Discouraging foreign direct investment in the pharmaceutical sector

It is often said that to err is human but to persist in error can only be interpreted as diabolical. Once more Mr Joseph Gatt repeated his misleading statements and half-truths but completely missed the salient points of my piece (The Sunday Times, February 20).

Despite taking up a lot of column space, he nonetheless (purposely?) avoided tackling the most relevant issues:

1) Why does he not declare his personal interest before the readers of The Sunday Times and let them judge the real reasons behind his contributions?

2) Why have other non-pharmaceutical originator companies set up factories a long time ago in Malta (despite our so-called weak patent protection) whereas the companies he apparently champions still have not?

This is what I meant when I said that it is clear that signing the European Patent Convention (EPC) does not automatically translate into investment from the originator pharma sector. Mr Gatt simply and conveniently dismisses the local pillars of industry as cheap labour profiteers.

3) If we give the generic companies that are coming here the cold shoulder, what guarantees do we have from Mr Gatt that the originator companies will set up in their stead? (If the investment he assured us would pour in from the latter is real, I'm sure that Malta Enterprise would eagerly welcome it!). It is obvious that he can offer no such guarantees unless he is their authorised representative.

4) Why are originators setting up shop in large Third World (cheap labour) countries where not only is there little or no patent protection but patents and copyrights are regularly attacked as attempts to delay socio-economic development?

5) Does he deny that imminent loss of patent rights is itself a massive incentive for originator companies to invest in their R&D pipeline in order to compensate for anticipated loss of revenue?

6) When generic companies were practically non-existent in the Fifties, how many new drugs were discovered? How does this figure compare with 2005 when the so-called 'pirates' are 'threatening' the originators (his words not mine)? Is this 'threat' real or imaginary?

7) Why are the EU and the Commonwealth in general favour facilitating generic companies?

It is very clear to me that Mr Gatt has no real technical or factual point to make. If he had, wouldn't he have made his case or representation before the appropriate authorities? By choosing the newspapers to analyse an essentially legal and economic issue, I surmise that he knows that he has no real financial figures to persuade with.

So in practice, all he is achieving is to put unwarranted pressure on Malta Enterprise's negotiators so as to disrupt the very successful foreign direct investment (FDI) drive being organised in the generic pharmaceutical sector. Why else send your opinion piece to two newspapers at the same time? In fact, my defence of Malta Enterprise (ME) was focused around the job they have to do and which they are doing well in the pharma sector - what they definitely don't need right now is senseless sniping attacks in the media.

With regard to the Euro-Access Consulting report that Mr Gatt goes on and on about, whoever said that it's perfect? The part quoted at length by Mr Gatt refers to an identified competitive edge that generic companies would have by operating in Malta, known as a Roche-Bolar exemption-type clause.

One single competitive edge can never be the sole justification for an entrepreneur to invest his money in a new business enterprise. The fact that it is one of Malta's few available competitive edges along with spoken English (we also have huge disadvantages to carry such as a small domestic market, no land communications with our export markets and a small manufacturing industry with a short history) obviously led Malta Enterprise to use it in their niche marketing promotions.

So what? Mr Gatt simply can't get over the fact that this approach has been and still is successful. Once Malta signs the EPC, that competitive edge will vanish forever and we will be in the same boat as the East European nations which have none of our natural limitations and have taken billions of dollars of foreign direct investment (they have an exclusively generic pharmaceutical industry, incidentally).

Over and above that single competitive edge, the financial incentive package I had mentioned in my previous article, would still be needed to attract manufacturing FDI. Alas for Mr Gatt's argument, it is therefore a sequitur (not a contradiction) of my original point that patents ultimately are not what block or promote investment decisions.

No amount of quoting the Economist Intelligence Unit changes the truth or reality - at the end of the day the EIU consists of economists/journalists who are as susceptible to bias or mistakes as the next man. No one denies that the originators spend millions on PR and selling their lobby's viewpoint - it is their right but no-one is obliged to believe them either.

Incidentally, I "spoke ill" of Mr Gatt's references because they are not complete or balanced: a newspaper article, a chapter from a general text and a Website (particularly that of a lobby group) are not generally considered authoritative sources - at least not where I studied. The Journal of Generic Medicines he so eagerly quotes is not considered a learned peer-reviewed journal - it is more of a newsletter (hence why Malta Enterprise wrote in it).

And, if he wanted to criticise the Euro-Access report, he should have done so critically and not sowed it with snippets of unfair comment and quotations taken completely out of context.

For all his second contribution's verbosity, I am still mystified as to where all this innovative investment is to come from. The "native-born potential for innovative ideas that can take the world by storm" smacks of wishful thinking when projected as a national investment platform!

Come off it, Mr Gatt! What cutting-edge scientific research with commercial potential is being undertaken at our University? Where are the national research institutes or foundations? Where is the venture capital? Where are the billionaire capitalists who can afford to fund pure scientific research on just a business plan? Not even the banks locally will support anything except heavily secured investments. What type or number of patents or even copyrights have locals registered in the last years? They exist only in his imagination.

I will not answer his preposterous assertions on "modern" English pharmaceutical terminology at length; suffice it to say that I prefer to get my definitions from learned texts, not American health insurance Web adverts! I must admit though that even I was surprised when he scored an own goal: he equated rivals with enemies by giving our political parties the latter classification. Modern politics is considered a complex mind-game with high stakes - exactly like the pharmaceutical market, incidentally - but it's leagues away from open war in a democratic society.

Comparisons are odious and calling Pfizer and Ranbaxy 'pharmaceutical companies' does not disguise the fact that they operate in quite different sectors of the market - the aircraft carrier cannot be compared to the Gozo ferry which in turn cannot be compared to a rowboat simply because all three are marine craft that carry people on the surface of the sea.

I hope that this time Mr Gatt will understand my "prosaic" example. The size of Pfizer's bankroll (and the 20 largest companies Mr Gatt is so fond of) is derived from a myriad of factors, one of which is that they enjoyed a long period when they had it easy with little or no competition.

Facile and simplistic "facts" are what people get when what is downloaded from the Web is taken as Bible truth; perspective is lost and so is the benefit of having different viewpoints.

Incidentally, you can rank companies in terms of sales (read prices), but also in terms of number of employees (read investment), number of products (read management ability), number of patients treated (read social conscience), new product pipeline (read R&D investment) or even manufacturing capacity (read capital investment). Size isn't everything.

I have worked for ten years in healthcare and am proud of it. Generic or originator manufacture is immaterial to me because both industries have a role to play in healthcare. Originators discover new products, make lots of money off them and use part of it to find more new products (the rest goes to shareholders).

Generic companies then make the older drugs affordable and widely available, make slightly less money in the process and use part of it to grow their business (the rest also goes to shareholders).

In future, I will only answer Mr Gatt if he is honest enough with your readers to answer the questions I have put him. Indeed, if he had not singled out by name two ME employees unfairly criticising them for simply doing their job, not slurred hardworking and law-abiding people as "pirates", or had he adopted a more balanced approach by considering both pros and cons, I would not have challenged him at all.

In future though, he is well-advised to stick to a theoretical discussion of intellectual property rights. That way he will not be taken to task on his imaginary "facts" relating to pharmaceuticals which he clearly knows nothing about. No amount of thinly disguised Web (mis)information or Internet searches can substitute practical knowledge or experience.