GlaxoSmithKline CEO: Big Pharma has to be willing to concede in India

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GSK CEO Andrew Witty

Indian officials must have been glad to hear from GlaxoSmithKline ($GSK) CEO Andrew Witty. During a trip to the country, Witty told Indian media that the country's policies on pricing and patents are understandable, even reasonable, though they may pain the pharma industry.

"I think it is wholly reasonable for a country that is having tremendous growth with challenges has to think about pricing," Witty told The Economic Times. But he offered a hint of rebuke to authorities who've taken an adversarial stance against foreign drugmakers, saying that "there are alternative ways to achieve" cost savings, "and having a good dialogue may create positive ways to do it."

Of course, "good dialogue" is something that the Indian government has had with few drugmakers ever since the health ministry forced Bayer to license its on-patent cancer drug Nexavar to a generics maker intent on selling low-cost copies. Patent officials have yanked intellectual property protections on a series of Big Pharma drugs, including Roche's ($RHHBY) hepatitis C drug Pegasys and Glaxo's own cancer drug Tyverb. And since the country's top court rejected Novartis' ($NVS) bid for a patent on its blood cancer treament Gleevec (sold as Glivec in India), the Swiss drugmaker's CEO Joe Jimenez and top officials in India have exchanged some barb-filled letters about the country's policies.

Witty has said in the past that attacking IP protections isn't the best way for India to increase access to cutting-edge medicines. But Big Pharma can't expect to avoid pricing warfare in the country--or in other developing markets--if companies insist on business as usual, he told the The Economic Times. "India is a very unusual country," Witty said. "It starts from a different place than a Britain or a France or a U.S.A., therefore we have to think about what is the right way for India to balance its needs."

In addition to the patent wrangling, India has worked to make medicines more affordable by slashing prices on an increasing number of drugs--652 at last count. And for that, Glaxo has more reason to complain than many other companies. Its products suffered disproportionately from those recent cuts, and now the company is scrambling to mend relations with wholesalers and pharmacies, which are balking at their own squeezed margins.

Still, India remains a key market for the company, and will continue to be. The company last week announced that it would sock £85 million into a new production plant and warehouse there, most likely in Bangalore; the facility will be able to turn out up to 8 billion tablets and 1 billion capsules a year. Making production more efficient is one way for GSK to be able to charge lower prices while still posting positive financial results, Witty said.

"If we have to find a way of bringing innovation to India, you should have prices which are affordable," Witty told the The Economic Times. "And the key to that isn't to get rid of patents. The key to that is to fix the R&D process, the manufacturing process to make it more efficient. ... [C]ompanies cannot turn up and have any price they want. Companies have to come up with a competitive and efficient business model."

- read the ET story

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