INDIAN WORK HABITS THROUGH EYES OF FOREIGNERS

Argumentative too emotional - are Indians tough to work with? 

Corporate Dossier asked expatriate CEOs to describe the most incorrigible traits of Indian work culture.

The list we've compiled might upset you, but feel free to argue — which you will anyway.: 

We're always late 

Seasoned expats have given up complaining about this quirk, except for a few German and Japanese CEOs, who still feel the pain every time they see an Indian colleague sauntering into a meeting 15 minutes late. 

Makoto Kitai, MD, Mitsubishi Electric India, remembers fondly his days in Japan, when everyone would actually arrive five minutes early. "In India, being late by 15 minutes for a meeting is not considered to be late," he sighs. "Schedules go haywire in India but people don't complain." 

If only our lack of punctuality was confined only to meetings! "Whether it a dinner or a larger function, I now assume that guests will arrive at least one hour late," says Philipp von Sahr, President of BMW Group India. 

We're very argumentative 

Indians, as Nobel laureate Amartya Sen tells us, are argumentative by nature and given the opportunity, we will debate and discuss till the cows at home. Jean-Christophe Lettelier got a taste of this as soon as he took charge at L'Oreal India last year. The meetings he conducted would go on interminably with everyone going in circles. 

"Maybe it's because of an inductive approach to understanding things, but Indians make things more complex than they really are," he says. "I value the depth of thinking, but sometimes I have to just close the topic. Else there is complete chaos." 

Mitsubishi's Makoto Kitai is another expat CEO who has had a hard time conducting meetings. "Japanese are very good listeners. We as a culture never speak out of turn which ensures that our suggestion would be asked every time. My Indian colleagues, on the other hand, are very ardent speakers and are always impatient when it comes to an opportunity to articulate their views," he says. We also have a propensity to get into time consuming discussions just about anywhere. 

As Tetsuya Takano, MD of Ricoh India points out: "In India it's easy to form a discussion group. You only have to ask someone something and suddenly five people are around you and you can discuss anything. The preferable subject is politics." 

We're confusingly diverse 

After a year at the Hyatt Goa, Glen Peat thought he had Indian work culture figured out — then he was transferred to Mumbai. Now the chief of the Hyatt Ludhiana, the New Zealander says, "Punjabis are so very different from South Indians and the people of Delhi are so different from the people in Mumbai. 

At first, I thought everyone in India speaks Hindi. It takes a lot of adjusting for an expat used to a uniform national culture." Expat CEOs invariably see India's diversity as one of its strengths, but truth be told, it takes getting used to. "The diversity poses quite a challenge in terms of unanimity of operations, tweaking the offerings to different needs," says Volvo Auto India MD Tomas Ernberg. 

Besides managing your own work force, the diversity factor also plays an important role in market success. "It's both a challenge and an opportunity, as there is no one way of doing business or dealing with people. Something that works in Mumbai may not work in Chennai or Kochi. So, India allows the expatriate to use his creative side," says Ricoh India's Takano. 

It takes 3 of us to fix a light bulb 

the first time are usually struck by how establishments there manage with so few people. It's the other way round for expats in India. Dmitry Shukov, CEO of MTS India was amazed to see eight people pushing the boarding ladder at the airport the first time he arrived in Delhi. 

"In Russia there is just one person doing that job. In sectors like retail, there is always excess staff in India," he says. It's also very common in the hospitality industry, where guests are pampered with a level of service unheard of in the West. But splitting one person's job among three not only reduces wages, but also the challenge. Or, as Rex Nijhof, the Dutch chief of the Renaissance Mumbai Hotel puts it: "If you have something heavy and only two people available to move it, you have to find a way to build wheels on it. In India, you just get six more people." 

We're too emotional 

Indians are highly engaged with their work, which makes us more emotional about it. This can be disconcerting for expats used to a less engaged workforce, going about with stoic expressions. 

"People here wear their heart on their sleeve, which is something I love," says Ben Salmon, a former diplomat with the Australian High commission, who is now CE0 and Co-founder of Bangalore's Assetz Property Group. "The flip side of it is that you can't criticise someone's work without visibly upsetting them. If there's bad news, it has to be carefully packaged." 

This makes simple performance appraisals a herculean task in Indian workplaces. Bosses are wary about giving negative feedback, however constructive it may be, since the receiver is quite likely to fly into a rage or burst into tears. "During performance reviews, Indian managers tend to give only positive feedback and leave the criticism unsaid," says L'Oreal's Jean-Christophe Lettelier. 

We don't trust easily 

''There seems to be a trust deficit in Indian business and society in general which makes business par ties wary of each other until a relationship develops," says John Kilmartin, Director of IDA Ireland, the Irish government 's foreign investment agency. 

The lack of trust extends to international brands and often translates into behaviour that expat CEOs find surprising. "For some reason, customers in India tend to escalate issues very quickly. May be this is due to lack of trust? Regardless of why this happens, we need to convince customers that we will always be fair and do the right thing for them," says Nigel Harris, president and managing director, Ford India. 

But once the trust is earned, it tends to be strong. "The culture in India is such that if you earn a person's trust, you'll be treated like family. People in India are extremely cautious....but once on-board, their loyalty's commendable," says Michael Mayer, Director, Volkswagen Passenger Cars. 

We escalate decisions to the boss 

When it comes to big issues, where the stakes are high, we would rather let the boss decide. At L'Oreal India, Jean-Christophe Lettelier has been trying to push decision making down to the front line and make the organisation entrepreneurial, but his observation is: "People avoid taking full responsibility for anything because they don't want to take any blame if things go wrong. Then if things do go wrong, they blame something else instead of taking responsibility." 

Ben Salmon, CEO and Co- founder of Assetz Property Group was a diplomat at the Australian High Commission before he became an entrepreneur. He says: "There's a tendency to push decisions up to promoter level. For someone who believes that midmanagement should be taking decisions everyday within a strong corporate framework, this part of the Indian business environment is challenging." 

We're very hierarchical 

It's hard to get Indians to call the boss by his first name. Expats squirm when emails begin with the phrase "My respected sir." Tom Albanese, CEO of Vedanta says "Indians can be too eager to please sometimes. The only time I get flowers is when I am in India. I find awkward garlanding moments all the time. " The bowing low and garlanding is occasional and symbolic, but a practical day-to-day problem is addressing the CEO by his first name. 

"Despite my best attempts, many of my colleagues still do not use my first name in discussions. The focus on hierarchy makes people take titles very seriously," says Ford's Nigel Harris. If you can't beat them, join 'em. 

At Volvo Auto India, MD Tomas Ernberg has started adding the suffix jee after the names of his colleagues to show them an equal measure of respect. "People in India give too much importance to hierarchy. Even unconsciously it does reflect in their style of working and interaction," he says. 

Michael Thiemann, CEO, ThyssenKrupp India tried to demolish hierarchies in his company and distribute responsibilities according to capabilities, like they do in Germany. The result, he says, was chaos. Thiemann then called in his senior colleagues to rework things. "We developed the concept of team work with an Indian flavour, taking care of the hidden rules of the Indian working culture," he says. 

We're lousy at work-life balance 

Indian CEOs pooh-pooh the issue saying we have to work 18 hours and build the nation, but expats find the lack of work-life balance in India quite appalling. "When I started working at BMW India, I was amazed to see e-mails coming from colleagues well after mid-night. I personally went to them and told them they need to maintain a good work-life balance," says Philipp von Sahr, President, BMW Group. 

Expat CEOs believe spending long hours in the office equates with inefficiency. "It's actually hard work done smartly that takes you the long way. Time management is important," says Volvo's Ernberg. 

Others, like Irishman Mike Holland, CEO of Embassy Office Parks in Bangalore, take a more philosophical view of the problem. "It relates to being in a different level in the economic hierarchy," he says. "Unlike the West, there's no distinction between work and life in India — they are fused. For an expat, it takes getting used to." 

We're don't follow due process 

''India's the global capital of BPO (Business Process Outsourcing) but in day-to-day life, Indians don't seem to believe in business processes at all," says Mike Holland, CEO of Embassy Office Parks, a joint venture of Blackstone Prive Equity and Bangalore's Embassy Group. 

Some expat CEOs attribute this impatience with due process and the desire for shortcuts to age. "India has a much younger workforce and I like to give enough space to employees. I don't want to take away the freedom from employees," says Guillaume Sicard, President, Nissan India. 

Still, systems and processes are the life blood of an MNC and many expat CEOs fret over this issue. As Volkswagen's Michael Mayer says: "It may take people take some time to get used to it, but it's important to understand the rationale behind these systems since each one of us has to adapt to the entity we represent." 

We're all stuntmen 

Where the West has adventure sports, Indian have daily life. As managing director of Chyso India, a French manufact urer of chemicals used in the construction industry, Giles Everitt has seen labourers atop skyscrapers, painting the walls without a proper harness or life-line. "If there is one thing I would like to change in Indian work culture, it is the attitude towards health and safety," he says. 

Why do we take so much risk? It is mostly lack of awareness says Ben S almon of Assetz Property, who believes real estate developers are now creating that. "Earlier, the cost of safety wasn't built in and construction labour didn't see their job as a trade. That's changing, though we're still nowhere near global standards." 

We say what you want to hear 

If someone says "I'm 99% sure I will be there," most of us know he doesn't plan to be there at all. But for an expat CEO, such lines create big misunderstandings. New Zealander Glen Peat of Hyatt Hotels used to take a statement like "I'll be with you in five minutes" at face value -- and find himself waiting a long time. "It's ingrained in Indian culture. It's not very honest, but I've realised it's a way of being courteous," adds Peat. 

We do everything at the last minute 

The Indian attitude towards deadlines has been known to send many expat CEO blood pressures through the roof. "It took time for me to adjust with the time management of people in India," says Ricoh's Takano. "But if a deadline is not being met, they would stretch and make sure things fall in place." 

Guillaume Sicard of Nissan Motor India, used to be incredulous at the confidence his Indian colleagues displayed as deadlines approached. "Time management is quite fluid in India. They will work late hours into the night, even on weekends, to meet the deadline. Americans or Europeans would never do that. There they believe in a strict 8 to 5 pm working day." 

Be that as it may, doing things at the last minute can lead to shoddy quality. ThyssenKrupp's Michael Thiemann never takes that chance. "In India, up to 95% progress, everything is done very well. However, the boring 5% remains and that is where I get involved to make sure that the work is really done," he says.

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The Silent Role of Credit Ratings in India’s Bad Loan Crisis

The numbers are stark. Nearly Rs 15 lakh crore ($200 billion) of loans in the banking system are distressed loans, unlikely to be recovered in full. That is a whopping 10 percent of India’s GDP. Investment bank, Credit Suisse pointed out that 10 corporate groups account for nearly one-third of all corporate loans and 20 percent of all distressed loans.

Credit Suisse famously called these corporate groups “House of Debt” (HoD) companies. Public sector banks account for a large share of these distressed loans and have thus borne the brunt of the frontal attacks instigating this crisis. Public sector banks also constitute 70 percent of India’s banking system, so it is expected that they will have the highest exposure to these loans. Over the last year, there have been 26 opinion articles by various experts across all mainstream newspapers on the banking crisis. Of this, 17 have laid the blame for this mess solely and squarely on governance failure in public sector banks. 13 have suggested that privatising these banks may prevent future crises. Conspicuously missing in this whole debate is the role of credit ratings. There has been no article in the last year that has questioned the inadvertent role of such credit rating agencies in instigating and perpetuating the current bank loan crisis.

Using the “House of Debt” (HoD) companies as a case study, I undertook a massive data project to objectively analyse if bad loans to these corporate groups were solely a function of crony lending by public sector bankers, as alleged. According to Credit Suisse estimates, these corporate groups had a total debt of nearly Rs 3 lakh crore ($50 billion in today’s value) as of FY10. By FY14, their debt had ballooned to Rs 7 lakh crore ($110 billion). This includes 20 individual companies that belong to these 10 corporate groups. Each of these companies were also given a credit rating for various types of borrowing by independent, licensed, private rating agencies such as Moody’s, Fitch, CARE, CRISIL and ICRA during their period of heavy borrowing. I obtained ratings for each of these companies for each type of borrowing such as long term, short term, foreign loan, structured debt etc from FY11 to FY16. I computed a rating index for each type of borrowing by each rating agency to arrive at a single, standardised credit rating for each company for each year. Using these standardised ratings, a weighted average was computed for each corporate group, based on the borrowing of their individual companies. Broadly, I classified these aggregate ratings in three categories, in line with the definitions provided by these credit rating agencies - No Risk (Rating A and above), Low Risk (Rating BB to A) and High Risk (Rating B and lower).

As the chart shows, in the three years from FY11 to FY13, every single one of these “HoD” corporates were deemed to be in the ‘Low Risk’ or ‘No Risk’ category by these credit rating agencies. Only around FY14, some of these corporates began to be downgraded by these agencies to the “High Risk” category. In other words, all these corporates were deemed perfectly risk-worthy by these credit rating agencies to indulge in the kind of borrowing that they did during those years.

Similarly, the shares of each of these companies were also actively tracked and analysed by research departments of various investment banks. At the minimum, there were at least 20 independent, private research analysts of global and domestic investment banks that provided ratings for each of these companies through financial years FY11 to FY15. Using a similar methodology, I computed an aggregate equity rating for each of these corporate groups in three categories – Positive, Neutral and Negative. Again, not a single one of these corporate groups had been given an aggregate negative rating by any of these analysts between FY11 and FY13. The first group to be rated negative was Lanco in FY14 which, by then, had started defaulting on its loan obligations already. Equity ratings also play an important role in banks’ lending decisions to corporates, albeit indirectly.

Armed with these strong credit and equity ratings, these corporate groups went on a borrowing spree between FY11 and FY14. It is well known that a strong credit rating is almost a mandatory requirement for a large loan from any bank – be it private or public sector bank. An astonishing one-third of all corporate loans by banks went to these ten corporate groups, according to Credit Suisse estimates.

Inevitably, this borrowing binge led to stressed balance sheets. Measured as overall debt to earnings before interest (EBITDA), seven of these corporate groups had dangerously high levels of debt starting FY12, indicating stressed balance sheets. Recall, credit and equity ratings continued to be positive during this time frame even as balance sheets were increasingly getting stretched.

Starting FY13, many of these corporates were not generating enough earnings from their businesses to even meet interest obligations of their borrowings. Measured as the ratio of earnings to interest obligations (interest cover), five of these corporates were in the zone of high risk of default. Nevertheless, the glowing credit and equity ratings for these corporates continued unabated. The net effect of all this is that these “HoD” corporates today account for nearly 20 percent of all distressed loans in the banking system.

It is obvious from the above analysis that credit and equity analysts have been equally culpable of erroneous judgments in leading up to the bad loan crisis. Yet, the entire debate on the cause of the bad loans crisis has been capsuled down to a simplistic narrative of corrupt public sector bankers captured by crony entrepreneurs in lending indiscriminately. This could certainly be the case and this analysis does not disprove any of those theories. But if the sole reason for the crisis is dishonest lending by bankers, then what explains the rosy ratings of these corporates by a large group of independent, experienced, reputed, private sector analysts during the time these corporates indulged in such reckless borrowing? Lending motives can be questioned if bankers lent to companies that had poor ratings. Credit ratings and sometimes equity ratings are very critical inputs to a large loan decision in any bank. If the entire financial system was oblivious to the dangers of such indiscriminate borrowing, how is it that the throats of only the public sector bankers are being choked? It could well be the case that a macroeconomic slowdown was the larger reason for loans going awry. Had the credit rating agencies not been so liberal with their ratings, would banks still have lent such large sums to these corporates? Of course, we won’t know the answer to this counter factual question but the fact remains that this question did not even arise. Ironically, the most popular solution mooted by experts to prevent such future crises is to privatise these public sector banks when an entire swathe of credit and equity analysts from the private sector were equally guilty of bad judgments during the current crisis.

Credit ratings and their inherent conflict of interest are not new. The world witnessed it during the 2008 global financial crisis. Credit rating agencies are paid by the very borrowers they rate. It does not take a behavioral economic expert to tell us that no one bites the hand that feeds. Revenues of equity rating agencies are also impacted by the very corporates they rate, albeit indirectly. A substantial portion of an equity research department’s revenues is received as trading commissions from investors in return for arranging meetings with corporate executives and industry influencers. Corporate executives tend to grant meetings to only those brokers that have a positive rating of them. These conflicts of incentives have been recognized by regulators in developed markets and are increasingly regulating incentive structure for credit and equity ratings.

It may well be a blessing in disguise that India does not have a robust credit market, since it is likely that retail investors would have relied on these dubious credit ratings to invest in corporate debt that could have turned sour later. Yet, we play blind to these more fundamental issues and choose to hang the neck that’s easiest to tie the noose around. The Securities & Exchange Board of India (SEBI) has some basic rules to license credit rating agencies. But there is no accountability pinned on them. And there is no proper regulatory framework for equity research and ratings. India is a unique equity research market where equity analysts write research reports based on rumours they hear, be it of central bank governors or company earnings. In most other markets, this would be reprimanded strongly.

Lest this be misconstrued, this is not to insinuate any mala fide intent by these rating agencies. This is to merely place the bad loans crisis in a larger perspective and argue for a holistic solution. It is indubitable that the public sector banking system needs to be cleaned up. It is also unquestionable that accountability needs to be imposed on private sector ratings agencies – debt and equity. It would be foolhardy to think that merely privatising public sector banks is the panacea to such problems in the future.

Praveen Chakravarty is a Senior Fellow at IDFC Institute, a Mumbai based think/do tank. His work focuses on financial sector legislation & political economy. Noise to Signal will bring you insights from that.

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Asian Policy Amid Brexit Angst

For Asia’s export-driven economies, last month’s Brexit vote could rub salt in a nagging wound. China’s slowdown has already hampered export sectors in countries that count the Middle Kingdom as their largest trading partner. While a Brexit-based recession that is limited to the United Kingdom would have a minimal direct impact on the region — average export exposure to the U.K. from non-Japan Asia is about 0.9 percent of GDP — a downturn that spreads to Europe would inflict two to three times more damage. Vietnam would be among the hardest hit, as exports to the European Union account for approximately 7 percent of its GDP.   

Declining exports to Europe would compound another economic trouble spot—frustratingly stagnant private investment. Fiscal policy in the region has resulted in dramatic increases in government investment spending since 2015, but private investors haven’t followed suit. That’s at least in part because flagging exports have made businesses nervous about expanding capacity and investors nervous about funding it, according to analysts with Credit Suisse’s Global Markets team. “The common theme across the Asian economies is a high correlation between exports and private investment cycles,” say the analysts.   

If private investment won’t ride to the rescue of ailing Asian economies, what will? Credit Suisse believes that monetary policy easing will be key. The most likely method of such will be via interest rate cuts, which should prove attractive to central banks for two reasons. For one, the expected delay in interest rate hikes by the Federal Reserve gives Asia’s central banks cover to slash their own rates without fears of weakening their currencies against an even stronger dollar. Furthermore, the banks generally have plenty of room to make such cuts: Their real interest rates are significantly higher today than they were, for instance, during the 2013 “taper tantrum” that shocked emerging markets.

At least one Asian central bank has already enacted post-Brexit rate cuts. Taiwan policymakers announced a cut of 12.5 basis points late last month and Credit Suisse believes another cut will follow this fall. The Bank’s analysts expect Indonesia’s central bank will implement the largest cut at 50 basis points while those in India, Malaysia, South Korea, and Thailand will likely reduce rates by 25 basis points. In India, too, a new benchmark for loan pricing put in place by the Reserve Bank of India earlier this year should ensure the rate cut is passed down to bank customers more readily than in the past.   

Rate-cutting policies won’t sweep all of Asia, however. China could be a major exception due to continuing pressure on the yuan and concerns about capital outflows. For Chinese policymakers, monetary policy may take a backseat to fiscal stimulus, which could include accelerating some planned spending from the Communist Party’s most recent five-year plan. But they are not in any rush. Credit Suisse analysts believe that regret over stimulus projects in 2009 and 2010 has left officials more hesitant to approve stimulus this time around, and Chinese government officials will take their time gauging the impact of the Brexit vote before doing so.   

If exports are an open question, one spot of good news for several Asian economies is that consumer spending had already emerged as a bright spot for several of them even before the Brexit vote. Those countries with the lowest relative export exposure — India, Indonesia and the Philippines — will likely outperform GDP growth expectations with the help of strong consumer spending. Thailand and Vietnam should also experience robust growth in consumer spending, albeit not enough to compensate for weak investment growth. Credit Suisse projects both countries will see slower GDP growth in 2016 than last year, along with China, Malaysia, and South Korea as well.

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Ramdev aiming to test waters in dairy, baby-care products.

Yoga guru Ramdev is now aiming to test waters in dairy and baby-care products to expand Patanjali’s ‘swadeshi’ consumer products portfolio that is expected to clock a turnover to Rs 10,000 crore this fiscal. In research and development (R&D), he’s investing Rs 150 crore in an upcoming institute near here.

“We will invest Rs 1,000 crore to set up six processing facilities across the country. Besides, we will invest Rs 150 crore in research and development,” Ramdev told IANS.

He said the new product lines would include animal husbandry and feed, hand-woven ‘khadi’ (cotton) clothes and baby-care products, besides dairy products like milk, cheese and paneer.

He said the profits earned from baby-care business would be used for the betterment of the poor children. From the ‘khadi’ wear, the earnings will be used to strengthen ‘khadi’ weavers.

Patanjali Ayurved Ltd, a company co-founded by Ramdev along with his aide Acharya Bal Krishna in 2006, has sold fast moving consumer goods products worth Rs 5,000 crore in 2015-16, a 150 per cent growth from the previous year.

“In one year we are going to take its turnover to Rs 10,000 crore,” he said.

Supporting Rashtriya Swayamsevak Sangh’s advocacy of cow protection, the yoga guru said the company is coming up in a bigger way for improving and conserving indigenous cow breeds.

“We are investing Rs 500 crore in two-three years to multiply locally-bred cows through cow embryo transplantation technique. Our aim is basically to multiply the indigenous cows that will automatically increase the milk output and strengthen the dairy industry,” said Ramdev.

A cow normally gives three to five litres of milk a day, whereas the indigenous cow produces 25 to 50 litres, he said.

Patanjali, which has 15,000 offline stores and is focusing on exports and improving online trading, is also launching cattle feed and supplements this year to boost the milk production.

“Now we are setting up our facilities where the land is either purchased at market price or gifted by an individual. We don’t believe in getting land on lease from any government,” he said.

The consumer products giant, which has a vast market among Ramdev’s spiritual followers numbering millions in the country and overseas, is also aiming to launch bio-fertilisers, bio-pesticides and indigenous seeds, besides natural medicine and natural cosmetics.

Patanjali’s food park in Padartha near Haridwar spreads over 170 acres. It caters to food, cosmetic, beverage and medicine segments. This has generated employment for over 10,000 locals.

Its second mega food processing facility, spread over 600 acres, is coming up at Nagpur in Maharashtra. Each Patanjali product has ‘Made in Bharat’ inscription on it.

Ramdev, whose mantra for success seems to be low-pricing of products ranging from eight to 10 per cent profit margin, said setting up the country’s first Vedic Education Board is also one of his top priorities.

As per the plan, Vedic Education Research Institute, run by Patanjali Yogapeeth, aims to allow its affiliated schools to offer a blend of the traditional ‘gurukul’ education along with modern syllabus.

“But there are too many hurdles to get clearances from the central government for the Vedic board approval,” he said.

The success of Ramdev, the face of the company, has also attracted global attention.

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Reasons Why India Is the 'Pharmacy' of the Developing World.

Low-cost, generic medicines produced in India are helping millions of people across the world get affordable, high-quality medication.

Developing countries across the world face several challenges, key among which is providing their people with affordable medicines of high-quality.

A ‘public first’ approach to policy, strict medicine patent law and doctors who have used reverse-engineering to introduce generic drugs, are some of the reasons that India has emerged as the ‘pharmacy’ of the developing world. Read on to learn more.

1. Millions of people around the world rely on affordable medicines made in India to stay alive, making the country the ‘pharmacy’ of the developing world

Before 2005, India did not grant product patents on medicines. This allowed for the production of low-cost, generic versions of medicines that were patented in other countries.

Indian manufacturers, with their reverse engineering skills, were the first to market low-cost versions of the life-saving cancer (Imatinib) and HIV drugs (Zidovudine) within a few years of their US launch. Robust competition among generic producers in India has resulted in a price reduction of more than 99 percent for medicines across different therapeutic areas, including Hepatitis C, HIV/AIDS, Malaria, Tuberculosis and medicines for non-communicable diseases that are critical for public health programmes. 

2. Access to affordable HIV treatment from India is one of the greatest success stories in medicine

In the year 1999, WHO announced that HIV/AIDS was the No.1 killer in Africa. Big pharmaceutical corporations with patent monopolies were charging over $10,000 per patient per year for antiretrovirals (HIV medicines), thereby making treatment economically unviable for millions of patients in the developing world.

Dr. Yussef Hamied from India electrified the world by announcing that the generic company Cipla would manufacture and supply the triple fixed-dose combination of HIV antiretrovirals at $1 a day, a 99.99 percent price cut.

Today, India is the world’s primary source of affordable HIV medicines as it is one of the few countries with the capacity to quickly produce newer HIV drugs as generics.

Major donors, and procurers like the Global Fund, the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR), UNITAID and others, rely on the country’s  generic antiretrovirals for the programs they support. These drugs are not only affordable but are also of high quality.

Governments of developing countries have also initiated HIV treatment programmes using generically produced medicines from India. These programmes benefit more than 15 million people who are living with HIV/AIDS.

3. India is one of the biggest suppliers of low-cost vaccines in the world

The recombinant Hepatitis B vaccine is an excellent example of one of India’s low-cost medicines. Large multinational pharmaceutical companies held a complete monopoly on the vaccine and ensured that the price of the drug was high. At $23 per dose, a manufacturer in India saw an unmet need and, in the absence of patent barriers, developed a Hepatitis B vaccine to reduce the price of the drug to less than $1 per dose. Today, India is a main supplier of vaccines to UNICEF and to the Ministries of Health in numerous countries.

 

4.India prevents ‘evergreening’ and makes affordable generics possible.

In 2005, India adopted a strict medicines patent law that, while allowing patent protection for new pharmaceutical compounds, makes it tougher to get a patent on new forms of existing medicines.

The law was designed with the objective of stopping drug giants from indulging in ‘evergreening,’ an unfortunately common and abusive patenting practice in the pharmaceutical industry. It is aimed at filing and then obtaining separate patents – referred to as ‘secondary patents’ – relating to different aspects of the same medicine. Such patents are routinely granted in the US and other countries, but India chose to prioritise access to medicines over the business interests of the pharmaceutical industry.

This public health approach to setting strict patent standards is in line with international trade rules and encourages timely entry of affordable generics into the market, driving prices down.

How the law works is borne out of the patent decision in 2005 which rejected the Swiss pharmaceutical company Novartis’ attempt to patent the salt/crystalline form of ‘Imatinib,’ a life saving medicine for treating chronic myeloid leukemia.

Filing and obtaining patents covering salt and crystal forms of existing pharmaceutical compounds is a lucrative game for pharmaceutical companies and Novartis tried to do the same in India but failed due to public health safeguards in the patent law.

As a result the drug – imatinib mesylate –produced generically costs $790 per patient per year in India compared to $106, 322 per patient per year in the US.

5. Sky high prices of patented drugs in the US vs low cost Indian generics

The prices of medicines in the United States are one of the highest in the world because US laws and policies blindly favour pharmaceutical companies over generic competition, allowing multiple and extended monopolies on the same medicine, leading to exorbitant prices for lengthy periods of time. On the other hand, India’s policy and lawmakers have identified generic competition as the strongest and most effective force to reduce drug prices. Having fewer patents in India means more generic competition, which means more affordable medicines for people and governments in developing countries.

In contrast to India’s stricter patentability criteria, the U.S. allows the practice of ‘evergreening’ that helps delay generic competition and keeps prices high. It is a common tactic by which the pharmaceutical industry extends their monopoly on drugs beyond the original patent’s 20 years. Long monopoly of a single company in the US  keeps prices high because generic competition is blocked.

The infographic below highlights the sky-high prices of patented drugs in the US vs low-cost Indian generics.

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State of affairs

The Big-Bank Bloodbath: Losses Near Half a Trillion Dollars,.

At 20 big banks, plunging share prices this year have erased a quarter of their combined market value

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