Social Scientist. v 3, no. 36 (July 1975) p. 53.


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Foreign Monopolies Dominate Indian Drug Industry

THE HATHI Committee Report, submitted to the government on 6 April 1975, has made about 200 recommendations to make essential drugs available to the masses at reasonable prices. An important proposal is "nationalization of the foreign sector". A close study of the working of the "foreign sector" in the drug industry would clearly indicate the need for such a step though the government does not seem to be spurred bv any sense of urgency.

The balance sheets of thirty topmost foreign companies for the years 1960 to 1970 disclose that the^e companies had hiked up prices by 400 per cent over the manufacturing cost and reaped fabulous profits. They remitted about Rs 100 crores abroad over the last 15 years. Concentrating on the production of specific formulations, they deliberately avoided bulk production especially of essential drugs in which the profit rate is relatively low.

Drug industry in India is of fairly recent origin. Though the first unit came into existence as far back as 1901 the industry did not make any headway until 1939 when it met only 13 per cent of requirements. The years 1940 to 1953 witnessed a period of growth, when foreign firms went in for domestic production. However, it was only with the progressive banning of imports that these companies started taking a keen interest in the manufacture of formulations which turned out 10 be a highly paying business. Even then, drug manufacture has trailed at least ten years behind the developed countries.

In 1973, India had about 2800 companies engaged in the production of bulk drugs costing Rs 660 million and formulations worth Rs 3700 million. A small number of 118 firms controlled approximately 80 per cent of total output. Out of these, only 79 companies were actually engaged in the production of ethical drugs making the rest absolutely dependent on them. In this group of 79, 47 were foreign-owned. Table I shows the market cornered by the overseas firms.

Foreign monopolies concentrate their production 'on formulations or compounds because profit is more prolific than in bulk drugs. Of the total production of 4600 tonnes of bulk drugs in the organized sector



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