Pharmaceutical Industry and the Super-Exploitation of Workers

India is often referred to as the ‘pharmacy of the world’, being the largest supplier of generic medicines, with a global market share of 20 percent.

A generic medicine is one that contains the same chemical substance as a medicine that was originally protected by chemical patents. Generic drugs are allowed for sale after the patents on the original drugs expire. One-fourth of all medicines consumed in Britain are supplied by Indian pharma companies. Two-fifth of all generic medicines used in the USA come from India. Over 80 percent of medicines used all over the world for treatment of the deadly illness, AIDS, are supplied by Indian pharma companies. Four Indian pharma companies, Sun Pharmaceuticals, Lupin, Cipla and Dr Reddy’s Laboratories are among the ten largest generic medicine producers of the world.

The Indian pharma sector also supplies over 50 percent of the global demand for various vaccines. The world’s largest vaccine producer, the Poonawala owned Serum Institute of India (SII) is based in Pune, Maharashtra. Poonawala also figures among the ten richest capitalists of the country. SII is also aiming to be the biggest supplier of Covid vaccine in the world with the support of the Bill & Melinda Gates Foundation.

According to the Forbes list of richest Indians for 2020, there are owners of thirteen pharma companies figure amongst the richest fifty, and nineteen amongst the richest hundred. The majority of pharma companies have greatly increased their wealth over the past year.

Ten Largest Indian Pharma Producers
Figure 1: Ten Largest Indian Pharma Producers

There are more than 3000 small and big pharma companies with over 10,500 production plants across the country. However, the top ten companies account for nearly one-third of the total sales of medicines in the country. (See Figure 1). The largest Indian pharma company, Sun Pharma, owned by Dilip Shanghvi, has annual sales of Rs 33,000 crore, supplies drugs to more than 100 countries, has 43 plants, including 17 overseas and employs about 36,000 workers all over the world.

While there is a large concentration at the top of the Indian pharma industry, it also has a large base of micro, small and medium scale enterprises (MSME), numbering over 20,000 units. A large number of them do contract manufacturing and job work for big pharma companies. Big pharma companies take advantage of the very low wages paid by small units by off-loading the production to them. MSME units account for 70 percent of production by volume and 50 percent of ex-factory value.

The number of workers employed by the industry has grown from under 4 lakhs to over 8 lakhs over the last decade. The rapid growth of the industry and its high profits have, however, not led to improvement in the conditions of workers. Large numbers of workers required for packing and despatch are piece-rated contract workers who are not even paid minimum wages. The pharma industry is not listed as ‘scheduled industry’ so minimum wage payment is not mandatory.

The callous attitude of the capitalist owners towards their workers was starkly revealed during the recent lockdown. While continuing to pocket enormous profits, the owners of these companies did nothing to address the difficulties faced by their contract and piece rate workers due to lockdown.  The majority of such workers were forced to return to their villages.

The pharma companies employ nearly 3 – 3.5 lakh medical representatives for promoting the sale of their products. In some companies, they constitute as much as 70-80 percent of the total permanent workforce. They are paid low wages, have no defined working hours and no job security. If monthly sales targets are not met, they are asked to leave at a day’s notice.

The pharma industry does not believe in permanently curing chronic illnesses and does not invest in research for this purpose. Drugs for illnesses like high blood pressure and diabetes have to be taken lifelong to keep the illness under control. That ensures a very large market for drugs.

Foreign companies dominated the Indian pharma market till 1970 when the Patent Act of 1911, allowing product patent, was replaced with a Patent Act which allowed only process patent and for a much shorter number of years. Under product patent, the product cannot be produced by anybody except the patent holder whereas process patent allows the product to be produced by a different method.

Indian capitalists took full advantage of the change in patent law brought about at their insistence. They found alternate methods of producing medicines which were till then sold by foreign monopolies in the country. By 2010, Indian capitalists had captured 70 percent of the pharma market of the country and have continued to dominate it since then. No foreign monopoly figures among the top ten medicine producers and sellers of the country even today.

From the 1980s itself Indian capitalists started exporting generic medicines. The export market was much more profitable due to high drug prices in overseas markets. By late 2000, over 50 per cent income for major Indian pharma companies came from international markets.  Exports amount to nearly Rs 1,45,000 crore. For the ten largest pharma companies, domestic sales were only about one third of the total sales. For some of the companies, overseas sales are as high as 80 percent of the total.

When the WTO forced India and other countries to comply with the provisions of the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS), the patent law of the country was changed in 2005 to allow product patents. Indian pharma companies now have to wait to develop and produce the equivalent generic drug until the expiry of the patent. The production technology and production scale developed over the years has, however, allowed Indian pharma capitalists to continue to dominate the generic medicines’ market globally.

The Indian pharma industry has made itself the pharmacy of the world on the back of low wage workers and the active support of the Central Government. The huge drug production capacity in the country to supply drugs all over the world has, however, not led to availability of drugs at affordable prices to all the people of the country.

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