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[e-drug] A suggestion for improving Access to genuine drugs (9)

E-DRUG:  A suggestion for improving Access to genuine drugs (9)

Production is certainly not rocket science. Investing in and managing a 
production facility however faces a number of uncertainties though.

There are a number of critical issues that need to be addressed in 
approaching production:

1. Economies of scale are certainly important, but plays second to the 
issue of "size of the market". The size of the market (demand) is very 
limited in Africa given the tie in arrangements (buy branded or from 
particular suppliers etc) and the approach of favouring "lowest" cost 
products instead of local or regional production (the latter has been 
dealt with ad noseum with mixed levels of success in the food aid 
discussions). So the point is, what is the minimum efficient size of 
operations that makes "business sense" and what are the challenges to 
the demand side.

2. There are different levels of capabilities if one is setting out to 
produce. Correa highlights the stages initiation (simple formularies, 
repackaging etc), internalisation (where higher activities) and 
generation (creation of new knowledge). This categorisation was 
rejected/not prioritised by most of Civil Society in the WHO neglected 
diseases initiative, notwithstanding its critical importance at 
informing production.

3. Finally, the political aspect. Any country seeking non-branded 
products faces enormous political pressures not to move into production. 
In fact the WHO and large swathes of CSOs STILL support a 0% tariff 
policy as if tariffs have not historically been used to develop 
industries. This merely increases the uncertainties raised in 1 above. 
That much of the arguments of these groups is actually supportive of 
monopoly pricing by rights holders is lost in the debate even though any 
pricing comparison (like HAI/WHO) hits a range of deceptive barriers for 
price comparisons (including different packaging, reporting of costs 
FOB/CIF, etc). Given the differential pricing and exploitation that is 
well documented it is perhaps telling that this generalist point is lost 
in the prescriptions adopted by much of progressive society - because 
the link between tariffs and productive capacity is not well 

In the 1970s and 80s Surendra Patel of UNCTAD pushed the argument 
strongly that consumption of technology rich goods does not equate with 
technology transfer. This seems no longer to be the case in large 
measure. That the HIV/AIDS movement has yet to come to emphasise this 
enough is perhaps a reflection both of need and a particular reading of 
international political economy of health.


SEATINI South Africa
Riaz K Tayob <riaz.tayob@gmail.com>

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