Novartis really hates India.

Nope, we don’t think the headline is too strong. According to FT, Novartis CEO Vasella “is likely to switch hundreds of millions of dollars in planned investments from India to other locations in the next few years in response to an Indian court ruling that weakens intellectual property rights on new medicines.”

Novartis lost the Glivec patent ruling in India, and so, like a little boy stomping his feet in the ground, Vasella says: "This [ruling] is not an invitation to invest in Indian research and development, which we would have done. We will invest more in countries where we have protection. It's not a punishment. It's just a question of the culture for investment. Do you buy a house if you know people will break in and sleep in your bedroom?"

Here’s the problem for the drug industry: They keep stomping their feet and challenging sovereign nations and lawful court decisions based on established laws, over and over, behaving like spoiled little brats.

First we had former Pfizer CEO McKinnell warning Germany about their drug prices, saying investment would suffer if Pfizer didn’t get the Lipitor price the company wanted. Clearly the drug industry hates price limits in Europe, and would rather invest anywhere else.

Then we had Abbot which refused to sell seven drugs in Thailand, because of another patent dispute. So Asia is no fun, since they really can’t afford branded drugs and want to manufacture generics instead. And let’s not even start about the patent situation in Latin America and Brazil.

Quite frankly, the only remaining region which the drug industry isn’t upset about is the U.S. But that’s only half the global market, hence, not a viable business model.

And so, the foot stomping these CEOs do around the world ain’t going to do them much good. It may feel good, and they may get backslaps when they return to HQ, but let’s face it; the foot stomping doesn’t enhance share holder value.

To the stomping CEO’s we have one suggestion: Grow up.

- Peter Rost, M.D. is a former VP of Pfizer and the author of Killer Drug and The Whistleblower.

Comments

[Steve Woodruff]

Whatever one might think of any of these particular cases, companies, or countries, I like the fact that there are global checks and balances on behaviors.

If a country decides to despise intellectual property rights, it then puts itself in danger of losing investment dollars and commitments (Russia is a good example). AS IT SHOULD BE.

If a company plays hardball without good rationale, it runs the risk of losing business and goodwill. AS IT SHOULD BE.

Novartis is well within its rights to make such investment decisions. Countries have to decide what sort of business climate they want to have relative to the rule of law, and IP rights. And companies have to decide how to counterbalance principle and P.R. As J&J and others are discovering, some situations seem to be, in the short-term, a lose-lose. That's when you reach down to long-term thinking, and the principle of doing what's right as best you're able to determine what that is.