India initiated production of critical drugs in 1951 with the aid of UN bodies to keep out patent blocks—a model we have forgotten
History offers many excellent lessons for our science and technology development; but for that we need to know the past.
Not the fabled past of mythical times based on folklore and imagined technical prowess, but the more recent history of modern India, when a poor, struggling nation set itself some ambitious targets.
One of the more fascinating aspects of this history is the setting up of a penicillin manufacturing factory in the 1950s.
Almost anyone with interest in pharmaceuticals knows about Hindustan Antibiotics, the first factory in the Third World to start production of critical drugs in 1954.
Few, however, are aware of the ideological battles that were fought as Jawaharlal Nehru pondered the path of development that his newly independent country should pursue, when access to technology was elusive, resources were scarce and drug multinationals were determined to control markets through their know-how and patents.
Why is this of any relevance now? Simply because we have not learned the lessons of the past.
What triggered this column’s plunge into history was a small news item about the enormous sums the government had spent on procuring vaccines to fight the SARS-CoV-2 pandemic.
It reflected the concerns that India’s first prime minister grappled with while dealing with the question of setting up manufacturing projects in the country and in particular, the penicillin project.
The news report of August 4 said the Government of India had spent, till July 31, 2023, a total of Rs 36,397 crore on COVID-19 vaccines. The big payout was to the Serum Institute of India, a contract manufacturer for Covishield, the vaccine developed by British multinational AstraZeneca.
It received Rs 25,583 crore for 1.3 billion doses, while Bharat Biotech, makers of the indigenously developed Covaxin earned Rs 7,301 crore for 35 million doses. These figures reveal how far we are from the goal of self-reliance in pharma that Nehru had hoped for.
In 1950, India had to take a decision on a critical question: should it accept US multinational Merck’s offer of collaboration to set up a penicillin factory by paying the steep technology/royalty fees it was demanding—a steep US $175,000 annually for 15 years—or should the proposed public sector project steer clear of such collaboration under which the foreign company would lay down the terms?
Merck’s offer was the best India had got, since the other companies, Glaxo and Pfizer, were only prepared to import pure penicillin in bulk and have it bottled in the country. It was at that point two UN agencies, the World Health Organization (WHO) and Unicef, came up with an amazing proposal.
Unicef would provide a grant of $850,000 for equipment, while WHO would give another grant of $350,000 to provide technical personnel who would design, erect and commission the factory and also train Indian scientists, engineers and technicians on how to run the plant. It was an attractive offer, except for the fact that neither of these UN bodies had ever set up a manufacturing plant before.
That was not the only reason why some members of the Penicillin Committee, which was steering the project, opposed the WHO-Unicef proposal. In a paper detailing the politics and lobbying that occurred, economic historian Nasir Tyabji notes that licensed manufacturing had become the option preferred by industrialists and the reason the chairperson of the committee, Neville N Wadia of Bombay Dyeing, backed the Merck proposal and was sceptical of UN agencies’ proposal.
Wadia was also president of the Bombay Millowners’ Association, the most influential lobby group of industrialists at the time. Although he knew little of pharma industry, he was almost on the verge of signing the agreement with Merck when Nehru stepped in.
A major sticking point in opting for the WHO-Unicef proposal was the fear that Merck’s patents would come in the way of setting up the project. Merck held four process patents and extensive consultations were carried out with foreign scientists and experts on the patent claims.
The considered opinion was that three of the patents could not be enforced because of prior art (evidence that the invention was already known) while the jury was out on the fourth.
A top WHO official who was instrumental in pushing the project is said to have assured the Penicillin Committee that the patent issue would not prove to be a barrier since the technical know-how for manufacturing penicillin was the result of university-based laboratory work and collaborative research undertaken under the auspices of the War Production Board. Ultimately, with support of cabinet colleagues, Nehru decided to go with WHO-Unicef proposal.
It was a momentous decision shaped by Nehru’s vision of building self-reliance in a critical sector like pharmaceuticals—surprisingly, he had no reservations about foreign control of engineering projects such as dams—and his abiding belief in international cooperation.
He also subscribed to the ideals that drove the UN proposal—that India must agree to keep the plant in the public sector and share its research and discoveries with the network of similar training centres the UN was setting up in the Third World.
In sum, India must maintain an open-door science policy. Nehru would not have demurred, and thus was born Hindustan Antibiotics which laid the foundation for India’s generics industry.
Another factor at play in Nehru’s decision to jettison the Merck offer was his distrust of multinationals. During his visit to the UK at the time the penicillin project was being negotiated, Nehru mentioned to a cabinet colleague that senior British officials had complained to him that UK autonomy had been circumscribed by the influence US multinationals were exercising over their policymaking. Nehru was concerned that India’s planning process could be similarly constrained by entering into collaborations with companies such as Merck.
India and the world have changed vastly since those days. Over the decades Hindustan Antibiotics and other public sector drug manufacturing companies have been in steep decline; some have died unsung, others are on the disinvestment block.
Nehru’s vision of self-reliance in pharma has become distorted even if the generics sector is booming. The backbone of that success has come at a cost. Generics companies make their profits from licensing deals they enter into with drug giants, a mutually beneficial agreement that allows the latter to maintain their patent monopolies and market dominance.
This was first published in the 16-31 August, 2023 print edition of Down To Earth Magazine
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