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The market situation of Chinese Chlor-alkali industry changed greatly in 2008. Affected by the financial crisis and the industrial cycle, the Chlor-alkali enterprises went through a tendency from making profits to making deficits. While 2009 is still a tough year.

 

It is estimated that by the end of 2008, the productivity of Chinese PVC had reached 15.81 million tons, rising by 9.2% over 2007(14.48 tons). The productivity of Chinese Chlor-alkali had reached 24.72 tons, rising by 13.3% compared over 2007 (21.81 tons). The growth rate was much lower than several years ago.

 

In 2008, the market price of products in Chinese Chlor-alkali industry went up and down like roller coasters. The highest price of PVC was about 9,000 RMB per ton and the lowest price was 5,000 RMB per ton. While the highest price of the liquid caustic soda (converted into 100%) was 2,800 RMB per ton and the lowest price was 2,000 RMB per ton. The violent fluctuation of price of products had hindered the formulation of production and sales plans by enterprises.

 

Affected by the appreciation of RMB and anti-dumping movements abroad in 2008, it became difficult to export and sell Chinese Chlor-alkali products, especially PVC products. Since the third quarter of 2008, the costs of foreign products has reduced greatly as the global crude oil price fell back. The cost advantages of Chinese Chlor-alkali products disappeared gradually and the export volumes fell sharply.

 

In 2008, South China went through a wide range of rain and snow and the supplies of power and railway transportation were cut down in some areas. This caused a heavy damage to the production and transportation of chlor-alkali products. In May, the earthquake in Sichuan stopped the production activities of many chlor-alkali enterprises in this area, bringing about gigantic economic losses to the manufacturers directly and indirectly. According to statistics, the outputs of Chinese PVC were 8.817 million tons in 2008, decreasing by 9.25% over the last year (9.72 million tons). The outputs of sodium hudroxide were 18.521 million tons, rising by 5.27% compared with the outputs in last year (17.593 tons). Because the growth rate of the productivity was much higher than that of outputs, the overall rate of operation of chlor-alkali devices was low.

 

After the third quarter of 2008, affected by the continuously low demands in the lower course, the stocks of manufacturers increased and the selling price went down greatly. They suffered great losses. More and more manufacturing devices were stopped using and those working devices had much less loads. The overall rate of operation of PVC was only 30% to 40% and the rate of operation of sodium hudroxide was 50% to 60%.

 

In 2009, Chinese chlor-alkali market will still have to face the harsh tests and there will be many variables in the process of the development of the industry.

 

In 2009, Chinese chlor-alkali industry doesn’t stop its step of expanding the production though there is financial crisis. According the statistics of China chlor-alkali online, in 2009, the predicted productivity of invested PVC is 3.33 million tons and sodium hudroxide 4.95 million tons. According to 2008, with the decrease of demands, the rate of operation of devices was badly insufficient. Especially the rate of operation of PVC devices was below 60%. Therefore, in 2009, with the increase of the productivity, the rate of operation of devices will continues to fall down.

 

According to the outputs of 2008, the outputs of PVC were less than 2007 and the growth rate of the outputs of sodium hudroxide was much lower than previous years. It is estimated that in 2009 the outputs of Chinese PVC will increase greatly compared with 2008. But the growth rate of the outputs of sodium hudroxide will continue to slow down.

 

In 2008, the price of Chinese chlor-alkali products, especially the price of PVC, fluctuated greatly. This resulted in some losses to those enterprises. It is estimated that it will be difficult for the price of Chinese chlor-alkali market to change sharply in 2009. The manufacturers will control their outputs properly according to the demands. And the supply and demand of the market will be balanced on the whole.

 

With the decrease of the global crude oil price, the costs of foreign ethylene PVC has been cut down and the quantities of resources that enter Chinese market will continuously increase. It is estimated that the export volumes of Chinese sodium hudroxide will increase. And as some devices for sodium hudroxide abroad have been shut down, the demand for Chinese sodium hudroxide will increase, which is certainly an opportunity for Chinese sodium hudroxide manufacturers.

 

Because the expanding speed of the productivity of Chinese chlor-alkali enterprises was so fast in the last few years, the supply of the products has exceeded demand and the industry has entered the period of integration. With the increase of producing costs of enterprises and the decrease of sales prices, the level of making profits has fallen down rapidly. Especially in the third quarter of 2008, affected by the global financial crisis, most of the enterprises suffered great losses. It will be difficult to improve the situation in 2009, and the chlor-alkali industry will also enter the period of integration.

 

Affected by the financial crisis, those small enterprises with short resources, low-end technologies, small scales and severe pollutions will gradually lose their competitive strengths under the pressure of environmental protection and costs. Those leading chlor-alkali enterprises which have rich raw materials such as coal, salt, coke, and calcium carbide and own scaled and complete cycling process routes, will become the pacemakers of the industry in the financial crisis.

 

Affected by the crisis, the competition of costs among enterprises will become fiercer. But as Chinese government has begun to make policies which are in favor of Central China and the West, some chlor-alkali projects in these areas will be developed well, For example, because it is far from the consuming markets and has high transportation costs, Xinjiang will choose the strategy of developing the industry of deep processing and using of coal, reducing the transportation volumes of products and increasing the additional values of products. Meantime, compared with some areas with severe water shortage, Xinjiang has a comparatively rich water resource and will promote the development of the coal chemical industry, especially the chlor-alkali chemical industry. In China’s current economic situation, the development of the chlor-alkali chemical industry in similar areas will have a good opportunity.

 

Under the circumstances of the global financial crisis, Chinese government will publish a series of policies to promote domestic demand and converse the deficit situation of industrial enterprises. Besides, the government will also publish some favored polices in export rebates, which is a good news to the chlor-alkali industry.

 

In general, there are opportunities and challenges for Chinese chlor-alkali industry in the market of 2009. From the normal market cycle, the industry will enter the period of integration and the financial crisis will speed up this process.

 

By reading this report, readers can acquire the following information:

- Categories of Chinese chlor-alkali industry

- The variation tendency of the productivity of Chinese chlor-alkali industry

- The status of export and import of Chinese chlor-alkali industry

- The variation tendency of the outputs of Chinese chlor-alkali industry

- The main enterprises in Chinese chlor-alkali industry and their operational status

- Effects of the global financial crisis on Chinese chlor-alkali industry

- The affecting factors on the development of Chinese chlor-alkali industry

- Predicts on the developing tendency of Chinese chlor-alkali industry

 

The author recommends the following persons to buy this report:

- Manufacturers in the chlor-alkali industry

- Consumers in the lower course of the chlor-alkali industry

- Persons doing business in the export and import of the chlor-alkali industry

- Investors that want to enter Chinese chlor-alkali industry

- Manufacturers and sellers of the chlor-alkali devices

- Other brokers and research institutes that concern Chinese chlor-alkali industry

Source: China Research and Intelligence

If you’d like to copy or quote this article, please keep the source information

 

To get more details, please visit http://www.shcri.com/reportdetail.asp?id=333

A report on the UK Self Build Industry:

 ”Past, Present and Future”.

 By:  Barry Sutcliffe (M.D – Building & DIY.com)*.

 

1) Introduction (p1)

2) About the Author (p2)

3) The Self Build Industry – Past. (p2)

4) The Self Build Industry – Present. (p3)

5) The Self Build Industry – Future. (p15)

6) Conclusion. (p19)

 

Introduction:

 This report has been written to bring to the attention of the “main players” in the Self Build Industry, the fact that things are not as they should be in 2010.

 The Self Build Industry has not been growing at anything like its “potential rate” for some time.

 Growth over the past 20 years based on “completions” averages around just 1.5% per annum.

 This, despite the massive boom in the overall housing market during the same period, and also despite the very significant advantages that Self Building can offer over buying a property from one of the “Volume House Builders”.

The supply “infrastructure” of the industry is geared up to cope with far higher volumes of business.

 The Latent demand for the industry’s “product” product is very high.

 The quality of the product of “the opposition” (the volume house builders) has got poorer and poorer over the past 20 years.

 So, why is the industry not growing as it should?

Why will things get worse if we carry on as we are?

 And: How can we fix the problem?

 

About the Author:

 The author of this report has been involved in the UK Self Build Industry for around 30 years. He has completed around 20 Self Build projects, either for himself, or acting as a Project Manager.

 10 Years ago he set up a “Bespoke Housing Development” company, designing and building large, high quality homes in South Wales.

 He has also built / refurbished / renovated around 250 houses for various Building Contractors and Councils, and has worked on many varied projects in the “Commercial Building and Civil Engineering Industries” (including Factories, Schools, Hotels, Hospitals, Retail, Civils and Infrastructure).

 Around 1990, He was a “Co Founder” and was on the original “Executive Committee” of “The Association of Self Builders” (ASB), where he took on the role of “Regional Coordinator” for the UK, running regular meetings in the North West, where he would present talks on various subjects, and give free help and advice to Self Builders from around the region.

 

The Self Build Industry – Past.

 To understand the present, we need to start in the past.

 The Self Build Industry became a significant sector of the building Industry, probably around the late sixties to early seventies.

 There have always been people interested in, and actually managing to build their own homes, but the numbers of completions started to hit “interesting levels” around this time.

 There was no real “form” to the industry and no real leadership. People just basically “had the idea” to Self Build, found out how they could do it, and got on with it.

The choice in the “product and supply” market was nothing like it is today, but people managed to “get by” and create some very nice properties (far better than they would have been able to afford by buying from one of the National Housing Developers), whilst also making a considerable saving on the cost at the same time. – the old adage used to be “Your third one is free!”.

 The biggest problem people had at the time was that they were very much “on their own” when they set about starting to plan a project.

 

The Association of Self Builders:

 Formed around 1990, the Association of Self Builders (ASB) was a voluntary organisation, whose core intention was to promote the growth of the Self Build Industry and to give some backing to the people who were “giving it a go”!

 The people who formed the Committee of the Association realised that there was very little “free and unbiased” help available at the time, for the thousands of people who were now embarking on one of these major projects every year, and very little to stop them making major mistakes which could possibly jeopardise their projects.

They decided to try to help, by forming the ASB and offering free and impartial advice and other forms of assistance to anyone starting out on a project.

 The main sources of information at the time were Murray Armor’s book “Building Your Own Home”, and Bob Mathews book “Practical House Building”. There were also 2 yearly “Self Build Trade Shows” One in London and one usually in Birmingham, which were usually very well attended by the many thousands of people who realised that this “Self Build” idea was a pretty good one!

 The monthly magazines had either not been launched, or were in fairly limited circulation. There was no internet. There was no easy to access mobile phone networks. Phones that were available were the size and weight of a house brick and were very expensive.

 There were very few companies who embraced the idea of Self Build and who built it into the core of their businesses, and although there were a few specialist Self Build Mortgages available, they were not widely marketed and were often found only after considerable research.

 Anyone who started out on a Self build project at that time was pretty much on their own, and would need to put in a lot of work hard, do a lot of running around, gathering all the information, finding all the people they needed, and going through the “myriad” of necessary processes to be able to get a project “up and running”.

 The ASB  intended to help to improve the way the industry worked. – To create “lines of communication” between Self Builders and the professional people they needed to be able to plan and complete their projects. – To be a place to go, just to get some support and ideas, and to know that there were people there at the other end of a phone, who would help them, without necessarily wanting anything from them in return.

At that time we marketed the ASB, saying that: There are presently around 13,000 – 14,000 Self Build completions a year. – That there are major benefits to be gained from Self Build, and that people should think seriously about having a go themselves”.

 Ok, that was around 20 years ago. How have things changed since then?

 The Self Build Industry – Present.

 Well, unfortunately, things are not as they should be!

If we take the level of completions in the early 90′s at (around) 13,500 per annum, and using figures from a couple of years ago, before the recession hit, of around 18,000 completions, we find that in around 16 years there has only been an increase in completions, of around 280 each year!

 This despite:

 •             The growth of the internet and the “explosion” of information now available.

•             The fantastic improvement in the way we can communicate with each other and with businesses across the UK (and the world) via the mobile network.

•             The exponential growth in the number of companies who now “encompass” Self Build as part of their core business. – From “Architects” to “Carpet suppliers” and who market their product directly to the Self Build sector.

•             The huge increase in the number of lenders and the ease of procuring a range of Self Build Mortgage products, – each designed to suit different types of people

•             The growth of the “specialist literature” market, with numerous regular publications now widely available, offering up to date information and advice. – Plus the dozens of specialist books which have been written on the subject and which are freely and widely available at reasonable cost.

•             The increase in the number of Trade Shows (large and small) around the country.

•             The growth of “Buildstore”, and the launch of the Superb “National Self Build Centre” in Swindon.

•             The improved “land finding” tools such as “Buildstore” and the various other internet / property sales web sites, plus the wider inclusion by Estate Agents of building plots as part of their itinerary.

•             The generally improved road and rail networks which allow us to travel further to work, and therefore to consider buying plots in more rural locations than maybe we would have been able to consider 20 years ago. (These more rural plots often come with lower asking prices, so should be more “in demand” than plots closer to the centres of population).

•             The increase in the number of “specialist” and “bespoke” products designed just for this market which allow Self Builders to produce a far superior “individual” product to anything that the “volume builders” offer.

•             The increase in the popularity and availability of “Timber Frame” “Package Build” “Project Management” and “Turnkey” products which make the whole process so much easier for the clients.

•             The fact that the “offerings” from the main “Volume Builders” have given us smaller and smaller buildings on smaller and smaller plots, whilst getting more and more expensive (relatively speaking) and giving a poorer quality finished product year after year.

•             The increased choice of Structural Warranties and Guarantees.

Add those changes to the original “Good reasons to Self Build”, such as:

•             A “personalised” finished product.

•             Higher Quality (generally).

•             Larger living space for less money.

•             The “Buy 2 get one free” theory (which IS still possible in the right circumstances).

•             Larger plots.

•             The VAT refund system.

 Taking all those points into consideration, the question has to be asked:

Why has there only been an increase in completions of around 280 per year in the UK? – That equates to around just 5 (five) extra completions / County / year!

If the Self Build Industry as a whole was classed as a single business, with so many “USP’s” (unique selling points), and such a strong base of potential clients, all hungry to buy its product, – and it only showed an increase in turnover of around 1.5% per annum, the “boss” would not only have been sacked, he would probably have been shot! (for his own good!!)

As an industry, we have to admit that our progress is pretty pathetic, given everything we have to work with.

 So why is the industry in such a poor state?

There are many reasons why our progress has been so poor, and I am afraid we can’t simply place the blame on “lack of available land”.

The Self Build industry is possibly one of the most disparate and disjointed industries in the UK. There are literally tens of thousands of individual businesses / trades people / service providers / suppliers / advisors etc. – All of them acting as “single entities”, and all vying for their “little slice” of the market.

You may say: “Ok, but why is that so different from other types of industries? – That is how most business sectors work. – Individual companies, all in competition with each other for a “certain level” of trade”.

Unfortunately for us, the Self Build industry is not like other sectors!

  For example: If I want a haircut, I know that if I head into any town in the country, I’ll find a selection of suitable establishments who can offer the service. – In other words, everyone knows where to go for that service and how to find exactly what they need. – The fact that these businesses are small and spread out all over the country does not really matter. – There is “form” to the industry which the public can easily understand and adapt to wherever they happen to be located in the UK (or even abroad).

 However, If I want to find a “Project Manager” for my Self Build project in the South East of England, although there are plenty of Project Managers “out there”, I have a completely different set of factors to:

a) Research.

b) Understand.

c) Act upon.

 Once I have gone through this initial process, I will be confronted with another set of variables which I must choose from, which will involve me in more research, and more decisions on subjects which I may have very limited knowledge of and limited ability to understand.

 Here is an example of what I mean, using the “Project Manager” scenario as a basis:

 My project is in the South East of England. Someone has told me that if I don’t have the time to plan and build it myself, I can take on a Project Manager to look after it for me. – So I start to ask my first questions to “find out” about the possibilities of finding and taking on such a person. My questions go along the lines of:

 •             What is a Project Manager?

•             What do they do?

•             Do they do everything? Or just some things?

•             Do they do the designs and drawings?

•             Do they get the Planning Permission and Building Regulations for me?

•             Do they give me a “Structural Warranty” on the finished house? 

•             How much do they cost?

•             Where do you find one?

•             Do they guarantee the work like Builders do?

•             Do they have insurance like Builders do?

•             Why are they better to use for this type of project than a Builder?

•             Do they give you the “Stage Certificates” that I have heard the mortgage companies need?

•             Do they buy the materials or do I?

•             Etc!

I go on the internet and I find that the results I am presented with from a search on the term “Project Managers” is not quite as straightforward as I had thought. – There are individual “Self Employed Project Managers”. There is something called “Package Build” which comes with a Project Manager included in the cost, and something else called “Turnkey Project Management” which sound very similar to “Package Build” but I suppose it must  be different in some way!

 Some of the Project Managers who are “Individual” Self Employed people, say they can do the same as the big package build companies but a lot cheaper. – How is that so? And can they really offer the same service as a large company? – How would I be able to compare the two?

There are some who say they will do the “Designs” and the Site Management, but nothing else? (does that mean that they will get the Planning Permission for me or not?) – Some say they will look after all the “cost” side of the project, keeping me in touch with everything I spend, and some others say they will guarantee a “finished price” for the completed building. – Which of those included the Structural Warranty?

 Some will let me choose and buy all the materials and take them to site ready for building in to the job. – I like the idea of that because I can look around for bargains. Some say they need control over all the materials ordering while the job is in progress so they can make sure everything they need is there on time. – Some say that they will buy all the materials, and that I simply go and choose them all at their offices at the start of the job. – Which ones were they now? Were they the ones who did the warranty? – Oh damn, I’ve forgotten. – I’ll have to start again!!

 Unfortunately that is only the start of it! – Say (for another example), that I decide that “Underfloor Heating” is something that interests me. – I need to find out about it and get an idea about how much it will cost:

 I start by going on the internet. – I find hundreds of web sites, all offering similar products. Some “supply only”, some “supply and fix”. Some have expensive glossy web sites, some are just Plumbers Merchants. The big companies are a long way from me, but they must be good mustn’t they? – Otherwise they wouldn’t have these glossy ads saying they can cover my area? – Will the distance make them more expensive? – Or because they are large, will they be cheaper? How do I find out how much they are without committing myself to having to buy their products? How does the guarantee work if you buy from a Merchant? Do they have fitters? Can a normal plumber fit Underfloor heating? – Or is it a specialist job?

 I find the web site for the “Self Build Exhibition” in Swindon and see that they have some companies there who have a display of underfloor heating – I probably need to go and see that before I make any decisions.

 I go. – Its brilliant, there are loads of displays, and you just click your laser “thingy” at the bar code and you will get lots of information sent to you. – I’ve learnt a lot about how underfloor heating works now and found companies who do it. – I’ll wait for the info and then I might be able to make up my mind what to do. (Unfortunately, the info can take up to 3 weeks to arrive sometimes).

 I go back home and carry on planning the project. – I start talking to a plumber and he says that underfloor heating is a bad idea. – If you get a leak in the system its “hell” to repair, and that it is very slow to heat up, so you have to leave it on most of the time, and then it warms the house after you have gone away for a weekend – wasting energy and costing you money. He also says it’s expensive to install. – I didn’t think of that!

 Hang on! – I’ve met another Plumber who actually installs underfloor heating and he says it’s the best thing since sliced bread! – He’s given me a price but it is very expensive. – He says that’s because it’s more expensive to do upstairs than it is to do downstairs! – Why would that be? – Maybe he’s “pulling the wool”!

 Hang on again, the post has just brought the info from the show. I’ll contact a couple of these companies before I decide.

 3 weeks later: They came to the house, I gave them the drawings and I have now got a quote. – Its dearer than any of the local guys, but they seemed very professional and explained everything to me. – They say that if I have a problem they will attend to it promptly, but how can they from 100 miles away? – Is that what I am paying the extra for?

 Do I pay the extra to bring them in because I like their system, or do I use the local guy and save money, knowing that they at least live locally? – Or do I take the advice of the first guy who said the whole thing is a bad idea, and stick with radiators?

 I am confused!

 Now take those two scenarios and multiply them by 50 to 100 times, to cover all the different areas of the project you have to research before you start, and while you build.

- It all becomes VERY daunting, VERY time consuming, VERY confusing and can also become very expensive, and you haven’t even started building yet!

 Many people simply give up half way through the “research phase” because it all becomes too much for them.

Unfortunately, if they DO manage to get through that process, they are STILL nowhere near to being able to start. They then have to move on to:

“Finding Land”:

There seems to be a growing misconception that the problem with the Self Build Industry is the “lack of available good quality land”. – I’m sorry, but that is not the problem with the industry. – There is however a major problem with the process of “land supply” to Self Builders:

 There are presently around 6700 building plots listed with Buildstore. This suggests to me that across the UK there are probably around 30,000 Building Plots presently available. Many of those plots have been for sale for some time.

 These days we can build on most land. Where there is poor ground, we use rafts or piles. Existing drains and services can usually be diverted or “built around”. Overhead cables can often be diverted or taken underground.

The reason that there are thousands of plots for sale which have been sitting there for months or years is simply that they are overpriced for what they are.

The best “nice, flat, clear plots in good locations sell quickly and can often sell for considerably more than they are really worth, whilst still allowing a profit to be made at the end of the project. – That is one of the benefits of the Self Build process.

Poorer quality / complicated / difficult plots often either don’t sell or take a long time to find a suitable buyer who is prepared to take on all the problems that come along with it. – However, the problem is not actually with the poor quality of the land, but with the price of the poor quality land and the complicated and sometimes protracted process of solving the problems. I will explain:

Any Self Builder is looking to buy land, plan, and build a new home. In the process they want to give themselves something better than they will buy from the “Volume House Builders” and at lower cost.

However, say for example, I go and look at a plot of land which has a drain running across it, and some old foundations in one corner, with a “building line” which prevents me from building on part of it, and some planning restriction or other and with a “ransom strip” across the access. – In an area where the adjacent properties are selling for £140,000. – And the asking price for the plot is £60,000.

I’ll probably get out of the car, have a quick look, laugh, and get back in the car.

However if that same plot of land had an asking price of £15,000, I’d probably look more closely.

The problem with the land was not the “inherent difficulties”. It was the fact that someone (either the Agent or the owner) has put far too high a value on it. – If it was priced attractively, so that there was still a healthy potential profit after all the problems were solved, then many more people would be interested in buying it. – Self Builders don’t mind hard work, they just don’t like paying for something that is not giving them value for money!

Presently, Estate Agents generally have very little idea how to value land. They just give it their “best guess”. – This is not their fault. – Plots of land come onto the market fairly rarely. – And when they do they will be in areas of differing housing types and qualities from the previous plot “a few months ago”. The agent does not have a magic wand which can be used to give them a picture the finished house! – Therefore they can’t give an accurate valuation of what it could be worth. – They can’t judge how good and efficient the Self Builder will be, so they can’t work out how much the house will cost to build or what the quality of finish could be. – They simply have to hold their finger in the air, guess and hope they are right (Another problem with the valuing process is that often the person doing the valuing will not be experienced in land values, or will not understand the building process, and will basically go along with whatever the seller (who also has no experience of the market) wants to value it at.

If the plots that are presently available that have been on the market for some time, all had their prices lowered considerably to make them more realistic, many of them would sell.

If 18,000 of them sold tomorrow, the number of “Self Build Completions” next year would double!

The next part of the process which presently scares people away from “having a go” is:

 

Planning Permission:

 There are probably many thousands (possibly “tens of thousands”) of people in the UK who have land adjacent to their properties, or who own parcels of land, who, if there was a simple, straightforward way to see if they can get Planning Permission, without risking all their savings, would probably “go for it”. Unfortunately at present there is no such system.

Unless they “have a go” themselves (which most people would not even think about attempting), they presently have to find, talk to, hire, and pay specialist Planning Consultants. Sometimes the fees can be in the £1,000′s, and most people have not got £1,000′s lying round to throw at a venture which only stands a fairly slim chance of succeeding.

 So, those thousands of potential Building plots stay as vacant land.

 If there was a central organisation where anyone could go, which operated something similar to the “No Win / No Fee” system that the “Injury Claims Solicitors” now operate successfully, this could all change. – The hub of this organisation could possibly (initially) be in the Swindon Centre, and could then go regional as new centres opened.

“Anyone and everyone” would be able to bring or send details of their potential plot to the centre. 

The centre would have a nationwide database of “Planning Specialists”, all of whom worked on a “pre agreed system”.

The land details that come in would be offered to various specialists in the local area. – Whoever accepts the contract first would go to the site, and (based on a set formula) do a quick appraisal of the potential of the land, to ascertain the likelihood of it gaining Planning Permission, and if so, what would be the most appropriate type of development. They would also estimate the likely land value once the Planning Permission was granted. – They would do this, either free of charge, or for a small fee (maybe £100 – £150).

They would return their findings to the centre, who then, based on the results, contact the potential seller:

•             If there is NO likelihood or Permission being granted they return the documents with a covering letter informing them that “In our view this land would not be suitable for development”.

•             If there is the potential for Permission to be granted they make them two offers:

1) The seller can pay all the fees as they accumulate, with a deposit being paid upfront.

2) The seller can agree a “set commission” when the Planning Permission is granted. (This could possibly be up to 20% of the land value).

The advantages to the seller are:

•             That the process is very easy and stress free for them

•             They can do it with very little outlay and little risk if they wish

•             Although, if they opt for the “commission” option they pay a larger fee of possibly 20%. The fact is: 20% of £100,000 or £200,000 is FAR better than 100% of nothing!

This could prove to be an extremely lucrative operation for the central body organising it, and it could increase the numbers of plots becoming available “exponentially”.

Once the Planning Permissions were gained on plots, the chances are that they would then be marketed through the centre’s own “In house” Land Agent, thus bringing in further income to the “organising body”. – This would then also put the potential buyers in touch with the centre, who could also then offer them assistance with mortgages etc.

Other areas of the planning process for Self Builders include the “Design” and the “Building Regulations”. – Presently, although there could be a significant improvement in the processes involved for both of these operations, they are not a major problem area and do not need to be covered in this report.

There are, however, plenty more question that need answers, including: “Do we try to build it ourselves / or use Sub Contractors or a Builder / Package Build / or a Project Manager?” These are all areas where the quality of information and guidance freely available needs to be improved significantly, along with the standardizing and simplifying of the answers to many other questions such as: “What about Finance?” “Which guarantee will be most suitable?” “What about Insurance? “How do we programme the work” “When is the best time to start” “How do we design a house?” “How much will it cost to build?” “How much profit can we expect?” etc.

It’s actually surprising when you take all the factors into consideration, that ANY Self Build projects get started! – But, eventually some of these people do actually manage to complete the whole process and be ready to start building. The problem is that by the time they are ready to start, they are mentally and physically exhausted!

It’s all a bit of a mess!

Why is this how things are? And why does it seem to be harder now to get a project going, than it was 20 years ago?

Answer? – In two words: “The internet”.

Now you think: “Well up to now he seemed to be making sense, but he’s just lost it! – How can such a wonderful communication tool like the internet be responsible for holding back the growth of the Self Build market?

Easy:

TOO MUCH INFORMATION / TOO MUCH CHOICE!

If you glance back to the previous section where I go through the “Project Manager” and “Underfloor Heating” scenarios, you will notice that it was, in fact the “multitude of choices” that left the person confused and ready to give up.

•             Too many sources of information written by too many different people with too many different agendas.

•             Too many variables for how each product or service can be presented, and no way to easily compare “like for like”

•             Too many different sections of the project to have to consider all these variables in, individually, in order to pull the whole planning process together.

If I went on the internet for a few hours with a printer and a stack of paper, I could print out literally thousands of pages on pretty much EVERY subject related to Self Build.

How do I know:

•             Which ones are telling me the truth?

•             Which ones are reputable companies?

•             Which have good guarantees?

•             Which are reliable?

•             Which is the best value?

•             Which is the best product?

•             Which would be most suitable for my project?

The answer is that “I don’t”!

 20 years ago, this was not a problem: – There were two books. – You bought one or both, – or you didn’t!

Murray Armor’s and Bob Matthews way of planning and building was pretty straightforward and simple, and if you got yourself well organised you could go through the planning process in 6 – 9 months, and be on site working. – With your house finished in a further 6 months to a year depending on your circumstances.

This “Disparate & Disjointed Industry”.

 One of the biggest factors creating the difficulties and the confusion in the industry is that there is presently nothing “pulling it all together”.

Theoretically, The Self Build Centre in Swindon could be “The hub of a much larger industry”. – Presently however, although (as I have already said), it is a superb place, it is very “underused”.

 

It is an excellent showcase for probably around 300 suppliers / manufacturers. It promotes its 3 “core” products of Land / Finance and a Trade card, and it runs “seminars” and “courses”, but apart from that, its sphere of influence is limited.

It has links to some “affiliates” (which is a small step in the right direction), but has no other real and useful interaction with the tens of thousands of relevant businesses (small and large) across the UK, and it does not presently use its position as probably “the most dominant single organisation” in the market, to push the industry “as a whole” forward.

As a “static entity”, it also has the problem that once people have visited the centre and seen the products; they then go away, knowing more about those particular products. They may then see other similar products locally or on the internet, which they now know will do the job just as well, possibly from a supplier who is cheaper and closer to home than the exhibitors at the show. – Although there are obviously good reasons for exhibitors to be at the show, if some changes were made, things could be a lot better.

The place should be “buzzing” every day. – In fact there should be at least 3 of these centres across the UK! – I know how to make this happen, but I will come to that later.

Self Build – “Present”. – Conclusions:

1) We need to start to pull everything together. We need to “standardize”, “simplify” and “clarify” the whole industry:

Until we start to pull all those thousands of individual businesses together and until we start and get some standardisation of product / service / supply we will always have the present problems, and in fact the problems will get worse as information of all types becomes more and more freely available.

While we have confusing trade names which all basically deal with the same subject, like: “Project Managers” / “Package Build” / “Design and Build” / “Turnkey Build” / “System Build” etc, or “Built in Vacuums” / “Central Vacuums” / “Whole House Cleaning Systems” / “Hidden Vacuums” etc, there will always be confusion that will be to the detriment of the industry.

Why not bring everything to do with “Project Management”, under one heading (“Project Management” being as good a name as any!), with a simple explanation (found wherever anyone may look for it), telling people that it means “Other people looking after your project in one form or another”. – We can then sub divide it down into the various “options” and “sub headings” within and under the overall heading, in a logical manner. – That way EVERYONE would know that THIS is where we go if we want to get someone to look after our project, and THESE are the options we have if we want to consider the idea.

The same would go for “Built in Vacuum systems” along with many hundreds of other misleading “terms and titles”.

Once these logical changes are made and brought together with “centralisation” of the industry (see below) then the system that we would create would be FAR superior to the one that exists at the moment.

Until the public can take on a Self Build project without being expected to understand literally thousands of things that they may have previously had no experience of, – and be expected to work out for themselves what every product does, – and understand all the different services and trades, – and to be able to make all the right decisions – at the right time, the industry will stay in the same poor state that it is in now!

 2) Centralisation:

Just as important as “standardising” “simplifying” and “clarifying” the whole the system, is Centralising it.

 •             What good is a company who can provide me with the “specialist” item or service that I need, if I can’t find it  because they don’t have a web site, don’t advertise widely, or if they happen to be out of my “phone book” area?

•             What good is an Internet Trade Directory that limits my searches to “My town” or “My County”, or “My Post code”, when the people I need may well be outside those limited search parameters?

•             Although the internet is a fantastic tool, when I need to find a Plumber because my tap is leaking water all over my kitchen floor, I don’t want to be shown half a million “search results”, including stuff about: “Plumbing the Depths” “Christopher Plumber” “Dr Smiths” latest paper “Research into the problems of the Plumbing Industry”, and I definitely don’t want details of Gardeners or Bricklayers!! – I need a bloody Plumber!! – And I need one NEAR ME, and I need him NOW!!

•             If searching for trades, services and suppliers brings up a completely different set of contacts each time you use a different “search tool”, the chances are that you are never going to get to see some ideal local contacts, and that you therefore possibly won’t get access to the company that could give you the best deal.

•             If anyone can market themselves in any directory, under sometimes misleading headings, then there are always going to be plenty of people who will misuse that system (in other words “Cowboys”).

There is presently no real control on poor quality companies being able to abuse the system. – Why? – because there is no MONITORED INDEPENDANT CENTRAL SYSTEM WITH CENTRAL CONTROL. – If there were, it would be easy to have a “complaints procedure system” which could lead to companies being deleted from the main directory database. – If their deletion from the database meant that they then suffered because they lose the ability to make the new contacts that they need, then they would be more likely not to do things to cause their clients to complain in the first place! (OK, this system will never be perfect because there will always be “other directories” and other places they can advertise, BUT if the general public get to know that if they use the CENTRAL TRADE DATABASE, they will:  a) Easily and quickly find what they need / where they need it, and b) Know that there are “safety” and “complaint” systems in place to protect their interests, then they are more likely to stick with that central database for all their searching.

Centralising the information available for EVERY Trade, Service Provider and Supplier “under one roof” is of ABSOLUTELY CRITICAL IMPORTANCE if we are to move the Self Build Industry forward as a whole.

The National Exhibition at Swindon has made a start on this. They have provided a number of good “starting points”, including the roof! – Unfortunately, there is still a long way to go before they would be able to be called “The Centre of information for the WHOLE of the Self Build Industry”.

I need to mention my web site “Building & DIY.com” here. – This is not an advert, but I am using this example to show how things could change:

 

I, along with colleagues, am presently launching a major new web site which has been design to help tackle some of the problems in the industry, including this matter of “centralisation”.

When a potential Self Builder thinks about starting out on a project, they usually begin with some research. – They want to find out a bit about the subject and the possibilities it can create for them.

Someone might have told them about a book that they should read, which they will want to find and order. Or, they will go to the Newsagent and find what they can on the magazine shelves. Most people nowadays will go on the internet, type in “Self Build” and then peruse the results for half an hour, listing anything interesting.

I have just done exactly that.

I was shown all the monthly magazines, mortgage products, the Centre in Swindon, various sites selling land, Range cookers, insurance, “dial before you dig”, and quite a few case studies (along with lots of other “stuff”).

However, NOWHERE was I given any idea of “WHERE TO START”!  – The reason for that is because everyone on there is paying money to be there and needs to sell something to justify being there.

That’s fine as it is, but it’s no good to me when I want to start to find out what I need to do first! (OK, as I drill down into some sites, I find “snippets” and “nuggets” of useful information, but there is nothing for me to sit down and “get stuck into” to start to learn about the processes I will need to go through to plan and build a new home.

Building & DIY.com has been designed to start to change that.

The site offers the FREE TO ACCESS “Essential Guide to Building & DIY”. – I am still writing this. – It is turning into a mammoth task, – but once it is finished it will offer the best place to go to learn about EVERYTHING the Self Builder needs to know, from day one to completion. – We give it away free, and it is right there as soon as you enter the site, in the middle section of the “Home page”. – In other words, – it’s What they need – Where they need it!!

The whole site is designed on the same basis. There is a Trade Directory which actually does what a Trade Directory should do! – You give it a location, and it shows you who can give you that service / product. – NOT just in your Post Code, or County, or alphabetically, but LOGICALLY (who is there nearby, who can supply that product or service? -  and if there isn’t anyone suitable nearby, then who is there further away?)

The Directory does not just work on “Trade Titles” (e.g. “Plumbers”, “Electricians” it is also “Products” and “Services” based. So, if you want a rooflight, you search for rooflights, and you will be shown companies who actually sell rooflights, – near to you (not just companies called “Rooflights are us” at the other side of the country, who can’t supply your area!).

If you want “Ground Source Heating” it shows you any businesses that can provide YOUR AREA with a “Supply only” service or a “Supply and Install” service. – In most cases, starting with “local companies” and “moving out”.

 Every business can advertise under as many relevant headings as they wish FREE OF CHARGE (with upgrade options). – But only as long as they can readily offer that particular product or service in the area where they advertise it. 

(Note: The Trade Directory is also a “work in progress”. We presently have around 200,000 relevant business addresses listed, but this should hopefully grow quickly over the next few months to provide “THE” definitive, and most user friendly Trade Database” in this sector).

I could go on and on about the various features of the site, but I don’t want to hijack this report with my own product. Suffice to say, each part of it has been designed to address the problems the Self Build Industry presently faces. – If you are interested in having a look, it’s at “www.buildinganddiy.com”.

The top and bottom of it is that the Industry NEEDS to centralise to grow. – Between the National Exhibition and my new site we have got the basis of what we need to start pulling things together. – Where we go from here is what is important. – I am only “The new boy”, and don’t have the “clout” to knock heads together yet, but someone reading this might “get” what I am saying and want to take things further.

3) We need to “Network” all the Trades / Service Providers and Suppliers, so that anyone can be found from anywhere (using the “centralised system” to assist this process).

At the moment there seems to be a reluctance to make the most of the way the internet is able to “link” our businesses together (using “web links”). This needs to change.

Ok, A Timber Frame Company is not particularly going to want to “link” to other Timber Frame companies. – BUT where there is no “conflict of interests” why not use all of the tens of thousands of relevant web sites to help to “kick start” the process of “drawing the Industry together” (which, as I have already said, is something we need to do if we are going to grow).

Timber Frame companies could have a whole page / section, dedicated to “links” to all sorts of other businesses which could be of great help to people who are either “just visiting” their site, or “buying their product”. – These links could to be any business – from “Architects” to “Curtain sellers”!

The more we use the link system the more weight we would all carry in the “search engines”. – So, by linking, not only do we pull the industry together and help it to grow (which helps our individual turnover and profits), but those involved also get to appear higher up in Google and Yahoo search results in the process! – It’s “win win”!

This is especially important for the larger organisations, and especially important for whichever organisation leads the way in starting to move the industry forward.

I will be shortly creating a section within Building & DIY.com, solely for links. – We will monitor the links we allow and if complaints are made against people on the list they may be removed. – Other large companies should follow suit.

4) We need to “Communicate” with our market much more efficiently:

If we are going to make the changes necessary to improve the industry, it’s no good doing all that work if we don’t let our potential customers know.

We have a “news and events” section on Building & DIY.com. Something similar should be readily and clearly accessible from all the affiliated sites who become “linked” within the “new improved” networking system across the industry.

That way potential Self Builders would not end “wandering around in the dark”, searching for good contacts and information. – They will be “led” to them, simply and quickly, from wherever they happen to start looking.

5) Estate Agents need to be more informed / accurate about estimating land values:

There needs to be a “pricing formula” which is applied to each new plot of land which comes to the market, so that everyone who looks at it can work out how it has been valued and see if they agree with the figures used. (– I could come up with this formula, given the right assistance).

Anyone could then use this formula to work out what they can afford to offer for the plot, and, more importantly, the seller would see at the “valuation stage” what their land is actually REALLY worth, which might stop them coming up with stupidly high prices.

6) The Planning process needs to be simplified:

 It is presently too complicated, too cumbersome, too long winded, and too risky. – I don’t think we will be able to change the “Planning System” easily, but I have many ideas which will make the system workable for us as an industry.

However, we can start to work on the Government to see if we can get some flexibility and improvement in the system for Self Build”.

(Note: there also need to be better safeguards to stop some of the larger “ugly” Self Build sites which from time to time appear. – Some Councils have just allowed anyone to build pretty much anything they want on some fairly large sites, and the results are a complete mess! – This needs to be stopped, just as importantly as getting some leeway for “individualism”)

7) We need to give the whole image of the industry a “revamp”.

TV shows have started the ball rolling and have sparked a lot of interest in the industry. – Unfortunately, when the public starts to have a look into planning their own project they are met with all the problems and complications I have thus far listed!

We need to bring the whole of the industry into this century, “format” and “present” ourselves better. Use our “celebrity figures”, market ourselves properly, make the whole thing appear “slicker” less daunting, “simpler” and more “doable” to the public.

 8) We need to invest in, and develop organisations such as “The National Self Build Association”(NaSBA).

 NaSBA has recently been formed with similar aims in mind to those of the original Association of Self Builders, which are to promote and to further the growth of the industry and communication within it.

As long as it is an efficiently functioning body, it’s involvement as an “unbiased and independent partner” to assist in planning how the industry can grow and move forward is very important at this time when things need to start to change.

However, if such an organisation exists, we should make sure that it is developed to its full potential, and that it has “teeth” so that it will be a voice that must be listened to.

We should make sure that it is ready to take on whatever challenges present themselves if and when the industry starts to move forward.

At the very least it would be an invaluable “bridge” between the “public” and the “movers and shakers” in the Industry. A “neutral ground” where ideas could be presented / problems solved and grievances aired.

To that end, the larger companies and organisations in the industry should all contribute towards the running of the Association, and expect nothing in return.

If it is seen as an important entity in its own right, it will be more likely to draw some good quality membership from both the general public and the industry and it could quickly become an integral part of the growth process of the industry as a whole.

If all this is to happen, we will all need to pull together, – and the sooner the better!

The Self Build Industry – Future.

If things carry on as they are, the industry will continue to drag its heels, and although it will probably always stay around the “top three or four” of the “Volume builder chart” for completions each year, – compared to what it should be, it will always be the “lame duck” of house builders in the UK. – Never creating an impact and never reaching its potential.

I will now give some basic details of one “vision” of the future of the Industry. – It is a fairly radical departure from where we are now, but if the industry is ever to reach anything like its potential, what I am about to detail needs to happen.

Using this system, if we can get the expertise and the funding, there is no reason why we could not double the number of Self Build completions in 5 – 7 years, and double them again within 10 years.

This section is only going to be able to lightly “touch on” the main ideas.

What I propose represents creating a whole new sector to the Building Industry, and it cannot be detailed fully in a report such as this.

 Hopefully though, it may “nudge” some of the people reading it to want to investigate further).

Introducing:

“Commercial Self Build”

This may sound like a contradiction in terms, but in fact it could be what saves our industry from a future of “mediocrity” and “under achievement”.

Probably, a more “user friendly” term for it would be:

“Full Project” Self Build or “Full Management” Self Build.

The concept basically involves the creation of a new sector of the Building Industry. – Taking the best of what the Self Build industry has to offer. – Mixing it with the best aspects of Volume Residential Building, and throwing in some additional ideas from the USA.

How does it work?

I’ll start with the USA: 

A few years ago I built a property in Florida. I was very impressed at the time with one of the options for buying a new home:

Driving around Florida, you will regularly come across vast “sub divisions” (estates) made up of hundreds, and sometimes thousands of building plots.

As you drive around these estates, you will occasionally come across houses with tall flags poles set around the garden, or a sign saying “Model Home”. – These properties have been built by the various house builders in the region, and are open every day for viewing.

The way the system works there is that when you want to buy a new “bespoke” property, you visit as many of these “Model Homes” as you wish. – Find one that you like, and go off and find a plot from the thousands available.

Each plot has a small (A5 size) plaque at its front boundary with a phone number on it. You ring the number and get through to the Agent or the owner, with whom you can discuss the purchase price.

If you wish to buy the plot, you then go to the Model Home that you like best, to discuss the possibility and price of that home (or a derivative) being built on the plot you have found.

You will, within a couple of days, receive a contact giving you an estimated price for your chosen home on your chosen plot!

If you decide to go ahead, you reserve the plot with a deposit, and the wheels of the purchase and planning process automatically spin into action.

Two or three weeks later you can find yourself in the Builders Head Office, spending a full day “Designing and Specifying” you’re new home!

These offices generally have “In house” Designers / Planning Specialists, and a full department which deals with “Fixtures / Fittings and Finishes”.

You spend a couple of hours with the Designer, telling him anything you want to change from the original layout or appearance of the house you visited, and what you want doing with the garden and the driveway. – He already has all the standard house designs on the computer and can normally make the changes in hours. The landscaping will be done in another office down the corridor (The Design Department liked the ideas I had for my house, which blended two of their existing designs and enlarged the building. – They actually saved my “derivative” of their designs, called it “The Sutcliffe”,  and they now offer it as one of their “Standard Designs”!)

After finishing in the design department, you then move to the “Fixtures and Fittings section” where you are given an “Advisor” to work with, who then takes you round a large room, equipped with everything you need to make choices on: Things such as “Colour of render” “Colour and Type of “Shingles” (roof tiles to you and me), internal paint colours, ceiling styles (they use ceiling recesses a lot as architectural features), internal and external door styles, bathroom suites and equipment, kitchens, taps, electrical features and fixtures, air conditioning, wardrobes, floor tiles, carpets etc.

You then move to the “Finance” office, where you discuss the likely cost of the project (which may have already been updated by the Design Office). The only addition to be made to the price is for any extra fixtures and fittings (over and above the standard spec), which are all already individually priced, and can sometimes be calculated and added whilst you are discussing the financing of the project.

When you walk out of that office at the end of the day, you have basically done your job! (The same job that takes us up to a year to complete in the UK!)

Within a few days you receive your full specification with your amended drawings, a fixed price, a complete breakdown of all the fixtures and fittings costs, and a timescale for the build.

If you wish to change anything you do so, otherwise (if you have got your finance in place by then), you basically sign up and they get going! 

Their Planning system is simpler than ours and they can start building sometimes within 3 or 4 weeks.

At the end of the contract they meet you at the new house, issue you with all your guarantees, warranty, and keys and you move in.

Now, – wouldn’t it be good if we could work like that?

To be honest, I don’t think our system will be that “slick” for a good number of years, but we can make a huge step in the right direction pretty quickly if we have the “will” to do so.

I propose taking some of the features of the Florida system and mixing it with some of our “home grown” procedures and methods to create a “hybrid” which will work in this country, – NOW.

Taking the “best bits” of our present systems:

 We actually already have some very strong “Plus points” between the “Self Build Industry” and the “Volume Residential Housing Industry” (we just aren’t presently using them in the right way).

 They include:

Self Build:

•             Low overheads.

•             Flexibility of “design” and “fitting out”.

•             Larger houses for less cost.

•             Larger plots.

•             A huge choice of “products”

•             A significant profit margin attainable at completion.

Volume House Building:

•             Economies of scale

•             Efficiency of large organisations

•             See the product before you buy (show houses)

•             Simple purchase procedure (often with “in house” finance contacts).

•             Wide choice of locations / plots / styles.

So, how do we bring together all the benefits of our systems, with the slickness of the American system? – AND for it all still to be classed as “Self Build” (so we can still re- claim the VAT)?

he first task in this new venture would be for us to create the completely new “Housing Development System”.

This new system would work along the following lines:

We would buy large areas of land around the UK, (often competing with the “volume house builders”), with the intention of building possibly a “number of hundred” dwellings per site. We would also look to create “Contract Options” or “Pay as you sell” options with “Councils” or “Private Individuals” (which would allow us to keep the amount of the investments to a minimum whilst still securing the land to develop and sell).

We would design the layout of the site in such a way that it can be developed with far higher efficiency and at significantly lowers costs than most developers presently manage to achieve.

We will sell the plots individually to private buyers, as a part of the new “Full Project Self Build” System.

We could form “Joint Ventures” with companies in the industry, including:

•             Timber frame / Mortgage providers / Major “Product” manufacturing companies / Energy suppliers / Package Build companies / Larger Builders Merchants / Plant Hire organisations / Civil Engineering companies / Warranty Providers / The “Monthly Publication” organisations. (Many of these types of organisations will stand to gain, not only from profits from the completed ventures, but also from increased turnovers for their businesses by being “preferred suppliers” during the development of the new site).

We would market the sites as “Bespoke New Homes for Sale” (under the new “Full Project Self Build” Banner). With plots available for anything from 2 bed semi’s to large detached properties (depending on the site layout, size and the geographical location). “Plot” prices and “Build” prices would be itemised separately on our itinerary.

The asking price per plot would be roughly equivalent to the market values of equivalent single plots in the local area. The “completed” price of each property, to a “standard specification” should be significantly lower than an equivalent developer’s poorer quality product.

The Plots would be bought first (before any building

starts), but as the initial part of a 2 part contract, with the second part being the property itself. – This would be pretty much doing things in just the same way that we do now (as Self Builders), – i.e. we buy a plot and then we build on it (this would also help to bring positive cash flow to each venture with the early sales of the plots).

We would not use: “Show Houses” / “High cost” Marketing and Advertising / or Part Time Site Sales Staff on each site. Every site would be marketed from (initially) a single centre (similar to, or “such as” the National Self Build Centre) and via various communication networks (including Estate Agents). – This would keep the marketing costs “per plot” low. – As we grew, we would open new regional centres around the UK.

As the system becomes established across the UK, potential buyers of new homes would know automatically where they can find full details of all our sites (either at a “Regional Centre”, on the dedicated web site, or via the many thousands of “affiliated” web sites).

Our potential buyers would be able to visit the sites at any time, and would be able to drive around the newly installed roads. Each plot would be clearly marked, with a board giving brief details of the development planned for it.  Details of all plots would be available on line (if they have access to a computer which has mobile broadband, site visitors could pull up details for each plot as they drive around the site).

 

If they are interested in any particular plot, they would contact the Sales Centre to either make an appointment to meet a Sales Advisor at the site or to come to the centre to discuss a particular plot. (Only serious potential buyers would travel to the centre, – but with the benefits this scheme would offer to everyone over and above those they can achieve with standard “volume build” properties, interest should be very high.

The next stage of the process would broadly follow the American Model (described earlier) through Planning Permission, to building and completion.

Each plot would be developed on a “Project Management” basis (as they are in Florida); with the necessary trades being brought in as and when required.

Materials would usually be purchased (mostly from our “preferred suppliers”) on accounts opened specifically for the individual purchasers. – These accounts would be paid monthly by the purchasers, on receipt of an invoice from us (utilizing the “Stage Mortgage” system). – This would keep our outgoings, and therefore our “interest on borrowing” charges down to a minimum, and also set the project up “officially” as a “Self Build” (which would then allow the buyers to reclaim their VAT).

Warranties would be provided at the completion, just as they are presently.

Using this system, we could continue to offer the benefits presently enjoyed by Self Builders, and would be able to add in a significant number of extra benefits which would take the pressure and stress away from the whole Self Build process.

These developments would bring many benefits including the following:

•             Flexibility of design / finish / fitting out.

•             Lower cost to the buyer.

•             Speed of development to completion.

•             Less stress for the buyer.

•             A higher quality “bespoke” finished product at a lower cost than a standard developer’s product.

•             Simple and quick purchase process.

•             Ease and speed of sorting out the financial aspects.

•             Everything sorted out for the buyer in one (or two) visits to the Sales Centre.

•             Economies of scale for the builder.

•             Higher “Site Layout” efficiency (using new ideas).

•             Better privacy levels than are presently offered by most developers.

•             “Design and Build” efficiency.

•             Increased “Site set up” efficiency.

•             Low “Per unit prelims”.

•             Possible preferential prices from our “preferred suppliers”.

•             Low borrowing interest costs (buyers paying their own materials accounts monthly).

•             Full retail prices charged for “extras”.

•             Profits start to be seen at an early stage (on the sale of the plot via “Stage Mortgage”).

•             Higher turnover for the industry generally as the number of house completions increases.

•             The existing volume developers will be forced to improve their products to compete.

•             The UK housing shortage could be reduced.

Conclusions:

Whether or not you agree with what I have said in this report, the fact remains that this industry is not presently doing very well, and it has not been developing as it should have been for the past 20 years! – Things need to change if we are to make it better.

I have put forward some ideas, based on 30+ years of experience in the Commercial / Civil / and Residential Building Industries.  – I have experienced these industries from “all sides” and I have a reasonable id

How FSA of UK function as an integrated regulator?

Introduction

Financial Services and Market consist of a number of players rendering all the financial services under one roof. Earlier each market player had their own sphere and they do the business within their boundaries. The scenario had been changed and a number of financial services are being rendered by the same institution under the same roof. The arena of the banking and financial industry had met with oceanic changes during the last few years, by internationalisation of the finance market and free trade.  The investment banking, clearing houses, loan disbursing and security services and the related financial services had been merged into one group. The same financial institution had been serving as investment banking, clearing houses, loan disbursing and security services and the related financial services provider.

As the middle class also started investing in the financial products and in securities, the industry becomes one of the biggest in the world. The regulatory issue came into the fore front as banking and financial industry becomes the integral part of the country’s financial stability. The insolvency of the banking companies created lot of problems. The structured product which is a combination of a verity of financial products is an example which gives light to the integrated financial services.

Read the rest of this entry »

The Worldwide Investment Advice Industry report, published annually by Barnes Reports, contains timely and accurate industry statistics, forecasts and demographics. The report features 2010 current and 2011 forecast estimates on the size of the industry (sales, establishments, employment) for the 47 largest world countries, including United Kingdom, France, Germany, Italy, Spain, Russia, China, Japan, India, Australia, Canada, Mexico, Brazil, Argentina and South Africa. The report also includes industry definition, 5-year historical trends on industry sales, establishments and employment, a breakdown of establishments, sales and employment by employee size of establishment (9 categories), and estimates on up to 10 sub-industries, including investment advise, investment counselors, and mutual funds managers.

Table Of Contents :

1-Argentina
2-Australia
3-Austria
4-Belgium
5-Brazil
6-Canada
7-Chile
8-China
9-Colombia
10-Czech Rep
11-Denmark
12-Egypt
13-Finland
14-France
15-Germany
16-Greece
17-Hungary
18-India
19-Indonesia
20-Iran
21-Ireland
22-Israel
23-Italy
24-Japan
25-Malaysia
26-Mexico
27-Netherlands
28-New Zealand
29-Norway
30-Pakistan
31-Phillipines
32-Poland
33-Portugal
34-Russia
35-Saudi Arabia
36-Singapore
37-South Africa
38-South Korea
39-Spain
40-Sweden
41-Switzerland
42-Taiwan
43-Thailand
44-Turkey
45-United Kingdom
46-United States
47-Venezuela
48-Appendix: Definitions & Terms

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Car alarm is a vital component of car security system. Its growing demand proves it is effective against car theft and burglary.

Car alarm systems range from basic to highly advanced. The manufacturers keep on distributing a wide variety of models. They still manufacture large quantity of one-way car alarms. Two-way car alarm systems are mostly produced for distribution in developed nations.

Many car alarm makers are now manufacturing car tracking system employing the technology of Global Positioning System. Police can now track the movements of stolen vehicles using this system. Prices are more or less stable in spite of the rising cost of materials due to the tight competition among manufacturers.

Many companies producing car alarms acquire highly advanced equipment and introduce computer testing system to meet customers’ satisfaction. Their products are carefully tested at facilities with simulation testers and temperature chambers to ensure reliability.

Their engineering departments develop high and technically advanced car alarms to satisfy the special requirement and certification of countries worldwide. Manufacturers also offer the most affordable cost effective shipping methods, and they make sure that products are always delivered on time.

Makers of car alarm are looking for ways to mass produce hybrid car alarms attuned to the standards of the National Insurance Crime Bureau for vehicle security.

Hybrid alarms for automobiles are more durable and in many ways better than traditional car alarms. Most manufacturers concentrate on improving the quality, enhancing stability, reducing power consumption and bettering control range of their products. They even distribute accessories like central locking kits and reversing sensors.

China ranks fourth among the world’s largest car manufacturers. Its car production is estimated at 5.1 million in 2004 and the actual sales have reached 5 million units. Because China has a big local market to serve, car security industry has also expanded, serving both the domestic and foreign markets.

Taiwan has moved most of its production of basic car security alarm to the mainland and scaled down on its own manufacturing. Nevertheless, it focused on providing comprehensive car security solutions and satisfies specific requirements.

The increase in demand for car alarms and other car security products in China are considered sustainable. International players continually strengthen their presence in China attracted by the foreseeable growth of car security business and car manufacturing. Both Taiwanese and Chinese manufacturers have penetrated the car security OEM (original equipment manufacturer) market already.

Directed Electronics Inc. is one of the largest companies in the world distributing car security products. It is the company behind Viper car alarms. It is largely praised by installers and customers for its great features and benefits integrated into the system.

JSC Diveti is a company established in 1994 in Kaunas, Lithuania. Few years later, this company became one of the biggest importers of car security systems. The company begun the production of car security system named Sharpshooter in 2004.

The alarm system is manufactured utilizing the technology SMD (surface-mount device). The excellent design process and the creativity of Divetis was evaluated then certified by accredited international laboratory.

Guangzhou Car-mate Technology Co. Ltd; manufactures, researches and exports car electronics products. The company produces GSM car alarm, GPS car navigation and HID (high-intensity discharge) xenon kits.

Abstract

This paper is concerned with the impacts of strict patents in the pharmaceutical industry, focusing on the Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement. It discusses the historical and current policy context, to better understand how strict patents affect the availability of essential drugs in developing countries.

The research shows that the pharmaceutical industry prioritises profit above health. Strict patents reduce the availability and affordability of new essential drugs in developing countries, and thereby have a negative impact on the health of the world’s poor. Larger pharmaceutical companies benefit more than smaller companies because they have a monopoly in the industry. They invest more in research and development and, linked to economies of scale, are better positioned to exploit markets for new drugs.

The example of India highlights the importance of generic production and essential drugs in developing countries. It shows that while TRIPs promotes economic growth of the industry and encourages investment in research and development of new drugs, it increases the prices of new essential drugs, thereby isolating benefits from the majority poor populations in developing countries.

The paper suggests that based on historical and current trade policy, developed countries have an ethical obligation to allow poorer countries to develop infrastructure for their pharmaceutical industry, a responsibility not being fulfilled. It suggests TRIPs be revised under a more ethical framework. This includes increasing public funding of research and development, shortening the length of patents and allowing developing countries to generically produce essential drugs.

The paper highlights the interconnectedness of social, economic and political factors that could increase the availability of essential drugs in developing countries. It highlights the importance of better understanding the issues surrounding strict patents, and why the scientific community is critical to this process, in terms raising awareness and collaborating with independent organisations and concerned citizens to ultimately press governments for change at the national and international level.

Table of Contents

1. Introduction

1.1 What are Patent Laws?

1.2 What is TRIPs?

1.3 Focus and Structure of the Paper

2. Pharmaceutical Industry for Profit or for Improving Health?

2.1 Scale of Profits

2.2 Investment Priorities

2.3 Diffusion

3. Essential Drugs and Generic Production

4. Impacts of TRIPs

4.1 Main advantages

4.2 Main disadvantages

4.3 The Doha Agreement and Compulsory Licensing

5. Conclusions

6. References

1. INTRODUCTION

‘As the ancient scourge of polio was rolled back by his vaccine 50 years ago, Jonas Salk, the inventor of the polio vaccine was asked why he never took a patent out on the medicine, a patent that would have made him wildly rich. “There is no patent,” he replied … “Could you patent the sun?”’ (Salon.com magazine 2001).

This paper explores the impacts of pharmaceutical patents on drug availability in the third world, focusing on the impacts of the Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement. It highlights the value of essential drugs and generic production in developing countries, using India as a case study. It also explores alternatives to TRIPs and the role of the scientific community.

1.1 What are patent laws?

A patent can be defined as ‘a monopoly right granted to person who has invented a new and useful article, an improvement of an existing article or a new process of making an article’. It consists of an exclusive right to manufacture the new invented article, or manufacture an article according to the invented process for a limited period. During the term of patent, the owner of the patent, i.e. the patentee can prevent any other person from using the potential invention .

Figure 1: Brief History of Patent Law

The timeline below illustrates the brief recent history of patents in the world .

1880-1882

Patent statutes introduced in most European countries

1883

Paris Convention for the Protection of Industrial Property – cornerstone of the modern international patent system.

1947 International Patent Institute (IIB) established at the Hague

1970

Patent Co-operation Treaty signed in Washington, D.C.

1978

International Patent Institute integrated into the European Patent Office (EPO)

1979

Bayh-Dole Act passed-granted permission to U.S. universities to license and profit from federally sponsored research*

1980

International Patent Documentation Centre (INPADOC) integrated into the EPO

In the pharmaceutical industry patents have a straightforward objective. They provide a strong incentive for companies to invest in the research and development of new drugs, knowing that they will be able to recuperate costs and, subsequently, profit from the new drug. However, patents enable parent companies to control the price and availability of new drugs. There is no competition from other companies to produce the drug, which would usually lower the price. Thus, increasing the length of patents can reduce the availability of new essential new drugs in developing countries, with knock on health problems.

Essential drugs can be broadly defined as those that satisfy the health care needs of the majority of the population. They should, therefore, ideally be available at all times in adequate amounts; in the appropriate dosage forms; at reasonable (affordable) price; and, meeting the criteria of quality, safety and efficacy (New Strait Times 1998).

Under the term of a patent, drugs, essential or non-essential, can only be produced by the parent company. This means that there is no competition from other companies to produce the drug, and the parent company can charge a high price for the drug, effectively making the drug unavailable for poorer people.

New drugs tend to be more available to developed countries, because people are more affluent and can afford higher prices. For this reason, pharmaceutical companies tend to market their drugs at developed countries. Overall, developed countries benefit more from new technology and advances in science because their governments, companies, and people can afford to buy into the technology.

The World Trade Organisation’s (WTO) Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, which extends the length of patents, enables companies to significantly increase their profits and increase the technology gap between developed and developing countries.

1.2 What is TRIPs?

The Trade Related Aspects of Intellectual Property Rights (TRIPs) was added to the General Agreement on Tariffs and Trade (GATT) at the end of the Uruguay Round of trade negotiations in 1994. It came into full force in January 2005, and its inclusion by the World Trade Organisation (WTO) was the ‘culmination of a program of intense lobbying’ by the United States, supported by the EU, Japan and other developed countries .

The United States strategy of linking trade policy to intellectual property standards can be traced to senior management at Pfizer (a large United States pharmaceutical firm) in the early 1980s. Pfizer mobilised corporations and made maximising intellectual property privileges the number one priority of United States trade policy .

According to the WTO, ‘TRIPs is an attempt to strike a balance between the long term social objective of providing incentives for future inventions and creation, and the short term objective of allowing people to use existing inventions and creations’ .

The following requirements of TRIPs all have a bearing on the pharmaceutical use of patents .

? Copyright must be granted automatically, and not based upon any “formality”, such as registrations or systems of renewal.

? National exceptions to copyright (such as “fair use” in the United States) must be tightly constrained.

? Patents must be granted in all “fields of technology” (regardless of whether it is in the public interest to do so).

? Exceptions to patent law must be limited almost as strictly as those to copyright law. In each state, intellectual property laws may not offer any benefits to local citizens which are not available to citizens of other TRIPs signatories (this is called “national treatment”). TRIPs also has a most favoured nation clause.

? Patents in the pharmaceutical industry will apply for 20 years, instead of 10 to 15 years.

Some developing countries began to grant their own patent protection in the late 1980s, but TRIPs is a compulsory requirement for any country who wants to be a member of the World Trade Centre, and with that memberchip access to international markets and trade relationships. Countries which do not adopt TRIPs can be disciplined through the WTO’s dispute settlement mechanism, which is capable of authorising trade sanctions against dissident states . Therefore, the economic and poltical threats, which could cripple a poor economy, effectively forced developing countries to ratify the agreement.

The TRIPs agreement makes it easier to obtain and enforce patents. It increases the length of pharmaceutical patents, from 10 to 15 years to 20 years, which encourages companies to invest more in research and development and promotes economic growth. However, it favours developed countries, which have the capacity to enforce their rights globally, and create more exclusive trade options under the Intellectual Property Rights (IPRs). Developed countries have more pharmaceutical infrastructure and companies that are used to using patents to make profit.

1.3 Focus and structure of this paper

Chapter 1 introduced the main contentions of using strict patents in the pharmaceutical industry. It explained how patents work, and the main changes that TRIPs will make to the pharmaceutical industry.

Chapter 2 shows the monopoly of a handful of large pharmaceutical companies in the pharmaceutical industry. It provides a sense of the scale of the profits made by these companies, contrasting the investment priorities and types of drugs produced with those that are needed in developing countries. The Chapter debates whether the industry is for profit or health, briefly highlighting how companies make false claims through advertising in developing countries.

Chapter 3 introduces the idea of essential drugs and generic production, exploring the benefits with a case study of India. Chapter 4 shows how TRIPs will restrict generic production of essential drugs, and the impacts this will have on the majority poor populations in developing countries. The conclusion, Chapter 5, suggests how TRIPs could be revised under a more ethical framework, exploring the historical and current drug policy context, with particular emphasis on the role of scientists.

2. PHARMACEUTICAL INDUSTRY FOR PROFIT OR HEALTH?

In an attempt to understand how pharmaceutical companies control the availability of essential drugs, and use patents to make substantial profits, this chapter debates whether the pharmaceutical industry is for profit or health. It looks at the scale of profits made by the pharmaceutical industry and their investment priorities, also challenging whether ‘diffusion’ of biotechnology works to provide essential drugs to developing countries.

2.1 Scale of profits

There is a very familiar trend in the international pharmaceutical industry. A handful of multinational companies, originating from developed countries, have a great deal of economic power, which gives them control over drug availability and health. They also lobby governments to make trade policy which suits their profit making agenda. In 1996 the first ten multinational pharmaceutical companies accounted for approximately 36 per cent of the world pharmaceutical sales of US$ 251 billion .

Table 1: The World’s Top Ten Pharmaceutical Companies in 2003

Company Pharma Profit ($million) Pharma Sales ($ million) Pharma Operational Profit Margin

Pfizer 12,920.0 28,288.0 45.7%

Merck & Co. 10,213.6 21,631.0 47.2%

GlaxoSmithKline 7,598.2 26,979.0 28.2%

Johnson & Johnson 5,787.0 17,151.0 33.7%

AstraZeneca 4,006.0 17,841.0 22.5%

Novartis 3,857.3 13,497.4 28.6%

Wyeth 3,505.5 12,386.6 28.3%

Aventis 2,969.6 15,705.4 18.9%

Abbott 2,739.0 9,304.0 29.4%

Takeda 2,446.6 6,838.3 35.8%

Group Subtotal 56,042.9 169,621.8

Average 31.8%

Source: Adapted from Scrip Report 2003

The pharmaceutical sector racks up the largest legal profits of any industry, with an average 18.6 % return on revenues in 2001 (Resnik 2001).

However, Table 1 shows that the top ten companies achieved a much higher average profit margin of 31.8% in 2003. Thy have a monopoly over the industry. Linked to economies of scale, larger companies can exploit larger market penetration to increase their profits. For example, Pfizer and Merck & CO, two out of the top three pharmaceutical companies in 2003 according to gross sales, had a profit margin of 45.7% and 47.2% respectively. This was much higher than the average profit margin of the top ten companies (31.8%), which illustrates the relationship between economic power and power of market exploitation.

The pharmacetical industry justifies their high profits with the argument that a great deal of time and money is invested in the research and development of new drugs. In 1998, developed countries spent US$520 billion on research and development, more than the total economic output of the world’s poorest 30 countries. In 2003, it was estimated that the average cost of producing a new chemical compound is around US$ 200 million . Thus, the industry is keen to protect their investments and subsequently reward their efforts by making a great deal of profit. However, there are ethical issues as to whether the scale of the profit can be justified, given the healthcare problems that exist in developing countries resulting from the unavailability of essential drugs.

Large pharmaceutical companies maintain their monopoly by investing great sums in legalities to lobby governments into protecting the industry, by making strict patent law. ‘The combined worth of the world’s top five drug companies is twice the combined GDP of all sub-Saharan Africa and their influence on the rules of world trade is many times stronger because they can bring their wealth to bear directly on the levers of western power’ (Borger 2001).

One of the leading US biotechnological companies, Genentech, has four times as many lawsuits to protect its patents as it has products (Fowler 1996). At least one company has been created in the US whose ‘main business,’ according to the Wall Street Journal, ‘is buying up broad patents and then sueing other companies for alleged infringements’ (Fowler, 1996).

Thus, there is also the issue that investing so much money and time in litigtion is highly unproductive, when this money could be better spent on research and development of new drugs, and subsidising the cost of essential drugs in developing countries.

2.2 Investment priorities

The world market for pharmaceuticals shows a clear division: non essential drugs are produced and targeted at developed countries promising high profits, while developing countries are still in need of basic healthcare and essential drugs.

Of the 1223 new drugs marketed between 1975 and 1996, only 13 were developed to treat tropical diseases – and only four were directly the product of pharmaceutical industry research. In recent years, drug companies have produced thousands of new compounds but less than 1% are for tropical diseases .

In 1998, global spending on health research was US$70 billion , but 90% of the money spent on health research and development focuses on medical conditions responsible for only 10% of the world’s burden of diseases (Benatar 2000). Only US$300 million was dedicated to research for vaccines for HIV/AIDS and only US$100 million to malaria research, diseases with the highest mortality and morbidity rates in the world, and devastating in developing countries.

‘It would be more profitable to develop a drug designed to enhance sexual performance for Anglo-American males than to develop a medicine designed to treat or prevent malaria’ (Resnik 2001).

There is also the suggestion that pharmaceutical companies focus more effort on a certain drug in developing countries when it is in their research interest; “Of diseases in the Third World, AIDS is getting the most attention and focus. Not coincidentally, it is also one of the few diseases that remain a threat to First World countries” (Censored 2000).

Pharmaceutical companies are able to devote their resources to non-essential drugs targeted at the richer markets of developed countries and at the same time, exploiting the markets in developing countries by influencing the world price for drugs. For example, pharmaceutical companies have long resisted “differential pricing” on their US$12,000-a-year courses of anti-AIDS drugs, which would allow a course to cost less in Cameroon than in Canada . Thus, the effect of purchasing power parity means that the prices are even higher in real terms in developing countries.

Drug Aid

In many cases, drug companies will provide drugs to developing countries at cheaper cost as aid. For example, in March 1998 Glaxo Wellcome (UK) announced that it would sell its anti-HIV drug AZT for 70 per cent below the normal price to pregnant women in developing countries . However, drug aid is not always beneficial. Reich et al (1999) found that out of 16,566 drug donations shipped from the US to 129 countries between 1994 and 1997, 10-40% were listed on neither the national essential drug lists nor the WHO model of essential drugs in developing countries. Also, 30% of shipment items had a year or less of shelf life (ibid.).

Advertising and false claims

There is also evidence that companies, in addition to prioritising non-essential drugs for developed countries, exploit markets in developing countries by convincing people that they need non-essential drugs. A survey, in the Annals of Internal Medicine found that ‘62 per cent of the pharmaceutical advertisements in medical journals were either grossly misleading or downright inaccurate’ (Madeley 1999).

There has been much criticism of the advertising in developing countries, claiming it is particularly persuasive in nature and that people are misinformed and encouraged to believe wild promises. This illustrates the exploitative nature of the pharmaceutical industry, and the quest for profit at the expense of health.

“In the corporate headquarters of major drug companies, the public relations posters display the image they like to present: of caring companies that bring benefit to humanity, relieving the suffering of the sick. What they don’t say, is that, so far, their humanity has not extended beyond the limits of the pockets of the sick” (Hilton 2000).

In summary, the pharmaceutical industry is for profit. A handful of economically powerful companies use economies of scale to exploit the markets of developed and developing countries. As a whole, the pharmaceutical industry is:

? Priortising investment in non-essential comfort-oriented drugs for the wants of the more affluent in developed countries, whilst neglecting the needs for essential drugs for poorer people, particularly in developing countries.

? Investing heavily in litigation and patents to restrict competition from other companies, and enable control over the price and availability of drugs.

? Exploiting people in developing countries, using persuasive advertising to make false claims.

? Motivated by profit, not health.

As Smith (1994) points out, ‘There is a direct conflict between the pursuit of health and the pursuit of wealth.’

2.3 Diffusion

Policymakers and representatives of the pharmacetuical industry argue that relevant technology reaches poorer people by means of ‘diffusion.’ This describes the process by which drugs become available to the poor after patents expire, and when competition to make the drugs drives down the prices of the drugs so that poorer people can afford them. However, as agents of disease, including bacteria and viruses, are continually adapting to drugs and developing resistance to them, new drugs are often essential and life saving, which means it is critical they are available very soon after production in developing countries. Patents reduce the availability of new essential drugs, because they increase the time it takes for diffusion to take place, if it happens at all.

The lack of infrastructure in developing countries makes it difficult for essential drugs to reach those who need them, which can increase the time it takes for technology to ‘diffuse’ to the poor, even after patents have expired. For example, oral rehydration therapy, a simple and cheap salt-and-sugar solution, has been mass distributed since the 1980s and has greatly reduced child deaths from diarrhoea, ‘but even though it only costs 10 cents a sachet, it is still unavailable for 38% of diarrhoea cases in Third World countries.’ Another example, Penicillin, discovered in 1928 and first marketed in 1943, is unavailable to 2 billion people. (Healey 2001)

The unavailability of essential drugs therefore extends beyond a lack of access to new drugs designed to treat devastating infectious diseases [essential drugs] (Resnik 2001). 50% of people in developing nations do not have access to even basic medications, such as antibiotics, analgesics, bronchodilators, decongestants, anti-inflammatory agents, anti-coagulants and diuretics (Reich 1979-1981).

In the 1980s structural adjustment programmes were enforced on developing countries by the International Financial Institutions (IFIs), such as the World Bank and International Monetary Fund. These trade liberalisation policies involved the establishment of ‘export-processing’ zones, which offered financial incentives, such as tax concessions, to companies. By favouring privatisation and encouraging multinational companies to move their operations to developing countries, one of the supposed objectives of economic liberalisation was to assist ‘development’ and the transfer of pharmaceutical technology to developing countries.

However, there has been a lack of ‘diffusion’ of knowledge and technology. In fact, it is the lack of technology transfer measures in export-processing zones that attract pharmaceutical multinational companies. With firm control over technology, even when high-tech methods of production are used they can be kept away from the domestic economy. The southern Indian city of Bangalore has, ‘thanks to Western companies’ passion for outsourcing, grown into one of the world’s premier technology hubs and is the centre of the India’s growing IT industry’ (its export revenues rose from US$150 million in 1990 to $4 billion in 1999). However, areas surrounding Bangalore are in fact extremely ‘low-tech’. In Karnataka (also state capital), there were still only 2.73 internet connections per 1000 people in 1999; in even poorer states (like Orissa), that rate dropped to 0.12 connections per 1000 people.

‘As it turned out, there has been virtually no transfer of relevant technology by these companies to developing countries … in fact, by using the power that control over technology brings, they have eliminated many potential competitors and prevented indigenous pharmaceutical industries from developing to meet the real needs of the people of the third world’ (Kanji et al 1992). Thus, the evidence leads me to personally agree with this line and disagree that diffusion can be relied upon to make essential drugs available at times when they are needed most in developing countries.

Multinationals provide employment in developing countries, it is typically very low paid with little security, and the products (and the techniques and profits) go back to the companies of developed countries. Unfortunately, even though direct foreign investment provides low-paid jobs and does not transfer technology, those jobs are still vital for many that live in poverty and have limited employment options. This highlights why re-regulation of the corporate sector is required so that markets meet certain social criteria. For example, interfering with markets to reduce the price of essential drugs in developing countries.

“Pharmaceuticals, they are a commodity. But they are not just a commodity. There is an ethical side to this because they’re a commodity that you may be forced to take to save your life. And that gives them altogether a deeper significance. But they [big pharmaceutical companies] have to realize that they’re not just pushing pills, they’re pushing life or death. And I believe that they don’t always remember that. Indeed I believe that they often forget it completely.” (Drummond 2003)

3. GENERIC DRUG INDUSTRIES AND ESSENTIAL DRUGS

In many countries with large poor populations, such as Argentina, China, Egypt and India, national policy enabled a locally financed pharmaceutical industry to develop almost exclusively engaged in manufacturing generic drugs. These industries could ‘copy cat’ certain drugs and in some cases the manufacturing processes of other pharmaceutical companies.

This Chapter illustrates the main benefits to health of generic production in developing countries, in terms of increasing the availability of essential drugs. It uses India as a case study.

Benefits

In countries with generic drug industries, drug prices are low because the primary national objective is for the government to provide affordable drugs for its people, and develop the industry for economic welfare and greater self-sufficiency. India holds a record, with prices for many drugs 10 to 100 times lower than in developed countries. The introduction of generic antiretroviral drugs by Indian companies reduced the price of these drugs by 97% (Henry et al 2002). Research and development efforts by generic drug industries have also led to the development of vaccines against leprosy and hepatitis B, and anti-cancer drugs .

Multinational companies have less economic control over the market because the domestic drug industry controls the domestic market. Therefore, poorer people are less dependent on multinational companies and the extortionate prices that they can charge for drugs. In addition to lower cost, as will be seen from the case study of India, generic drugs have the advantage of being competitive in quality to those produced by large multinationals, originating from developed countries.

A case study of India

In India, multinationals held only a 20 per cent market share in 2000 : national pharmaceuticals have gained knowledge and capacities in research and development, which has enabled them to replicate manufacturing processes for already known drugs, and develop a bulk drug industry for various chemicals and antibiotics.

India’s local drug companies have long benefited from a relaxed patent regime.

History of patent law in India (up until the 1970s)

1856 The Act Vi Of 1856 On Protection Of Inventions Based On The British Patent Law Of

1852 Certain Exclusive Privileges Granted To Inventors Of New Manufacturers For A Period Of 14 Years.

1859 The Act Modified As Act Xv; Patent Monopolies Called Exclusive Privileges (Making. Selling And Using Inventions In India And Authorising Others To Do So For 14 Years From Date Of Filing Specification).

1872 The Patents & Designs Protection Act.

1883

The Protection Of Inventions Act.

1888

Consolidated As The Inventions & Designs Act.

1911

The Indian Patents & Designs Act.

1999

On March 26, 1999 Patents (Amendment) Act, (1999) Came Into Force From 01-01-1995.

1972

The Patents Act (Act 39 Of 1970) Came Into Force On 20th April 1972.

Source: Adapted from http://www.legalserviceindia.com/articles/patents_geographical.htm accessed 10th November 2004

In the past, India honoured patents on manufacturing processes but not patents on products, which allowed generic drug companies to ‘reverse engineer and manufacture drugs’ without paying royalties to the companies who own patents on those drugs (McNeil 2001).

The features of the 1970 Patents Act helped to promote India’s pharmaceutical industry, which specialises in generics. It has enabled considerable technological innovations and development of knowledge, with its provisions enabling the drug industry to grow at a rapid pace. (The Lancet, 2004)

The Indian Pharmaceutical industry is the pre-eminent sector in India, in terms of scientific and technological developments. India ranks among the top 15 drug manufacturing countries in the world. In 2004, the domestic drug industry met approximately ‘70% of India’s demand for bulk drugs, drug intermediates, chemicals, pharmaceutical formulations in the form of tablets, capsules and orals’ (Lancet 2004). India’s generic drug industry has enabled a huge number of people to afford essential drugs that would have otherwise been out of reach because of patent induced high prices and unavailability. Generic production therefore promoted self-sufficiency and assisted economic development.

“The Indian firm Cipla’s offer to MSF [Médecins sans frontiéres] to provide a cocktail of antiretrovirals for less than $350 a year (compared to the big boys’ $10,000) resounded like a thunderbolt. Suddenly, the emergence in the South of very low cost generics producers seems credible” .

4. IMPACTS OF THE TRIPs AGREEMENT

This chapter discusses the impacts of the TRIPs agreement (January 2005) on India’s pharmaceutical industry. It starts by mentioning the pressure and reasoning behind India’s decision to comply with TRIPs, and then examines the positive and negative aspects of the agreement, which might emerge in the next few years.

India amended the law governing patents i.e. Patents Act, 1970 by Patent (Amendment) Act, 2002, on 20th May 2003.

The main features of Patent Act, 2002, were:

? Enlargement of non-patentable inventions

? Twenty year patent term for all patents

? Burden of proof on defendant in case of infringement when a patent is for the process of producing a new product

? Making importation a right of a patentee

This Act prepared India for full TRIPs compliance, and currently, India is adapting to the changes to the pharmaceutical industry under the TRIPs Agreement, which came into force on January 1st 2005.

Indian companies have now lost the opportunity to develop processes for patent protected drugs. This could allow multinational companies to establish a monopoly over the Indian drug market, unless Indian pharmaceutical companies can compete.

Pressure to comply with TRIPs

There was pressure for India to meet TRIPs requirements because India would have otherwise been disciplined by the WTO, and ‘India’s market access rights would have been jeopardised’ along with other benefits (Lancet 2004).

There was intense lobbying, predominantly by the United States pharmaceutical industry, to impose the TRIPs agreement. PhMRA claimed that the US pharmaceutical industry loses US$500 million annually only through a lack of patent protection on drugs in India . The GlaxoSmithKlein CEO Jean-Pierre Garnier described the Indian pharmaceutical industry as price-undercutting “pirates”, and said the company “is not doing this to get a Nobel Prize.”

In response, Hamied, on behalf of the Indian pharmaceutical firm CIPLA, said “Indeed, we are a commercial company. But I market 400 products in India. If I don’t make money on a half-dozen of them, it’s no big deal. I don’t make any money on the cancer drugs we sell or drugs for thalassemia, a blood disorder that’s common in India. We sell these drugs virtually at cost because I don’t want to make money off these diseases which cause the whole fabric of society to crumble. India alone will have 35 million HIV cases by 2005, and it’s something we can’t afford.” (Lindsey 2001)

4.1 Main advantages

On the one hand, TRIPs could promote more research and development and stimulate competition to produce new drugs. On the other hand, India will lose its ability to generically produce essential drugs for its majority poor population.

Generic drug production in India has meant that research and development of new drugs has taken a back seat. Indian companies are ‘getting actively engaged in research and development of their own molecules/pharmaceutical products and processes . The Indian government is providing a range of tax concessions designed to encourage research and development, including a 10-year tax holiday on income arising from research and development. (Lancet 2004)

Thus, TRIPs is increasing investment in the research and development of new drugs. It promotes economic growth of the Indian drug industry, because companies now have patent induced control over the price and availability of new drugs. India already has more pharmaceutical products approved by the United States Food and Drug Administration (FDA) than any foreign country, which is helping the industry to obtain and enforce patents. The Indian pharmaceutical industry will be able to increase its contribution to drug discovery and development, which, given the cost-effectiveness of research and development in India, can only increase. (BJU 2003)

‘TRIPs will cement India’s position as a global pharmaceutical outsourcing hub and offshore location for research and development and other support services including strategic services in patenting and related matters.’ India is also becoming an attractive location for the outsourcing of patent drafting . In addition to these benefits to the industry as a whole, TRIPs has also imposed higher quality standards for drugs and processing.

Proponents of TRIPs argue that patent induced privatisation of the industry will lead to growth of the domestic industry that will increase the availability of all biotechnology products to poor people i.e. diffusion. However, as mentioned before, patents can reduce the availability of new essential drugs by restricting short term diffusion. Thus, although TRIPs may encourage more research and development of drugs, these drugs will be less available to poorer people who cannot afford them at times when they need them most.

However, there are counter-arguments that TRIPs will not make new drugs unaffordable. For example, Shantha Biotech, which was first to launch the indigenously developed hepatitis-B vaccine in the country in 1997, has secured the World Health Organisation (WHO) certification for its product “Shanvac B” (now marketed at “Hepashield”). Shantha is the only company in India to get this certification for the hepatitis-B vaccine, and it is being provided at a quarter the price of the previously imported vaccine (Jayaraman 2001).

However, despite greater availability of a few specific drugs, linked to some Indian companies obtaining licenses, the price of new drugs over the next few years is likely to be relatively high in terms of what the population is used to and can afford.

4.2 Main Disadvantages

Under TRIPs, there will be more consolidation in the pharmaceutical industry, as larger companies are more capable of using patents to secure higher profits. Linked to economies of scale, these companies will be able to exploit the patent system to out-compete other companies. Multinationals such as GlaxoSmithKline, which already operate in India, will have a particular advantage. Smaller companies will be less capable of buying into the strict patent system. Merely securing a patent from America’s patent office costs at least $4000. Defending it in court can cost millions (Economist 2002).

Although TRIPs does not patent old drugs already on the market, there is still a backlog of products waiting for grant of product patents, some which may already be on the market, as product claim applications have been filed since January 1 1995. Unless Indian companies have stopped manufacturing such drugs completely, a large number of litigation and infringement suits will ensue .

TRIPs restricts India’s generic industry and longer patents provide additional incentive for foreign investment in India. This could actually pose a threat to India’s pharmaceutical companies. At an international level, Indian companies’ advantage in cheap vaccines for hepatitis or rabies may be eroded by potential development of cocktail vaccines that promise delivery of multiple vaccines in a single shot (Jayaraman 2003). Although TRIPs encourages growth of the industry and creates some large winners, it creates many losers.

Since the 1970s, India’s poor population has benefited from a range of drugs available at relatively low prices. The industry is efficient at making generic varieties and has a number of different companies able to produce such drugs, which means that new drugs on the market can be imitated both quickly and easily. This provides a means of sharing the benefits of technological advancement in developed countries with developing countries, usually isolated by a gap in technology. According to some reports, India is home to the fastest growing rate of new infections in the world (Hankins 2003). Without the benefits of generic drug production, the population of India could suddenly be faced with a health crisis.

According to a recent Times of India report; the price of cancer drug Gleevac has risen from to Indian Rs120, 000 ($2,590) from its price just a few months ago of Indian Rs4000 ($86.35) – 30 times more, because of TRIPs .

4.3 The Doha Agreement and Compulsory Licensing

TRIPs has a clause that allows governments to override patents and provide essential drugs to the poor in some circumstances. Working with Non Government Organisations (NGOs), Brazil and a group of African countries pressured policymakers to revise TRIPs. The meeting in Doha, November 2001, between the world’s trade ministers attempting to organise a new round of trade negotiations (Health Affairs 2004), led to the Doha “Declaration on the TRIPS Agreement and Public Health.” This declaration affirmed that TRIPS “should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.”

‘It affirmed the right of nations to use the exceptions of TRIPS, such as the compulsory licensing provision, to meet public health concerns, specifically stating that “public health crises, including those related to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency” and thus facilitate the right to use compulsory licensing’ (World Trade Organisation Declaration 2001).

‘Governments can issue compulsory licenses to allow other companies to make a patented product or use a patented process under licence without the consent of the patent owner, but only under certain conditions aimed at safeguarding the legitimate interests of the patent holder’ . For example, the Supreme Court of India may interfere to justify the dispensation of drugs at an affordable price on the grounds of concern for public suffering. They can grant a compulsory license for companies to produce a generic drug. If required, the government may also fix the price of these drugs as well as the royalties to be paid to the inventor for the remaining term of patent .

A further 30 August 2003 Amendment to the Doha Agreement enables governments to let their pharmaceuticals generically produce drugs for other countries, as well as their own people, in times of ‘acute suffering.’ Previously, Article 31(f) of the TRIPS Agreement stated that products made under compulsory licensing must be “predominantly for the supply of the domestic market”. (WTO Press Release 2003) This applied directly to countries that could manufacture drugs, limiting the amount they could export. It will now be possible for countries to import cheap generic drugs in times of ‘acute suffering’.

This was regarded as a victory by the developing world and as a defeat by the research-based drug industry.

However, there are serious questions as to whether compulsory licensing can even work. ‘No generic medicines have been manufactured this way in the past decade, treating no patients in any country worldwide’ (Attaran 2003). ‘Threats of compulsory licensing might be useful when rattling sabres with drug companies to lower medicine prices, but only a single (and unusually powerful) developing country, Brazil, has ever succeeded in doing so. As such, compulsory licensing or the threat of it has seldom had any practical effect for public health’ (Attaran 2004).

Nevertheless, the pharmaceutical industry in developed countries has objected, with the United States leading the objections. ‘America’s drug industry has fought tooth and nail to impose the narrowest possible interpretation of the Doha declaration, and wants to restrict the deal to drugs to combat HIV/Aids, malaria, TB and a shortlist of other diseases “unique to Africa” .’ This means that the industry is against the use of compulsory licencing, and only prepared to accept its use in Africa, which is very unethical when most developing countries do not have sufficient access to essential drugs. It highlights the ruthlessness of paharnceutical companies, in terms of seeking maximum profit even at the expense of the world’s health.

Compulsory licensing and the amendments to TRIPs are positive in respect to health care in developing countries. The changes suggest that governments do respond to pressure and there has already been some admission on their part that TRIPs could be revised under a more ethical framework. However, even with these amendments, TRIPs does not tackle the root problems of unequal power relations between developed and developing countries, which give rise to the unequal access to pharmaceutical biotechnology.

5. CONCLUSION

This chapter argues in favour of alternatives to TRIPs. It starts by summarising the benefit of increased public funding in research and development. It shows the close ties between science, business and government and goes on to explores wider policies, highlighting the ways that the scientific community can promote more ethical drug policy.

Public funding

If a larger proportion of research and development of new drugs was publicly funded, then this would encourage more investment into the development of essential drugs, which are needed in developing countries.

Data submitted to the Joint Economic Committee of Congress by the National Bureau of Economic Research reveals that public research, not private, led to 15 of the 21 most essential drugs introduced between 1965 and 1992, and other studies in the 1990s suggest that only a minority of important drug discoveries in recent years (estimates range from 17% to 40%) were the result of commercial research (O’Leary 2002). This shows that public funding is paramount to the production of essential drugs, and therefore to health in developing countries. The combined effect of shortening patents and increasing public funding in the pharmaceutical industry would ensure that not only are more essential rugs produced, but that they also reach those who need them.

The next section shows that scientists need to devote more attention to the unethical nature of drug policy and voice concerns to the public. This involves deconstructing a scientific agenda from the economic agenda of government and big business.

Governments, science and big business

Scientists ideally work to discover “truth” and gather knowledge to help people. Research and development, however, tends to be profit-driven, and there are conflicts between seeking scientific advancement and helping people, because helping people is not always profitable. Government policy supports the pharmaceutical industry, as strict patents favour the expansion if the industry and economic growth. Although business and governments are therefore dependent on scientists to design new drugs and technology, their common agenda allows them to exert political and economic control over science. Any social objective to deliver essential drugs to the poor is lost in this agenda. Scientific search for ‘truth’ therefore becomes a quest for profit, because of the vested interests of government and business.

The United States Office of Management and Budget reported that academia, in addition to federal funding, receives millions of dollars for research from donors and the private industry.

“Bioethicists at the University of Toronto take funding from GlaxoSmithKline, Pfizer and Merck to write editorials on bringing biotechnology to the developing world . . . Bioethicists at the University of Pennsylvania take money from Pfizer to write an article explaining why physicians should not accept gifts from companies like Pfizer. (Engler 2004) This shows the irony whereby large companies control information which should criticise their activities.

In the United States, even federal money comes with strings attached. Federally funded experiments and research are subject to massive amounts of bureaucratic regulation and oversight. Members of academia are now increasingly involved in the private sector. ‘This means that, even in basic research, funding is not free from profit motives or federal regulation, and the research is not necessarily a pure drive for more knowledge .’ Thus, it is hard to separate science from the profit motives of business and politics, which share a common agenda. Scientific information can be biased because it is conditioned by this agenda.

‘Today the most powerful players outside government are private corporations. They contribute financially to political parties in the US, Europe and elsewhere and a neo-liberal trade agenda has become the mantra of virtually all elected political parties. The price governments have to pay for this support is to ensure that their electoral platform corresponds quite closely to the agenda of big business.’ (Shutt 2001)

It is unfortunate that science, politics and business are so intertwined that it is difficult for the benefits of biotechnology and knowledge to jump the political and economic hurdles to reach developing countries.

It means that scientists need to be more vigilant about the type of drugs they help to produce, and what they endorse. Moreover, the scientific community need to play a more active role in raising awareness about pharmaceutical issues, so that people become more informed and capable of working with other groups, such as NGOs and members of the scientific community, to press governments for change. Scientists and the public can apply pressure to regulate the corporate sector, by imposing corporate social standards in the trade of drugs, and deconstruct those pressures from big business that controls science and information.

Public mistrust

Governments have control over science. They manipulate the science often finding a balance between where public support lies and where the money lies. This has resulted in public mistrust and scepticism in science. In the UK, for example, the public was informed by government that BSE could not be transmitted from cattle to humans, and the government promoted British beef and the industry for around ten years, before it emerged that there was a human form of the disease, variant CJD. Mistrust and scepticism was the result.

Scientific ignorance can also weaken the ties between science and the public. People may ignore the science because it is viewed as obscuring a larger picture (Michael, 1996). Science can be difficult to understand and, as mentioned, communication through the media reflects the agenda of business and government. If people do not trust the scientific media or understand the science of issues, their uncertainty can be compounded by a general mistrust of science and the scientific community. It is also important to consider that people also have different views on issues, which highlights the need for better communication and debate. New abortion procedures to people who are already pro-life are simply ‘more efficient ways to kill unborn babies,’ whereas to pro-choice advocates they are safer, less intrusive ways of protecting the choices and health of mothers .

People need to feel that a scientific organisation has no vested interests. This is why independent organisations for public scientific awareness and education are important to build up this trust. In Britain, this includes COPUS (Committee on Public Understanding of Science) run by the Royal Society. There is also the Wellcome Trust, which informs the public on science policy and practice (as well as contributing to researching social implications of sciences) “The culture of science needs a sea-change, in favour of open and positive communication with the media.’ If these independent scientific institutions, collaborating with NGOs and the scientific community, can succeed in informing and educating people, ‘it will pay for itself many times over in renewed public trust’. (UK Select Committee on Science and Technology 2000)

Agreeing with this line of thinking, if independent scientific organisations can give more attention to health problems in developing countries, then they can raise public awareness about these issues. The potential to change policy rests on a more informed public.

Individual scientists and the scientific community, collaborating with independent organisations, can debate ethical issues and highlight the importance of improving health in developing countries by increasing the availability of essential drugs. “Some of the favourite topics of bioethicists seem trivial compared with the important health issues facing people in the world’s poor countries and in impoverished regions in rich countries” (BMJ 2004). “The risk of dying from maternal causes in sub Saharan Africa is 1 in 16. In Western Europe it is 1 in 4000.” Bioethicists could focus their attention on the morality of a world system that allows “500 000 girls and women [to] die every year – 99% in developing countries – from preventable conditions and injuries related to pregnancy and childbirth.” (Lancet 2004)

It is especially important to make younger people more aware of the issues pertaining to the use of strict patents, in order to produce an informed public in the long term. Thus, there needs to be more attention to such issues in colleges and universities, as part of a curriculum, then younger people could debate for themselves the fairness of TRIPs. Again, a more informed public would be less likely to accept the ‘unfair’ policies enforced by their governments.

Therefore, policy must change. After all, it is the wider policies that enable corporations to exploit poorer people, who cannot afford to buy into technology. Roy Vagelos, the former head of Merck, claims that “‘A corporation with stockholders can’t stoke up a laboratory that will focus on Third World diseases, because it will go broke’ … ‘That’s a social problem, and industry shouldn’t be expected to solve it .’ Although biased from an industry viewpoint, he does make the point that companies are by definition profit motivated and that giving companies greater freedom is not in the best interests of health, especially poorer people.

Historical policy context

‘One cannot separate economics, political science, and history. Politics is the control of the economy. History, when accurately and fully recorded, is that story.’ (Smith, 1994). There are wider policies that need to be considered. Patents are a form of imperialism.

In the nineteenth and twentieth centuries rich, powerful states, including Britain and other European countries, exploited third world colonies. Richer states exploited the natural resources and workforce of the colony, and efficient supply chains were constructed for this purpose, based on unequal power relations. Although developing countries gained economic dependence in the 1960s and early 1970s, an economic dependence continued. Developed countries lent large sums of money to developing countries, and these debts became unpayable due to the rise in interest rates. Developing countries, instead of investing in health, still have to repay these debts, and they have become economically dependent on the companies and governments of developed countries, who control trade policy.

Thus, based on a historical trade policy context, governments in developed countries have the responsibility to help developing countries supply drugs to their populations.

‘Enormous agricultural subsidies ($310 billion) in developed countries deny the agrarian populations of poor countries the opportunity to export products and accumulate wealth’ (OECD, Paris 2002). The subsidies alone are roughly equal to the entire gross domestic product (GDP) of sub-Saharan Africa. ‘Redirecting just 1 percent of this government spending to global health would more than double the foreign aid spent to control HIV/AIDS, malaria, and tuberculosis combined.’

President Yoweri Museveni of Uganda opines that giving priority to medicine patents in trade negotiations has been a “red herring” and that “if there were no agricultural subsidies…we [Africans] would earn enough money to buy all the drugs we want” (Wall Street Journal Editorial 2003). Although I think that reducing agricultural subsidies is just one element of improving pharmaceutical infrastructure in developing countries, he makes a valid point that improving the distribution of drugs is linked to redistributing wealth between countries.

Kanji et al (1992) take this further to point out that a country’s pharmaceutical and health policy cannot be isolated from its general development startegy. November et al 1982 elaborates by stating that ‘dependence on products [drugs] and the agents and institutions which make them available, fosters the notion that the solution to illness resides in the purchase and consumption of medications rather than improvements in living condtions’ (November et al 1981).

I agree with this line of reasoning that links the unavailability of essential drugs in developing countries to wider policies, and highlights the need for more sustainable development that takes into account the vulnerability of the poor by imposing strict social criteria in drug policy and trade, rather than strict patents (economic criteria). It should be emphasised that shortening the time length of patents is one important factor among many that could improve the avilability of essential drugs and all round healthcare in developing countries.

Melrose, 1982, says that ‘companies should keep to their declared obligation of making sure that drugs “have full regard to the needs of public health” and demonstrate special social responsibility in poor countries by not advertising non-essential multivitamin tonics, cough and cold preparations and expensive and irrational combination drugs (Melrose 1982).’ Although I agree that corporations need to behave more responsibly, this should be a legal prerequisite rather than an ‘obligation.’

Ironically, there is great potential and ability of the large pharmaceutical firms, which have been so criticised in this text, to develop more essential drugs for the poor. The private sector has a great deal of knowledge and capital, which can be used to produce new essential and non-essential drugs. Thus, although public funding would help to give priority to essential drugs, the private sector should still contribute significantly. This is especially the case in the foreseeable future because the private sector is largely responsible for the production of all new drugs. ‘If Pfizer, Merck, Glaxo-Wellcome, and other pharmaceutical companies do not develop drugs that plague developing nations then …there is a real danger that people in developing nations will become therapeutic orphans’ if the pharmaceutical companies lack the proper incentives to develop drugs for the developing world’ (Reich 1979-1981).

Thus, the final part of the conclusion looks at ways of regulating the corporate sector.

Regulating the corporate sector

Governments can regulate the pharmaceutical industry in two broad ways, either by direct control, usually by making legal requirements, or by creating incentives. A mixture of the two strategies can be effective.

Control involves regulating and monitoring biotechnology companies and pharmaceuticals through the creation of legal requirements. For example, when these organisations develop drugs/ vaccines, governments can mandate them to comply with research and manufacturing standards to ensure products are safe and efficacious . Governments can control drug prices furthermore because they often have authority over the granting and use of patents. For example, in the US, the government has the right to license drugs to other companies if the patentee does not make it available to the public on reasonable price and terms. Such a right is currently focused on drugs that have been developed with public support . It needs to extend to drugs developed with private support.

Although laws are paramount in regulating corporate conduct, there is the issue that corporations have no moral obligations over and above the requirement to comply with the law (Friedman 1970). Governments can, in this regard, create further incentives for these organisations to engage in developing drugs/ vaccines that benefit populations in developing countries. For example, it could create subsidies or offer grants for research in certain areas. The Orphan Drug Act, introduced in the US in 1983, creates tax and marketing incentives for those companies that engage in creating drugs for rare diseases. Also, governments could commit to purchasing future critical drugs/ vaccines in order to minimise the ‘private entity’s financial risk’ .

Ideally, TRIPs should be replaced by policy which curtails the power and influence of the private sector, by shortening the time length of patents, allowing generic production in developing countries, and at the same time increasing public funding of research and development.

In summary, making more ‘ethical’ drug policy is dependent on:

? International policies

- removing TRIPs, shortening the length of patents; allowing developing countries to generically produce essential drugs.

- subsidising research and development of essential drugs.

- regulating the corporate sector: ensuring that essential drugs are reasonable priced; ‘a price that allows the company to earn its money but also promotes accessibility and equity’ (Brody 1996) & (Spinello 1992).

? National policies

- providing funding and technical support for NGOs who raise awareness of the issues surrounding the use of strict patents in the pharm,aceutical industry.

- Promoting education in schools; collabortaing with independent scientific organisations to provide information publicly, through the media.

- Setting an example by increasing public funding in research and development; prioritising investments in essential drug production; greater transparency; governments more accountable to the public than companies.

- Campaigning for fairer drug policies at the international level

? Education and public awareness

- Informed people in developed countries, able to raise issues pertaining to the use of strict patents and resist ‘unfair’ policies.

? The role of the scientific community

- a scientific community that focuses more on third world issues and health problems, and raises awareness about the underlying policies that cause an imbalance in wealth and health.

- Independent scientific organisations that can communicate information to the public and collaborate with scientists and NGOs, and raise concerns with business and government.

- campaigning for ‘truth’ and sharing of knowledge, as well as more regulation of the corporate sector, and governments who are more accountable to the public.

This paper highlights the interconnectedness of social, economic and political factors which can improve the availability of essential drugs in developing countries.

To end on a more positive note, pharmaceutical companies have created life-saving drugs which have helped to save millions of lives, but these drugs have tremendous potential to save many more lives and alleviate suffering by helping to curb the incidence of various infectious diseases, which cripple the social and economic fabric of developing countries. The paper also highlights the importance of better understanding the impacts of TRIPs in developed countries, so that governments are pressed to change policies at the national and international level. The role of the scientific community is critical, in terms of having more say and control over drug policy, and helping to increase public awareness about drug policy. Ultimately, a concerted effort between the scientific community, public and NGOs can resist ‘unfair’ drug policy and some of the exploitative practices of pharmaceutical companies.

7. REFERENCES

Books/Journals

Attaran, A. (2003) Assessing and Answering Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: The Case for Greater Flexibility and a Non-Justifiability Solution. Emory International Law Review 17, no. 2 (2003): 743–780.

Benatar, S. (2000) Avoiding Exploitation in Clinical Research. Cambridge Quarterly of Healthcare Ethics 2000; 9: 562-65

BJU (2003) Fitzpatrick (Ed) International Volume 92 No

China Food and Beverage Industry Report, 2009-2010

The food and beverage industry consists of three sub-industries: food processing, food manufacturing and beverage manufacturing. The whole food and beverage industry developed slowly in H1 2009, but all the sub-industries had achieved considerable growth after November: the food processing industry experienced the fastest growth, the beverage manufacturing industry resisted decline and grew steadily, and the food manufacturing industry experienced relatively slower growth in operating income at a rate below the industry average. ( http://www.bharatbook.com/detail.asp?id=83307&rt=China-Food-and-Beverage-Industry-Report-2009-2010.html )

In 2010, the food and beverage industry still maintains growth momentum. In Q1 2010, the operating income grew by 25.4% year on year, which is much higher than that in Q1 2009, and the net profit soared from RMB5.599 billion in Q1 2009 to RMB6.988 billion, up 24.8% year on year.

1. Beverage Manufacturing Industry

The industry is in growth phase, with huge development potentials. Promoted by medium and high-end wines, China’s wine output reached 960,000 tons in 2009, up 27.6% year on year; soft drink and liquor grew at 24.3% and 23.8% respectively; rice wine and beer grew relatively slower, at 12.1% and 7.1% respectively.

In the soft drink sector, the competition in concentration has emerged. In recent years, low-concentration fruit juice has maintained a market coverage of 80% , but as people pay more attention to healthy diet and young people change their dietary habits, nutrient-rich high-concentration fruit juice will become increasingly popular, and its market share will rise rapidly.

2. Food Processing Industry

The report analyzes the meat processing sector of the food processing industry. In 2009, the meat processing sector maintained fast and stable growth, and chilled meat, in particular, was produced and consumed on an increasingly large scale and was gradually replacing fresh meat. From the perspective of enterprise development, Shuanghui, with the industry’s most comprehensive product line and remarkable economies of scale, is the absolute leader in the high-temperature meat market, while Yurun dominates the low-temperature meat market with 60% market share.

3. Food Manufacturing Industry

The report analyzes the frozen food, dairy products and instant noodle sectors in the food manufacturing industry. In recent years, China frozen food industry has formed a market led by Sanquan, Synear, Longfong and Wanchai Ferry with different business strategies. Sanquan and Synear set up outlets all over China, while Wanchai Ferry and Longfong focus on first-tier cities. In 2009, Synear cooperated with fast food chains such as KFC and ZKungfu to further expand it marketing channels and enhance its brand competitiveness.

As the economy recovers and consumer confidence rebounds, the food and beverage industry will develop at an accelerating rate. Finally, the report analyzes and forecasts the development prospect of sub-sectors of the food and beverage industry in 2010.
 

To know more and to buy a copy of your report feel free to visit : http://www.bharatbook.com/detail.asp?id=83307&rt=China-Food-and-Beverage-Industry-Report-2009-2010.html       

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Consumer Trends in India: Opportunities in Health and Wellness Food & Beverages
http://www.bharatbook.com/detail.asp?id=135943&rt=Consumer-Trends-in-India-Opportunities-in-Health-and-Wellness-Food-Beverages.html

Food: India Industry Guide
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According to our latest research offering “China Apparel Industry – New Opportunities for Growth”, apparel and textile industry forms an integral part of the industrial sector in China. The government emphasis on promotion of manufacturing sector has given a new dimension to the industry. Availability of low cost production facilities has resulted in a phenomenal bottom-line and top-line industrial growth in recent years. The report further reveals that in coming years also, the industry will continue to post double-digit CAGR growth enticing new foreign players to enter this fast growing Chinese market. 

The study identifies that per capita spending on apparel and footwear in China has doubled from US$ 10 to US$ 20 per annum over the past ten years, but still it remains low when compared to other countries. It is even lower than the other BRIC countries – Brazil, Russia and India. We anticipate the per capita spending to register an impressive growth in the years to come on the grounds of various supportive trends discussed and analyzed in the report. 

Further, among all the apparel industry segments, ladies wear captures the top slot, with around 30% share in the total apparel sales in 2008. Rising economic status is giving Chinese females better discretionary power, which, in turn, is positively impacting the ladies wear market. Almost similar trend is expected to prevail in coming years also, which will sustain the segment’s attractiveness for further developments. 

“China Apparel Industry – New Opportunities for Growth” is an outcome of extensive research and thorough analysis conducted by our industry experts on the burgeoning apparel industry of China and its components. The report also discusses the market structure, current and past market performance of various segments including Casual wear, Men’s wear, Women wear, Children wear and Sportswear. We have also identified all the key players in the Competitor Analysis section of the report. The section talks about the business profile and strategic moves of the leading players operating in the sector. 

The report is aimed at offering clients a strategic insight into the concerned industry so that they can better analyze the opportunities that they can leverage to become the market leaders.

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The impact of global recession on the computer hardware companies is left behind and they are back on the progress track. It seems that the forecasts that were made before recession are going to turn true. Different segments of the computer hardware industry are growing with improvement in their design and functionality and rise in their demand.

 

Not only the big computer hardware manufacturers, but the small and medium sized enterprises too are making big contributions towards the industry growth at a global level. Below you can find few sections that analyze the growth of computer hardware industry segments in different countries.

 

Before that, here is a list of the main segments of the computer hardware industry:

Finished goods like computers and laptops.
Networking hardware consisting of routers, modems, network cards, network adapters, hubs and switches and other components.
Storage hardware ranging from the hard disks to the USB storage devices.
Input and output peripherals like keyboard, mouse, scanners, video cards, speakers, headphones, game controllers and so on.
System hardware consisting of motherboards, UPS, monitors and other components.

 

Personal Computer Market

In 2008, the global PC market generated the revenue of $203.7 billion that represented the compound annual growth rate of 8 percent from 2004 to 2008. The PC market in China had total worth of $21.8 billion in 2008 representing the total compound annual growth rate of over 14 percent. The United States PC market generated $50.6 billion in 2008 showing 3.8 percent compound annual growth rate.

 

An impressive growth of 42 percent was shown by the PC sales between October and December 2009 in the Indian market. The 52 percent of the desktops sold were contributed by the multinational computer hardware companies and 13 percent by the Indian computer hardware manufacturers. The remaining 35 percent consisted of assembled desktops.

Growth of Other Segments

From October to December 2009, the Indian computer hardware market witnessed the 70 percent growth of laser printers. The dot matrix printers grew by 13 percent while the inkjet printers grew by 17 percent over the same period in India. The UPS market too recorded the growth rate of 28 percent during the period.

 

In Chin, the total revenue generated from the networking hardware was $4.8 billion in 2008. For the same year, the network hardware growth in the United States was $23 billion. The total revenue for the global network hardware market in 2008 was $112.8 billion. Also, the global storage hardware and peripheral market recorded the revenue of $160.3 billion in 2008.

 

The Future Trends

Going by the latest growth rate, the global computer hardware market is expected to attain the worth of $537.3 billion by 2012. The computer hardware manufacturers have started following the concept of green computer hardware manufacturing and this is further going to add to the profits of the computer hardware companies.

 

The small and medium sized computer hardware manufacturers from the developing countries like India have a great future in the computer hardware components. They along with the major players are going to take the computer hardware industry to a new level in the nearby future.