TNCs and Globalisation
A transnational
corporation is a company that operates in at least 2 countries. The HQ is
generally located in the country that the corporation was founded in while
remaining assets, mainly the manufacturing plants, are located in LEDCs where
labour is cheap and readily available.
The
influence of a transnational corporation is great and there are few parts of
both the developed and undeveloped world where the influence of a transnational
corporation cannot be felt. In the majority of countries, transnational corporations
play a major role in the economy of the country and often have a lot of control
over whether the economy is successful or unsuccessful.
These
companies make large profits but the research and development of new drugs can
be very expensive. The largest ten pharmaceutical companies are among the top
400 companies in the world. One of the most famous pharmaceutical companies is
GlaxoSmithKline (GSK) which employs 9650 people in over 100 countries and sell
their products to 179 countries. GSK’s headquarters are distributed throughout
MEDCs. There are 5 in the USA, 2 in Switzerland, 2 in the UK and 1 in France.
Branded pharmaceuticals
Medicines
have two names, their generic names (normally the active ingredient) and then a
brand name which the manufacturer trades the drug by.
When
a company discovers a new drug, it’s put through clinical trials in order to
gain approval for marketing. If the trial shows that the drug is safe and
effective, it’s approved and given a license. Given that testing generally
takes 12 years and costs £500,000, the company that developed the drug holds
the exclusive rights to the drug for 10 - 12 years in order to recuperate the
money they spent on research and development. The drug company will market the
drug under a brand name and the drug is protected from being developed by
competitors by a patent.
When the
patent expires, other companies can produce the drug however they can only sell
it under another brand name or its generic name. When
other companies produce the drug, they can generally do so for less and sell
the drug for less money since most of the research and development has already
been done. Given that branded drugs are normally 3 - 30 times
more expensive than their generic counterparts they are prohibitive to the
majority of the world. Consumers of branded drugs generally have no choice but
to purchase the branded drugs since the branded drugs are normally prescribed
by doctors, at least in the UK.
Branded
drugs are more expensive up to 30 times, generic ones 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. Nurofen costs £1.70 for 16 tablets; Ibroprfen costs 41p for 16
tablets from Tecso.
While drug
companies may seem to be profit making corporations, they do in fact bring
important advances to societies. Drug companies provided numerous jobs and
invest in society by paying taxes and investing in new, more advanced technologies.
Pharmaceuticals
can be sold under two broad categories: generic or branded.
Essential drugs
The 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 non communicable disease. 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 the 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. anti-HIV
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
The UKs largest Pharmaceutical Company
GlaxoSmithKline
is the third largest TNC pharmaceutical
company in the world. Founded in London in 2000 (GlaxoWellcome is actually the
original drug company, founded in 1880), the company has grown substantially
and offers products for many diseases, especially diseases common to MEDCs such
as diabetes and cancer. They also have treatments for viral diseases, mental
health diseases and GlaxoSmithKline offers several over the counter products
such as indigestion tablets.
The
company’s headquarters are located in London, with more sub-headquarters spread
around the world. GlaxoSmithKline has a presence in 99 cities across 39
countries.
While
GlaxoSmithKline mainly targets more developed countries, the company has
several programmes that help less developed countries. Since 2008,
GlaxoSmithKline has been running trials of a vaccine against malaria, which
would bring unprecedented benefits to most of the world, especially less
developed countries. However the drug could end up being prohibitively expensive
for less developed countries given its 25 years development period. None the
less, GlaxoSmithKline has made several pledges to try and bring its drugs to
developing countries. The company has committed itself to lower the prices of
its drugs in 50 of the least developed countries and to make its drugs more
affordable to industrialising countries such as Brazil and India. In addition
to this, all chemicals and processes that the company holds intellectual
property rights to have been placed in a “patent pool” which will allow other
companies to develop the drugs and improve upon them.
GSK
Corporate and Social Responsibility
GlaxoSmithKline
has numerous programmes within communities to help improve the health of those
communities. Globally, GSK provides disaster relief medicines. For example,
after the earthquake in Haiti, GSK committed £250,000 to the British Red Cross
to fund a mass sanitation unit that prevents water borne diseases from
spreading. On a more local scale, GSK provides services to local communities. Within
the UK, GlaxoSmithKline has an independent living programme for young people
living with disabilities. In the USA GlaxoSmithKline runs a programme to
provide specialist care for homeless children. GlaxoSmithKline also runs
educational programmes within the UK and USA to help develop an understanding
of science issues and to encourage the young to take up careers in science.
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
Research – this is a critical sphere as it is
this that is responsible for finding drugs that act as cures/offset symptoms of
diseases. Thus, drugs to offset impact of HIV/Aids have evolved. Most research
is into diseases of affluence so CHD and cancer, high blood pressure that
affect many people in richer areas of the world attract a lot of investment for
research and drug development. Diseases that affect many in poorer areas such
as malaria receive less. However, GSK do tackle this and HIV/Aids and TB – and
there is clearly a need for this, given numbers affected, its debilitating
impact and rates of spread.
Production – many drugs are sold under different names – those sold by major pharmaceutical companies directly (the designer label versions) are more expensive than the copies – that perform the same function – at affordable prices. WHO provides a list of such drugs –under their actual technical name, rather than that used to market them by big brand name companies. This has led to court action having been taken in the US – so answers may relate to the purpose of production – to improve health of population or for profit.
Distribution – many companies target doctors with regard to selling their products rather than the patients – and they are sold principally forprofit. Often symptoms are treated rather than the cause – as this is more lucrative – so iron tablets are manufactured rather than changing the diet of sufferers and ensuring they eat green vegetables. The presence of drugs that are made but are not available to poorer countries is an issue – as HIV/Aids sufferers in poorer countries cannot access treatment. GSK provided 206 million tablets at special prices to poorer countries, including 120 million of these generically made.