Dynamics and Regulation of the Asian Pharmaceutical Industry: A Critical Review

This paper provides an overview on 18 papers presented at a Stanford University conference on the Asian pharmaceutical industries. It begins by putting the contributions and growth of individual national industries in quantitative perspective. Several substantive issues are then addressed: (1) the distortions introduced by the system prevalent in many Asian nations for physicians to secure much of their compensation through the profits from drugs they directly dispense: (2) the effects of government price controls, which among other things encourage emphasis on proliferating minor improvements to existing drugs; (3) the fragmentation of manufacturing industry structure, which leaves too many firms lacking the economies of scale required inter alia to sustain high levels of quality control and which makes regulatory monitoring difficult; (4) the implications of World Trade Organization rules requiring nations to begin issuing pharmaceutical product patents where previously their industries could free-ride on the technological advances of industrialized nations; and (5) whether more Asian pharmaceutical firms can overcome the hurdles to becoming significant technological innovators.