Cluster specific interventions in national development

pharmacy

The term “national development” ideally represents the aggregate of our individual socio-economic states. In other words, Nigeria would have been deemed developed if our individual quality of life and productivities were at levels deemed satisfactory for human beings. Though this standard of judging development is a moving target (GDP, HDI and others) and perceived development could be skewed and not evenly spread among the citizens, it is still by looking at the citizens that one can really make a judgement on national development.

That said, the quality of leadership of a nation is measured by the capacity of that leadership to transport citizens to development. To do so, individuals should, at least, possess the wherewithal to identify specific measurement criteria to be used in assessing the intentions and actions of leadership. Leadership, however is not passive, the citizens are active followers who are consistently engaged by the leadership team to achieve a consensus for moving in a particular direction.

To achieve this focused and unanimous movement, leadership would need to make citizens see why the movement is critical to national development; and to do so, a certain level of citizen enlightenment is required. Nations that have achieved dramatic leaps in the socio-economic fate of their citizens have this attribute in common – their citizens knew where their country was going and allowed themselves to be mobilised for it.

Though the term citizen broadly refers to the entirety of a nation’s population, within the context of national development, citizens could refer to the active stakeholders in the nation-building process and would include the academia, business community and public sector officials. Nations are built when there is the appropriate engagement of these stakeholders and the institutionalisation of these engagements towards a common cause.

A case study of India and Finland, for example, shows that nations do not just develop; development are driven when a shared sense of purpose is achieved between active stakeholders who imbibe and implement a consistent course of action that provides competitive and comparative advantages.

The Indian economy, by adopting a process patent regime in the early 70s, as against a product patent regime, was able to position itself as a global manufacturing nexus. Finland, a nation whose former main exports were agricultural products, adopted one of the most innovation endearing public education systems and aggressive investment in research to become a global leader in ICT.

From the above, Nigeria’s challenges can be outlined as:

1. Paucity of leadership that is engaging a visionary dialogue
2. Emergence of a followership unaware of the need for dialogue
3. Misplaced emphasis on unnecessary issues (tribe and religion)
4. Near oblivion on the urgency of the moment
5. A selfish posture by those who should be bothered

Need for cluster specific interventions

Prof. Michael Porter of the Harvard Business School is, perhaps, synonymous with the term “competitiveness” as he had contributed immensely to the literature on the competitiveness of nations. In a presentation to Nigerian Federal Ministers in 2009, he outlined the key factors that influence national competitiveness:

1. The Business environment
2. Cluster development
3. Firm operations and strategy
4. Social infrastructure and political environment
5. Macroeconomic policies
6. Natural endowments

A study of that presentation is proof to the long journey ahead, which in my opinion, we are yet to begin. However, the specific area that comes to mind which I believe we can all do something about is in the area of cluster development; something we very much need in the Nigerian pharmaceutical industry.

Clusters do not just develop; they are made happen by individuals who I would term “missionaries”. These individuals have done their best to synthesise the “gospel” – the strategy that would help us in the long term, and are eager and willing to preach this message to both policy and business leaders. These individuals are very much needed in both policy setting and business management positions, as their actions and inactions would to a large extent determine the fate of the whole.

The Indian case study

In the 1960s, propranolol – the first beta blocker was developed by the British company, ICI Pharmaceuticals. The drug was quite expensive for many Indians at the time and, as reported by Haley and Co, the Indian company, Cipla, led by Yusuf Hamied, head of R&D and the CEO’s son, started manufacturing a cheaper version for the Indian market in contravention of product patent regulations.

In response, ICI protested to the Indian government, and Hamied justified his actions as corresponding with national interests to then then Prime Minister, Indira Gandhi. Earlier In 1959, a Justice in the Indian legal system had issued a report urging that, for the sake of national interest, a partial process-patent regime become the law in India and Hamied advocated for the Justice’s recommendations. “Should millions of Indians be denied the use of a lifesaving drug just because the originator doesn’t like the colour of our skin?” he asked the Prime Minister.

His arguments must have been persuasive; for, in 1970, Prime Minister Indira Gandhi urged parliament to change the laws governing drug patents, applying the laws, not to the chemical compounds themselves but to the processes used to manufacture them.

Between 1970 and 2004, India’s regulatory and institutional environments in pharmaceuticals and agro-chemicals limited patent protection to providing exclusive rights only to processes through which the products were produced, rather than to the products. In other words, Cipla could go ahead and manufacture Propranolol, if it could tweak the production process a little to demonstrate some novelty even if the same product was produced. These developments allowed India’s innovative, high-quality and low-cost pharmaceutical industry to develop; to produce and to sell legally in developing countries, low-cost Indian versions of high-cost Western pharmaceuticals, without patent infringement.

Within this time frame, the number of Indian pharmaceutical manufacturing companies grew from slightly above 2000 to above 20,000 employing more than 5 million persons directly and over 20 million indirectly. In 2005, to meet the requirements for membership in the World Trade Organization (WTO), India had transitioned to a product-patent regime. Even now, the new product patent regime is well crafted to reflect Indian peculiarities.

Though there are several arguments against product patent regimes as a hindrance to development for developing nations like Nigeria, it is very much enshrined as one of the pillars of WTO, even though there are exceptions in case of national interests (DOHA Declaration). In the new India patent regime, such interests are stated to include national economic interests.

The point, however, from this case study is that the Indian pharmaceutical manufacturing Industry did not just emerge, it was designed to emerge – enabled by the right policy makers with their hearts in the right places and by ambitious business men. Also, the Indian process patent regime when compared to Nigeria for example, had provided India with a head start as, over the years, Indian pharmaceutical firms with deep pockets and sufficient manufacturing expertise had emerged, positioning the industry to maximise the generic market opportunities presented in North America and Europe.

A summary of the active stakeholders in the Indian story would include:

1. The academia – the legal luminary that made the recommendation for a process patent regime.
2. The business community – the firm that pleaded for government intervention and those encouraging it from the rear.
3. The government – a wise prime minister that was not afraid to do the needful.

The beneficiary is the Indian society.

Forming the Nigerian pharmaceutical cluster

It is well known fact that two are better than one and that greater efficiencies arise when even those in competition align themselves more closely towards attaining some common principal needs. For the Nigerian manufacturing pharmaceutical industry, such needs would include:

1. Favourable intellectual property management policy regime
2. Favourable government policies promoting local competitiveness
3. industry specific interventions like import waivers
4. Access to funding
5. Economic efficiencies that promote increased adaptive capacity to innovation
6. Stable business environment

Now, someone could say that to attain some of these, we would need to first escape the country and move our facilities somewhere else! This perhaps is the main thrust of this article – that what we need to thrive is a proactive government that has a cluster specific mindset and thinking, however, such governments are not born, they are made. Hence, the chief pre-occupations for our “missionaries” would be to influence government, which I believe is a noble aspiration that is possible to achieve if undertaken as a cluster project in a very strategic manner. Though in many cases, it is one individual – one man or woman that would lead the pack.

It should be noted that there were consequences for the Indian policy of 1970. For example, virtually all the multinational companies had to leave India as the competitive advantages offered by patent production was lost. India then capitalised on its relatively large domestic market and the small but growing market in other developing countries like Nigeria to drive its emergence as a manufacturing nexus.

I have always argued that trade liberalisation and open market economies that emphasise the removal of government subsidies and the implementation of other capitalist policy constructions are touted only by developed countries that benefit from such weakening of our national competiveness. No country has ever developed by receiving the size of the grants we get from developed countries for our health care needs. Hence, any serious desire to achieve national economic renaissance – the kind that acknowledges that the manufacturing sector is a pillar of such renaissance and not just the GDP size – must be seen for what it is: a serious change in the status quo.

That said, ours is not an impossible task. I believe we are at no better time than now; our challenges are huge but our path is also clear – the Nigerian government must be engaged. We must go to Aso Rock!

For the missionaries mentioned earlier, it is not an ambition, it is a dire need. Though a lot may not know it, a large population of Indians owe their socio-economic fate today to the actions of the earlier outlined stakeholders that stood up and did the needful. I believe you are, at least, standing.

References

Porter, Michael E. “Creating a Competitive Nigeria: Towards a Shared Economic Vision.” Presentation to Federal Ministers of Nigeria, Lagos, Nigeria, July 23, 2009.

G.T. Haley, U.C.V. Haley, C.T. Tan, “The effects of patent-law changes on innovation: The case of India’s pharmaceutical industry”. Technological Forecasting & Social Change, 79 (2012) 607-619.