The Effect of Trips Agreement on Pharmaceutical Industry in Egypt

CHAPTER 1: INTRODUCTION 1.1 OVERVIEW: Trade Related Aspects of Intellectual property Rights was put into effect in the developed countries since Jan 1996. And it will be implemented in Less Developed Countries starting from Jan 2006. Egypt is preparing its pharmaceutical industry for such agreement. A sense of optimism is expressed in the rich North. While a sense of pessimism is expressed in the poor South. Research and Development companies feel quite secure. Reverse Engineering companies (producing imitated products) feel seriously threatened. Advocates claim that the agreement will encourage innovation and will provide humanity with more advanced inventions that will help in pain relief concerning health aspects. Critiques argue that the agreement will deprive the poor form advanced technological benefits and will raise their sufferings. The North is demanding Royalties for permitting legal usage of its inventions by others. The South is asking for Compensation for their ancestors' contribution in science which others took as their base and built upon it. Royalties demanded by multinationals are meant to justify high spending on R&D. But multinationals are not only seeking compensation for the free usage of their innovation in less developed countries. Some of them are willing to invest in less developed countries through establishing factories and branches acting as regional bases in such countries. A research performed by Smith, S.E, Stanford University about the Indian Pharmaceutical market states that “ Pending successful implementation of the product patent protection law in 2005, a substantial increase in MNC participation in the pharmaceutical market is likely, much of which will be supported with localized operations.” (Smith, 2000). Along with the application of the TRIPS agreement, the pharmaceutical industry witnessed a growing trend for Mergers and Acquisitions in the U.S.A and Europe. “After the year started with rumblings from