The Effect of Trips Agreement on Pharmaceutical Industry in Egypt

Topics: Patent, Agreement on Trade-Related Aspects of Intellectual Property Rights, Pharmaceutical industry Pages: 66 (21499 words) Published: January 22, 2011
Trade Related Aspects of Intellectual property Rights was put into effect in the developed countries since Jan 1996. And it will be implemented in Less Developed Countries starting from Jan 2006. Egypt is preparing its pharmaceutical industry for such agreement. A sense of optimism is expressed in the rich North. While a sense of pessimism is expressed in the poor South. Research and Development companies feel quite secure. Reverse Engineering companies (producing imitated products) feel seriously threatened. Advocates claim that the agreement will encourage innovation and will provide humanity with more advanced inventions that will help in pain relief concerning health aspects. Critiques argue that the agreement will deprive the poor form advanced technological benefits and will raise their sufferings. The North is demanding Royalties for permitting legal usage of its inventions by others. The South is asking for Compensation for their ancestors' contribution in science which others took as their base and built upon it. Royalties demanded by multinationals are meant to justify high spending on R&D. But multinationals are not only seeking compensation for the free usage of their innovation in less developed countries. Some of them are willing to invest in less developed countries through establishing factories and branches acting as regional bases in such countries. A research performed by Smith, S.E, Stanford University about the Indian Pharmaceutical market states that “ Pending successful implementation of the product patent protection law in 2005, a substantial increase in MNC participation in the pharmaceutical market is likely, much of which will be supported with localized operations.” (Smith, 2000). Along with the application of the TRIPS agreement, the pharmaceutical industry witnessed a growing trend for Mergers and Acquisitions in the U.S.A and Europe. “After the year started with rumblings from industry observers about the likelihood of increased consolidation in Europe, merger and acquisition activity during 2001 was dominated by deals involving U.S pharmaceutical giants.” (Marketletter, 2002). The trend is growing in India as well. The research performed by Smith, S.E, Stanford University states that “the process of consolidation is well under way. It lead to tremendous increase in productivity. For example, sales force productivity at Novartis India Limited increased by 58 percent between 1996 and 1998. Following the merger that formed the company. Although a considerable proportion of these giants is attributable to merged firms’ ability to cut stuff (which is hard to do in India), companies that have survived the consolidation process tend to be healthier overall than they were during the pre liberaization era.” (Smith, 2000). 1.2 Problem Definition

The application of the TRIPS agreement starting from January 2005 does not only threat sales, profitability or even the employment rate in the pharmaceutical industry in Egypt, but it threats the existence of the industry itself.


The purpose of this survey is to measure the impact of the agreement of Trade Related Aspects of Intellectual Property Rights (TRIPS), which created a right to patent protection for pharmaceutical products. Patent rights must be enjoyable without discrimination as to the place of invention, the field of technology & whether products are imported or locally produced. And the Egyptian pharmaceutical industry, which is more of imitation, based rather than patent based. The industry in Egypt is essential as it covers about 92% from the market needs. (Ali, 2003)

1.4 Theoretical framework (conceptual)

Dependent variable
Egyptian Pharmaceutical Industry
The Egyptian pharmaceutical's industry survival which is more of imitation, based rather than patent based. The industry in Egypt is essential as it covers about 94% from the market needs....
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