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    Moving from Rhetoric to Reality: South-South Collaboration in Health Biotechnology


    International Trade Forum - Issue 2/2010

    A study conducted into the health biotechnology sector in six developing countries with substantial biotechnology industries throws new light on far-reaching productive results of cooperation within the sector. The emergence of post-colonial South-South collaboration in these countries is helping move joint activity beyond political rhetoric to a substantial economic reality, despite most international ties in developing countries remaining with the North.

    The Size of the World Pharmaceutical Markets

    According to the WorldPharma report Emerging Influence: Industry in Figures,1 in 2008 the combined size of emerging markets (including China, Brazil, India, Republic of Korea, Mexico, Turkey and the Russian Federation) reached about US$ 105-115 billion. These figures can be compared to the market size of the United States of America (about US$ 287-297 billion) and the top five European Union (EU) countries (France, Germany, Italy, Spain and the United Kingdom) with sales of US$ 162-172 billion.

    Growth in Developing Markets

    Although the pharmaceutical market worldwide experienced moderate growth in 2008, the global recession and tighter regulations took their toll on developed markets. In contrast, sales in developing nations witnessed a growth spurt. In comparing respective growth rates, the United States pharmaceutical market, the world's largest, was forecast to grow by 1-2% and the top five EU countries were expected to grow at a rate of 3-4%. However, the emerging markets were projected to grow at a combined rate of 14-15%, five times that of the developed markets.

    South-South Collaboration

    Developing countries have established a number of regional free-trade zones and South-focused trade agreements. Some examples are the Southern Common Market in Latin America, the Common Market for Eastern and Southern Africa and the India, Brazil and South Africa trilateral agreement. Firms in various developing countries have started to form alliances in order to reach each other's markets. Knowledge about these linkages, the opportunities they present and whether cooperation extends to science-intensive sectors such as health biotechnology has been limited. Other questions in the study were whether the collaboration was restricted to trade or involved joint research and development and other innovation activities.

    To better understand the extent and characteristics of South-South collaboration in the health biotechnology sector, the University of Toronto carried out a brief survey, together with a number of partners in developing countries, of 467 health biotechnology firms in six developing countries with relatively strong biotechnology sectors: Brazil, China, Cuba, Egypt, India and South Africa.2 Representatives of the firms were asked whether they collaborated with companies or other organizations in other low- and middle-income countries. If so, they were asked to provide information on their cooperation. A total of 288 firms responded to the survey, a response rate of 62%.

    The survey revealed a surprisingly high level of South-South collaboration, with more than a quarter of the firms (27%) indicating they are actively working together with other developing countries in health biotechnology. South-North collaboration still dominates, with more than half (53%) of the firms reporting collaboration with developed countries. Joint South-South activity revolved mostly around end-stage commercialization activities, with 72% of the collaboration involving distribution and 34% involving marketing activities. In comparison, only 13% of the joint activities involved research and development.

    Most cooperation is between the leading developing countries in health biotechnology. Brazilian firms work relatively intensively with China and Cuba. Chinese firms collaborate heavily with India and Indian firms have frequent linkages with South Africa. Similarly, Brazil works in partnership with Argentina and South Africa with Botswana. Also striking is the widespread regional commercialization collaboration in health biotech. South African firms, for example, have distribution and marketing links with well over 20 African countries, including Botswana, Namibia and Nigeria. Egypt's distribution and marketing activities are undertaken in cooperation with around 10 African countries and widely within the Middle East. India has commercialization partnerships with other Asian countries, such as Sri Lanka and Pakistan. Brazil has numerous commercialization alliances with other Latin American countries and with Portuguese-speaking regions of Africa. South-South collaboration has a dual purpose: to strengthen regional economic ties; and to amplify the global competitiveness of leading developing countries in health biotechnology.

    Firms in the smaller countries surveyed, Cuba and South Africa, were particularly active in South-South health biotechnology collaboration. Of the countries surveyed, South Africa has the second-highest number of collaborative links and Cuba engages in more collaboration than China. Gaining access to markets appears to be the main motivation, underscoring the need for health biotechnology firms to export their products to ensure viability.

    Challenges for Developing Countries

    However, there are several challenges that firms must contend with when engaging in South-South collaboration. Follow-up interviews in developing countries revealed that firms find it challenging to identify appropriate partners in other developing countries and to initiate the collaboration. Finding enough detailed information about potential partners is a difficult task, and building trust can also be hard for firms, especially those with limited capacity and resources. Companies also commonly reported that the excessive time and the high cost of moving products or ingredients for production across international borders were a major challenge for the collaboration. It was also difficult for collaborators to fulfil the requirements of the drug regulatory systems in both of their respective countries, and immature regulatory systems or vastly different regulatory processes hampered the collaboration. Lastly interviewees in the countries with limited scientific proficiency highlighted that poor local scientific and supporting infrastructure was a hindrance to cooperation that focused on creating low-cost biotechnology products. Entrepreneurs highlighted that this could increase the end cost of products and make the exchange of goods between collaborators difficult and slow.

    Opportunities Through Collaboration

    By working together, developing countries use their respective strengths to increase the availability of relatively inexpensive health biotechnology products in developing countries' markets. For example, during Africa's 2007 meningitis outbreak, biotechnology firms in Brazil and Cuba provided African countries with affordable vaccines to prevent the further spread of the disease. By working together, the two countries quickly developed a cost-effective vaccine for Africa that was cheaper than an alternative from multinational firms. In addition, treatment for hepatitis, tuberculosis, malaria and HIV/AIDS is now available in sub-Saharan Africa through generics producers from China and India. Firms such as Ranbaxy, Shanta Biotechnics and Holly-Cotec are providing lower-cost alternatives, thereby improving access to health products.

    Clearly, South-South collaboration in health biotechnology is moving beyond political rhetoric to become a reality in a number of developing countries. Firms are using South-South collaboration to expand their reach into non-traditional markets and build competitiveness in biotechnology. South-South collaboration should be on the agenda of more firms in developing countries. South-South collaboration is also a powerful tool for providing lower-cost health products to which international organizations, donors and philanthropic organizations should pay attention. By encouraging South-South collaboration, donors can harness the capacity of developing countries to provide more affordable and more locally relevant health products, in order that these products can reach more people in the developing world.

    1Available at www.worldpharmaceuticals.net/editorials/015_march09/WPF015_theemerging.pdf.
    2H. Thorsteinsdóttir and others, 'South-South Entrepreneurial Collaboration in Health Biotech', Nature Biotechnology, vol. 28 (2010). pp. 407-416.

    Acknowledgement: The authors thank all the firms that responded to the survey and generously shared their expertise and time. This project was funded by Genome Canada through the Ontario Genomics Institute and by the International Development Research Centre, and was supported by the McLaughlin-Rotman Centre for Global Health, an academic centre at the University Health Network and University of Toronto. Halla Thorsteinsdóttir is supported by a New Investigator Award from the Canadian Institutes of Health Research.