Tecnoquímicas’s main focus has been on the production of OTC drugs and other nonessential medicines. Although the types of medicine it produces may not necessarily be those that would contribute to greater access to medicines as such, there are a number of important points that ought not to be overlooked when examining this firm, to the extent that it is being examined as a market leader in Colombia.
First, with respect to neglected diseases, its ongoing R&D activities in the area of tropical diseases such as leishmaniasis may provide an important contribution to access to medicines for tropical diseases in the country. These activities do not appear to have resulted, for the time being, in a concrete deliverable cure, but they are an illustration of the considerable potential of public private partnerships such as CIDEPRO for the area of tropical diseases.
The lack of capacity to produce many essential drugs is due to the fact that multinational companies ended their licensing agreements for the production of such drugs probably at a point too soon for Tecnoquímicas and other domestic manufacturers to absorb the licensed technology and know-how.
Second, the case study highlights the role that Tecnoquímicas’s well-established distribution system plays in providing medicines not only in Colombia but also
in Central America. No foreign company has a comparable network in this area, which may be due in part to its familiarity with the language and culture of the region. At the same time, it was language barriers that were the determining factor in partnering with a Florida-based firm, as opposed to firms from Korea or India.
A related issue affecting access to medicines in Colombia is the high price levels for certain essential medicines, which are in many cases provided through importation by foreign firms and protected under exclusive patent and test data rights (see also Section 8). Comprehensive comparative price data between firms were not available to the study team, but the prices charged by Tecnoquímicas for its products are fairly representative of the prices charged by a market leader in Colombia. The institution of universal health coverage has, however, meant that the majority of the population can have access to medicines without having to pay substantial sums out of their own pocket.
8. Policy-relevant findings
The information gathered on the Colombian pharmaceutical market in general, and on Tecnoquímicas in particular, gives rise to the following principal findings.
1. Due to its size, Tecnoquímicas may not be representative of the Colombian pharmaceutical industry in general. In addition, Tecnoquímicas has shown particular flexibility in terms of its various technology sources, product diversification, use of own brands and export opportunities, as well as the quality of its local distribution network. These elements, which may not be met by the bulk of Colombia’s domestic producers, illustrate some general requirements in the pharmaceutical industry, i.e. well-trained staff and specific local advantages that may be used to attract technology partners.
On the other hand, the level of Tecnoquímicas’s technological capacity does appear typical for the domestic industry, which is characterized by its focus on drugs formulation and adaptation of existing products, and its lack of capacity to develop APIs or new chemical entities. Many Colombian pharmaceutical firms acquired initial technological capacity in pharmaceutical production through licensing agreements with multinational pharmaceutical companies.
Local firms such as Tecnoquímicas used this initial expertise to develop other avenues of technological learning after the termination of most of the licensing agreements with multinational companies. The study shows that the purchase of foreign production plants may provide important sources of technology and capacity building for the domestic pharmaceutical sector, provided the latter already has some level of pharmaceutical manufacturing capacity. Tecnoquímicas now receives know-how and technology transfer from foreign suppliers of APIs, consultants, former employees of multinational firms, and a well-developed cooperation network with Colombian universities and research centres. API and equipment suppliers also provide advice on plant design, processes and formulations. With regard to improvements that
allow GMP and other quality standards to be met, the local industry resorts to foreign consultants available on a contract basis.
2. Most Colombian firms are capable of formulating pharmaceutical products that are based on chemical synthesis. However, there is not much experience in the formulation of medications of biotechnological origin, although there are some laboratories that are venturing into this area and into vaccine production (e.g. through collaboration with Cuban institutions). There is little experience in the formulation of cytostatic products, immunomodulators or ARVs, which are supplied through imports. The main determining factor is the lack of investment in special production and development areas, which are required for the production of these products because of their high potency and toxicity (Gallo Castro et al., 2010).
3. In addition to drugs formulation, Colombian firms are usually capable of carrying out incremental pharmaceutical innovation, e.g. the modification of existing products, such as the development of new pharmaceutical forms and combinations of existing ingredients, improvements or adaptations of known products, and improved manufacturing methods. Very few local firms are capable of producing APIs; the large majority depend on imports of APIs from various sources, such as China and Germany.
4. Local producers play an important role in the Colombian health system.
Most multinational originator companies left the country for various reasons (inter alia the political instability prevailing in the 1990s and the national health system, which favours affordable generic medicines). They still supply the market with medicines that local producers cannot make, but local producers have taken over the production of many other drugs. Major Indian and Chinese producers of generics are not currently producing in Colombia.
This study identifies language and cultural barriers as important reasons for this. Colombian producers prefer collaborations with Spanish-speaking foreigners. In addition, some local producers such as Tecnoquímicas have rejected some API shipments from India and China due to concerns about poor quality. APIs are therefore not only sourced from these countries. For these reasons, Colombian producers in sourcing their APIs are not limited to these countries. Thanks to large and efficient distribution networks of domestic firms such as Tecnoquímicas, and thanks to their ability to adapt products to local needs, Colombian producers seem well prepared to compete with Indian, Chinese and other producers, should these decide to enter the Colombian or Latin American markets. In addition, Colombian producers have benefited from facilitated market access to other Latin America countries on the basis of several free trade agreements to which Colombia is a party (in particular, with Venezuela and the Andean Community). Although these advantages might assist the domestic pharmaceutical producers in becoming economically viable in the long run, more private-sector R&D is needed to increase technological capacity in producing more complex medicines to better compete with foreign imports and to bring down prices.
5. The implementation of a universal health care system has allowed the creation of a public market for generic products that has dramatically expanded access to medicines. The public generic market has been the launching pad for the consolidation of a local pharmaceutical industry. The expansion of the universal health care system, together with the rise of local generic production and the complementary importation of other drugs by multinational firms, has resulted in 86% of the Colombian population having access to medicines.
However, intellectual property protection and other issues pose an unresolved problem for price and access to medicines (see below).
6. The high price of medications under patent or data protection is an unresolved issue in Colombia. Under the universal health care system, medicines are provided free of charge by the Colombian Government. The high prices of intellectual property-protected drugs have sparked Government demand for more affordable generic alternatives by domestic producers, where available.
However, the social emergency declared by the Colombian Government in December 2009 has exposed long-lasting problems. First, there have been allegations of certain practices in some segments of the pharmaceutical industry to encourage the prescription of certain medications. Furthermore, the fact that some essential ARVs, such as Kaletra, have been sold in Colombia at much higher prices than in comparable markets illustrates the effect of patents and exclusive rights in pharmaceutical test data on medicines prices.
The Colombian Government has taken some measures to bring down those prices, but these measures have been insufficient and unsuccessful. The price control system has not resulted in any price reductions, except in one case (Kaletra). The regime of parallel imports has so far not been implemented through regulation and thus is not operational. It would seem that more government determination is required to ensure the success of these measures.
In addition, other corrective policy measures may have to be considered, such as anti-trust law and policy. Finally, increased competition through capable local producers could be a promising avenue to address high prices.
7. A strong intellectual property regime and a framework that fosters FDI are not sufficient conditions for encouraging FDI in the pharmaceutical industry. Colombia has an intellectual property regime whose standards of protection are among the highest in the world. There are important incentives for the establishment of FDI and trade agreements that permit export to an important regional market and to industrialized regions, such as the EU and the United States. There is also an interesting domestic market.
However, all these conditions that foster investment were not sufficient to prevent the massive closure of plants during the 1990s, or to reverse that trend in the present decade. Insecurity and political violence, the trend in the multinational industry to concentrate production in fewer places, and increased local GMP standards requiring costly upgrades of production sites in Colombia seem to have been more important factors resulting in a withdrawal of foreign investments.
8. The multinational innovative laboratories have not transferred technology to their Colombian branches to synthesize or formulate new chemical entities
in Colombia. Since 2002, all of the marketing approvals for new chemical entities have been for the importation and sale and none have been for manufacturing and sale. The evidence that emerges from the protected NCE registry suggests that, at least since 2002, the multinational innovative pharmaceutical laboratories do no synthesize or formulate new medications in Colombia but supply the market through imports.
9. Colombia’s drug regulatory system has contributed to the gradual establishment of local production. The country has to date followed a policy of requiring absolute bioavailability and bioequivalence in vivo tests only for high-risk medications. This selective policy accommodates the industry’s limited capacities to carry out such tests on a large scale. It has thereby contributed to keeping the market competitive. The country has at its disposal research centres and human resources to carry out these tests, although not on a large scale. It would be helpful for the preservation of the existing degree of market competition if any tightening of regulatory requirements were preceded by an increase in the capacity to carry out bioavailability and bioequivalence tests and by an active policy regime, e.g. providing for subsidies, transition periods, etc. Finally, the Andean Community, despite legislating on technology transfer, FDI and intellectual property, has so far neglected a regional approach to drug regulation. Unified regulatory standards for medicines would provide an important step towards the realization of economies of scale for local producers by means of regional exports.
10. Even though there is still room for improvement, the Colombian pharmaceutical industry has been gradually raising its GMP levels, especially through the creation and strengthening of INVIMA. This was achieved while preserving a competitive market. The possibility to export to other regional markets has been a stimulus to make some locally owned laboratories improve their GMPs and other quality standards. Plans to export to other nontraditional Latin American markets, such as Argentina and Brazil, will provide incentives to raise GMP capacity even further to comply with higher requirements in these two countries. Technology transfer by foreign consultants is likely to play an important role in this context.
11. Colombia has human resources and minimal infrastructure to carry out R&D regarding type II and III diseases, but investment in R&D is insufficient.
The country has at its disposal a significant science and technology system, well-trained human resources and minimal infrastructure in research centres and universities. This is a platform that, although it cannot be compared to those in developed countries, allows the conduct of basic and applied research for the development of medications, vaccines and diagnostic kits for neglected diseases, or for receiving knowledge for such purpose. However, these initiatives are at an embryonic stage and few in number. In addition, public and private investment in R&D is still low, and cooperation between the scientific-technological sector and the pharmaceutical industry is not fully satisfactory. Public–private partnerships between manufacturers and universities, such as the research projects carried out by Tecnoquímicas and others on leishmaniasis, are encouraging examples of such cooperation.
To improve the overall situation, it would be helpful if the government could provide financing for this type of research and establish priorities and coordinate the efforts of the different organizations and existing initiatives.
The private sector alone can hardly be expected to take the lead in this context, considering the lack of a market for type II and III diseases.
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