TRIPS and the Pharma Sector

In this post I plan to deal with issues of TRIPS implementation in India and issues facing pharma companies post-TRIPS.
The Crux Of the Issue

The Indian govt. agrees to enforce TRIPS by 2005. Indian pharma industry has grown by almost 30% for the past few years. At S$13.6 billion it is the third largest in the world in terms of volume. It is 13th in the world in terms of value. By reverse engineering patented drugs and then manufacturing them using very cost effective processes the Indian companies have brought down end user costs dramatically. Their market share in the domestic market has risen from under 30% to over 72% in the past thirty years. They now import generic drugs to a large portion of the third world countries. TRIPS implementation in India would mean that the patent holding companies would retain exclusive marketing rights over locally manufactured or imported drugs. They could also keep production down to increase prices. This would sound a death knell to domestic drug manufacturers who would no longer be able able to manufacture and market the patented drugs. This may also mean increased drug costs to poor third world populations.
What can the Indian companies do
They can push for compulsary licensing. Compulsory licensing would imply that any company would have the right to manufacture a generic (non-branded) version of the drug, provided it pays the patent holder a royalty. It would also allow Indian companies to export much-needed patented drugs to the less developed countries which need them but don't have manufacturing facilities. The other alternative is to increase R&D spending to compete with western drug manufacturers. This they can do by utilising the cheap and skilled manpower that is available in India.
Links
Yale Global The Economist