[Ip-health] Financial Times- GSK to cut drug prices for developing countries

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GSK to cut drug prices for developing countries

By Andrew Jack in London

Published: November 29 2009 22:30 | Last updated: November 29 2009 22:30

GlaxoSmithKline
<http://markets.ft.com/tearsheets/performance.asp?s=uk:GSK>  is to cut
signi-ficantly the prices of its medicine in emerging economies next
spring.

<http://www.ft.com/cms/s/0/9848b498-dd14-11de-ad60-00144feabdc0.html>
"My preference is not a high price and 100 units of profit for 100
patients, but to drop the price and make 100 of profit from 500
patients," Abbas Hussain, head of emerging markets at the UK
pharmaceuticals company, said. "We fundamentally believe access for more
of the masses is the way to go."

The reductions - expected to reduce prices in most developing countries
to below two-thirds of western prices - reflect intensifying efforts by
drug companies to tap demand from the faster-growing economies as
western markets stagnate.

This year Gbola Amusa, a pharma analyst with UBS, said emerging markets
would help the sector maintain annual sales growth of at least 3 per
cent, and singled out Novartis
<http://markets.ft.com/tearsheets/performance.asp?s=ch:NOVN> , Bayer
<http://markets.ft.com/tearsheets/performance.asp?s=de:BAYN> , Novo
Nordisk <http://markets.ft.com/tearsheets/performance.asp?s=dk:NOVO%20B>
and Teva <http://markets.ft.com/tearsheets/performance.asp?s=il:TEVA>
as beneficiaries.

A number of pharmaceutical groups in recent years have made donations or
offered deep discounts in the world's poorest countries on a narrow
range of medicines - notably anti-retrovirals for HIV.

GSK and other companies have been forced to reduce prices in recent
months by healthcare systems in developing countries. This year the
Philippines imposed sharp reductions for all drug manufacturers, and
Turkey is poised to demand substantial cuts.

Global pharmaceutical groups have been criticised for "cherry-picking"
rich patients in poor countries who can pay western prices, while
leaving most of those in need without access to their products.

In response, companies have argued that even very large price reductions
would leave their medicines unaffordable to the poorest, while creating
a risk of "diversion" of lower-priced products back to richer markets,
which would undermine prices in the west.

Mr Hussain said experiments by GSK in lower-price markets had not led
richer countries to demand similar discounts, while exports back into
richer countries were "not substantial enough to worry about".

The US, western Europe and Japan account for the bulk of sales of
patented medicines, but the greatest growth is forecast to come from
countries such as China, Russia, India and Brazil.

In the third quarter, GSK's sales in emerging markets were 14 per cent
of total pharmaceutical sales, up from 12 per cent a year before.

http://www.ft.com/cms/s/0/9848b498-dd14-11de-ad60-00144feabdc0.html