Beecham overpriced Ampicillin 3-fold!

By Hilarion M. Henares Jr.

     FORTUNE magazine once described the Multinational Corporation as a New World Force, transcending the boundaries of nations, with no loyalties save the dictates of the objective logic of profit, and with the power and skill to create wealth and allocate resources on a global scale.
     Indeed, the rise of multinational corporations is the first direct challenge to the existence of the nation-state. If we compare their annual sales with the “Gross National Product (GNP)” of countries, as Lester Brown had done, we find that General Motors is bigger than Switzerland, bigger than South Africa, and six times larger than the Philippines.
     The combined sales of the 32 largest corporations are larger than the GNP of Japan and of any other country except the USA and the Soviet Union.
     Indeed, the United Nations launched the so-called Development Decade in the 1960s based on the proposition that the developed and underdeveloped countries will get rich together through the agency of foreign investment and the multinational corporations.
     It is now an accepted fact that the Development Decade was disaster, and the proposition upon which it was launched proved to be exactly half-true.
     The rich nations got richer and the poor nations got poorer. And nowhere is this more evident than in the deteriorating and chronic deficits in the balance of payments position of the underdeveloped countries.
     There are two ways by which foreign investments contribute to the deficits of the underdeveloped country:
     • The widespread practice of “transfer pricing” by which exports are undervalued and imports overvalued in transactions between subsidiaries and parent companies.
     • So-called “investment income” as categorized in balance of payment tables, which sums up the interest payments and profit remittances derived from investments of multinational corporations.
     When multinationals buy from and sell to their own subsidiaries, they establish “transfer prices” that have little to do with market values.
     In many cases, to save on taxes paid in an underdeveloped country, or merely to effect illegal remittances of profits, exports are undervalued and imports are overvalued in transactions between subsidiaries and parent companies.
     A variation often used and even more favored is to ship underpriced exports and overpriced imports to a tax-free port such as Hong Kong or the Bahamas, known as tax havens, and to re-export the goods at their normal market value or even at an inflated price to another subsidiary in the country where they are to be sold.
     Company manuals on how to run multinational corporations are filled with detailed instructions on intra-party transfers to maximize the global profits of the parent company.
     Richard Barnet and Ronald E. Muller report that foreign subsidiaries in Latin America, trading with their own parent companies, consistently underprice their exports, charging on the average 40 percent less than prices charged by local exporting firms.
     In the Philippines, we have PMC exporting to parent Proctor & Gamble, PRC exporting to parent Unilever, and so on, and so on. And a multinational canning Philippine pineapples is said to be exporting its products at a low price mostly to the tax-free port of Hong Kong, there to be re-exported at a higher price to the rest of the world.
     At the same time, when it is to their advantage, multinationals grossly overvalue their imports.
     • Constantine Vaitsos, in a detailed study of overpricing in Columbia, reports the following overpricing: drugs, 155 percent; rubber products, 40 percent; electronic products, 16 to 60 percent.
     • In Columbia, Valium was sold at 82 times the established international market prices; Librium, 62 times; Tetracycline, 10 times; transistors, 11 times.
     • In Chile, overpricing ranges from 30 percent to more than 700 percent.
     • And according to Pedroleon Diaz, overpricing in Peru ranges from 50 percent to 300 percent.
     • In Equador, 75 percent to 200 percent.
     In the Philippines, a Senate Committee found that Esso Philippines (now Exxon) was buying oil at $1.74 per barrel at the time the price was 99 cents.
     And Esteban Bautista of the UP Law Center testifies that the local subsidiary of Bristol/Mead Johnson bought from its mother company Ampicillin at prices from $177.98 to $242.99 per kilogram, and another subsidiary of Beecham bought the same drug for $251.00 per kilogram.
     On the other hand, a local firm, Doctors Pharmaceuticals bought from other sources the same drug as low as $91.40 per kilogram, almost one third of the transfer price of multinational corporations. 

Source: http://www.philippinefolio.com/contdetail.php?id=19&id_app2=262&id_app3=01222

Hernares, Hilarion Jr. Beggar and King – Make My Day Book 19.