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The Globe

Coca-Cola lines a shelf at a supermarket in
Shanghai in May 2009.

The New Rules of
Globalization

PHOTOGRAPHY: AP IMAGES

As more countries rethink their priorities, multinationals must proceed with caution. by Ian Bremmer

I

n the past few years, Pfizer has encountered globalization’s new phase. As part of the Indian government’s efforts to make medicine accessible to as many people as possible, in February 2013 India’s
Patent Office revoked Pfizer’s patent for the cancer drug Sutent and granted a domestic manufacturer, Cipla, the right to produce a cheaper generic version. India’s Intellectual Property Appellate Board has since set aside the decision and has directed the Patent Office to reassess the case. In
China, meanwhile, the government has been slashing drug prices to reduce health care costs. Beijing established price ceilings on essential drugs in 2009 and lowered the ceiling by around 30% in 2011, and

it has pledged to expand the list of essential drugs to more than 500 medications by 2014. Such moves pose major risks for a multinational company like Pfizer: Lower prices create disincentives for quality control, and China’s hospitals, which rely on drug sales for profits, are pushing inexpensive locally made products.
Until 2008 going global seemed to make sense for just about every company in the world. Western markets were extremely competitive, population expansion had slowed and incomes had flattened, and corporate operating costs were rising. Developing nations, by contrast, boasted population growth, rising salaries, relatively low wages, and a welcoming climate for foreign

January–February 2014 Harvard Business Review 103

THE GLOBE

Map Your Industry

The Rise of State Capitalism in
Emerging Markets

State capitalism, which distorts the workings of free markets and