generics made by local companies, but
Western firms are also seeking to put their brands on
unpatented medicines, prompting the likes of Abbott
Laboratories and Daiichi Sankyo Co Ltd to buy up Indian
companies. With sales of patented drugs in Western countries
slowing, emerging markets are a vital growth driver
for drugmakers. India cannot be ignored, but there are
clearly better bets elsewhere. — Reuters
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By Elena Becatoros
B arbed
wire-topped walls stretch across the narrow,
twisted streets of Nicosia’s walled medieval
city, where abandoned buildings extend across a
no-man’s land. On the other side, Turkish Cypriots have
been watching with fascination - and consternation - as
the economy of their long prosperous southern neighbors
implodes. Separated by a militarized border, Greek
Cypriots and Turkish Cypriots had no contact for the
best part of 30 years from the mid-1970s onwards; they
have only been able to cross from one side to the other
for the last decade. Torn apart by inter-ethnic strife that
climaxed in a 1974 Turkish invasion, the two sides have
much to be bitter about.
But bitterness is not the dominant sentiment in
northern Nicosia, as the southern side that once proudly
trumpeted its membership in the euro currency goes
into meltdown. “I am very sorry about it,” said Selcuk
Ekendal, a soft-spoken Turkish Cypriot pensioner
watching friends play cards in a coffee shop, not far
from the barricades dividing north from south. This is
not just a southern affair, he insists: “The crisis is everywhere.”
But the truth is, the crisis doesn’t directly affect
Turkish Cypriots. Without any financial ties to the south,
and outside of the eurozone, the north has not been
touched by the Greek Cypriot economic disintegration.
Unrecognized by any country apart from Turkey, the
breakaway Turkish Cypriot state has no direct trade
partners apart from Turkey - making it almost entirely
dependent on the large emerging power. That was
once a curse but these days it’s looking increasingly
like, if not a blessing, at least a safety net.
To be sure, the north has long languished as an economic
backwater, while the Greek Cypriots in the south
enjoyed a post-invasion financial boom that many
dubbed an ‘economic miracle’ and led to decades of
sustained growth, eventually allowing them to clinch
coveted EU membership.
For Greek Cypriots, being part of the euro club now
seems in many ways a shackle - because of the harsh
conditions imposed on staying inside, and the even
more frightening consequences of leaving. The Turkish
Cypriot economy is so dependent on Turkey that it
even uses the Turkish lira as its de facto currency. But
these days, there’s an element of relief, although
remarkably little gloating, in being able to watch the
euro turmoil as a spectator.
It’s a remarkable reversal of fortune. Although the
1974 invasion left northern Cyprus with most of the
country’s fertile agricultural land and rapidly growing
tourist sites, the breakaway state’s political isolation
came with a huge economic cost. Hundreds of thousands
of Turkish settlers flowed into the island. Ankara
spent billions sustaining them, and the newly formed
government. It quickly became clear that the statelet
14 ANALYSIS
depended for its survival on Ankara, both economically
and politically. To the south of the dividing line, the
Greek Cypriot economy recovered fast from the invasion,
eventually turning its part of the island into an
off-shore banking hub that grew to dwarf the island’s
gross domestic product by eight times - something
economists had long warned was unsustainable. And
unsustainable it was: Greek Cypriot banks tottered as
they became overexposed to Greek debt that became
toxic when that country’s economy crumbled over the
last few years. Their collapse would have dragged
down the entire economy and raised fears that Cyprus
could end up becoming the first country to leave the
17-nation eurozone. European officials rushed to patch
together some kind of rescue, but insisted that ordinary
Greek Cypriot savers had to contribute, too.
While politicians tried to work out what would work,
banks in the south were shut down for nearly two
weeks to prevent people draining their accounts. A
new last-minute bailout agreement sparing ordinary
savers averted disaster - but for Greek Cypriots, the
economic pain is probably just beginning. Turkish
Cypriots, on the other hand, have slowly seen their
tourism industry blossom.
But Turkish Cypriots said they knew exactly how the
WEDNESDAY, APRIL 3, 2013
Reelection may better Hamas ties with West
By Adel Zaanoun
K haled
Meshaal’s reelection as leader of Hamas,
which controls the Gaza Strip, provides a chance
for the Islamist group to improve ties with the
international community, analysts say. The veteran
leader was chosen Monday to serve another four-year
term despite indications he might be forced aside by
the movement’s powerful and more radical leadership
in Gaza. Based in exile, the pragmatic politician’s more
moderate line on Israel and inter-Palestinian reconciliation
has given him wide-ranging support in the Arab
world and some sympathy in the West.
“Meshaal’s differences with Hamas’s more radical
leadership, and flexibility on issues like reconciliation
and peace, presents him to the world as a rational
leader whom it is possible to deal with,” said Walid Al-
Mudallal, a politics professor at Gaza’s Islamic
University. “He excels in... relations with the Arab
world,” and his reelection “will give a big enough
chance to improve Hamas’s ties with the West and to
market it as a movement that isn’t hostile,” he said.
Meshaal’s comments last year that he was willing
to “give a chance” to talks with Israel may make him
more palatable to the international community, but it
sat uncomfortably within a movement whose charter
calls for the destruction of the Jewish state. Late last
year, Meshaal said he would not seek another term as
Hamas chief, but the ongoing upheaval in the Middle
East changes in the region forced a rethink.
“Arab and regional changes were the fundamental
reason for Meshaal changing his mind about candidacy,
and for his victory,” said Mukhaimer Abu Saada, a
politics professor at Al-Azhar University in Gaza. “No
one has his political experience,” he added, saying his
candidacy was supported by Hamas leaders across the
territories as well as externally. “Hamas faces the challenges
of Palestinian reconciliation, confronting Israel,
and relations with Egypt. Meshaal is able with his experience
to bring Hamas through its difficult challenges.”
Hamas has a long and bitter history of rivalry with
the Fatah movement of president Mahmoud Abbas
which governs the West Bank, is viewed as a terrorist
organisation by Israel, and has strained ties with Cairo
which suspects Gazan involvement in a deadly attack
on troops in Sinai last year. But with Meshaal at the
helm, things could well change, Abu Saada said. “Two
years ago, the international community saw political
Islam as a danger and wouldn’t deal with Meshaal. But
the Arab revolutions and victory of political Islam mean
the US and Europe want to re-examine their thoughts
on this. Through Egypt and Qatar, Hamas has a plat-
form to improve relations with Europe and the United
States, he said.
Salah Jumaa, a specialist on Palestinians for Egypt’s
MENA news agency, said that “support from Cairo is a
gateway to the world” for Hamas. “The Muslim
Brotherhood played a role in Meshaal’s importance to
the movement,” he said, referring to Egypt’s ruling
Islamist party, from which Hamas stemmed. “Cairo
hosting the Hamas meeting to elect Meshaal is proof
that Egypt will support the movement in opening it up
to the West.”
Egypt played a central role in brokering reconciliation
efforts between Hamas and Fatah which led to the
signing of a deal in April 2011, although it has yet to be
implemented. And Qatar has also proposed a mini Arab
summit aimed at reconciliation which has been welcomed
by both rival movements. Even for Israel, said
Saada, “they will prefer someone they know” in charge
of Hamas - even if it is a sworn enemy. In Sept 1997,
agents of Israel’s Mossad secret service disguised as
Canadian tourists bungled an attempt to assassinate
him on a street in Amman by injecting him with poison.
But the avowed radical has gradually come around
to an implicit acceptance of the notion of a Palestinian
state alongside Israel, although the Jewish state has so
far reserved judgement. — AFP
Turkish Cypriots: Solidarity tinged with relief
people of the south were feeling in their crisis. “We
have experienced what Greek Cypriots have experienced
a long time ago, about 12 years ago, when a lot
of banks went bankrupt and people lost a lot of money,”
said Hassan Chirakli, an affable Turkish Cypriot who
runs a shop selling traditional Turkish sweets. Turkey
suffered a deep financial crisis in 2001 that forced the
country to overhaul its banking system by restructuring
and recapitalizing failed banks. Turkish authorities
took over more than a dozen struggling banks - and
with the Turkish Cypriot economy so closely linked to
that of its protector nation, the effects in impoverished
northern Cyprus were brutal.
In this photo taken March 24, 2013, Selcuk Ekendal, 72, speaks to AP inside a coffee shop in the Turkish
Cypriot part of the divided capital Nicosia. — AP
The closest the two sides have come to resolving the
island’s division came a few years later, in 2004, with a
peace plan brokered by then-UN Secretary General Kofi
Annan. With hopes high, the deal was put to separate
votes in the north and the south. The Turkish Cypriots
accepted the plan, but the Greek Cypriots rejected it.
Chirakli says the answer to the financial woes on either
side lies with reunifying the island. “If the Greek
Cypriots had said yes to the Annan plan, it would have
been completely different,” he said. “This is what I wanted
all the way, and I still want it. Some sort of a solution
to this country.” — AP