A Study On The Pharmaceutical Company's Appeal For Value And The National Drug Policy

BackgroundHealth is a fundamental human right. Access to health care, which includes access to essential drugs, is a prerequisite for realizing that right. Drug policy plays a crucial role in many aspects of health care and the area of economics.Despite the obvious medical and economic importance of drugs there are still widespread problems with lack of access, poor quality, irrational use and waste. Experience in many countries has shown that these complicated and interdependent problems can best be addressed within a common framework, that is formulate and implement a comprehensive national drug policy(NDP).ObjectivesThroughout the policy process there should be negotiations consultation and dialogue with all interested groups, individuals and stakeholders. Because the pharmaceutical industry plays an important role in the research and development of national drug policies, it is necessary to research drug policies from the perspective of the capital gains in the pharmaceutical industry. That is, under the industry analysis framework, studying the microscopic mechanisms of the formation of the pharmaceutical enterprise value, with the pharmaceutical companies as the research object and the pharmaceutical industry as the starting point.Significance(1) To grasp capital's appeal for value and development drug policy effectively:The problems of drug is closely related to human health and equity. The key objectives of a national drug policy are to ensure access (equitable availability and affordability of essential drugs), quality (the quality, safety and efficacy of all medicines) and rational use (the promotion of therapeutically sound and cost-effective use of drugs by health professionals and consumers). Capital investment in the pharmaceuticals, production and selling drugs is not for medicinal purposes, but for appreciation and efficiency. Given the diverse interests and the economic importance of the issues involved, opposition to the new policy and attempts to change it during implementation can be expected. To indulge capital free development can lead to market failure, but not appropriate controls will also bring efficiency loss. So the policy makers should anticipate shifts in opponents positions and identify strategies to involve them and to win their support.(2)To guide capital investment and promote the development of the pharmaceutical industry:The national drug policy should be based on the current national situation and the requirements of the future development. In addition to health-related goals, the national drug policy also has economic goals, which is maintaining a good drug supply system, improving the innovation ability of the pharmaceutical industry and promoting the development of state pharmaceutical industry. Pharmaceutical industry in China is still in the developing stage and there is lack of capital's participation in innovation. It is important to established a flow mechanism that can make the capital pass in and out freely and increase in value effectively. To explore the interactive relationship between drug policies and pharmaceutical industry, and grasp the value formation mechanism of pharmaceutical enterprise is a basic work to ensure the mechanism operating effectively. Only there is an objective and fair assessment of the company's value, can the capital be attracted to participate in and promote the development of the pharmaceutical industry and companies.Methodology(1)Qualitative analysis and quantitative analysisThis paper based on a qualitative analysis of the data and facts. During the analysis, we describe and reveal the relationship between variables through mathematical model derivation and demonstration. And then, we draw the corresponding view by using Econometrics methods for a empirical test. After that the related problems of pharmaceutical companies and the national drug policy can be analyzed, interpreted and even predicted. Also the Event Study Methodology is used to test abnormal returns in the capital market during from the development to the implementation of the national drug policy.(2) History evolution and institution change theoryThe pharmaceutical companies' appeal for value should be understand and researched from the development of and under the background of the pharmaceutical industry. We can outline the general rules of its evolution and obtain the the inevitable evolution results through the analysis of the evolution and current situation of the pharmaceutical industry. Institution change is compatible with the economic results of environmental change, and theory is summarized in and refined from the economic reality problem, which is used to explain economic phenomena, guide the economic reality and even predict the future economy. It is necessary to analyze the evolution of theory and the dynamic development of economic reality. Only based on the history and the logic of reality, can a research be consistent in theory and be kept inherited.(3)Interdisciplinary research methodsThe research inevitably involves many disciplines, including the related theory of national drug policy, industrial organization theory,company and its value theory, financial theory, public policy research, health economics and pharmacoeconomics. So, This study must be integrated with interdisciplinary research methods.(4) Practice-oriented research methodsThe purpose of this topic is to expand the research of national drug policies from the perspective of industry capital. There are two important practical guidance:one is the development and implementation of NDP, the other is as a guidance of financing and investment of the pharmaceutical industry capital. Fllowing such a guidance, multi-disciplinary knowledge are Integrated and the general rules of the interaction between the NDP and the the pharmaceutical companies'value are studied from the industry level, the company level and the institution level.Conclusions(1) Market value is different from moral or ethical value. When we devote ourselves to research of national drug policy, we should be soberly aware that the development and implementation of NDP is probably a repeated game of interests, although the national drug policy itself is full of social recognized fairness and the basic concepts of ethics. Different interest groups is difference in views of value who recognize and this point should be considered in our study. As an Institution arrangement, the development and implementation of NDP must be related to economic interests and can not bypass the distribution and redistribution of economic interests. Pharmaceutical companies are the main affiliated parties of economic interests whose only concern is the economic consequences maybe caused by the NDP and its economic goals and Who will seek possibilities that can maximize their economic interests at different levels of the development and implementation of NDP.(2) Analyzing at industry level, we can conclude that a free competitive market mechanism may be more beneficial to the development and implementation of NDP than a monopolistic one.However, the severe and necessary term often make the market rule work in order to ensure the public interests, and cause the survival of the fittest. As a result, the market will concentrate on few but powerful pharmaceutical companies which become an more important interest group that can further affect the development and implementation of NDP. A higher market concentration will attract more capital into the market. The pharmaceutical industry capital prefer monopoly for higher returns. In order to attract capital into the development of domestic pharmaceutical industries, and improve pharmaceutical supply capacity and international competitiveness, It is necessary to encourage a moderation monopoly through the non-economic tools and in some cases the economic tools also included.(3) Analyzing at company level, we can draw a conclusion that innovation ability is a proof that the external value of a company internalizes it's strength. The pharmaceutical company should undertake the major R & D tasks and the government's main role is to guide the production, Science and research multilateral cooperation, constantly improve the health care system and information dissemination mechanism, create an environment which is long-term stable and compatible with the institutional, achieve the goals of public health and eliminate or weaken the impact of negative factors of innovation at the same time. The pharmaceutical companies should realize that research and innovation have the important meaning to keep the core competitive power of a company and continuously improve its value, so that they have an incentive to engage in innovative activities.(4)Analyzing at institution level, we can conclude that as an important content of intellectual property protection, drug patents protection can effectively encourage drug research and innovation. The purpose of patent policy designed does not hinder the access to drug essentially, on the contrary, drug development innovation is continuously encouraged under a reasonable patent system which as a result, will cure all sorts of illnesses and improve the human life quality. However, there is a clearly defined income boundary by the property right during the process that industrial capital maximize its interests. This led to an inevitable conflicts of interest between the industry capital's appeal for value and the issue of public health. Especially in developing countries and undeveloped countries, patent protection for drugs has an obvious influence on access to drugs. The conflicts only can be coordinated and cannot disappear entirely. The national drug policy plays an important role on increasing accessibility under the patent system through coordination mechanism.(5)Fairness and justice is the basic point of the development and implementation of national drug policy, but there is also an economic consequences at the same time. We can infer the pharmaceutical company's response through its performance in the capital market. Both the researchers and the policymakers must clearly realized that the capital appeal should be considered during the development and the implementation of NDP. The artificial segmentation between public policy and industrial policy must be thoroughly abandoned and a dialogue mechanism must be established to construct a national drug policy with a harmony of society goals and economic goals. Contributions(1)The following ideas was general accepted, which is that formulating and implementing a national drug policy usually are highly political processes. Such a policy usually seeks to achieve equity of access to basic health care,primarily by making the pharmaceutical sector more efficient, cost-effective and responsive to health needs. The conflict and the coordination between the pharmaceutical company value appeal and the national drug policy is concerned and analyzed in stakeholder analysis framework and from the perspective of economic interests driving. The conclusion is that the national drug policy formulation and implementation should be along the path of social and economic goals.(2)The specific behavior of pharmaceutical company in order to realize capital appreciation is put forward and analyzed during process of the national drug policy research, formulation and implementation. The theory of industrial organization and the company value appraisal theory was combined in public policy research to study the microscopic mechanism affecting the value formation of pharmaceutical company at industry level, company level and institution level.(3)Using Event Study Methodology in the research of NDP and the capital market data, we analyze and examine the impact on capital market made by the national drug policy and the response to the NDP made by the capital market. The result show that the development and implementation of NDP would cause an economic consequences.