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Novartis pulls R&D investment in India over Glivec patent ruling

Swiss pharmaceutical company Novartis has revealed it will withdraw significant planned R&D investments in India over the next few years as a result of the Indian Glivec (imatinib) patent ruling.

Swiss pharmaceutical company Novartis has revealed it will withdraw significant planned R&D investments in India over the next few years as a result of the Indian Glivec (imatinib) patent ruling.

In a Financial Times report, Novartis' CEO Daniel Vasella said that the company could no longer do business in a country where laws have weakened intellectual property protection on new medicines and would now transfer investment elsewhere.

In early August 2007, an Indian court rejected a challenge by Novartis to a law which denies patents for minor improvements to known drugs.

Novartis had appealed against an earlier Indian ruling to reject patents on its leukaemia drug Glivec. The court argued that incremental innovation did not qualify it as a new chemical entity justifying protection. The company countered by saying that the Indian patent system stifled innovation, such as making a drug resistant to heat or changing the formulation to oral delivery rather than an injection.

Incremental innovation is defined as an action which improves a currently delivered benefit, or a small change made to an existing product not only to keep it fresh in the eyes of customers, but also to extend its lifecycle. Companies often emphasise incremental innovation for good reason, as there are many pressures to produce benefits alongside the pressures of consistency and risk aversion.

Vasella said in an interview: "This ruling is not an invitation to invest in Indian research and development, which we would have done. We will invest more in countries where we have protection. It's not a punishment. It's just a question of the culture for investment."

Despite Vasella's comments, the Glivec case now sets a precedent among pharmaceutical companies seeking patent protection in countries that cannot afford to pay for branded drugs.

The Indian situation underscores the battle between multinational drug firms and humanitarian campaigners, such as Medecins Sans Frontiers, which claim that pharmaceutical companies are placing patent protection and profits ahead of patient access to drugs.

Other cases
US pharmaceutical company Abbott recently reduced the price of its HIV treatment Kaletra (lopinavir/ritonavir) paid by the Brazilian government by some 29.5 per cent in 2007 to USD 0.73.

Abbottís cooperation with Brazil came about when the government there threatened to compulsorily license Abbottís drug in 2005, although a compromise price was later settled.

Both Abbott and Merck have created specific pricing models for their ARV drugs in developing countries, but the Brazilian government has only accepted the formerís model. Bristol-Myers Squibb (BMS) recently agreed a new pricing system there.

Thailand has adopted the compulsory license procedure and is importing generic copies of US-manufactured HIV and cancer drugs. Abbott reacted to Thailand's position by withdrawing seven of its latest HIV drugs from the market there, but then went on to cut the price of Kaletra to around USD 1,000 per patient per year.

22nd August 2007

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