The emergence of the pharmaceutical industry in the developing world and its implications for multinational enterprise strategies

Abstract

Purpose

The purpose of this paper, focusing mainly on India – and a lesser extent on China – is to examine, broadly, two related issues concerning the rise of pharmaceutical industry in the emerging economies: the strategic response of the emerging‐country pharmaceutical firms to the new patent regime that recognizes and enforces product patents; and its implications for multinational enterprise (MNE) strategies.

Design/methodology/approach

The paper is based on extensive review of the relevant conceptual and empirical literature and secondary data.

Findings

The strategic response of pharmaceutical firms in the emerging economies (India and China, for example,) to the new patent regime is to develop multiple competencies and position themselves to simultaneously compete and collaborate globally with the MNEs – large firms rapidly moving towards discovery and development of new drugs, and medium and small firms engaged in the production of off‐patent generics and contract manufacturing, respectively.

Practical implications

The trend towards greater collaboration between the emerging‐country firms and the MNEs in the new patent regime raises serious concern about prescription drug prices in the developing as well as developed countries. Given the importance of the pharma industry to the health of nations, firms in rich and poor countries alike will continue to come under public pressure to develop and market the needed drugs at affordable prices.

Originality/value

The paper would be of value to practitioners and scholars interested in the implications – for MNE pricing, outsourcing and R&D strategies, for example – of the rapid rise of pharmaceutical industry in the developing countries such as India and China.

Citation

Rao, P.M. (2008), "The emergence of the pharmaceutical industry in the developing world and its implications for multinational enterprise strategies", International Journal of Pharmaceutical and Healthcare Marketing, Vol. 2 No. 2, pp. 103-116. https://doi.org/10.1108/17506120810887907