The significance of TNCs
- They control economic activities between countries and develop trade within the countries.
- They exploit differences in the availability of capital and costs of labour, land and building.
- They take advantage of government policies in other countries and can get around trade barriers.
- They can achieve economies of scale, allowing them to reduce costs.
- Large companies have a wider choice of location and governments are keen to attract TNCs.
These companies make large profits but the research and development of new drugs can be very expensive.
Branded pharmaceuticals
Pharmaceuticals can be sold under two broad categories: generic or branded.
Branded drugs are more expensive up to 30 times,
Generic drugs are simply their chemical description. They are therefore identical to their brand named equivalent. The generic name is often complex but the brand names are more well known, fluoxetine hydrochloride is branded as Prozac by Eli Lilly. The cost of the branded drugs tends to make them prohibitive for much of the world's population.
Essential drugs
WHO regularly publishes lists of 'essential drugs'. They are "those drugs that satisfy the health care needs of the majority of the population; they should therefore be available at all times in adequate amounts and in appropriate dosage forms, at a price the community can afford."
These are generic drugs that can provide safe, effective treatment for most diseases such as diarrhoea. They are seen as important in improving the 'world's health'. But the lists are unpopular in countries which have a strong pharmaceutical industry, it is not implemented in the USA or the EU. In the USA legal action has meant that generic drugs are no longer encouraged.
Drug development
The largest profit comes from the sale of brand names in developed counties. Therefore most research is done on drugs to control 'diseases of affluence'. Patents for new branded drugs last 20 years and so are not available in generic form. Patents last for 20 years and it is illegal to make a generic copy. Therefore many new drugs that WHO regard as essential are not available to poorer countries.
Some companies use the profits they make in wealthier countries to subsidies research onto diseases affecting poorer countries. This leads to improved health in poorer countries, (e.g. Malaria)
Marketing and distribution
Drugs cost a lot of money to research and develop, which companies get back from the sale of their drug.
The cost of patented drugs affects global health because some poorer countries may not be able to afford the drugs they need.
Some pharmaceutical companies, often through deals with wealthier countries, provide free or cheaper drugs for poorer countries (e.g. antiretroviral -HIVAIDS drugs). The industry targets doctors as they prescribe the drugs for their patients. Therefore the consumer often has little say in the product used.
Another criticism is that pharmaceutical companies and the WHO tend to treat the symptoms rather than the cause of the problem. To prevent anemia in pregnant women iron foliate, a vitamin supplement, is recommended by the WHO. But the compound is found in leafy green vegetables. It is possible that encouraging the growth of these vegetables would be more valid than promoting vitamin supplements
GlaxoSmithKline
GSK produces almost four billion packs of medicines and health care products each year, including one-quarter of the world's vaccines.
It produces products for wealthy countries (e.g. Pravastatin-RL) , a drug for Coronary Heart Disease), and for poorer countries (e.g. polio vaccines).
GSK makes a large profit from drug sales but also donates some drugs to poorer countries for free.
For example, GSK's donated 750 million albendazole tablets to treat over 130 million people with elephantiasis (an infectious inflammatory disease).
GSK also invests a large amount of its profit in community programmers to help people in need - 3.8% of their pre-tax profits (£282 million) in 2007. GSK has been working on new vacancies to combat H1N1 flu strains and they have recently lowered their prices. Check out the issues behind the Big Brands
Background and information on the The Pharmaceuticals Industry in the UK
