Entry and competition in generic biologics

Patents for several blockbuster biological products are expected to expire soon. The Food and Drug Administration is examining whether biologies can and should be treated like pharmaceuticals with regard to generics. In contrast with pharmaceuticals, which are manufactured through chemical synthesis, biologies are manufactured through fermentation, a process that is more variable and costly. Regulators might require extensive clinical testing of generic biologies to demonstrate equivalence to the branded product. The focus of the debate on generic biologies has been on legal and health concerns, but there are important economic implications. We combine a theoretical model of generic biologies with regression estimates from generic pharmaceuticals to estimate market entry and prices in the generic biologic market. We find that generic biologies will have high fixed costs from clinical testing and from manufacturing, so there will be less entry than would be expected for generic pharmaceuticals. With fewer generic competitors, generic biologies will be relatively close in price to branded biologies. Policy makers should be prudent in estimating financial benefits of generic biologies for consumers and payers. We also examine possible government strategies to promote generic competition. Copyright © 2007 John Wiley & Sons, Ltd.

Introduction: The apparel industry and North American economic integration

The economic and social consequences of international trade agreements have become a major area of inquiry in development studies in recent years. As evidenced by the energetic protests surrounding the Seattle meeting of the World Trade Organization (WTO) in December 1999 and the controversy about China's admission to the WTO, such agreements have also become a focus of political conflict in both the developed and developing countries. At issue are questions of job gains and job losses in different regions, prices paid by consumers, acceptable standards for wages and working conditions in transnational manufacturing industries, and the quality of the environment. All these concerns have arisen with regard to the North American Free Trade Agreement (NAFTA) and can be addressed through an examination of changes in the dynamics of the apparel industry in the post-NAFTA period.1 In this book, we examine the evolution of the apparel industry in North America in order to address some of these questions as they pertain to North America, with an eye toward the broader implications of our findings. We also consider the countries of the Caribbean Basin and Central America, whose textile and apparel goods are now allowed to enter the U.S. market on the same basis as those from Canada and Mexico (Odessey 2000). © 2009 by Temple University Press. All rights reserved.

China in Global Value Chains: Implications for Industrial Policy and Development

Rapid technological advances and liberal trade regimes permit functional reintegration of dispersed activities into new border-spanning business networks variously referred to as global value chains (GVCs). Given that the gains of a country from GVCs depend on the activities taking place in its jurisdiction and their linkages to global markets, this study starts by providing a descriptive overview of China’s economic structure and trade profile. The first two chapters of this paper demonstrate what significant role GVCs have played in China’s economic growth, evident in enhanced productivity, diversification, and sophistication of China’s exports, and how these economic benefits have propelled China’s emergence as the world’s manufacturing hub in the past two decades. However, benefits from GVC participation – in particular technological learning, knowledge building, and industrial upgrading – are not automatic. What strategies would help Chinese industries engage with GVCs in ways that are deemed sustainable in the long run? What challenges and related opportunities China would face throughout the implementation process? The last two chapters of this paper focus on implications of GVCs for China’s industrial policy and development. Chapter Three examines how China is reorienting its manufacturing sector toward the production of higher value-added goods and expanding its service sector, both domestically and internationally; while Chapter Four provides illustrative policy recommendations on dealing with the positive and negative outcomes triggered by GVCs, within China and beyond the country’s borders. To the end, this study also hopes to shed some light on the lessons and complexities that arise from GVC participation for other developing countries.