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TRANSCRIPT
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Issues paper - Access to medicines
Leveraging the PrivateSector for Public HealthObjectivesA Briefing Paper for DFID on Technology
Transfer in the Pharmaceuticals SectorRobert Lewis-Lettington
Cheri Grace
September 2004
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Leveraging the Private
Sector for Public
Health Objectives
A Briefing Paper for DFID on
Technology Transfer in the
Pharmaceuticals Sector
Cheri Grace
September 2004
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Title: Leveraging the Private Sector for Public Health Objectives: A BriefingPaper for DFID on Technology Transfer in the Pharmaceuticals Sector
Author: Cheri Grace
DFID Health Systems Resource Centre27 Old StreetLondon EC1V 9HLTel: +44 (0) 20 7251 9555Fax: +44 (0) 20 7251 9552E-mail: [email protected]
Copyright: © 2004 by HSRC Designed by: Adkins Design Printed by: Fretwells Ltd
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1 Abbreviations and Acronyms 4
2 Executive Summary 5
3 Background 7
4 Purpose and Scope of the Briefing Paper 94.1 Methods 104.2 Format of the paper 10
5 International Obligations and Programmes to Encourage Technology Transfer 115.1 Technology transfer obligations in TRIPS 115.2 Initiatives to foster TT 11
5.2.1 Working Group on Trade and Transfer of Technology 125.2.2 Incentives offered by WTO member governments 125.2.3 Initiatives involving multi-laterals and non-profits 13
6 Technology Transfer Experiences 156.1 Goals of TT 156.2 Basic conditions conducive to TT 156.3 Scope of TT experiences investigated 166.4 Private sector incentives to engage in technology transfer 166.5 The impact of changing IP on technology transfer: theory and practice 216.6 Scope for further work 23
Annex A: Summary of Technology Transfer Experiences 24
References 37
Contents
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API Active pharmaceutical ingredientARV AntiretroviralDFID Department for International DevelopmentDNDi Drugs for Neglected Diseases InitiativeEU European UnionFDI Foreign direct investmentGMP Good manufacturing practiceGSK GlaxoSmithKlineHIV/AIDS Human immunodeficiency virus/acquired immunodeficiency syndromeICH International Conference on Harmonisation of Technical
Requirements for Registration of Pharmaceuticals for Human UseINTECH Institute for New Technologies of the United Nations UniversityIP Intellectual propertyIPR Intellectual property rightsIPTT Initiative on Pharmaceutical Technology TransferJPMA Japanese Pharmaceutical Manufacturers AssociationLDCs Least-developed countriesMDR TB Multidrug-resistant tuberculosisMMV Medicines for Malaria VentureMNC Multinational corporation NIH National Institutes of HealthOECD Organisation for Economic Co-operation and DevelopmentPPP Public-private partnershipR&D Research and developmentTB TuberculosisTDR Tropical Diseases Research Department, World Trade OrganizationTRIPS Trade-related aspects of intellectual property rightsTT Technology transferUNCTAD United Nations Conference on Trade and DevelopmentUS United StatesVL Voluntary licensingWHO World Health OrganizationWTO World Trade Organization
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1 Abbreviations andAcronyms
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DFID Heal th Systems Resource Centre 2004
Technology transfer (TT) is defined here as the dissemination of knowledge andexpertise in the pharmaceutical sector from developed country organisations toorganisations in developing countries. Recognising that technology transfer ispotentially a very important activity for the international community to encourage,particularly when such transfers further public health objectives, this briefing paperdocuments a variety of TT experiences and analyses the motivations behind theenabling agreements. These experiences range from those that occur spontaneously,sometimes between relatively equal partners engaging in more of a technologyexchange, to those taking place in countries with industries in more nascent stages ofdevelopment, as well as those where public bodies sometimes impose obligations oroffer incentives, including through public-private partnerships (PPPs), to bring partiestogether.
On the obligation side, the TRIPS agreement is weak on imposing technology transferobligations in developed countries as a legal requirement, although the statementsreferring to TT as an objective may be used as an interpretative device, either to informthe application of other parts of the TRIPS Agreement, or as the basis for politicalobjection to the manner in which the Agreement is being interpreted and applied bydeveloped members. On the incentive side, developed country examples wheregovernments have offered incentives to industry to engage in TT are limited. However,non-governmental and international organisations have been active in this field, andtheir engagement well noted in the examples.
Regardless of where the TT experience fits within the ‘spontaneous/purely commercial’versus PPP continuum, sustainable arrangements have required a solid businessrationale for engaging in any such technology transfers. Many of the technology transferexperiences have involved an element of public funding or technical support that serveto ‘sweeten’ the deal, making it a sound business investment for the technology donorand/or recipient.
It is difficult to generalise about the kind of incentives that can be offered to bringtogether such TT deals, since the appropriate incentive and the business case itsupports, will differ according to such (usually difficult to uncover) factors as theparticular company’s history and past investments, perceived competitive advantagesand future strategic goals. In some instances, the business case for the participatingfirms may be immediately obvious, short-term, and easily attributable to the TTexperience. Alternatively, the business case may be more subtle and long term – forexample, a response to public pressure or a desire to fulfil overall company strategicobjectives.
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2 Executive Summary
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As for how changing intellectual property (IP) can be expected to impact TT, as long asthe institutional and governance structures are aligned with increasing protection of IP,then we might expect to see more willingness of firms to license and contract outincreasingly important/proprietary technologies to developing country firms.1 However,the opposite argument has also been made – that strong intellectual property protectionis liable to stifle technology transfer as technology owners exploit their market power.The technology/patent-holder will no doubt need to consider all types of costs andbenefits when choosing the most appropriate contractual/ownership mode and thedegree of technology that can be successfully transferred.
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This briefing paper is part of a series of studies commissioned by the UK Departmentfor International Development. It focuses on answering emerging policy questionsrelated to access to medicines and is aimed at documenting technology transferexperiences between developed and developing country firms in the pharmaceuticalsector, and unpacking the motivations behind such agreements.
Definition of TT
The NIH defines TT as ‘the exchange of information, materials or intellectual propertyrights between (and among) government, academic, or industry laboratories, to facilitatefurther research and commercialisation’. The United Nations definition is more processorientated, and talks of a ‘process of sharing knowledge, skills, expertise and know-how’, divided into four categories: Technoware, including physical objects andequipment; Humanware, including skills and human aspects of technology managementand learning; Infoware, including designs, blueprints, and document-embodiedknowledge on information and technology; and Orgaware, including organisationalknowledge needed to operate a given technology. The TT experiences covered in thisreview are primarily limited to firm-to-firm transfers, but often involving a non-profit orinternational organisation as a third party.
Technology transfer and access to medicines
Why the focus on technology transfer? Proponents of TRIPS argue that, by aligning withthe prevailing IP protection standards in the world’s developed countries, developingcountries stand to gain through increased trade and investment with the multinationals(and presumably, technology transfer and technological development that comes withthis). Opponents of TRIPS argue that technology transfer is not automatic withincreased multinational corporation (MNC) interaction, and anyway, multinationals haveneither by incentive nor obligation been compelled to delocalise their activities to thesouth.2
Yet, technology transfer is potentially a very important activity for the internationalcommunity to encourage. As a potential source of technological catch-up and growth indeveloping countries, such transfers can encourage economic development. Whenthey occur in the pharmaceutical sector, and particularly for drugs for diseases of thepoor, they can also contribute towards public health objectives. This briefing paperfocuses on TT experiences that have the potential to encourage capacity developmentin the pharmaceutical sector of developing countries and/or the potential to deliverproducts that meet public health objectives. The goal is to help understand how to
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3 Background
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create an environment where such transfers can occur spontaneously, and in thosecases where they do not occur spontaneously, how to develop obligations and/orincentives for technology suppliers and recipients to engage with one another.
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The purpose of this briefing paper is to begin a process whereby technology transferexperiences that either benefit public health or have the potential to encourage industrialcapacity development can be documented and better understood. Specifically, itaddresses the questions: What types of obligations or incentives have caused MNCsand firms in less developed countries to engage with one another? How can donorscapitalise on these incentives, or develop such incentives, where the technology transferwould benefit public health? What effect is changing IP likely to have on the incentivesfor technology transfer?
The Terms of Reference did not call for an exhaustive analysis of all the componentsthat influence or result from technology transfer. The scope of the paper is also primarilyconfined to firm-to-firm technology exchange and transfers, which inevitably limitsdiscussion of all the TT forms that can help facilitate technological development andcontribution to public health. However, it was decided that this briefing paper shouldscope out those experiences that can be easily documented, without the need forconducting more expensive in-country case studies.3
The paper also does not extensively cover the enabling environment that is conduciveto technology transfer and technology spillovers. Similarly, it only briefly touches uponthe role of IPRs, technology transfers and technology spillovers in economicdevelopment. Extensive reviews on this subject can be found on the United NationsConference on Trade and Development (UNCTAD) website and recent empiricalresearch can be found on the website for DFID’s Development Research Centre at theLondon Business School Centre for New and Emerging Markets, for example.4
This briefing paper does not rely on country-level empirical data collection, althoughextensive interviews were conducted with informants in order to confirm and supplementinformation gleaned from written reports. It was primarily a desk-based exercise,focused on a cost-effective means of gathering information from available reports,studies, and interviews to answer a set of specific questions posed by DFID. What isnew about this paper is the way that it brings together and analyses these pieces ofinformation, from quite varied sources, to answer these specific questions.
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4 Purpose and Scope ofthe Briefing Paper
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4.1 Methods
Methods included a literature review, including academic, press, and equity analystreports from the major investment banks. The research assistance of Kate Hurtig andRabiya Hussain was helpful in gathering this literature. Interviews were held with thefollowing categories of people: academics, pharmaceutical equity analysts, individualswithin research-based MNCs, the International Federation of PharmaceuticalManufacturers’ Association, an individual from the US National Institutes of Health,individuals from the World Health Organization (WHO) and from non-profits whoparticipate as brokers and technology donors in technology transfer deals, andindividuals from other UN agencies who are knowledgeable in the subject areascovered. A conference on the subject of technology transfer sponsored by theInternational Federation of Pharmaceutical Manufacturers Associations provided usefulinformation as well.
Helpful comments were received on an early draft of this paper in May/June 2004 from:Nel Druce, Deputy Director of the Institute for Health Sector Development; ProfessorLynn Mytelka, Director of INTECH; Maciej Gajewski, Policy Research Analyst,International Federation of Pharmaceutical Manufacturers Associations; and AndreasSeiter of the World Bank. A second draft went through a formal review process,benefiting from feedback submitted by Hannah Kettler of the Gates Foundation; AndrewCreese at WHO; Abdul Barkat, Professor of Economics, University of Dhaka; ProfessorRichard Mahoney, University of California, San Diego; and Krisana Kraisintu, formerDirector of Government Pharmaceutical Organization of Thailand and currently workingin three African countries to transfer technology for antiretroviral (ARV) drug production.
4.2 Format of the paper
The paper begins with a discussion of the technology transfer obligations on developedcountry signatories to the World Trade Organization, as stipulated in the TRIPSagreement. The initiatives that developed country governments, international and non-profit organisations have put into place to foster technology transfer are described.Since the best prospects for encouraging more TT may lie in recognising where TTalready works and in capitalising on these successes, the majority of the paper focuseson documenting existing agreements and uncovering the motivations that have led totheir development. Finally, the impact of IP on the prospects for increased technologytransfer is discussed. Annex A provides a detailed mapping of the technology transferexperiences from which the paper’s findings have been drawn.
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5.1 Technology transfer obligations in TRIPS
The principal provisions of the TRIPS Agreement relevant to technology transfer includethe Preamble, Articles 7 and 8, and Article 66.2 and its reaffirmation in Paragraph 37 ofthe Doha Declaration.
In its statement of objectives in Article 7 of the TRIPS Agreement, the transfer oftechnology is established as a core value of the Agreement, along with the promotion ofinnovation: ‘The protection and enforcement of intellectual property rights shouldcontribute to the promotion of technological innovation and to the transfer anddissemination of technology’. However, this statement refers to the effects of theoperation of the TRIPS Agreement, and not to specific obligations. Since the generalobjectives are not made more concrete by the imposition of specific obligations ondeveloped members or technology holders, legal enforceability is a problem. However,the statement of objectives may be used as an interpretative device, to inform theapplication of other parts of the TRIPS Agreement. It may also be used as a basis forpolitical objection to the manner in which the Agreement is being interpreted and appliedby developed members.
Article 66.2 of the TRIPS Agreement is the most concrete manifestation of an expressobligation on developed members to encourage technology transfer in favour only ofleast developed members through the establishment of incentives to private enterprises.However, even the language used in Article 66.2 is ‘soft’, talking of non-specific‘incentives’ to ‘promote and encourage’ and to ‘enable’.5
5.2 Initiatives to foster TT
Technology and its transfer can be thought of like any economic market with agents onthe demand side and on the supply side. Under perfect market conditions, nointervention would be necessary. However, market conditions for some types of TT areoften not perfect. For example, there may be information asymmetries or hightransaction costs acting as barriers (especially information and seek costs).
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5 International Obligationsand Programmes toEncourage TechnologyTransfer
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Governments, international bodies and non-profits can help facilitate TT by reducingmarket failures or by providing incentives to engage.
5.2.1 Working Group on Trade and Transfer of Technology
At the World Trade Organization (WTO) Ministers meeting in November 2001 in Doha,a Ministerial Declaration provided for the establishment of a Working Group on Tradeand Transfer of Technology, with a mandate to examine the relationship between tradeand technology transfer, and to make recommendations on steps that might be takenwithin the scope of the WTO to increase flows of technology to developing countries.The Working Group has held several meetings, and the Secretariat has prepared tworeports for members. The reports seem to view the solution to lower rates ofdevelopment as dependent upon a stable investment and IP climate, an environmentinto which foreign direct investment (FDI) will flow, along with improved education andtraining, with the assumption that FDI is the best means for transferring technology.Given the lack of consensus and/or concrete proposals coming from this WorkingGroup, it has been suggested that the Group, while reflecting a concession todeveloping country demand, may be a largely symbolic act.6
5.2.2 Incentives offered by WTO member governments7
The developed members of WTO have provided modest incentives to the private sectorto promote technology transfer in the pharmaceuticals and public health sector,including tax advantages that may accrue from participation in public-privatepartnerships and direct or indirect government financial participation in clinical testingprogrammes, such as in relation to human immunodeficiency virus/acquiredimmunodeficiency syndrome (HIV/AIDS) vaccines.
Canada
The government of Canada has a variety of programmes in place to encourage thecommercial export of Canadian technology abroad; two examples are the CanadianInternational Development Agency’s (CIDA) Industrial Cooperation Programme andCanada’s contribution to the International Model Forest Network (IMFN). CIDA’sIndustrial Cooperation Programme provides financial support to Canadian businessesplanning sustainable business activities in developing countries in a variety of sectors.It reduces the risks to Canadian firms by sharing the costs unique to doing business indeveloping countries and those associated with providing training, the participation ofwomen, and a clean environment. Canada also exports its knowledge of forestrymanagement to the rest of the world through the IMFN.
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EU
The European Communities submitted a paper to the Working Group on Trade andTransfer of Technology on the subject of ‘Transfer of Technology to developing andleast-developed countries’. In this submission, the EU points to the importance ofcreating incentives to encourage FDI and foster business partnership (thereby puttingtechnology owners and recipients in contact). The paper states,
In parallel, developed countries can help improve the overall capacity of LDCsand create an enabling environment for FDI by means of appropriate domesticpolicies and capacity building programmes. Developed countries authorities also have a role to play through cooperation activities, support to joint research initiatives, expertise on public utility sectors, and support to regionalintegration.8
The presentation only points to these suggested activities; it does not detail how andwhether the EU has implemented or will implement any of them.
IPTT
The South African government is planning to launch the Initiative on PharmaceuticalTechnology Transfer (IPTT) to promote the production of off-patent pharmaceuticals totreat disease endemic to the developing world. It is expected that the government wouldenter into contracts to buy the resulting products, which would ensure that prices werekept low. The IPTT has its roots in the Doha Declaration, which includes an undertakingthat developed countries would promote TT to least-developed counties. IPTT is acooperative partnership with the industry, under which the government would negotiateTT arrangements and encourage local companies to use the technology to upgrade theirproduction facilities.
5.2.3 Initiatives involving multi-laterals and non-profits
UNCTAD
UNCTAD’s work on TT spans several decades, and includes case studies andnormative work, as well as analytical work on the relationship between investment andTT. UNCTAD has also developed concepts of technological capacity-building andtechnology partnerships. UNCTAD’s Compendium of existing measures contains aselection of 35 multilateral and 25 regional and interregional instruments that makeprovisions related to technology transfer and capacity-building. When bilateralagreements are included, the number exceeds 80. UNCTAD’s current work includesextensive policy analysis embracing global trends, particularly in the UNCTAD WorldInvestment Report, which examined the question of linkages between foreignenterprises and backward linkages with the domestic economy through affiliates.
Inter nat ional Obl igat ions and Programmes to Encourage Technology transfer
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UNCTAD is involved in a joint project with UNIDO on evaluating the impact of TRIPS ontechnology transfer issues in developing countries.9
WHO (TDR), MMV and DNDi
The Tropical Diseases Research Department of WHO and the Medicines for MalariaVenture are not explicitly set up to transfer technology. However, their contribution inthis area, in the context of ensuring access to drugs for neglected diseases, has beensubstantial, as documented in Annex A.
Similarly, the Drugs for Neglected Diseases Initiative (DNDi) is a $250 million initiativebegun with Médecins Sans Frontières and a group of developing countries to researchdiseases ignored by western drugs companies. Technology transfer and exchangeoccurs at the research stage. The six founding partners include the Indian Council ofMedical Research, L’Institut Pasteur (France), the Kenya Medical Research Institute,Médecins Sans Frontières, the Ministry of Health of Malaysia and the Oswaldo CruzFoundation (Brazil). WHO/TDR will participate in the meetings of the Scientific AdvisoryCommittee of DNDi as an observer to provide expert scientific and technical advice asrequired.
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This section documents a wide range of TT experiences, from those that have occurredon a spontaneous commercial basis as well as those that have been facilitated by somesort of broker – usually a government, international organisation, or non-profit – whomay also provide finance and technology transfer (e.g. technical assistance) as well.
6.1 Goals of TT
TT goals of various partners in the arrangement will differ. When the WHO, governmentbodies or non-profits are involved, goals may include: benefiting public health; ensuringpublic availability of new technologies; utilising intellectual property rights (IPR)appropriately as an incentive for commercial development of technologies; attractingnew research and development (R&D) resources; obtaining return on publicinvestments; and stimulating technological and economic development. The privatesector partners may share some of these goals, but in all the examples covered in thisreview except for one,10 there was also a definite business case. Without a strongbusiness case, the sustainability of the TT deal may be at risk as soon as other moreprofitable opportunities arise.
6.2 Basic conditions conducive to TT
There are some common preconditions that affect the willingness of MNCs to enter intotransfer of technology agreements. First of all, firms will not want to enter into anyarrangement that will expose them to major legal or technology risks. Secondly, therealso needs to be a supportive business and scientific environment in the recipientcountry that is conducive to such arrangements. That environment should includeskilled workers, economic and political stability, IP protection, a supportive regulatoryenvironment (e.g. customs), market size and potential, and a well-developed nationalinfrastructure of natural resources and transport.11 Although it has been suggested thatthe ability of developed world governments to influence decisions in this area throughgeneral incentives will be limited,12 clearly the examples in this section demonstrate thatwell-targeted and well-designed incentives, such as those that include tailored financingand skills transfer, can direct specific partners towards joint realisation of access tomedicines objectives.
6 Technology TransferExperiences
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6.3 Scope of TT experiences investigated
Pharmaceutical companies have been involved in numerous programmes focusing ontransferring health technologies and know-how to developing countries. Theseprogrammes cover a wide spectrum of the value chain,13 including: R&D alliances todevelop new medicines; clinical trials programmes; transferring technology forproduction to domestic manufacturers (involving quality assurance, processmaintenance, or regulatory compliance, for example); training activities in diseasemanagement and control strategies for physicians, pharmacists and other medicalprofessionals; and creating healthcare systems and structures in developing countries.
Annex A summarizes the TT experiences investigated for this paper. Only those TTexamples involving developing country firms have been included. Thus, for example,the Lapdap partnership for a malaria drug will not be touched upon in this paper, as it isa PPP involving GlaxoSmithKline (GSK), WHO, DFID and others, but has no developingcountry component (apart from as the beneficiary of the eventual product). However,the Aventis partnership, also a PPP involving WHO and a research based MNC, iscovered, since this PPP has an explicit goal to transfer technology to developing countryfirms.
6.4 Private sector incentives to engage in technologytransfer
Motivations for engaging in technology transfer agreements will vary by company,according to the particular product portfolio, company history and resources andcapabilities, for example. These motivations are also likely to change over time.
However, there are some generalisations that are typically true for all private companies.Although the company and its employees may hold a philanthropic interest in helpingachieve access to medicines, employees are also under significant pressure to meetearnings expectations, and this leads to assessing TT deals in the same way as theywould a commercial deal, i.e. whether the deal has the potential to earn a reasonablereturn for the company. This return may be immediately obvious, short-term, and easilyattributable to the TT experience. Alternatively, it may be more subtle and long-term –for example, a response to public pressure or a desire to fulfil overall company strategicobjectives.
Business case examples uncovered during the course of this paper, fromthe perspective of the technology donor, (usually a research-based MNC)are cited below.
• Historically, many countries had regulations regarding ‘local contentrequirements’ or ‘local presence’ of one sort or another, in order to be able to sellin the country. This was the rationale for Eli Lilly setting up domestic
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manufacturing operations in Egypt, for example.14 However, such requirementsare questionable under WTO rules, and consequently some MNCs have pulledout of domestic manufacturing in some countries, while other facilities remainbecause the business prospects have become attractive over time.
• Similarly, some domestic manufacturing has historically been established as away to ingratiate the MNC with a local government/regulator. This was aconsideration in Novartis’ decision to use the malaria drug, Coartem, as abeachhead into China.15
• MNCs may choose to locate production in a developing country in order to createa strategic location, such as one that is proximate to other countries it wants toserve in the region.16
• Another MNC rationale for transferring manufacturing technology to developingcountry manufacturers is to provide for a source of contingency supply.Manufacturing partners can help out when the research-based MNCs’ capacitycannot meet demand. In the example of Eli Lilly’s decision to transfer technologyto developing country suppliers, the need for contingency supply was linked to theneed for speed. Lilly needed to get supply from firms who had existing vacantcapacity that could be easily converted for the purpose of making tuberculosis(TB) drugs. Lilly could not have met the timescales required to satisfy the WHOdemand projections.17
• Patent holders may choose to engage in TT as a response to public pressure. Forexample, in 1995, Aventis (then Hoechst Marion Roussel) abandoned productionof the sleeping sickness drug, eflornithine, because it was not making a profit. Ittook years of international pressure to find a way to restart production of the drug.When this international pressure coincided with the media attention around thelaunch of Bristol-Myers Squibb’s (BMS) Vaniqa, an eflornithine-based productintended to remove women’s facial hair, Aventis and BMS became involved withWHO, in a deal that includes TT to developing country firms to manufacture drugsfor sleeping sickness, including eflornithine.18
• Investor pressure provides a similar motivation. Calpers, the world’s largestpension fund, put pressure on GSK to allow more generic companies to producecopies of its AIDS drugs for patients in developing countries. The fund askedGSK to evaluate potential licensing deals for its AIDS drugs and report back toshareholders within three months.19 The Calpers letter echoed many of theconcerns also raised by a group of leading European investors. Motivation for theletter was reported to be a concern as to whether a popular backlash about AIDSin Africa would limit the industry’s ability to charge high prices in rich countries.
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• A choice to engage in TT may also be made in order to appease a domesticregulator. For example, in October 2003, South Africa’s Competition Commissionissued a statement saying that Glaxo and Boehringer Ingelheim had brokencompetition rules by charging excessive prices for AIDS drugs in the country. TheCommission said it would recommend that generics companies be allowed to makecopies of the drugs and that the two companies be fined 10 per cent of the sales oftheir AIDS drugs in South Africa.20 This was likely to be one of the reasons why GSKchose to make its ARV licences available to multiple companies.
• Companies can get a tax write-off if they donate patents.21
• Technology transfer arrangements can be driven by a desire to reduce costs orreduce taxes. For example, clinical trials costs for Elli Lilly’s TB drugs have beenreduced through a clinical trials technology transfer in Tomsk, Siberia. Similarly,Singapore is a popular location for pharmaceutical production partly due to taxadvantages.
• Technology donors may also transfer technology as part of an obligation forreceipt of IPR from a publicly funded programme. For example, technologyrecipients from NIH programmes, who have licensed compounds made fromnatural materials, are required to go back to the originating country and reach anagreement with government authorities to share benefits arising from thecompound. For example, the NIH isolated the anti-cancer compound, calanolideA, from the bark of a tree found in Malaysia. It then licensed the rights to thistechnology to the private firm, Medicam, and required Medicam to reach anagreement with the national government from where the resources came to sharethe benefits arising from the technology. Medicam and the Malaysian governmentsubsequently agreed that Medicam would enter into a joint venture with aMalaysian firm, Sarawak, transferring technology for production of the product.22
• Research-based companies may be incentivised to engage in TT with developingcountry firms as part of the larger trend towards outsourcing non-core activities.23
Since the development or manufacture of a non-core product would not be fullymainstreamed strategically or functionally, then the additional cost of conductingthe activity in-house might be high relative to the transaction costs of transferringthe activity to another company. This is the motivation for many of the companiesworking with the TDR division of WHO.
• The above is closely related to the idea of how products are handled during theirlife-cycle. Research-based MNCs want to keep tight control over the entiresupply chain of a blockbuster drug during its high growth phase, from R&Dthrough to manufacturing, as highly proprietary blockbuster drugs are consideredto be key to the company’s competitive advantage and profits. However, onceproducts have reached maturity, production may be outsourced to other firms. Eli
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Lilly has an entire product division that develops the global strategy for theirportfolio of older products, for example.
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• MNCs may be motivated to use TT of a commercially unimportant product ortechnology as a low-risk way of testing out a new market or new partner firm. Thiswas part of the motivation when Novartis chose to use the development andmanufacturing of the malaria drug, Coartem, as a first step to working withChinese firms.25
• Finally, NGOs assert that a motivation for some PPP projects (which are also TTprojects) has sometimes been the development of products that will benefit richcountries as well as poor ones – the tuberculosis vaccine, for example. Andalthough a vaccine and better treatment for kala azar (leishmaniasis) will helppeople in developing countries, it is also of strategic interest to Western countries,the US in particular, because of the risk to military personnel. (The cutaneousversion of the disease, dubbed ‘Baghdad Boil’, has infected 150 US soldiersserving in Iraq, according to newspaper reports.)26
From the perspective of both technology donor andrecipient
• From the perspective of a research-based MNC, out-licensing for products thatare mature or less commercially interesting frees up management time and focusfor higher priority products. Since all the major research-based companies arepublicly listed, they have the incentive to optimise their R&D pipeline andportfolios, because the market judges them on this basis. Drugs with limitedmarket potential in developed countries are therefore not attractive to them,whereas a developing country-based firm, with a potentially lower cost base andlower required return to shareholders, may have more freedom and desire topursue such niche opportunities. GSK
has an important programme of ‘know-how’ transfer to local manufacturerswhereby we outsource production of products as part of a carefully managedproduction cycle aimed at freeing up GSK production capacity for thedevelopment of new drugs. Transfer of production traditionally occurs post-patent expiry for products which local operating units consider of strategicand/or commercial importance in local or regional markets. They continueto be GSK branded products and sold and marketed by the company.Production, however, is handled by a third party contractor, with thenecessary regulatory and technical support from GSK to ensure compliancewith local and international standards.27
• The Director of Medicines for Malaria Venture also stated that this was a commonmotivating factor for the firms they work with. For example, development and
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production of malaria products is usually not commercially interesting to majorpharmaceutical companies, but it may be interesting to developing countryproducers, especially if they receive help in deferring development costs, receivehelp with registration and with bringing the dossier up to an international level –this is the TT that MMV provides.28
• Any technology transfer partnership that can have a positive impact on the valuechain of both companies will have good prospects. Benefits may includeincreased access to scientific centres of excellence, to funding, or to developingtechnology and new skills; and potential access to targets or final products forglobal distribution.
• Any partnership that reduces risk would also be of value, for example, providingup-front funding of early research, fixing profit margins or guaranteeing salesvolumes, reducing expenses by sharing costs, or speeding up drug registrationthrough government partners.
Developing country firms may be motivated to enterinto technology transfer arrangements for:
• Funding
• Assets other than funding, such as raising the firm’s profile, demonstration/proofof technology, access to data, training, know-how, introduction to new markets.For example, Shanghai Desano (China) received the know-how of producingARVs from Cipla (India). Shanghai Desano’s motivation is to increase theirinternational profile, consistent with their goal to develop their export base inAfrica and Latin America.29
• The need to utilise excess capacity – increasingly likely as Indian firms mustswitch from their role as technology copiers, and must find ways to re-employscientists and production capacity. For example, the brochure distributed by EliLilly describing their TT partnerships for production of TB drugs, states that Lillywill give manufacturing firms in S Africa, China & India the technology to ‘convertexisting facilities’ for the production of these drugs.
• Access to new machinery, training, know-how and business partnerships that canbe useful for more profitable drugs. For example, Eli Lilly is providing aliophilization machine for freeze-drying the injectable TB drug solution.Production of injectables is more difficult than oral forms.30 The liophilizationmachine itself, plus the know-how for producing injectables, is a valuable skill thattechnology recipients can use for other, more profitable, product categories.
Similarly, technical assistance provided to developing country firms in order to bring the
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registration dossier of a new, neglected disease product up to the standards set by theInternational Conference on Harmonisation of Technical Requirements for Registrationof Pharmaceuticals for Human Use (ICH) can be helpful to the firms when developingdossiers for other disease areas. Help with bringing manufacturing quality up to goodmanufacturing practice (GMP) certification can be helpful in a similar way. Thesebenefits were mentioned specifically as those that MMV can offer to firms who partnerwith them to develop and manufacture malaria drugs.
6.5 The impact of changing IP on technology transfer:theory and practice
Transaction cost theory predicts that, other costs being equal, a patent owner wouldchoose to keep research, development and production of more proprietary productsand/or technologies completely in-house, particularly in an environment of insecure IPprotection.31 If keeping everything in-house is not possible, then the patent owner’s firstchoice would generally be to engage with other firms via very tight relationships (whereequity/ownership arrangements and duration of the working relationship are structuredto align the incentives of all parties). The contractual tendencies observed during thecourse of this paper do seem to support transaction cost theory.32 For example, thehepatitis B medication, lamivudine, is a commercially and strategically important productfor GSK in China, reaching number two in Glaxo’s sales revenues in China for 2002.With sales growth averaging 18 per cent per year, it is now the leading product on theChinese market for hepatitis B. Rather than license out production of this importantproduct in what can be argued is a relatively insecure IP environment, GSK has built agreenfield GSK-owned site in the eastern Chinese province of Jiangsu which conductsall stages of the manufacturing process. Similarly, it should not be surprising that manyof the R&D facilities (dealing with sensitive and proprietary products) set up by MNCs indeveloping countries are owned (rather than contracted).
As illustrated in the figure below, this ownership structure contrasts with the relativelyloose arrangements being sought by Aventis for production of commercially unattractivesleeping sickness drugs, and Roche for production of the drug for Chagas disease, forexample. Aventis is looking for partners willing to manufacture the drugs and essentiallylooking to contract with these firms ‘at arm’s length’, transferring the technology over tothe partners completely, with no residual ownership. Similarly, following Roche’sdonation, the Brazilian government will set up a manufacturing plant in the state of Acre(Amazone region) and start producing Bezonidazole with the know-how of Roche. Allrights related to benzonidazole have been handed over to the Brazilian government.
Technology Transfer Exper iences
21
-
Although transaction costs are an important consideration in determining contractualmodes and degree of technology transfer, the technology/patent holder will no doubtneed to consider all types of costs and benefits when choosing the most appropriatecontractual/ownership mode for such transfers. As for the influence of IPR oncontractual modes, other costs being equal, we might expect to see more willingness offirms to license and contract out technologies to developing country firms, as the IPRsituation in developing countries becomes increasingly secure. However, some haveargued the opposite – asserting that strong intellectual property protection is liable tostifle technology transfer as technology owners exploit their market power.33 The answerto this dichotomy of views may be found in market conditions. Large countries with ahigh level of pre-existing technological capabilities are more likely to attract licensingopportunities as the IPR environment is enhanced, whereas smaller and medium-sizedcountries, and those with lower technological capabilities, are unlikely to be able toattract licensing regardless of the IPR situation. Another factor to consider is the degreeto which the institutional environment – that is, the formal laws as well as the informalnorms that guide behaviour – are supportive of enhanced IP protection. For example,despite the presence of patent law since 2002, China has been criticized by MNCs as acountry having poor supporting institutions for IPR.34 Thus, IP laws are only one of manyfactors that may influence contracting modes and degree of technology transfer.
22 DFID Heal th Systems Resource Centre 2004
Leveraging the Pr ivate Sector for Publ ic Health Object ives
Mapping of TT Experiences: Contractual Trends
Low High
Tight
Loose
Co
ntr
act
Ter
ms
But other factors relevant to cost/benefit of contractingstructure as well: IPR environment, proximity to markets, size,
growth, competitive conditions, human capital basis,governance, infrastructure
Importance of the product/technology
Keep in-house/Export product
GSK, Suzhou (GSK-owned manufacturing facility)
Roche, Shanghai (Roche-owned R&D facility)
Willingness todo arm’s
lengthtransactions
Aventis, various locations to be determined (sleeping sickness drug manufacturing)
Roche, Brazil (Chagas disease drug manufacturing)
Eli Lilly, various locations (TB drug manufacturing)
GSK, Tianjin (JV for manufacturing)
AstraZeneca, India (AZ-owned R&D facility)
Novartis, Singapore (Novartis-owned R&D facility)
-
DFID Heal th Systems Resource Centre 2004
6.6 Scope for further work
This briefing paper provides a wide and relatively shallow mapping exercise oftechnology transfer experiences in the pharmaceutical sector, focusing on thoseexperiences that further public health objectives or have the potential to encourageindustrial capacity development. More detailed case study work would be needed tounderstand whether these arrangements have actually benefited public health and haveencouraged capacity development in the pharmaceutical sector in developing countries.Such a study would need to:
• uncover the contractual basis/ownership structures through which the agreementhas been concluded
• analyse the characteristics of the market where the technology is destined,including substitutability with other technology in the domestic market, pre-existence of subsidies or other forms of protections, the degree of competition inthe product market and the effect on competitor entry
• look at the characteristics of the firms offering and receiving the technology, e.g.minimum quality requirements of the technology recipient
• identify any trends/patterns in ownership structures, product types, or part of thevalue chain in which these relationships operate.
Technology Transfer Exper iences
23
-
24 DFID Heal th Systems Resource Centre 2004
The technology transfer experiences documented in this section fall into four categories.The following diagram shows the relationship of the first three categories, and the fourthcategory are those where the TT is more skills-based and is not being transferred firm-to-firm, but by other means. (Thus, these experiences do not fit very well in this paper,but they are provided for the sake of showing the range of TT experiences.)
Notes:
• The categorisation of the TT into ‘manufacturing, R&D and other’ is perhaps over-simplified, but it is meant to represent the general focus/thrust of the TT initiative.
• An attempt has been made to be comprehensive, but inevitably there will be
Annex A: Summary ofTechnology TransferExperiences
Mapping of TT Experiences: Organisation of Annex A
Examples 1 - 15:where the technology ‘recipient’ firm
is dealt with ‘at arm’s length’and usually involves an intermediary
as broker, funder or additionaltechnology donor
Examples 16 - 21:where the technology donor owns
or part-owns the firm to whichthe technology is transferred andwhere no intermediary is involved
(commercial transaction)
Examples 22 - 27:where firms are contracted ‘at
arm’s length’, but need nointermediary assistance and are
more appropriately called technologyexchange rather thantechnology transfer
(commercial transactions)
Receives public assistance Purely private funding
Ownedor
large equity stake
Contracted
Co
ntr
act
Ter
ms
Funding mechanism
-
DFID Heal th Systems Resource Centre 2004
missing examples, as the TT experiences which involve some kind ofassistance/collaboration with international or government organisations arebound to get more press and be easier to track down than those relationships thatare purely commercial or those that are more limited in scope, for examplemultitudes of packaging arrangements between MNCs and local firms indeveloping countries.
Annex A: Summar y of Technology Transfer Exper iences
25
-
26 DFID Heal th Systems Resource Centre 2004
Leveraging the Pr ivate Sector for Publ ic Health Object ives
1. In
dia
(firm
s ha
veno
t yet
bee
n fo
und)
Ave
ntis
35P
enta
mid
ine,
mel
arso
prol
and
eflo
rnith
ine
– al
l for
trea
ting
slee
ping
sick
ness
Man
ufac
turin
gan
d ot
her
On
May
3, 2
001,
WH
O a
nd A
vent
is a
nnou
nced
a p
artn
ersh
ip to
com
bat A
fric
an tr
ypan
osom
iasi
sor
sle
epin
g si
ckne
ss.
Ave
ntis
has
com
mitt
ed $
25 m
illio
n to
sup
port
ing
WH
O’s
act
iviti
es o
ver
a fiv
e-ye
ar p
erio
d. T
he p
roje
ct in
volv
es th
ree
rela
ted
effo
rts
– dr
ug d
onat
ion,
dis
ease
man
agem
ent
and
cont
rol,
and
rese
arch
and
dev
elop
men
t. A
vent
is w
ill a
rran
ge fo
r th
e pr
oduc
tion
of th
ree
of th
e fiv
e dr
ugs
used
to tr
eat s
leep
ing
sick
ness
, in
the
amou
nts
fore
cast
ed b
y W
HO
. W
ith th
efin
anci
al s
uppo
rt o
f Ave
ntis
, WH
O in
tend
ed to
con
trol
act
iviti
es a
nd a
ccel
erat
e di
seas
e su
rvei
llanc
ein
Afri
can
coun
tries
mos
t affe
cted
. A
lso,
Ave
ntis
will
fund
new
rese
arch
into
Afri
can
trypa
noso
mia
sis.
By
the
end
of th
e fiv
e-ye
ar p
erio
d, A
vent
is h
as c
omm
itted
to tr
ansf
er th
e pr
oduc
tion
tech
nolo
gyfo
r th
ese
prod
ucts
and
pro
vide
tech
nica
l ass
ista
nce
to d
evel
opin
g co
untr
y fir
ms,
who
wou
ld fi
ndsu
ch a
nic
he o
ppor
tuni
ty c
omm
erci
ally
attr
activ
e, a
nd w
ith th
e go
al o
f hel
ping
to p
rovi
de a
sust
aina
ble
sour
ce o
f sup
ply
for
thes
e dr
ugs.
2. In
dia,
Chi
na, S
.A
fric
aE
li Li
lly36
Mul
tidru
g-re
sist
ant
tube
rcul
osis
(M
DR
TB
)
Man
ufac
turin
gT
he L
illy
MD
R-T
B P
artn
ersh
ip is
a u
niqu
ely
com
preh
ensi
ve in
itiat
ive
with
the
Gre
en L
ight
Com
mitt
ee o
f the
Wor
ld H
ealth
Org
aniz
atio
n, th
e U
.S. D
epar
tmen
t of H
ealth
and
Hum
anS
ervi
ces’
Cen
tres
for
Dis
ease
Con
trol
and
Pre
vent
ion
(CD
C),
Brig
ham
and
Wom
en’s
Hos
pita
l(B
WH
), a
n af
filia
te o
f Har
vard
Med
ical
Sch
ool,
the
Inte
rnat
iona
l Cou
ncil
of N
urse
s (I
CN
) an
dP
urdu
e U
nive
rsity
to in
crea
se th
e nu
mbe
r of
trai
ned
pers
onne
l and
dru
gs a
vaila
ble
to tr
eat t
heex
pand
ing
cris
is o
f MD
R T
B.
Lilly
has
inve
sted
in it
s ow
n fa
cilit
ies
to e
nabl
e it
to d
oubl
e its
cur
rent
pro
duct
ion
of c
apre
omyc
in,
one
of th
e es
sent
ial d
rugs
use
d to
trea
t MD
R T
B. F
inal
ly, L
illy
is p
rovi
ding
bot
h ca
preo
myc
inan
d cy
clos
erin
e at
a fr
actio
n of
thei
r co
st to
WH
O G
reen
Lig
ht C
omm
ittee
-app
rove
d D
OT
S-
Plu
s37
trea
tmen
t pro
gram
mes
aro
und
the
wor
ld.
Lilly
has
sig
ned
tech
nolo
gy tr
ansf
er a
gree
men
ts w
ith c
ompa
nies
in In
dia
(Sha
sun
Che
mic
al a
ndD
rugs
, Ltd
.) a
nd S
outh
Afr
ica
(Asp
en P
harm
acar
e H
oldi
ngs,
Ltd
) an
d is
neg
otia
ting
a si
mila
rag
reem
ent i
n C
hina
(Z
hejia
ng H
isun
Pha
rmac
eutic
al C
o., L
td.)
. In
addi
tion
to m
akin
g av
aila
ble
the
nece
ssar
y m
anuf
actu
ring
know
-how
, Lill
y is
pro
vidi
ng fi
nanc
ial a
ssis
tanc
e fo
r th
e pu
rcha
seof
equ
ipm
ent (
lioph
iliza
tion
equi
pmen
t, ne
cess
ary
for
the
free
ze-d
ryin
g st
ep o
f inj
ecta
ble
prod
uctio
n) a
nd/o
r co
nver
sion
of m
anuf
actu
ring
faci
litie
s an
d te
chni
cal t
rain
ing
for
vario
us s
tage
sin
the
man
ufac
turin
g pr
oces
ses.
Cur
rent
ly, t
he c
ompa
nies
are
in v
ario
us s
tage
s of
faci
lity
conv
ersi
on a
nd in
itial
pro
duct
ion.
The
firs
t val
idat
ed p
rodu
ctio
n co
uld
occu
r w
ithin
the
next
six
mon
ths
with
shi
pmen
ts fo
r di
sbur
sem
ent t
o W
HO
-app
rove
d M
DR
TB
DO
TS
-Plu
s pr
ogra
mm
esoc
curr
ing
befo
re th
e en
d of
200
4.
Pos
sibl
e in
cent
ives
for
tech
nolo
gy r
ecip
ient
s to
eng
age
are:
acc
ess
to k
now
-how
and
gra
nts
for
equi
pmen
t for
pro
duci
ng in
ject
able
dru
gs (
know
-how
and
equ
ipm
ent t
hat i
s us
eful
for
othe
rpr
oduc
t cat
egor
ies)
; dem
onst
ratio
n of
abi
lity
to w
ork
with
an
MN
C (
usef
ul fo
r ot
her
prod
uct
Dev
elo
pin
gco
un
try
& f
irm
tech
no
log
yre
cip
ien
t
Tec
hn
olo
gy
Do
no
rP
rod
uct
TT
typ
e(M
anu
fact
uri
ng
, R&
Do
r o
ther
)
Des
crip
tio
n
Exa
mpl
es w
here
the
tech
nolo
gy ‘r
ecip
ient
’ firm
is d
ealt
with
‘at a
rm’s
leng
th’ a
nd u
sual
ly in
volv
es a
n in
term
edia
ry a
s br
oker
, fu
nder
or
addi
tiona
l tec
hnol
ogy
dono
r
-
DFID Heal th Systems Resource Centre 2004
Annex A: Summar y of Technology Transfer Exper iences
27
cate
gorie
s); u
sing
exc
ess
capa
city
. P
ossi
ble
ince
ntiv
es fo
r Li
lly to
eng
age,
as
tech
nolo
gy d
onor
:di
vest
ing
from
com
mer
cial
ly u
nint
eres
ting
busi
ness
; (si
mila
rly)
avoi
ding
the
need
for
furt
her
inve
stm
ent i
nto
capa
city
; get
ting
spee
dy a
cces
s to
con
tinge
ncy
supp
ly fr
om fi
rms
who
had
‘vac
ant s
uppl
y re
ady
to g
o’ (
whe
reas
Lill
y co
uld
not h
ave
met
the
times
cale
s fo
r m
atch
ing
supp
lyw
ith W
HO
’s p
roje
cted
dem
and,
whi
ch w
ould
hav
e be
en b
ad fr
om s
ever
al r
espe
cts,
incl
udin
gP
R).
Eli
Lilly
has
sub
sequ
ently
wor
ked
with
thes
e fir
ms
to s
ourc
e ot
her
prod
ucts
(ac
tive
phar
mac
eutic
al in
gred
ient
(A
PI)
and
form
ulat
ions
). I
mpl
icat
ion:
usi
ng th
e T
B d
rugs
as
a te
stca
se fo
r w
orki
ng w
ith th
e fir
ms
wou
ld h
ave
been
a r
elat
ivel
y lo
w-r
isk
way
to b
egin
a w
orki
ngre
latio
nshi
p.
In D
ecem
ber
2003
, Pur
due
Uni
vers
ity b
roke
gro
und
for
its n
ew m
anuf
actu
ring
faci
lity,
the
Alle
nC
hao
Cen
ter
for
Indu
stria
l Pha
rmac
y, w
hich
will
pro
duce
Ser
omyc
in (
cycl
oser
ine)
. U
nive
rsity
offic
ials
als
o vi
site
d Li
lly’s
man
ufac
turin
g pa
rtne
rs in
Indi
a an
d C
hina
to d
eter
min
e tr
aini
ngre
quire
men
ts fo
r bo
th fa
cilit
ies
and
to m
eet w
ith lo
cal u
nive
rsiti
es in
thos
e co
untr
ies
to d
iscu
sspo
ssib
le c
olla
bora
tive
effo
rts.
In
May
, Pur
due
Uni
vers
ity w
ill b
e ho
stin
g its
firs
t tra
inin
g fo
r fiv
eem
ploy
ees
of Z
hejia
ng H
isun
Pha
rmac
eutic
al C
o., L
td. (
Chi
na),
and
four
em
ploy
ees
from
Sha
sun
Che
mic
al a
nd D
rugs
, Ltd
. (In
dia)
, in
Wes
t Laf
ayet
te, I
ndia
na.
The
uni
vers
ity w
ill tr
ain
empl
oyee
sin
Goo
d M
anuf
actu
ring
Pra
ctic
es a
nd p
rope
r re
gula
tory
doc
umen
tatio
n.
Lilly
has
als
o es
tabl
ishe
d a
Cen
ter
of E
xcel
lenc
e fo
r th
e tr
aini
ng o
f med
ical
per
sonn
el in
the
trea
tmen
t of M
DR
TB
to h
elp
prev
ent f
urth
er s
prea
d of
the
dise
ase
and
is le
adin
g an
effo
rt to
esta
blis
h a
com
preh
ensi
ve s
urve
illan
ce p
rogr
amm
e to
mon
itor
deve
lopm
ent o
f res
ista
nce
agai
nst
the
antib
iotic
s us
ed to
trea
t MD
R T
B.
3. C
hina
Nov
artis
Coa
rtem
Dev
elop
men
t and
Man
ufac
ture
Coa
rtem
is a
n an
timal
aria
l lic
ense
d by
Nov
artis
from
a C
hine
se fi
rm.
Nov
artis
alw
ays
reco
gnis
edth
at th
is p
rodu
ct w
ould
hav
e lim
ited
com
mer
cial
pot
entia
l and
this
mad
e it
idea
l for
th e
com
pany
’sfir
st e
xper
imen
t in
wor
king
with
Chi
na, w
here
it h
as s
ince
bec
ome
one
of la
rges
t mul
tinat
iona
lsin
ope
ratio
n. T
he c
apac
ity a
nd r
elat
ions
hips
bui
lt th
roug
h th
e de
velo
pmen
t of C
oart
em a
re n
owbe
ing
used
for
othe
r pr
oduc
ts N
ovar
tis m
anuf
actu
res
and
mar
kets
in C
hina
. N
ovar
tis r
ecei
ves
publ
ic r
elat
ions
ben
efits
from
the
deal
. A
lso,
WH
O p
rovi
des
tech
nica
l sup
port
and
fund
ing
(for
deve
lopm
ent)
, dem
and
fore
cast
ing
and
a cr
edit
line
for
gove
rnm
ents
to p
urch
ase
the
prod
uct.3
8
4. B
ihar
Sta
te,
Indi
a –
Inst
itute
for
One
Wor
ld H
ealth
(IO
WH
)
Far
mita
lia (
take
nov
er b
y P
harm
acia
)Le
ishm
ania
sis
Dev
elop
men
t and
even
tual
lym
anuf
actu
re
With
littl
e m
ore
than
$10
mill
ion
from
the
Gat
es F
ound
atio
n, T
he In
stitu
te fo
r O
ne W
orld
Hea
lthha
s ju
st s
tart
ed a
larg
e an
d pi
vota
l hum
an e
xper
imen
t in
Bih
ar, I
ndia
, tha
t’s te
stin
g a
drug
totr
eat k
ala
azar
. K
now
n m
edic
ally
as
leis
hman
iasi
s, k
ala
azar
is c
arrie
d by
the
sand
fly
and
kills
an e
stim
ated
200
,000
peo
ple
annu
ally
. T
wel
ve m
illio
n pe
ople
are
thou
ght t
o be
infe
cted
, mai
nly
in In
dia.
In th
e 19
90s
the
Wor
ld H
ealth
Org
aniz
atio
n re
ceiv
ed a
don
atio
n of
par
omom
ycin
from
Far
mita
liath
e Ita
lian
phar
mac
eutic
al fi
rm h
oldi
ng th
e lic
ence
. F
arm
italia
was
not
inte
rest
ed in
dev
elop
ing
the
drug
on
its o
wn
beca
use
of p
arom
omyc
in’s
lack
of p
oten
tial t
o be
com
e pr
ofita
ble,
giv
en th
e
Dev
elo
pin
gco
un
try
& f
irm
tech
no
log
yre
cip
ien
t
Tec
hn
olo
gy
Do
no
rP
rod
uct
TT
typ
e(M
anu
fact
uri
ng
, R&
Do
r o
ther
)
Des
crip
tio
n
-
28 DFID Heal th Systems Resource Centre 2004
Leveraging the Pr ivate Sector for Publ ic Health Object ives
expe
nse
of c
ondu
ctin
g cl
inic
al tr
ials
and
the
poor
eco
nom
ic s
tatu
s of
peo
ple
mos
t in
need
of
it. W
HO
beg
an w
ith P
hase
I an
d II
tria
ls o
n th
e dr
ug, b
ut r
an o
ut o
f fun
ds a
nd h
ad to
sto
p.IO
WH
cam
e to
WH
O, l
ooki
ng fo
r a
proj
ect.
WH
O s
ugge
sted
they
take
ove
r th
e tr
ials
and
cont
inue
to P
hase
III,
whi
ch th
ey d
id.
5. S
hang
hai
Des
ano
Cip
laM
anuf
actu
ring
Sha
ngha
i Des
ano
(Chi
na)
rece
ived
the
know
-how
of p
rodu
cing
AR
Vs
from
Cip
la (
Indi
a).
Sha
ngha
i Des
ano’
s m
otiv
atio
n is
to in
crea
se th
eir
inte
rnat
iona
l pro
file,
con
sist
ent w
ith th
eir
goal
of d
evel
opin
g th
eir
expo
rt b
ase
in A
fric
a an
d La
tin A
mer
ica.
39
6. A
eras
Glo
bal T
BV
acci
neF
ound
atio
n
Var
ious
inst
itute
s in
deve
lopi
ng c
ount
ries
and
a S
outh
Afr
ican
vacc
ine
man
ufac
ture
r
TB
vac
cine
sR
esea
rch
and
man
ufac
turin
gA
eras
ann
ounc
ed in
Feb
ruar
y 20
04 th
at it
wou
ld b
egin
Pha
se II
tria
ls o
f tw
o ne
w v
acci
nes
agai
nst t
uber
culo
sis.
The
pro
ject
has
enl
iste
d pa
rtne
rshi
ps w
ith s
cien
tists
, aca
dem
ic in
stitu
tions
,go
vern
men
ts, a
nd c
ompa
nies
in E
urop
e, in
Sou
th A
fric
a an
d ot
her
deve
lopi
ng c
ount
ries,
and
in th
e U
S.
A c
linic
al r
esea
rch
site
is a
lread
y in
ope
ratio
n in
Cap
e T
own,
Sou
th A
fric
a, w
here
mor
e th
an 9
000
volu
ntee
rs a
re e
nrol
led
in a
clin
ical
tria
l. O
ther
site
s ar
e be
ing
cons
ider
ed in
Per
u an
d In
dia.
Aer
as is
als
o pa
rtne
ring
with
The
Bio
vac
Inst
itute
in C
ape
Tow
n to
man
ufac
ture
vacc
ines
for
futu
re P
hase
I an
d II
clin
ical
tria
ls.
7. V
ario
us,
prim
arily
Indi
anm
anuf
actu
rers
Wye
thP
harm
aceu
tical
s,va
ccin
es, c
onsu
mer
heal
th
Clin
ical
tria
l and
man
ufac
turin
gex
pert
ise
Ove
r 10
0 W
yeth
pro
duct
s ar
e m
anuf
actu
red
in d
evel
opin
g co
untr
ies;
som
e su
pply
ent
ire r
egio
ns.
The
re a
re 1
6 ph
arm
a pl
ants
, 3 v
acci
ne p
lant
s an
d 2
biop
harm
pla
nts
– so
me
of th
ese
are
owne
daf
filia
tes
and
som
e ar
e th
ird p
arty
sup
plie
rs.
Mai
n ar
eas
of T
T: p
rodu
ct/p
roce
ss k
now
-how
(tec
hnic
al d
ocum
ents
); k
now
ledg
e of
pro
duct
s an
d pr
oces
ses;
sci
entif
ic k
now
ledg
e; tr
ansf
erof
equ
ipm
ent;
regu
lato
ry a
nd q
ualit
y re
quire
men
ts; t
rain
ing
of p
erso
nnel
. E
xam
ples
incl
ude
Gha
na, w
here
Wye
th is
spo
nsor
ing
clin
ical
tria
ls fo
r tr
eatm
ent o
f riv
er b
lindn
ess
at H
ohoe
Hos
pita
l (in
par
tner
ship
with
WH
O)
in w
hich
Wye
th p
rovi
des
the
reso
urce
s fo
r pr
e-cl
inic
alan
alys
is, d
ata
man
agem
ent,
med
ical
writ
ing,
reg
ulat
ory
filin
gs, e
tc.
In G
ambi
a W
yeth
is p
rovi
ding
a ne
wly
dev
elop
ed p
neum
ococ
cal c
onju
gate
vac
cine
for
a fiv
e-ye
ar c
linic
al tr
ial.
In S
outh
Afr
ica
the
com
pany
is s
pons
orin
g a
clin
ical
tria
l with
40,
000
child
ren
to a
sses
s th
e pu
blic
hea
lth v
alue
of a
pne
umoc
occa
l con
juga
te v
acci
ne in
pre
vent
ing
pneu
mon
ia th
at r
esul
ts in
hos
pita
lisat
ion.
In In
dia,
Wye
th h
as n
ine
third
par
ty s
uppl
iers
and
two
owne
d pl
ants
, bot
h of
whi
ch p
rodu
ceho
rmon
als.
8. T
B A
llian
ceC
hiro
n C
orp.
TB
Man
ufac
turin
g rig
hts
Chi
ron
dona
ted
mos
t of t
he c
omm
erci
al r
ight
s to
the
drug
com
poun
d du
bbed
PA
-824
to th
e T
BA
llian
ce.
Chi
ron
didn
’t ha
ve a
ny r
easo
n to
take
this
forw
ard
and
thei
r go
al w
as to
get
that
dru
gde
velo
ped,
sai
d A
llian
ce s
poke
swom
an G
wyn
ne O
oste
rbaa
n. ‘
Chi
ron
had
ever
y in
cent
ive
toha
nd it
ove
r to
us.
’40
9. M
edic
ines
for
Mal
aria
Ven
ture
41
R
anba
xy &
Roc
heM
MV
&K
orea
n fir
m
Var
ious
mal
aria
prod
ucts
Man
ufac
turin
g &
R&
DV
ario
us R
&D
pro
ject
s ta
rget
ing
new
mal
aria
med
icin
es w
ith r
esea
rche
rs a
nd s
cien
tists
from
deve
lopi
ng c
ount
ries,
as
wel
l as
biot
ech
and
phar
mac
eutic
al c
ompa
nies
from
Chi
na a
nd S
outh
Kor
ea.
MM
V m
ay o
ffer
the
follo
win
g to
the
part
ners
hips
: offs
et c
osts
of d
evel
opm
ent;
prov
ide
acce
ss to
‘bio
logy
of d
isea
se’ m
alar
ia e
xper
tise;
pro
vide
tech
nica
l ass
ista
nce
rela
ted
to b
ringi
ngre
gist
ratio
n do
ssie
r up
to in
tern
atio
nal s
tand
ards
, inc
ludi
ng
Dev
elo
pin
gco
un
try
& f
irm
tech
no
log
yre
cip
ien
t
Tec
hn
olo
gy
Do
no
rP
rod
uct
TT
typ
e(M
anu
fact
uri
ng
, R&
Do
r o
ther
)
Des
crip
tio
n
-
DFID Heal th Systems Resource Centre 2004
Annex A: Summar y of Technology Transfer Exper iences
29
IC
H-le
vel c
linic
al tr
ials
and
GM
P c
ertif
icat
ion.
In K
orea
, WH
O id
entif
ied
a sm
all f
irm in
tere
sted
in g
row
ing
thei
r A
fric
an p
rese
nce.
The
re is
also
a s
mal
l ant
i-mal
aria
l mar
ket i
n K
orea
, but
big
eno
ugh
that
a s
mal
l com
pany
may
be
inte
rest
ed.
The
re w
as a
lso
an in
cent
ive
for t
he K
orea
n co
mpa
ny to
lear
n ab
out d
rug
deve
lopm
ent
and
the
deve
lopm
ent o
f the
reg
ulat
ory
doss
ier.
In th
e R
anba
xy d
eal,
Ran
baxy
get
s th
e de
velo
ped
wor
ld m
arke
t and
MM
V g
ets
the
deve
lopi
ngw
orld
. T
he n
ew h
ead
of R
&D
at R
anba
xy w
as in
stru
men
tal t
o ge
tting
the
deal
don
e. M
MV
offs
ets
the
cost
of R
&D
. In
the
pres
s re
leas
e, th
e C
EO
sai
d ‘C
olla
bora
tive
rese
arch
is o
ne o
fth
e id
entif
ied
grow
th d
river
s of
Ran
baxy
. D
evel
opin
g a
new
med
icin
e fo
r M
alar
ia a
fford
s R
anba
xyan
opp
ortu
nity
to p
rovi
de b
ette
r he
alth
car
e op
tions
in th
is s
egm
ent.
We
are
delig
hted
to jo
inha
nds
with
MM
V in
this
ven
ture
to e
nhan
ce o
ur s
ocia
l res
pons
ibili
ties
caus
e.’
A r
ecen
t agr
eem
ent w
as s
igne
d be
twee
n C
hong
qing
Hol
ley
Hol
ding
, a C
hine
se p
harm
aceu
tical
com
pany
, Sig
ma-
Tau
, an
Italia
n ph
arm
aceu
tical
com
pany
, MM
V a
nd th
e U
nive
rsity
of O
xfor
dfo
r th
e in
tern
atio
nal d
evel
opm
ent o
f the
ant
i-mal
aria
l dru
g, d
ihyd
roar
tem
isin
in-p
iper
aqui
ne(A
rtek
in).
Unl
ike
the
conv
entio
nal c
hlor
oqui
ne a
nd s
ulfa
doxi
ne-p
yrim
etha
min
e tr
eatm
ents
arte
mis
inin
, fro
m w
hich
the
drug
is d
eriv
ed, h
as n
ot y
et p
rodu
ced
any
know
n ca
ses
of r
esis
tanc
e. ‘N
ot o
nly
shou
ld th
is a
ntim
alar
ial b
e ef
fect
ive,
’ sai
d D
r C
hris
toph
er H
ents
chel
, CE
O o
f Med
icin
esfo
r M
alar
ia V
entu
re, ‘
our
goal
is a
lso
to b
e ab
le to
mak
e it
avai
labl
e at
a c
ost t
hat’s
affo
rdab
lefo
r pe
ople
livi
ng o
n le
ss th
an a
dol
lar
a da
y.’
A m
eflo
quin
e ar
tesu
nate
fixe
d-do
se c
ombi
natio
n is
bei
ng d
evel
oped
by
the
Far
Man
guin
osfa
ctor
y (g
over
nmen
t fac
tory
) in
Bra
zil,
with
ass
ista
nce
from
DN
Di a
nd th
e T
DR
div
isio
n of
WH
O.
DN
Di/T
DR
faci
litat
es th
e de
al a
nd th
e de
velo
pmen
t pro
cess
and
has
pro
vide
d m
anuf
actu
ring
tech
nica
l ass
ista
nce
as w
ell.
The
tota
l mal
aria
mar
ket i
s w
orth
app
roxi
mat
ely
$200
-300
mill
ion
per y
ear.
Thi
s is
not
com
mer
cial
lyin
tere
stin
g to
maj
ors,
but
may
be
inte
rest
ing
to d
evel
opin
g co
untr
y pr
oduc
ers.
esp
ecia
lly if
they
rece
ive
help
in d
efer
ring
deve
lopm
ent c
osts
, with
reg
istr
atio
n an
d w
ith b
ringi
ng th
e do
ssie
r up
to a
n in
tern
atio
nal l
evel
– th
is is
the
TT
that
MM
V p
rovi
des!
Lea
rnin
g ho
w to
brin
g th
e do
ssie
rup
to IC
H s
tand
ards
can
be
help
ful t
o th
e fir
m in
oth
er d
isea
se a
reas
. GM
P c
ertif
icat
ion
(gai
ned
thro
ugh
wor
king
in a
ccor
danc
e w
ith M
MV
sta
ndar
ds)
can
help
as
wel
l. M
MV
can
als
o of
fer
mal
aria
exp
erts
. T
he C
hine
se h
ave
mal
aria
exp
ertis
e, b
ut In
dian
s an
d K
orea
ns d
o no
t.
10. V
ario
usU
.S. N
atio
nal
Inst
itute
s of
Hea
lth(N
IH)4
2
Var
ious
Var
ious
- dd
I _ P
RO
TE
IN, S
.A. d
e C
.V.,
Mex
ico
- Men
ingo
cocc
al v
acci
ne –
Pro
gram
me
for A
ppro
pria
te T
echn
olog
y in
Hea
lth a
nd W
HO
, pro
duce
dby
Ser
um In
stitu
te, I
ndia
for
sub-
Sah
aran
Afr
ica
Dev
elo
pin
gco
un
try
& f
irm
tech
no
log
yre
cip
ien
t
Tec
hn
olo
gy
Do
no
rP
rod
uct
TT
typ
e(M
anu
fact
uri
ng
, R&
Do
r o
ther
)
Des
crip
tio
n
-
30 DFID Heal th Systems Resource Centre 2004
Leveraging the Pr ivate Sector for Publ ic Health Object ives
- T
hym
osin
B, L
ee’s
Pha
rmac
eutic
als,
Hon
g K
ong
- C
alan
olid
e A
, Sar
awak
– M
edic
am, M
alay
sia.
NIH
isol
ated
the
anti-
canc
er c
ompo
und,
cala
nolid
e A
, fro
m th
e ba
rk o
f a tr
ee fo
und
in M
alay
sia.
It t
hen
licen
sed
the
right
s to
this
tech
nolo
gy to
the
priv
ate
firm
, Med
icam
, and
req
uire
d M
edic
am to
rea
ch a
n ag
reem
ent w
ith th
ena
tiona
l gov
ernm
ent f
rom
whe
re th
e re
sour
ces
cam
e to
sha
re th
e be
nefit
s ar
isin
g fr
om th
ete
chno
logy
. M
edic
am a
nd th
e M
alay
sian
gov
ernm
ent s
ubse
quen
tly a
gree
d th
at M
edic
am w
ould
ente
r in
to a
join
t ven
ture
with
a M
alay
sian
firm
, Sar
awak
, tra
nsfe
rrin
g te
chno
logy
for
prod
uctio
nof
the
prod
uct.
- R
otav
irus
vacc
ine,
Bha
rat B
iote
ch, I
ND
IA
- O
ther
neg
otia
tions
for
com
mer
cial
isat
ion
licen
ces
with
com