protection under the WTO in the early 1990s forms an interesting case study.
The results relevant to developing country diseases are pessimistic. In the early
1990s patent applications for malaria, leishmaniasis, and chagas fell and
leprosy showed no change. In the early 1990s publications in the scientific
literature concerning malaria and leishmaniasis increased, while those related
to Chagas showed no change (Lanjouw and Cockburn 2001:273, 278).
For state-owned pharmaceutical firms in developing countries, producing
their own vaccines would create significant challenges in development and
clinical trials. The fixed start-up costs of production in pharmaceuticals are
high. New combination vaccines based on combining several antigens have
significantly increased the complexity of production. Vaccines are biological
products based on living organisms that are heat-sensitive and have fixed shelf
lives. Capital investment for a new production facility is currently around
€300 million to 500 million (Taylor et al., 2009). Vaccine registration and
manufacturing facility inspection standards are constantly being raised.
During development of the vaccine Infanrix hexa in the early 1990s around
5,000 subjects were required for clinical trials, tens of thousands for the subse-
quent development of cervarix,and 100,000 for post-license follow-up
commitments (Taylor et al.,2009:5). As costs increased the number of private
vaccine suppliers in the US dropped from 20 in 1970 to five in 2006 (Srinivas,
2006:1742). In 1994 the top ten companies in the industry held 28 per cent of
the total global pharmaceutical market and by 1999 this had risen to over 43
per cent (Nolan, 2001). Few developing countries will be in a position to
compete.
The most pessimistic view of medical R&D in relation to developing coun-
tries suggests that technological change is likely to be inappropriate, resources
will be targeted to high-income profitable markets, tightened intellectual prop-
erty rights are likely to hinder the diffusion of relevant technology, the compli-
cations described above will hamper production, and the medical sector will
continue to be plagued by market failures. On the contrary, however, the
vaccine market is more dynamic than ever and developing countries appear to
be among the principal beneficiaries.
Around 120 different vaccines are now available, with 80 products in late-
stage clinical testing, 30 of which target otherwise untreated diseases. A
malaria vaccine has gone to Phase III clinical trials. Several candidates are
going through similarly advanced trials for dengue fever. Merck and Co have
teamed up with the Wellcome Trust to develop more affordable and heat-stable
vaccines appropriate to conditions in developing countries (Wechsler, 2010:1).
Even the pessimism about localized production was misplaced. In 1986 there
were seven suppliers of four internationally procured vaccines, none of which
were in developing countries. By 1996 there were 14 producers for five inter-
nationally procured vaccines, seven of which were based in developing coun-
tries (Srinivas, 2006). In India a dynamic pharmaceutical industry is adapting
vaccines for local markets by reducing cost, sensitivity to periods out of cold
storage and vulnerability to rougher transport conditions (Lanjouw and
Technology and Economic Growth 111