Pharma industry takes double hit

16 November 2001

Local pharmaceutical companies are complaining of difficulties resulting from the devaluation of the Egyptian pound and the exposure to new rules on the protection of intellectual property rights.

Devaluation affects local producers because many of the medicines they sell locally are subject to Health Ministry price controls. This means that they are not able to pass on the increased cost of imported raw materials.

Of more concern for the medium term is the World Trade Organisation (WTO) agreement on trade-related aspects of intellectual property rights (TRIPS), which requires Egypt to provide full patent protection to pharmaceutical companies by 2005. Some local producers have expressed the fear that TRIPS will enable multinationals to control the market. However, international companies say the application of TRIPS will encourage new investment, and that fears about foreign domination of the market are misplaced.

The Pharmaceutical Producers Association has been pressing the government to ensure that the concerns of the local industry are taken fully into account as parliament prepares to pass a new law on protecting intellectual property rights.

These concerns have come to the surface following the granting to US-based Eli Lilly & Companyof exclusive marketing rights for its Zyprexa Olanzapine medication, used to treat schizophrenia. The rights were granted in August for five years by the Academy for Scientific Research, a body that acts as an effective patent office.

Some local producers have complained that, by allowing these rights to be granted to Lilly, the government is signing up to the requirements of TRIPS a long time ahead of schedule. However, the WTO agreement on TRIPS states that where a product is the subject of a patent application which is still pending, the government must ‘provide the patent applicant an exclusive marketing right for the product for five years, or until a decision on a product patent is taken, whichever is shorter’.

Lilly is understood to have filed an application for a patent for Zyprexa in 1996. This means that, according to WTO rules, the company is fully entitled to receive exclusive marketing rights.

Industry analysts say this mechanism is not widely used, as the requirements are very specific, and depend crucially on the timing of the original patent application.

Lilly is among several international firms with substantial investments in the local market. Others include the UK’s GlaxoSmithKlineand Pfizer of the US. The foreign players have sought to emphasise the benefits that will flow from the introduction of proper patent protection. Pfizer Egypthealth policy director Ahmed el-Hakim told the Cairo daily, Al-Ahram, on 5 December that there was a misconception that patent protection would lead to higher prices. He said most medicines used in general health care are not covered by patent protection, and so there is open competition between producers, which keeps prices down. ‘The Egyptian economy must not be deprived of the huge investments that will enter the Egyptian market with the approval of the protection laws,’ he said.

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