How Cuba Became a Biopharma Juggernaut

By Andrés Cárdenas O’Farrill,  a Cuban economist and associate researcher with the Academic-Industry Research Network (theAIRnet) based in Boston. Contact: [email protected] Originally published at the

We hear little about the Cuban biopharmaceutical industry, but it merits attention. The sophisticated system, which the small island nation developed despite limited resources and access to international markets, holds about 1,200 international patents and sells medicine and equipment to more than 50 countries. The industry is entirely publicly funded and managed, and is a key component of one of the most efficient public health care systems in the world. Its goal is to develop drugs of strategic importance to the health care of all people.

igh-tech industrial development isn’t the first thing that comes to mind for many when thinking of Cuba. The island nation more commonly invokes visions of a stunning place frozen in time: Crumbling colonial buildings sit alongside beautiful beaches, while 1950s American cars line city streets awash in the sun’s afternoon glow. Here, life is embedded in a state-controlled and mostly inefficient economy that’s virtually detached from global technology networks.

But there’s something missing in this outsiders’ view of the country, as it can’t account for the enormous successes of Cuba’s biopharmaceutical industry and health care systems. In light of ongoing debates in the U.S. and other nations about the role of government in ensuring people have the health care coverage they need, Cuba’s experience could prove instructive.

There is growing evidence of the Cuban biopharma industry’s success. Local production covers more than 60% of finished pharmaceutical products used in the country, and the industry’s trade balance has remained consistently positive for most of the period 1995-2015. Cuba’s biopharma sector has been able to finance many programs carried out within the nation’s public health system, and it is the main reason behind the affordability of the medical products supplied by the system. In terms of the biotechnology sector specifically, while Cuba’s government does not publish extensive statistics on the matter, industry officials report that the Cuban biotech sector managed to maintain positive, if modest, cash flows at a time when overall cash flows of the industry worldwide had been mostly negative for decades.

While not popularly understood outside the country, Cuba’s biopharma achievements have been recognized by the international scientific community. In 2005, the Laboratory of Synthetic Antigens, a small lab that belongs to the faculty of chemistry of the University of Havana, won the World Intellectual Property Organization (WIPO) Gold Medal Award for developing the world’s first synthetic vaccine (Quimi-Hib) against haemophilus influenza type b (or Hib). More recently, the CIMAvax-EGF vaccine for lung cancer became the first Cuban biopharmaceutical product to earn the U.S. drug regulator’s permission to carry out clinical trials on American soil. The product was developed by the Center for Molecular Immunology, which specializes in antibodies, cancer medicines, and other areas.

Had Cuba been forced to acquire most of its needed medical products at current international prices—rather than develop them on its own—it would not have been able to achieve its  remarkable health advances at a relatively low cost. No matter how well intentioned the government might have been with respect to public health, it would not have been able to subsidize an entire country’s essential medicines. Cuba has, of course, followed a different model, prioritizing domestic innovation and production.

It’s true that high levels of innovation make the Cuban biopharma industry an exception within the country’s overall industrial sector, which lags behind in many areas. However, it has not been an exception in terms of the environment in which it has grown. The architecture of Cuba’s health care system, and the nation’s public investment in free education, research, and innovation, have all been critical factors in the biopharmaceutical industry’s success story, making it a testament to the complexities of economic development, as well as of the role of history and institutions in shaping structural change.

Meeting the Needs of Universal Public Healthcare

Essential to the success of Cuba’s biopharmaceutical industry is the country’s public health care system, which was designed to meet the medical needs of the entire population. The organizing principle of the biopharma industry—as a result both of economic necessity and of Cuba’s publicly stated values—has been producing affordable medicines. It is supported by Cuba’s medical philosophy, which prioritizes prevention—the only viable path for a poor country to provide universal healthcare affordably. The public health care system demands that the industry produce low-cost, high-quality products, and supports it in doing so. As a result, Cuba has become a successful exporter of medical products, particularly biopharmaceuticals.

It all began with an emergency. Before the 1959 revolution, the Caribbean island had been home to a number of highly-trained, well-respected physicians. But nearly half of them left for the United States following a disagreement with the revolutionary authorities over institutional changes they were implementing. The government’s new measures included a unified regulatory framework for all levels of the system—which prior to the revolution had been painfully fragmented—along with a 15% price reduction for home-grown medical products and a 20% cut for imports. The changes provoked foreign companies that dominated the Cuban market, which until that moment had been free to set prices for their products without government regulation, as well as the laboratories, retailers and medical personnel linked to them. The clash led to many closures and other actions, creating a supply crisis that resulted in the nationalization of the industry in 1960.

Those events happened within the context of an already widespread public rejection of profit-seeking medical practices, which encouraged the government to intervene in private clinics and hospitals and to change the country’s philosophy of medical education. At that time, medical guilds were among the most powerful associations in the country, and also were among the most wary of the transformations that were taking place, for both political and financial reasons. From 1959 to 1967, a country with six million inhabitants lost 3,000 of its 6,300 physicians (not including new graduates in those years) and found itself with just 22 professors of medicine and a single medical school. They were sorely needed just as the new government-initiated reforms—designed to increase the availability of health services to underserved areas—were taking effect.

Their exodus prompted state investment in medical education—including the creation of a comprehensive primary care system—while priorities in training doctors shifted to focus on preventative medicine. The guilds disbanded in 1966 as a government-based nationwide union was created, and those in favour of deepening the changes were now free to carry out the project. Medical graduates had already been encouraged to serve in rural medical facilities and not engage in private practice. However, even when the government strongly discouraged, and eventually prohibited, opening new private clinics, a number of practices that already existed and complied with the new measures were allowed to continue. Until the public health system absorbed the last non-public clinics in 1970, the Cuban healthcare system, as it did before the revolution, consisted of three types of healthcare services: public provision, mutual clinics and private provision.

During the first half of 20th century, large public hospitals emerged in the country and provided free services, but they were limited to major cities and were chronically underfunded prior to 1959. Mutual clinics were created by mutual societies of Spanish origin and functioned within cooperative framework. In return for a monthly fee, members of these societies received high-quality medical services of high quality. At the same time in the first half of the 20###sup/sup### century, a significant network of private clinics flourished. They also provided high-quality services, but mostly worked on the profit principle, excluding the millions of people who could not afford to pay. The creation of rural services and other reforms were part of the government’s efforts to provide truly universal access to health services, and to encourage a new ethos of cooperation and solidarity within the medical profession.

Some testimonies of those involved as students at that time show that, even if the government deployed a good deal of ideological exhortation and public relations to attract new graduates for rural medical services, these graduates could choose where they wanted to work. Some decided to go to private clinics or to better-remunerated posts, but most decided to serve in remote rural places out of ideological or civic concerns.

These developments need to be seen within the context of the time and the atmosphere of ideological confrontation that served as inspiration for many young people. Many of them decided to put aside better pay and more comfortable working conditions in favour of serving higher ideals. Government efforts could also be interpreted as a huge behavioural intervention aimed at replacing external motivations for practicing medicine related to prestige and salary for more internal motivations related to personal fulfilment from serving a higher purpose.

The system these graduates were joining, and that Cuba was building, involved an open atmosphere of knowledge-sharing and cooperation. In the context of a centralized, nationwide system, the Cuban health care sector is able to save both time and money. To be sure, “centralized” means that methods and services are standardized and centrally designed. However, medical care and education, even if public, was conceived as a decentralized network of community clinics and hospitals equipped to tailor services to the local population’s needs.

In addition, the focus on primary care ensures the system can collect and synthesize community-based information about the population’s health and disease patterns. This data collection is part of a bigger project: Cuba’s comprehensive, integrated national medical record system determines where greatest health risks to society lie, allowing the government to more efficiently allocate resources. This structure can also substantially reduce drug development because it speeds up informed-consent enrollment in clinical trials—the backbone of drug and treatment development. The government intentionally designed the system in this way to further organizational learning and social efficiency.

The Role of Free Education and Early Investment in Science

Another important part of the Cuban biopharma success story is the broader crusade the government has carried out in favour of more education and scientific research. The resulting investments allowed the country to absorb and translate knowledge into innovative, world-class products.

While the Cuban biotech industry started developing in earnest in the early 1980s, its foundation dates back far earlier. Most Cuban biotechnology research centres emerged from already-existing research groups and labs. But with the exception of maintaining key personnel, most new institutions had to be built from scratch after the revolution, with the support of the Cuban state’s intense investment in scientific research since the 1960s.

One of the most important transformations experienced by Cuban academic medicine during the 1960s was the integration of scientific research into the government’s public healthcare strategy. The period prior to the revolution saw the development important medical scientific institutions. But they had developed because of the individual perseverance of their founders rather than consubstantial elements of public healthcare strategy. Some key examples include the Institute of Cancer, created in 1929, and the Institute for Tropical Medicine, created in 1937. Most research institutions, however, disintegrated in 1959 because their founders had political differences with the government; most of them left the country. A very small, select, group of experts stayed. They, together with younger, inexperienced professors sympathetic to the new government, as well as a significant number of foreign experts invited to teach, helped rebuild the scientific landscape in Cuba. They sophisticated it to an extent unknown in country’s history.

The main organization, born in 1965, is the Centro Nacional de Investigaciones Cientificas (CNIC). Many industry leaders in Cuba received their first scientific training at CNIC, originally a non-profit staffed by a small group of recently-minted physicians. These doctors had answered the government’s call to dedicate themselves to biomedical research. CNIC also employed chemists and engineers of different specialties. As remuneration was far from attractive and the training very demanding, only those really interested in science, and with the talent to afford the task, applied to be graduate students or researchers at CNIC. That first year only 13 students were selected to take the training. There is a testimony of one scientist who, prior to entering the training, turned down a salary of 600 Cuban pesos as assistant professor in favour of a residency in microbiology, where the salary was only 200 pesos. For him, it was about devotion to science.

The main goal of CNIC in its first years was to increase young medical graduates’ knowledge of the sciences and mathematics, and to initiate them into research tasks. It was a postgraduate school designed to produce high-level scientists. To that end, CNIC organized a series of courses and practices taught by Cuban and foreign professors. After taking these courses, several young researchers won graduate scholarships to study in Western and Eastern European countries, which exposed them to the leading research in their fields. Institutions such as the Pasteur Institute, Harvard University, Heidelberg University and Zurich University, to name just a few, hosted Cuban researchers during or after their formative years in CNIC. The fact that the beginnings of the Cuban biotech industry were developing at the same time as the beginnings of genetic engineering worldwide helped put Cuban institutions at the leading edge of the technological frontier.

As it developed, this multi-disciplinary institution became a hub for chemical and biological experimental research and an incubator for Cuba’s other scientific institutions. For example, as early as 1978, researchers at CNIC´s Microorganism Genetic Department knew about the possibility of recombination and were already working on the genetics of microorganisms and molecular biology. In simple terms, recombination involves constructing brand new genetic material (DNA molecules) by mixing (or combining) genetic material from different organisms. In 1986, U.S.-based biotechnology company Chiron developed the technology to obtain a genetically engineered (or DNA recombinant) hepatitis B vaccine; that same year, the Cuban recombinant vaccine was developed using a cheaper method.

A small but impactful neurophysiology unit created within CNIC in 1966 became Cuba’s Neurosciences Centre in 1990. It’s worth noting that the pioneer of the field in Cuba—and founder and current director general of the Cuban Neuroscience Centre—co-authored of a foundational paper with a renowned American neuroscientist. The Centre made Cuba the world’s first public health system to systematically use the quantitative electroencephalogram (qEEG)—a test that analyses the brain’s electrical activity to identify defects or problems.

Since the 1990s, CNIC adopted the form and function of a typical company by focusing on developing products and integrating a trading arm into its structure. But its origin as a focal point of the industry reflected the culture of cooperation that distinguishes the Cuban biopharma industry. Even if the core biotech firms within the industry function under what Cuban officials call a “closed cycle” system (a fluid form of vertical integration), formal or informal co-development are the signature of the industry. The complete realization of CNIC’s most innovative products has often been the result of some sort collaboration between at least two companies. This risk-sharing model has also become a very effective way of providing access to international markets, often in the form of carefully conceived partnerships, technology transfers, licensing and co-marketing agreements.

Cuba’s Enduring Scientific Success

Given this early investment, Cuba’s biopharma industry has evolved rapidly over the past four decades. Tracing its development over that period reveals the resourcefulness and commitment of the Cuban government and the island’s scientists. It also reveals the industry’s breakthrough scientific success.

The Scientific Pole, also known as West Havana Biocluster, was officially created in 1992. Its origins date from 1980 when oncologist Richard Lee Clark, who had served as president of the first cancer hospital in the U.S., travelled with a North American delegation to the island. There he met several Cuban government officials, with whom he discussed his groundbreaking research on interferon, considered a “wonder drug” in the battle to cure cancer. Shortly thereafter, Clark hosted two Cuban scientists at his hospital in Houston, Texas, sharing his research and expertise.

At the direction of Clark, Cuban researchers travelled the following year to the Helsinki-based laboratories of Dr. Kari Cantell, who first isolated interferon from human cells in the 1970s. Six Cuban scientists spent a week working with Cantell and his colleagues learning how to reproduce interferon in large quantities. Upon their return home, they set up a special laboratory in a small house in Havana to try to reproduce the Finnish results and produce interferon in Cuba. By the end of that year, 1981, they had succeeded. Eventually, the product proved not to be a wonder drug against cancer, but instead beneficial against dengue fever—an outbreak of which severely affected Cuba in the 1980s.

In the years that followed, the government policies helped implement a number of additional small pilot projects run by new interdisciplinary working groups, such as the Biologic Front in 1981 and the Center for Biological Research in 1982. When the United Nations Industrial Development Organization (UNIDO) decided to create an institution of excellence for the transfer of biotechnology to developing countries, Cuba applied for the vacancy but lost out to India. Determined to move forward, the Cuban Government then decided to create its own organization with its own resources.

By 1986, Cuba inaugurated CIGB (Centro de Ingeniería Genética y Biotecnología), now one of the country’s most outstanding biotechnology companies. Other important institutions followed. Among the most representative is the Immunoassay Center, created in 1987 to producing and commercializing diagnostic systems. The Finlay Institute opened officially in 1991, and the Center for Molecular Immunology in 1994. Many of these institutions have helped Cuba sell millions of dollars’ worth of biopharmaceutical products.

Greater integration with the rest of the world’s markets could increase the country’s already positive pharmaceutical trade balance from $86 million in 2015 to $119 million by 2020, according to estimates from Business Monitor International (BMI) Research. These are, of course, modest results compared with the performances of leading nations. However, they become impressive when you consider the point of departure and the fact that the biotechnology industry worldwide has historically found it very hard to achieve positive cash flow.

Looking at specific drug succeses, Cuba has produced a number of innovative drugs and vaccines as a result of advances in its biotech sector. Alongside the lung cancer and Hib vaccines mentioned earlier in this article, it has also produced policosanol (PPG), a pharmaceutical derived from sugarcane that reduces morbidity and mortality from atherosclerotic cardiovascular disease. CNIC developed the product, which won a World Intellectual Property Organization (WIPO) gold medal in 1996. Another gold medal winner was Heberprot-P, a novel biomedicine developed by the Centre for Genetic Engineering and Biotechnology (CIGB) for treating foot problems in diabetics. It won the WIPO Award for Best Young Inventor and a WIPO gold medal at the International Inventions Fair in 2011.

Often, these drug innovations from Cuba fail to get the recognition they deserve. Cuba’s VA-MENGOC-BC®, for example, was the world’s commercially available vaccine against serogroup B meningococcus. The product, developed by the vaccine-focused Finlay Institute, was awarded WIPO’s gold medal in 1989. At the time, it attracted attention from the pharmaceutical giant SmithKline Beecham (now part of GalaxoSmithKline)—but not from the media. Many years later, Swiss drug maker Novartis was mistakenly credited with developing the first vaccine of its kind to fight Meningitis B. Cuba had the drug 24 years earlier.

The Upsides and Downsides of Government Involvement

There’s no doubt that Cuban biopharma is an exception within the country; Cuba’s overall economy lags behind in both regional and world . Chronic underperformance and lack of dynamism have been recognisable features for decades. Most sectors in Cuba have a long way to go in terms of international competitiveness, particularly after the economic crisis sparked by the collapse of the Soviet Union, Cuba’s main trade partner during the Cold War. After 1991, and more visibly since 2008, the government introduced several reforms aimed at boosting the economy. But deep inadequacies remain unresolved.

Studies of these structural problems dominate the literature on contemporary Cuba and permeate the current conversation on the subject. Most of them, regardless of , largely look at on the macroeconomic consequences of, and possible solutions for, these shortcomings. And yet, whether coming from a or a perspective, most commentators admit that Cuba has created an impressive medical workforce that has produced results.

are more or less familiar with the fact that Cuba has managed to achieve successful health outcomes in many basic indicators—relative to averages for similar populations—it is far less understood that a major factor producing these achievements is a sophisticated industry that sells medicine and equipment to countries around the world.

An exception was a 2009 published by the magazine Nature, which said Cuba had “develop[ed] the world’s most established biotechnology industry, which has grown rapidly even though it eschewed the venture-capital funding model that rich countries consider a prerequisite.”

It’s true: Cuban biotech is a 100% government investment. It’s a sector whose development has avoided the that has worldwide. And yet, well beyond Cuba, a government as acting as investor in high-tech industries is no . Particularly in the biopharmaceutical industry, government investment has played a critical role in most every country. Consider the U.S. government’s National Institutes of Health (NIH) support of the creation of American biotech, or the programs of the German Federal Ministry of Education and Research, among many other examples. There is actually nothing unusual about the Cuban government’s investment and its strong involvement in biotechnology.

The singularity may come with the fact that Cuba is not only a developing country hindered by a robust economic embargo, but also a communist-socialist country with (until very recently) a fully state-controlled economy, of which the 100% state-owned Cuban biotech sector is part. The business of producing medical products was largely underdeveloped in Cuba before the revolutionary government got involved: foreign subsidiaries controlled 50% of the market, importers accounted for a further 20%, and local generic production was accountable for the remaining 30%. In the 1960s, the government acquired private local producers, and foreign producers reduced imports and closed their plants. In the 1970s, in order to minimize the impact of the U.S. embargo, the government began its first investments in pharmaceutical production plants. Initially, drug purchases from both Western and Eastern Europe complemented these efforts. Then came the biotech.

One does not need to admire the Cuban political system to recognize the success of what observers deemed ”: a reference to the seemingly unrealistic decision to invest $1 billion in the 1980s and the 1990s to develop the sector. It’s a “gamble” that has turned out to be the most successful Cuban R&D programs, and one that can serve as a model for other nations.

The lion’s share of today’s Cuban biotech industry is concentrated in BioCubaFarma, a state holding created in 2012 with the government’s economic reforms. It is a vast holding that comprises 33 companies that host more than 21,600 workers—hundreds of them highly-skilled professionals deeply integrated within several research-production activities. One of its explicit goals is to double the exports of the Cuban biopharmaceutical industry to reach more than $1 billion per year within five years. That would have totalled $5.076 billion—a huge difference compared to the previous five years, which saw total exports of $2.779 billion. Whether the industry has achieved this goal is hard to say given the lack of data, so a reasonable assessment of BioCubaFarma’s performance will need to wait.

There are factors that would have helped Cuba achieve this goal, and others that could have hindered it. One aspect that would have helped is the re-establishment of diplomatic relations with the U.S., which relieved many potential buyers and investors from some of the pressures associated with the economic sanctions. On the other hand, the industry needs to do more to incentivize its workers. While in the past, even in the middle of the crisis of the 1990s, qualified personnel were willing to work hard despite lesser financial gains, that doesn’t seem to be so much the case now.

An excessive focus on financial rewards has not helped incentivize workers; in fact, it has proven one of the downsides of the new economic measures introduced since 2008. Important wage increases have taken place since 2014 especially in the health sector, benefiting more than 440,000 healthcare workers, who in most cases saw their salaries grow by more than 100%.

These wage increases do not appear to be having their intended effect of retaining a motivated workforce and boosting productivity; in fact, they appear to be negatively impacting the motivational balance of the biotech workforce. They may have over-stimulated the financial awareness of some employees to the point of irritation, and to the detriment of . The industry has seen 40% of its workforce quit over the last two years. Not all of those leaving are scientists, but it is still an alarming number.

Even with all the challenges, in 2014 and 2016 $1.293 billion and $1.940 billion has been saved, respectively, by import substitution. Still, the government needs to better understand behaviour in innovative organizations, and which measures will encourage or discourage employee motivation—a key element in the good functioning of those organizations. If the success of the Cuban biotech actually depended on the high remuneration of their employees, this industry would simply not exist as it does today.

Defying Simplistic Analysis

There is no way one can digest Cuba’s biotech story while relying on conventional narratives on economics and economic development. Adhering to traditional frameworks, and failing to engage in an accurate institutional analysis, would make it impossible to understand how a cash-driven, high-tech industry successfully developed in a poor, developing country.

Because the island is in many ways a singular place, observers inevitably find themselves referring to its many particularities as explanations for the sector’s success. Almost all traditional studies contain important reflections related to institutional questions and other issues specific to Cuba. However, most of these discussions tend to underplay the complex relationship among institutions, innovation and economic development. They tend to end on a static, pessimistic note of conclusion. The analysis of, for example, property rights, ownership, competition, regulation, corporate governance, and related issues is coloured by the simplistic and linear, one-size-fits-all tendencies of neoclassical economics.

As cross-country historical evidence , structural change is a highly idiosyncratic process, which usually works in far more complex ways than assumed. Technological conditions in an economy are the result of non-linear interactions among cultural, geographical, historical and socio-political elements, rather than pre-determined assumptions about behaviour. Innovation is, by most accounts, a messy, uncertain process, which often has little to do with the straightforward causalities conventional narratives offer. Too often, liberalization and privatization are presented as inalienable and natural preconditions, and it becomes impossible to engage in analysis outside that framework. If we want to truly understand the formation and evolution of innovative firms and industries, them in their contexts and be open to what may emerge.

And so it happens that what emerges from a nuanced analysis often has a very unfamiliar face for contemporary audiences. When properly examining Cuban industry, for example, we discover powerful stories that challenge the homogenizing nature of most traditional studies of innovation, with their emphasis on property rights and returns to inventors. The Cuban biotech industry undoubtedly represents the most successful case of science and technology policy in that country’s economic history.

It is also a case that illustrates how having a competent and motivated scientific workforce is a determining factor in a country’s ability to upgrade its economic structure. Cuban scientists learned about biotech when few in the world believed in its potential. They grew along with the research, and therefore were in a better position to take the lead in developing unique innovations. It was, and still is, a risky move, but that’s the history of . This finding opens up scope for other sorts of reflections on the Cuban context in particular, and could ultimately help reshape policymakers’ choices regarding future industrial projects.

Of course, the whole issue inscribes itself within the discussion on the legitimacy of the government’s role as science and technology sponsor. The Cuban example in many ways shows us the good sides of public health and the virtues of a well-calibrated government policy. Of course, Cuba’s path does not need to be mandatory for everybody, but it may be . And learning about it may help us overcome our own biases—as economists and as human beings.

________

In the Cuban context, the term “biotech” is interchangeable with “biopharma,” and this article uses the terms in this way unless otherwise noted.  Biopharmaceuticals are the products you obtain through the biotechnology process; in other words, biotechnology creates biopharmaceutical products.

More specifically, from a we understand the biopharmaceutical industry in the way most academics and practitioners (including in the .) usually do, i.e., as a subset of a huge industrial sector devoted to the production of medical products, be they chemically (in the case of pharmaceuticals) or biotechnologically (in the case of biopharmaceuticals) produced. In Cuba this industry is mostly identified with the biotechnology because it is this subset the one that has become commercially relevant, which in turn has contributed to push forward the pharmaceutical side of the industry (mostly in form of generics for the domestic market). Again, this piece uses the terms “biotech” and “biopharma” interchangeably to refer to the Cuban biotech; it makes particular sense for the Cuban case and doing so is compatible with mainstream definitions.

This reference to negative cash flow points to the aggregate results of the biotechnology firms, whose historical performance has been on the whole disappointing in terms of profitability and cash flow. This assertion does not include the traditional pharmaceutical companies, but it has implications for the future of many pharmaceutical firms that are more and more dependent on their biotech subsidiaries, or on their alliances with biotech firms—to the point that they can no longer be definitionally separated.

In 2013 Novartis, received approval from the European Union to market its Bexsero against Meningitis B. The U.S. Food and Drug Administration (FDA) granted accelerated approval in January 2015. The international press has erroneously presented this vaccine as the first of its kind that has successfully fought the condition. Even if the new vaccine is said to be designed for different strains, it is not the first commercially available version—nor, , was it the first to be successfully employed in a nationwide meningitis B programme for children. Cuba’s VA-MENGOC-BC®, which also has the to fight , has been used in Cuba and other countries for more than two decades with impressive results.

The entity derived from the merger of all institutions of the Scientific Pole in western Havana, the biotechnological side of the industry, and all companies within the Quimefa Group, which represented the traditional Cuban pharmaceutical industry. Quimefa was a state holding created in 2001 devoted to producing small molecules (chemically-based drugs), mostly generics, to substitute for imports.

 In the Cuban context, the term “biotech” is interchangeable with “biopharma,” and this article uses the terms in this way unless otherwise noted.  Biopharmaceuticals are the products you obtain through the biotechnology process; in other words, biotechnology creates biopharmaceutical products.

More specifically, from a  we understand the biopharmaceutical industry in the way most academics and practitioners (including in the .) usually do, i.e., as a subset of a huge industrial sector devoted to the production of medical products, be they chemically (in the case of pharmaceuticals) or biotechnologically (in the case of biopharmaceuticals) produced. In Cuba this industry is mostly identified with the biotechnology because it is this subset the one that has become commercially relevant, which in turn has contributed to push forward the pharmaceutical side of the industry (mostly in form of generics for the domestic market). Again, this piece uses the terms “biotech” and “biopharma” interchangeably to refer to the Cuban biotech; it makes particular sense for the Cuban case and doing so is compatible with mainstream definitions.

 This reference to negative cash flow points to the aggregate results of the biotechnology firms, whose historical performance has been on the whole disappointing in terms of profitability and cash flow. This assertion does not include the traditional pharmaceutical companies, but it has implications for the future of many pharmaceutical firms that are more and more dependent on their biotech subsidiaries, or on their alliances with biotech firms—to the point that they can no longer be definitionally separated.

 In 2013 Novartis, received approval from the European Union to market its Bexsero against Meningitis B. The U.S. Food and Drug Administration (FDA) granted accelerated approval in January 2015. The international press has erroneously presented this vaccine as the first of its kind that has successfully fought the condition. Even if the new vaccine is said to be designed for different strains, it is not the first commercially available version—nor, , was it the first to be successfully employed in a nationwide meningitis B programme for children. Cuba’s VA-MENGOC-BC®, which also has the  to fight , has been used in Cuba and other countries for more than two decades with impressive results.

 The entity derived from the merger of all institutions of the Scientific Pole in western Havana, the biotechnological side of the industry, and all companies within the Quimefa Group, which represented the traditional Cuban pharmaceutical industry. Quimefa was a state holding created in 2001 devoted to producing small molecules (chemically-based drugs), mostly generics, to substitute for imports.

Print Friendly, PDF & Email

13 comments

  1. Ed

    “… In 1946, having graduated with an MSc in biochemistry, Granado became a medical assistant to the head of the University of Córdoba’s Hygiene and Epidemiology department.[2] He had already developed an interest in Hansen’s bacillus, and so the following year took a post as director of pharmacology in a leprosarium.[2] As a result, from 1947 to 1951, Granado studied at a clinical laboratory and at the San Franscico del Chañar Leprosarium. During this time, Guevara made a point of visiting Granado at San Francisco de Chañar.[3] Granado then won a scholarship to Instituto Malbrán, in Buenos Aires…..”

  2. makedoanmend

    If I may be so bold, excellent article. As I was reading the last paragraphs and footnotes*, I just couldn’t help wondering about the difference between a government capitalising a business/business sector and a venture capital fund doing the same. The Fund wants a monetary return whilst the government may have several aims, such as putting people to work and creating a positive cash sur trade balance. I would have thought a government seeking several outcomes would have a harder time nurturing a successful business sector.

    Not really worried about which is a better model, per say, it’s just that the long term objectives seem to be very different and that may have an impact on the viability or success of such ventures.

    (*the footnotes are duplicated – not that it matters in the least)

  3. JohnnyGL

    Wow, holy $h!t…

    A poor country of 10M people under US sanctions managed to do THIS?!?!?

  4. Mark P.

    Great piece. Cuba’s biopharma strategy is something I’ve been aware of since the late 1990s. Nevertheless, this article educated me on stuff I wasn’t aware of.

  5. nihil obstet

    Effective productivity and innovation? The section on trying to switch over to financial incentives towards the end of the article is telling, especially for American financial reward practices:

    These wage increases do not appear to be having their intended effect of retaining a motivated workforce and boosting productivity; in fact, they appear to be negatively impacting the motivational balance of the biotech workforce.

    We’ve known for over a hundred years that external incentives are counterproductive in any complex task, and yet we continue to allow upper management to claim that only lots more money will get them to work, school critics to claim that teacher incentive pay will improve schools, and economic developers to use public money to incentivize companies to try to make more money! We need to keep hammering away at this nonsense.

    1. Dave in Austin

      A few comments on Cuba and pharma.

      Before 1959 Cuba had a well-established expertise in distillation and fermentation based on processing sugar cane, the island’s largest industry. The main export market was the U.S., which was shut down and replaced by the USSR. Soviet block trade was managed and Cuba found a niche based on processing sugar. It also took the Chinese “barefoot doctors” experience and began a universal healthcare system.

      The US cutoff led Cuba to use the biochemical expertise to make basic pharmaceuticals and especially tropical vaccines for which there was a huge unmet demand because the victims lived in countries which spent little money on public health. In the 1960s the exports were mainly to sympathetic nations in Latin America. The Soviet and later Cuban intervention in Angola exposed Cubans to a host of new tropical diseases which the government feared would spread in Cuba. Russia payed the freight for the rapid pharmaceutical growth which took off even more when Cuba began to export doctors to the underdeveloped world, doctors trained and ideologically focused on giving care to the poor and often rural masses. With the fall of Communism and the end of the Russian subsidy Cuba focused on it’s strengths- low cost drugs and vaccines and the export of doctors. The U.S. responded by telling all the (quite well trained) doctors “Come here!” and giving easy licenses and green cards. The Brazilian government employs thousands of them. Some of the Docs are now suing in Brazilian courts for the money the Cuban government creamed off on the contracts. In the poor areas of Latin America and Africa the Cubans are heroes.

  6. Whiskey Bob

    I do see an interesting parallel to collectivization in that both the Cuban medical industry and like the Russian agriculture were both attempting to fill in a void through state level policies. However, the Cubans were attempting to expand medicine to the rural and poor while the Russians were expanding food supply to urban cities to help fuel their rapid industrialization.

    Anyways, it’s interesting that unlike the Russians, the Cubans did not force everyone in the industry to switch to the public sector, but instead slowly transitioned them over. The Russian example may have had diehard peasants who defended the new changes and helped to promote them, but a large number of them resented the changes as a betrayal against the previous promises of redistribution of land.

    It’s also interesting looking at how Cuban doctors and the like were incentivized with the new public system through ideology and Civic service. It also helped that they were given investments and education to pursue those goals. Russian peasants were not incentivized to embrace new technology that would make their production more efficient to help produce sur for the urban cities, and so they ended up keeping their old rate of production and consuming most of their sur. The peasants were also largely atomized and so it was even more of a burden for them to be expected to purchase the expensive equipment. This phenomenon was interpreted as kulaks (capitalist peasants) being greedy and the root of a possible capitalist restoration by the peasants. These were a fear by the Left Opposition and “political center” of the USSR at the time as the free market stop gap measure of the New Economic Policy was in place to expand agriculture. Collectivization was really them killing a ton of birds with one policy in order to meet their goal of rapid industrialization. However, it would have led to such a massive upheaval and disruption in food supplies. A softer approach like the Cubans employed in this case would have led to better results as it would have better targeted the core issues without the massive disruptions. It may also have not paved the way for a massive blowback like what happened during and after de-Stalinization, which leaned the politics rightward and ended up moving their socialism away from communism and towards capitalism.

    Which leads to the next comparison between a top-bottom state approach vs a bottom-up state approach. The top-bottom USSR eventually led to a bureaucracy that became impenetrable due to the powerful political lobbies that benefitted from it, leading later leaders to embrace liberalization and capitalism to combat it. The more bottoms-up approach of the Cuban incentizing medical workers to embrace public ideals and goals seems to be the better way for forging socialism. The only problem is their new embrace of more liberal ideas to incentivize workers threatens to undermine the entire project.

    1. makedoanmend

      Some interesting thoughts W. Bob. Certainly some good insights, if a I may say. I particularly like the comparison mode of analysis.

      The topic of incentives is an interesting one.

      Incentives might be a ‘loaded’ term in some respects, indicating that workers have to be “pushed” or “nudged” by an upper echelon. Whilst it is necessary to have authority, plans and the ability to alter plans as the situation dictates, the motivation of workers varies by the individual and indeed changes within the individual over time. The crude stick used in most societies today is to limit the amount of money an individual can access to support themselves, while at the same time hyping a consumption paradise, so that the top echelon can influence every aspect of working life, and often life beyond employment.

      From my take away, it seems one of the greatest incentives workers in Cuban pharma had was that they could collaborate.

      One has to wonder if the basic material needs of the individual are met through work and attendant status isn’t based upon accumulation would the individual feel more free than is currently the case for many people?

  7. The Rev Kev

    Cuba’s entirely state-owned biopharmaceutical industry has been remarkably successful, and can serve as a model for other nations.

    Maybe that is why they have been sanctioned and embargoed and isolated for all these decades. Can’t have them exporting such a successful system that undercuts so many billions of dollars of corporate profits. Didn’t Michael Moore take a bunch of 911 workers to Cuba for treatment once in one of his films called “Sicko”?

  8. milford bateman

    Excellent article outlining the brilliant success in an area that will be hugely important for Cuba in the years to come if they are to successfully reform their economy. The Cuban government needs to build on precisely this platform and methodology as it seeks to transform its economy in the years ahead while retaining key areas of its economic and social model. It certainly needs to push back on the standard neoliberal policy package DC is desperate to foist on the Cuban government, which will be a disaster just as much as it was in the Eastern European states (but a success for a narrow new business and old nomenklature elite). Building effective state capacity to create new economic models and systems, such as converting state SMEs into worker cooperatives, promoting municipally-owned service providers, etc, will, I think, determine how Cuba fares in the years to come. If anyone is interested, these issues are covered in a new book coming out by Sonja Novkovic and Henry Veltmeyer entitled, “Co-operativism and Local Development in Cuba: An Agenda for Democratic Social Change”. My chapter is on Cuba’s needed bottom-up reforms and I argue that it is imperative that the Cuban government build local state capacities to support a successful sustainable reform. My unedited chapter can be downloaded at my research gate site here:

Comments are closed.