| cost to invent drugs = identifying compounds (90%, say) + determining manufacturing process (10%) ^ Where are you getting these numbers from? They seem way too simplistic, and your argument essentially falls apart without them. Real 'invention cost' would be determined by far more factors
- cost of raw materials - labour cost (I bet it's cheaper for pharmaceutical companies to pay workers much lesser in India too.), - whether your competitors are targeting the same market (if these companies stopped researching said drugs, Cipla would come up with a cheaper way to do the R&D required, and then make a killing, even with their low rates, since they would have cornered the market.) Plus the goodwill of Govts of developing countries that are offered these medicines at low rates may lead to fruitful collaboration with national research institutes in those countries, thereby lessening the need for enormous profit margins anyway. As someone said below, the fact that there is more money to be made selling iPads rather than bread does not mean that everyone switches to making iPads. |
Of 5,000 new compounds, you'll find 250 which are interesting enough to test in a lab (animals or in vitro), 5 which are interesting enough to test on humans, and 1 which gets approved.
It costs peanuts to find the 5,000 new compounds, and a little bit to figure out which ones are interesting (say, $50,000 each, about $250 million). Those 250 interesting drugs will cost a million each to test - subtotal $250,000. The 5 drugs which are tested on humans cost a fair bit (say $50 million each - $250 million for all 5). Getting the final compound approved takes a lot too, because you need a massive trial.
All up, it's about $1 billion per drug.
If you want to reverse engineer it, it's about $10 million dollars for a chemical engineer to read the publicly available formula, figure out how to synthesize it, and set up a small plant.
Whether it's a new drug, or a drug you copied, it costs a few cents labor / materials to make each dose once the factory is built. Yes, India could knock $0.01 off each tablet, by employing cheaper factory techs. But no-one cares about saving $0.01 off a $1 product.
India could do the R&D cheaper, but not a lot cheaper. It's like building an OS - you need experience people who know what they are doing, not just cheap process workers.
Ripping off US companies isn't a bad idea, because it lets Indian workers gain more experience, which will help them create better R&D jobs. In the long run, this might even be good for the US, because Indian R&D could create a lot of good drugs for the US to buy.