Who Owns Whom

“Wherever the art of medicine is loved, there is also a love of humanity.” – Hippocrates

Property rights cover a vast domain of all kinds of rights, physical property, intellectual property (IP) and so on; it is one of the very fundamental pillars of modern society, and considered a cornerstone to creating wealth and prosperity. We cannot help but observe that pharmaceutical IP rights tend to generally attract criticism and often are questioned on humanitarian grounds. Yet IP does not attract as much attention in the ICT sector as an example.

PCs and mobile devices (Cell phones) are made up of IP components from different sources. Qualcomm, an American multinational corporation creates semiconductors, software, and services related to wireless technology. It’s a listed company with a market cap of $163 Billion and an annual revenue of $ 36 billion; revenue is largely based on its IP licences.

Going back to the pharmaceutical industry, we glean from the latest WOW report on the “Pharmaceutical industry in South Africa”, that vaccines and HIV related ARVs account for more than 50% of total public health sector expenditure on pharmaceuticals.

Besides the IP battle faced by the industry there are further challenges such as fake medicines and theft as well as fraud, in combination reaching alarming proportions in South Africa.

Considering the merits of medical advances based on substantial investment in research, the pharmaceutical industry IP deserves consideration, just like other industries who equally flourish by virtue of their IP protection.

It cannot be ignored that these advances have come at great investment and costs. Marie Curie died from exposing herself to her own discoveries (radioactivity). In modern days, medical research can take up to 15 years to get (FDA) approval for distribution of new medicines. Always pushing boundaries, the challenges become more complex and investment in technology and sophisticated equipment grows. In the end someone has to pay for all this.

The pharmaceutical industry made huge investment to create the COVID vaccine in record time with sufficient safeguards to secure regulators’ approval, which bears testimony to the benefits to mankind of the industry. They need some return on the investments made and expenses incurred.

Having said that, there is a need for legitimate generics in order to make medicine accessible and affordable for many people, particularly in the developing world. As stated in the latest WoW report on pharmaceutical industry in South Africa, pharma companies will make their own generics as part of the overall marketing strategies.

Norwegian economist Reinert in his book “How rich countries got rich … and why poor countries stay poor” advocates for an overhaul (and removal) of IP. IP opponents have argued that it hinders new developments in all fields.

The complexity of any amendment to the current IP constructs considering possible unintended consequences will make this a slow and incremental process if undertaken at all.

The pharmaceutical industry in South Africa is made up of a few big players with international roots. A healthy competition is apparent with most of them vying for market share. Pharmaceutical manufacturers are also strengthening their supply chains through partnerships with local third-party manufacturers.

The same cannot be said for the market configuration downstream of the value chain. In the distribution and retail, the South African market is dominated by very few large companies that control the wholesale and retail distribution of medicines. This oligopoly contributes to the high medicine prices in South Africa, and prevents the participation of SMMEs in the sector.

The latest entry in the sector is by the 30 licenced Cannabis producers. This industry seems to be holding a promise for the South African economy with formal and informal sales revenue of all cannabis products (including illegal sales) estimated at around R14bn in 2021. Based on DTIC projections, sales could double to R28bn by 2024 and account for 70% of the African market.

There is a word of caution in this regard. According to the latest WOW report on the Pharmaceutical Industry in South Africa, many suppliers of cannabis products are non-compliant. Recent tests of CBD oils conducted by cannabis analytics laboratory, Qure, found that only one out of ten products tested was compliant.

Slip-ups happen at any point in the value chain even in the strict medicines environment as the opioid crisis in the US demonstrated. There is therefore a need to put stringent monitoring and control systems in place to protect the consumer.

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