This entry was originally posted here on the Global Development Institute blog.

The segmented globalisation practices within India’s pharmaceutical industry

In a new paper published in Global Networks, Rory Horner and Jim Murphy argue that significant discontinuities are present between the business practices Indian pharmaceutical firms deploy in South-South production networks vs. those in South-North trade.

The geography of global trade is shifting rapidly, with actors in the global South playing much more prominent roles as both producers and consumers in global trade. South-South trade has expanded rapidly, yet South-South value chains and production networks have received less attention than North-South oriented value chains to date.

India’s pharmaceutical supply, often termed the “pharmacy of the developing world”, is one of the most crucial, and fascinating, examples of South-South trade. More than 50% of India’s pharmaceutical exports by revenue, and even more by volume, go to other countries in the global South. They are significant economically, but perhaps even more importantly for public health – having the potential to increase access to medicines through relatively low-cost generics. Yet, although it is well-known that large volumes of pharmaceuticals are exported from India, relatively less is known about the underlying supply chains.

Figure. Export destinations of India’s pharmaceuticals by revenue for 2014-15

Drawing on a large number of interviews conducted with large, medium and small-scale firms, we took a systematic, inductive, practice-oriented approach to understanding the globalization strategies of Indian pharmaceutical firms.

We found significant discontinuities between the practices deployed in the industry in accordance with whether the supply is oriented towards Northern or Southern end markets. Key differences are present in quality standard requirements – sometimes simplified to a distinction between “regulated” Northern markets, and less or “semi-regulated” Southern markets – which create some degree of market segmentation.

Yet the differences go beyond that and relate to a whole variety of distinct production and quality practices, market access and innovation strategies that Indian pharmaceutical firms use to reach different end markets.

To supply Northern end markets, many large Indian firms possess, for example, USFDA or UKMHRA approved quality standard-approved plants for particular drugs, have globalised aspirations and image management, significant financial resources and capabilities, have partnerships with Northern MNCs, have their own manufacturing and even R&D facilities in Northern markets, have dedicated R&D investment and are keen to be seen as innovation-oriented.

In contrast, to participate in Southern markets, with lower quality requirements, firms find lower entry barriers, often have a short or medium-term outlook, produce drugs from separate plants for those from Northern markets, often have key relationships with Southern trading companies, and have very little dedicated R&D facilities or degree of being innovation-oriented.

Production is strongly segmented between Northern and Southern end markets. Only the largest and most capable Indian firms participate in supply to Northern markets. Most also supply Southern markets, yet usually through separate production facilities and wider practices. A much larger number of Indian firms specialise in the Southern end market strand.

This research challenges any singular notion of the Indian pharmaceutical industry and its supply of medicines, pointing to significant heterogeneity. The table below highlights some of the key discontinuities in value creation, enhancement and capture strategies.

In short, we highlight the significant discontinuities within the industry, particularly between supply to Northern end markets and that to domestic or South-South markets. These differences are related to, but go beyond quality control certifications, and involve a range of production, market access and innovation practices.

There are other significant aspects of variation within the Indian pharmaceutical industry, for example between different companies, between formulations and bulk drugs production, between large and small firms. Moreover, some large Indian firms also supply medicines through a chain not discussed here; via donor organisations such as the Global Fund. Yet, those differences pointed to here are the minimum requirements to participate in these chains.

From an analysis of these practices, it appears both South-North and South-South networks have their benefits and limitations, with a need to find industrial and public health balance between high-cost and often inaccessible supply to Northern markets and cheaper, but sometimes weakly regulated, South-South trade in pharmaceuticals.

Much further research is needed to unpack “India’s pharmacy to the developing world”. I am currently exploring such issues further in an ESRC-funded project on “India’s pharmaceuticals and local production in sub-Saharan Africa”.

The paper was originally presented at a workshop on “Global production and local outcomes”, held in Manchester in June 2015. It forms part of a special issue, edited by Rory Horner and Khalid Nadvi, on “Global production networks and the rise of the global South”, which is forthcoming in Global Networks.


Geography Directions

 Rory Horner, University of Manchester, United Kingdom

trump Donald Trump, quoted in The Financial Times (2017). Image available via Pixabay.

Not so long ago, proposed policies to “repatriate international supply chains” as part of national-oriented initiatives openly marketed as protectionist, would have been quite difficult to imagine. Yet, like in many issue areas, Donald Trump’s approach to trade policy is unconventional. His planned trade policies, including import taxes, have been met with widespread condemnation, with many questioning how they may work in an era of global value chains (GVCs).

The irony of Trump advocating protectionism to support American manufacturing while visiting Boeing, which reportedly draws on parts manufactured in over 60 countries, has been pointed to. Former Swedish Prime Minister Carl Bildt has tweeted that: “If Trump wants to close down global value chains he will close down Boeing as well. Among others”.

Meanwhile, in relation to the UK’s planned…

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This post was originally posted here earlier today on the Global Development Institute blog.

In a new paper, published in the GDI Working Paper series, Rory Horner and David Hulme argue that the macro-scale map of development has shifted from “divergence, big time” to “converging divergence”, which consequently requires a shift from thinking of international development to global development.

The contemporary global map of development appears increasingly incompatible with any notion of a clear spatial demarcation between First and Third Worlds, “developed” and “developing”, or rich and poor, countries. The Sustainable Development Goals (SDGs), agreed in 2015, have a global focus that represents a universalisation of the challenge of development, a clear departure from the Millennium Development Goals’ (MDGs) almost exclusive focus on developing countries. The World Bank declared in April 2016 that it will no longer distinguish between developed and developing countries in its annual World Development Indicators. Although increasingly widespread recognition exists that the distinction between “developed” and “developing” countries is no longer tenable, enormous inequality and unevenness persists, and to some extent is even augmented, under a new spatial configuration of development. What then is the new “map” of development?

The “old” focus of international development was based on addressing what Lant Pritchett referred to as “divergence, big time” – the major departure in terms of economic development between developed and developing countries across the 19th and 20th centuries. “Poor people” were assumed to be synchronous with “poor places”. Various critical scholars questioned this binary, yet it remained dominant. The developed/developing country divide persisted through the second half of the 20th century to such an extent that the MDGS, the major development framing exercise of the late 20th century, were almost completely set within this type of macro-geographical categorisation: they were a rich world product which set targets for poor countries.

The OECD 2010 report on Shifting Wealth, the UNDP’s 2013 Human Development Report (which highlighted “The Rise of the South”), and recent books by Kishore Mahbubani and Richard Baldwin, join various claims that suggest a “great convergence”. Notably, converging trends between Global North and South are present across economic, human (eg health, education) and environmental indicators (eg carbon emissions). Inequality expert, Thomas Piketty, has suggested in relation to income that: “all signs are that this phase of divergence in per capita output is over and that we have embarked on a period of convergence” between rich and poor countries (2014, 61).

A Pew Research Center Survey has even found that a majority of people in the Global South believe their children will have a better life than they have, while a majority in the Global North believe their children will be worse off.

Clearly, despite such positive attitudes within the Global South, as well as dismal perceptions of “relative” falling in the North and the popular appeal of campaigns to “take back control” in the UK or “make America great again”, actual convergence or meeting has not been achieved. It would be unrealistic, and almost impossible, for 15 or at best 25 years to have reversed an almost two-century long “divergence, big time”. Yet, the trends above do indicate a significant change in trajectory in the map of global development and the relationship between “Global North” and “Global South”.

Accounts of convergence must be tempered with recognition of relatively growing inequalities and unevenness within nations. We argue that instead of a “great convergence” having superseded “divergence, big time”, 21st century global development is characterised by “converging, divergence”.

A complex mosaic of rich and poor has evolved within nations. Across various aspects of economic development, human development and the environment, cross-country converging is overlain by vast, and often growing, inequalities between people living in the same localities, nations, and macro-world regions. Indeed, as aspects of “global convergence” receive more and more attention, reports such as the OECD’s 2011 Divided We Stand and 2015 In It Together simultaneously highlight challenges of rising inequality within the Global North. The World Bank has recently examined Taking on Inequality. Francois Bourguignon has suggested that: “a partial substitution of inequality within countries for the inequality between countries”.

Within-country inequalities should be taken particularly seriously. Branko Milanovic and John Roemer have suggested that many people make perceptions of their welfare in relation to those in greater spatial proximity. Thus, within-country inequalities may be “weighted” more importantly than those in relation to people in other countries and in different parts of the world.

21st century “converging divergence”, at its most simple, is based around falling between-country inequalities, especially between countries in the Global North and South, and rising within-country inequalities. The term seeks to reconcile an empirical reality of how claims of “global convergence”, driven by highly populous rising powers of China and India, can coexist with growing inequality, particularly within countries.

Converging trends at a global level, along with more localised divergence, challenge many of the key aspects of dominant ideas about development – including its spatial reference and nomenclature, the meaning of development, as well as the orientation of development assistance.

While the “what” and “how” of the post-2015 era has been extensively debated, the “where” question is vital and has widespread implications. We suggest that these changes necessitate a shift from analysing international development to global development, as outlined in the table below.

Table 1. From International Development to Global Development
ISSUE International Development “Divergence, big time” Global Development“Converging divergence”
Geographic focus Place-specific: synonymous “poor countries”, “poor people” and Global South Universal: Sustainable development issues wherever they exist – Interconnected issues, shared issues across North and South, ‘one world’ and graduated challenges toward bottom billion
Spatial nomenclature First-Second-Third Worlds; Developed/Developing; Global North-South Layering: Global convergence, national and sub-national divergence (enclaves, peripherality, connectivity/exclusion)
Prominent meaning of development Modernisation and growth: Southern countries becoming like the Global North SDG agenda: Transformation, true “global development”; sustainability; social justice
Big ‘D’ development morality and actors Charity and development aid by Northern states, NGOs Development cooperation by traditional and new donors; multiple domestic and international sources of public and private development finance

Source: Authors’ construction.

The 21st century global map of development has shifted dramatically from the “divergence, big time” which Lant Pritchett articulated in 1997. “Converging divergence” – and the declining between-country inequalities and growing within-country inequalities it involves – instead presents a different “where” of global development. We conclude that “converging divergence” questions an exclusive emphasis of development studies and policy on the Global South and addressing the development divide with the Global North. At the same time, the continued extent of between country inequalities, despite aspects of some converging trends between North and South as two aggregate groups, means that an interest in addressing such inequalities – the historical focus of international development – cannot be abandoned or ignored. Arguably addressing global inequalities, both between and within countries, regions and North and South, must play a central role in development. It is also vital to pay attention to the shifting geography of these changes. Today we face a different socio-spatial manifestation of development divides than those which characterised most of the 19th and 20th century, so the challenge for scholars, policymakers, activists and states is to understand and work towards addressing these new 21st century divides.

Here at GDI we are keen to push forward discussions of “global development”, and unpack further its causal dynamics. We will be hosting a workshop this June to take this issue forward so look out for more!

This post was originally posted here earlier today on the Global Development Institute blog:

Have we all been “divided and conquered” by the super-rich? Political divides and polarisation were highly apparent in the UK and the US in 2016, and are highly prominent elsewhere in Europe. Votes for Brexit and Donald Trump have brought renewed attention to major cleavages within society – along economic, social, cultural, urban/rural lines. This has fostered disagreement and tensions amongst people who encounter each other in their daily lives, distracting attention from the almost mythical super-rich, with their almost impossible-to-relate-to amount of wealth. While such divides amongst the 99% (or even 99.9%) have grown and need to be addressed, stealthily the global super-rich seem to get wealthier and wealthier.

Extreme inequalities: a timely reminder

Oxfam’s flagship annual report of global inequalities, timed to coincide with the Davos World Economic Forum meeting reveals its most shocking-yet figures in terms of global wealth inequality – the combined wealth of the wealthiest 8 people (all men) on the planet is equivalent to that of the bottom 50% of the global population. The report valuably refocuses attention on where the starkest inequalities lie – between the super-rich and the rest.

Oxfam_golf_cart inequality.jpg
The report contains a range of staggering statistics on various inequalities. A few that stand-out include:

  • The World’s richest 1% own more than the other 99% combined
  • While two buses were needed a couple of years ago to fit those people who own more than the poorest half of humanity, now only a large golf buggy is needed
  • Between 1988 and 2011 the incomes of the poorest 10% increased by just $65, while the incomes of the richest 1 percent grew by $11,800 – 182 times as much.
  • A FTSE-100 CEO earns as much in a year as 10,000 people in working in garment factories in Bangladesh.
  • On current trends, it will take 170 years for women to be paid the same as men.

Following on from 2016’s “An economy for the 1%”, Oxfam’s 2017 report “An economy for the 99%” – rather than increasing divisions – seeks to lay out a positive vision of a “human economy” that could work for all.

Oxfam’s wealth statistics and interpretations are often critiqued. Critics like to point out that wealth is not income or consumption. For example, someone who just graduated from Harvard Medical School could be in the lowest decile of global wealth, yet this could be a very short-term position as they are likely to be very high up the income distribution. Americans with a lot of debt, but potentially high income and consumption, can then be found amongst the lowest 10% of global wealth.

A box in the report (p. 11) on the wealth inequality calculations addresses these critiques and clearly explains the methodology (based on data from Credit Suisse and Forbes billionaires list).

A global challenge

One wealth statistic Oxfam’s report doesn’t mention, but which the Forbes billionaire’s list also shows, is the shifting geographical composition of billionaires – a rapidly growing portion are from developing countries. The figure below, from my ongoing research with David Hulme, on contemporary global development, depicts this growing share.


Source: Horner and Hulme (forthcoming).

The number of U$ billionaires for the world has more than trebled from 538 to 1,810 from 2001-2016, yet the increase has disproportionately been in particular developing countries. While the number of billionaires as a whole has increased almost two and a half times in countries that fall into the UN’s classification of “developed”, it has increased almost 7.5 times for developing countries. In that 15-year period, the number of billionaires has increased in China from 1 to 251 (251 times increase), and India from 4 to 84 (21 times increase). In the “transition” economy of Russia, the number has increased from 8 to 77 (a 9.6 times increase).

This shows the growing extent of a significant disconnect between the super-wealthy and the societies in which they come from. Moreover, despite a slightly more even spread of aggregate incomes, jobs, prosperity, across countries – what some are calling a “great convergence”, much of this benefit is accrued by a small minority of the population. Extreme inequalities are thus a global problem – within and across societies.

Oxfam has previously (and already this year) been accused of mis-directing attention from the economic bottom-half of the world’s population to the global 1%. The 2017 report does note progress in terms of reduced numbers living in extreme poverty by official measures, especially driven by China and India. It could also be added that some research by leading inequality researchers such as Branko Milanovic and Francois Bourguignon – albeit using measures which are less attuned to capturing the extremes at the high end of the scale – finds somewhat of a reduction in global income inequality across individuals has taken place in recent years (driven by growing incomes in China and India particularly). Such research still points to vast income inequalities. Oxfam suggests that without such extreme concentration of wealth, much more progress could have been made in addressing extreme poverty.

Rather than mis-directing attention, Oxfam’s report is a shocking reminder of, and valuable signal to, where the starkest inequalities lie: the divide between the 1% (and even the upper fractions of it) and the 99%. Rather than income streams relating directly to how hard or well people work at a particular occupation, as Thomas Piketty as shown, wealth has growing significance in the global economy. As well as the headline wealth statistic, the Oxfam report presents a shocking collection of facts about other extreme inequalities related to wages, gender etc.

Development “goods” – wealth and income being key – are overwhelmingly accrued by a small portion of people. Development “bads” – as Oxfam’s work on carbon inequalities has shown – are also contributed by those same people.

While super-rich individuals and corporations are begged to come to different countries (the report notes various such incentives), refugees are often forcibly kept out and even blamed for increasing inequality.

Differences among the 99% have been invoked and publicised fostering battles amongst the vast majority. In the US, this week a President who has sought to invoke addressing those “left behind” will be inaugurated. Without question, he will continue to divide the 99% and overlook the 1% (and its extreme upper end) which he and his “billionaires and mere millionaires” cabinet are part of.

Reformed international cooperation for a human economy

In line with attempting to construct a positive vision of an “economy for the 99%”, Oxfam make a number of valuable suggestions, including:

  • International cooperation to avoid tax dodging
  • Wealth taxes to create funds for healthcare, education and job creation
  • Action to encourage companies to benefit workforce and society, as well as executives and shareholders
  • Tackling educational barriers and burden of unpaid work for women

To make such suggestions work will require a countering of the “divide and conquer” by the super-rich, with a mobilisation within and across countries.

Most countries have sufficient resources domestically for there to be considerable scope within countries to address inequalities. While this has long been the case in the Global North, it is increasingly the case in the Global South. One recent analysis suggests that more than 75% of global poverty at lower lines could be eliminated via domestic redistribution funded by new taxation and reallocation of public spending.

Yet, international coordination is vital too. Oxfam suggests “governments must cooperate” and this point couldn’t be amplified enough. To be clear, much previous international cooperation has been mis-directed in the interests of the super-rich- making things easier for certain companies, but not for many people or for many small businesses. Rather than an abandonment of international cooperation – or a retreat from globalisation takes which could equally be skewed to restricting certain mobilities and favouring the highly mobile super-rich – a reformulation is needed. Action on corporation tax and a wealth tax can only fully work with such international coordination.

Surely nearly all of us can agree that such extreme inequalities are unwarranted and unjust? To move away from being “divided and conquered” by the super-wealthy, a much more unified approach within and across countries is needed. Oxfam’s 2017 report is a timely reminder of that.

This piece was originally posted on the Global Development Institute blog:

Rory Horner begins our series looking at some of the big trends in development to look out for in 2017.

2016 was, by many accounts, a strange year. Contemporaneously with the often discussed “rising powers”, 2016 saw the growth and resonance of “declinism” in what could (at least relatively-speaking) be called “falling powers”. Take for example, the political success of campaigns summarised in mottos to “Make America Great Again” in the US or “Take Back Control” in the UK.

According to Pew Research, a majority of people in the so-called “developed world” believe their children will have worse lives than they have, despite having substantially better lives by most indicators than the vast majority of people in “developing countries”.


After two centuries of a growing gap, inequalities between what were once called “rich” and “poor” countries have begun to slowly decline in the 21st century – what has been termed a “great convergence”. At the same time, inequalities have increased within many countries – with the (absolute) poor in developing economies and (relative poor) in developed economies increasingly left behind.

2016 witnessed what Mark Blyth has referred to as a new era of neo-nationalism. The loss of national control in the Global North has been amplified, as have the extent of foreign influences being seen as negative. At the same time, the amount of control that can/will be taken back and the likely changes that will result have been inflated too.

The question for 2017 is not whether inequality will be on the table. The World Bank is “Taking on Inequality”. Neo-nationalists are invoking foreign sources of domestic inequalities.  It is how inequalities will be played out.

Will China and migrants be presented as the source of domestic economic and social challenges? Will states in the Global North cite domestic challenges and retreat away from addressing and improving international responsibilities and commitments favourable to the global development? Will domestic sources of inequalities, such as the declining tax take from the rich, be overlooked?

The “trading-off” of domestic and international inequalities is one to watch in 2017.


Read more of Rory Horner’s work on trade, globalisation and political economy.

This post was originally posted on the Rising Powers and Interdependent Futures blog.

In a recent special issue of Critical Perspectives on International Business Rory Horner observes how established multinational pharmaceutical firms are seeking, with different degrees of success, to alter the intellectual property institutional environment in rising power economies. The contrasting cases of India and South Africa highlight that MNEs’ attempts to fill so-called “institutional voids” may not always fit with societal best interests.

Rising power economies are potentially major growth opportunities for multinational companies. In the pharmaceutical industry, the “pharmerging” markets include the BRIC (Brazil, Russia, China and India) countries as well as Mexico, Turkey and South Korea, are a major focus for expansion.

Established multinationals counter a different institutional environment in emerging economies. Notably, they can encounter different systems of pharmaceutical patent protection – with either shorter duration and/or narrower scope of patentability in the global South.

The rising power economies are currently a key focus of contestation around the setting of IP rules. The dramatic growth of the BRIC countries could potentially challenge the trade rules around patents, including those in pharmaceuticals, which have been mostly driven by firms and countries from the Global North.

Continued business and diplomatic pressure from the Global North has and is being placed to secure and maintain extensive and long patent protection, with rising powers subject to particular attention. This was true in the formation of the World Trade Organisation’s Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement, as well as recently with intense debate around proposed recent changes in India, Brazil and South Africa.

The contrasting cases of India and South Africa are explored in this new article. Although both involve MNEs seeking to influence pharmaceutical patent law, South Africa has been quite prolific in granting patents, whereas India has been less so and has long been a thorn in the side of multinationals as a result.

India – MNEs’ struggle for institutional change
India has also been at the centre of contestation around pharmaceutical patent laws. Benefiting from local technological capabilities and restrictions on MNEs, product patents were removed in 1970 and domestically-owned pharmaceutical companies grew rapidly. With the onset of economic reforms in 1991, India has since risen to become the supplier of the third largest volume of pharmaceutical products in the world. In response, multinationals consistently sought and succeeded in securing patent law change in India, and India was even seen as a key motivation for the broader US efforts in relation to patents in the trade negotiations leading to the formation of the WTO and the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement.

Even since TRIPs was agreed to in the late 1980s, multinationals have continued to seek to influence India’s pharmaceutical patent laws. India has constantly featured in the United States Trade Representative’s annual Special 301 Report, introduced in 1989 to identify trade barriers for US companies due to IP laws. India has never dipped below “Priority Watch List” level on the Special 301 Report in its 27 editions to 2015. This pressure continued after India issued its first compulsory license under TRIPs in March 2012 to Natco Pharma to produce Nexavar.

South Africa – MNEs’ efforts to maintain broad patentability
South Africa is a contrasting case to India, with a much wider degree of patentability. With patent legislation in place as early as 1916 and the current statute since 1978, a later Intellectual Property Laws Amendment Act was passed in 1997 (subsequently amended in 2002 and 2005) to make South Africa TRIPs-compliant. MNEs have engaged in significant efforts to maintain the relatively broad scope of patentability, notably in two quite recent controversies.

South Africa’s pharmaceutical patent laws initially came to global attention in the late 1990s with a high-profile court case over proposed reforms to the Medicines and Related Control Substances Act to allow for parallel importing and compulsory licensing. The Pharmaceutical Manufacturers’ Association (PMA) of South Africa (mainly comprised of multinational or MNE subsidiaries as members) claimed the proposed reforms were in violation of WTO TRIPs obligations and unconstitutional. The MNE campaign however was visibly challenged by civil society organisations, most notably the Treatment Action Campaign (formed in December 1998). Although the lawsuit was eventually abandoned, South Africa has continued to be quite generous in granting of patents, more than international law requires and lacking many of the flexibilities present in the WTO’s TRIPs Agreement.

Recent proposed reforms to South Africa’s laws, in the form of a Draft National Policy on Intellectual Property put forward by the South African Department of Trade and Industry in 2013, have also attracted considerable controversy. Providing for higher standards for patentability, as well as possibilities of pre-grant opposition, the draft policy has attracted concern from international business groups and pharmaceutical MNEs. For example, the proposal was noted in the US Chamber of Commerce’s (GIPC) submission (7 February 2014, USTR– 2013-0040) to USTR’s 2014 Special 301 Report. A campaign coordinated by a firm Public Affairs Engagement, funded by PhRMA and the Pharmaceutical Association of South Africa (IPASA), to derail the reforms, attracted widespread condemnation. This campaign of MNEs attracted criticism from the Director General of the World Health Organisation, from Médicines Sans Frontières and from the South African Health Minister.

Beyond the “institutional void”
Rising powers cannot be accurately characterised as “institutional voids” which MNEs should fill for societal benefit, as some business strategy literature would suggest. Instead, in emerging economies, MNEs encounter a plethora of institutions that may be suited to serving local societal interests, such as the growth of emerging economy firms and serving health interests. Ultimately, rising powers may not be expected to inevitably converge towards or emulate those institutional environments practised in the Global North, but instead are likely to set their own agendas in accordance with their increasingly heterogeneous interests.