Pharmaceutical industry will face different opportunities and threats during accession to WTO. It is obvious that exposure to these opportunities and threats requires adequate knowledge about position of medicine in WTO agreements and challenges which are ahead of pharmaceutical industry during this process.In this article firstly, we try to review position of medicine and general hygiene in WTO agreements and then the challenges will be discussed.
Medicine and general hygiene in WTO agreements
Among up to 20 different agreements and 3000 pages of negotiations, only 5 of them point out the medicine and general hygiene directly including: General Agreement on Tariffs and Trade (GATT), Agreement on Technical Barriers to Trade (TBT), Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), General Agreement on Trade in services and Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
It is said in all of them except TRIPS that WTO members have the authority to take necessary actions in order to protect creature’s life and environment such as human’s health and security and animals and plant’s hygiene, but according to mentioned articles, these actions mustn’t lead to creating unnecessary obstacles for international trade.
In spite of GATT and GATS, there isn’t any direct clause about authority of protecting general hygiene but based on the evidence, we can say there are some contents which are concerned about access to medicine. Patent is the exclusive right granted to an inventor for a specified period of time in exchange for the publication and use of an invention. In the sector related to patents in WTO agreements, which maybe has the most connection with hygiene and access to medicine issue, it is said that members can use an invention without permission of its owner in the case of emergency or national necessity.
Following, we intend to review the most important commitments and challenges which are related to pharmaceutical industry of Iran during the WTO accession.
The first point is about tariffs. It is obvious that we can’t support pharmaceutical industry just with tariffs and also this method can’t last long because corporates are obliged to decrease their supportive tariffs. The Second point, is about TRIPS and patents and as mentioned before, it plays a crucial role in pharmaceutical industry. Members must respect to patents and produce generic forms of medicines only after their patent period finishes. This issue can have important effects on developing countries access to medicine. Iran has not been committed to patents up to now and therefore many medicines under the patent period have been producing. Since we were under sanctions it helped to meet the needs for demand of medicines and had also several advantages for Iranian patients. However, when the negotiations start, Iran has to be committed to patents which means producing this kind of medicines have to be stopped during a three to five-year period or instantly based on negotiations.
The last point is main key players in pharmaceutical market around the world in which, 10 companies such as Johnson& Johnson, Pfizer, Novartis, Sanofi and etc. own almost one third of global pharmaceutical market.
It is obvious that the major reasons for these companies success are scales of production, variety of production, R&D costs, marketing and promotion. Due to mentioned issues, these companies will be able to take over pharmaceutical market of any countries they want. On the other hand, because of Iran’s pharmaceutical market attractiveness, it is possible for huge foreign companies to dump medicines in Iran however as we said before according to WTO agreements, it is possible to protect the pharmaceutical sector against damages resulted by WTO accession. As a result, it is too difficult for our pharmaceutical companies to sustain in such a competitive market.
SWOT analysis of Iran’s pharmaceutical industry
- Vast pharmaceutical market in the regional terms
- Producing 97 percent of medicines domestically
- Large and fast-growing population
- Government’s special focus on health and hygiene area
- Experienced workforce in the industry
- Weak standards of intellectual property rights
- Strict governmental price control
- Low volume of Foreign investment in Iran’s pharmaceutical market because of the economic sanctions
- Nearly half of the raw materials are imported
- Most of domestic production are inexpensive medicines and the market is in demand of Hi-Tech medicine imports.
- The investment in R&D compared to international benchmarks is low.
- Rising regional demand for generics
- Possibility of Improving intellectual property and regulatory conditions to attract foreign investment
- Potential to collaborate on joint projects with key international pharmaceutical companies.
- Low taxes on foreign-made medicines that are not manufactured locally.
- High potential to be the Middle East production and distribution site for international companies.
- The presence of shadow market in Iran.
- Having more trade conflicts during accession because of patents
- Preference of the consumers towards international pharmaceutical brands
To conclude, we provide some cost-effective and advantageous suggestions in order to access WTO.
- Merging small companies and founding big companies in order to benefit from scales of production.
- Promoting technical knowledge in production and applying new technologies.
- Coping with international standards
- Improving GMP levels in pharmaceutical companies.
- Modify pricing regime aligned with global pricing methods.