On the face of it, this deal
seems to be a very good one.
For South Africa it has real potential
for positive outcomes; it will create jobs, it will upskill workers, it has the
potential to reduce the cost of the vaccine and give greater access to it, it
could enable Biovac to become the access point for those vaccines into Africa,
it is sustainable in the sense that the need is great and competitive drugs
appear to be few, it has the potential to reinforce a positive message to other
pharmaceuticals that South Africa is a viable destination for trials and drug
manufacturing (not that the likes Adcock Ingram or Aspen have done a bad job) despite the
restrictions on IP developed locally through public funds and exchange control,
and it is welcome news (politically and economically) in contrast to South
Africa’s recent woes reflected by the continuing fall in the rand over the past
few years.
So what’s in it for Pfizer? Why
would Pfizer transfer manufacturing skills, risk the fact that any IP it helped
developed locally may never be able to leave RSA, help reduce the cost of a
drug that it has spent the R&D developing (and still appears to be under
patent) and therefore possibly reduce potential revenue streams and help create
another drug manufacturer which could potentially produce generics in competition
to it? Afro Leo suggests that there is quite a lot in it for Pfizer.
This blog has reported for some
time on the pressure that has come to bear on big pharma to provide solutions
for developing and least developed countries which account for a considerable percentage
of the need for critical drugs. This pressure has also spilled over to the
patent system per se and has called to question the very idea behind
intellectual property (upon which big pharma rely) and its place in developing
countries. Added to that is the idea of integrated reporting for sustainable businesses where value is not just measured on bottom line profits but in the
concept of value to society and corporate responsibility, and an increasing
general awareness by the consumer in supporting companies and brands who do so,
and are seen to do so. This deal creates material for Pfizer to use to address these
issues.
There are bottom line reasons too
though. A decline in the rand makes imports expensive which will affect current demand
for the drug based on affordability. Creating a manufacturing partner in South
Africa therefore starts to make sense. Not only does the initial $ investment
go much further but it creates potential for drugs to be exported into Africa
more cheaply. In addition the deal creates options for Pfizer once the drug
goes off patent. The potential cheap production of off patent drugs under a
locally known brand name that would have captured market share, should be a
shrewd move to ensure longer term demand, not only for Prevnar 13 but potentially
others.
Admittedly, one would have to
consider the close detail of the deal especially on the extent and
effectiveness of the technology transfer and any competition restraints. Is
Biovac likely to be beholden to license to use the name and a supply of the active
ingredient even post the technology transfer, for example? There are other
risks too such as labour unions, quality and supply but overall, the deal does
seem encouraging.
