India's Patent Nonsense

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  • 04/04/2013

Gleevec case as reported by NDTV (New Delhi TV). Television segment can be seen here.

Indian drugs will now face backlash, warn analysts in US after Novartis ruling

NDTV | Reported By: Namrata Brar

Has India's Novartis ruling just killed its own innovation dreams? Will India's generic manufacturers now get slammed in their overseas markets?

While India celebrates the Novartis ruling, the United States is condemning it. The USA provides nearly 50 per cent of the profits to big pharma and India's bold decision has sent alarm waves in the lobbyist circles.

The Supreme Court on Monday dismissed Swiss drug-maker Novartis AG's attempt to win patent protection for its cancer drug Glivec, a blow to Western pharmaceutical firms targeting India to drive sales and a victory for local makers of cheap generics.

The decision sets a benchmark for intellectual property cases in India, where many patented drugs are unaffordable for most of its 1.2 billion people, and does not bode well for foreign firms engaged in ongoing disputes in India, including Pfizer Inc and Roche Holding.

"In my opinion, the Supreme Court's decision was not a patent ruling but a domestic economic policy decision," said Peter Pitts, President and Co-Founder of the Center for Medicine in the Public Interest (CMPI) and a former associate commissioner at Food & Drug Administration. "I don't agree that companies will be forced to invest in India at the end of the day because India is too big a market to ignore. If the Supreme Court of India does not understand something as basic as a beta crystal reformulation, then what hope is there for any patent?"

"If the Government of India does not understand the importance of incremental innovation, there are pretty rocky days ahead for the international community and the (Indian) government," Mr Pitts added.

While the Indian pharma market will be among the world's top 10 pharma markets by 2015, topping $20 billion (Rs. 1,08,580 crore), many in the United States feel that its restrictive patent laws will impede its growth.

The Indian pharmaceuticals industry should not celebrate too soon. On the surface the ruling might be a win for generics but in the longer term, the Big Pharma could retaliate. The US is the biggest market for Indian generics -- India exports generic drugs worth $11 billion (Rs. 59,825 crore) -- and any setback will hit them hard; the ruling could lower the chances of Indian generics companies winning contracts in the US and elsewhere. The days of Ranbaxy's Lipitor exclusivity will not come easily again.

The even bigger fear is: will innovation flee from India?

Shibani Malhotra, Global Healthcare Analyst at RBC Capital Markets, said, "Foreign investment will certainly reconsider its options... foreign majors who were investing in key partnerships with domestic Indian players, like the Abbot-Piramal deal, might have a change of heart. The idea for the investment was to build infrastructure -- a bigger foothold to launch high value drugs which now will be a difficult proposition. More importantly, what happens to a Biocon when it comes out with a new innovation? It won't want to do business in India, it would rather go to the US. India is killing its own prospects."

"We are disappointed with the decision of the Supreme Court, and remain concerned about the environment for innovation and investment in India," Pfizer said in a statement issued to NDTV.

In the US  -- the heart of big pharma lobbying -- there is massive criticism of India's decision. Will companies like Novartis delay cutting edge drugs to the Indian market? May be. Will global pharma foreign direct investment in India rethink its path? May be.

One thing is certain -- the US pharma majors will not take this lying down. They say if India can be protect its generic drug makers, they too will protect their turf. This means Indian generics may be in for a tougher backlash in global markets.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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