Patent battles in India focus attention on domestic industry expansion

Swiss-based pharmaceutical company, Novartis, is challenging Indian patent law following the domestic patent office's decision to decline a patent for cancer treatment Glivec (imatinib), as well as questioning the establishment of blocks to patent protection in the country.

Novartis claims that Section 3(d) of the Indian Patents Act is not compliant with the WTO rules outlined in the agreement on Trade-related Aspects of Intellectual Property (TRIPS). Section 3(d) formed a substantial part of the basis on which the Glivec patent was originally denied.

India has been the main source of affordable generic medicines, accounting for 84 per cent of the AIDS drugs the French charity, Medicine sans Frontiers (MSF) uses to treat over 60,000 patients in more than 30 countries, and that access to such drugs, including Glivec would be reduced.

Public interest and health groups are watching the case closely, as the Glivec patent order set an important precedent for the examination of other drug patent applications. Indian pharmaceutical firms will also be watching with interest to see if Novartis' complaint is rejected, but for purely financial reasons, as they move toward developing their own branded ethicals.

Background
In the early 1970s, the Indian government forewent a pharmaceutical product patent regime, permitting process patents only. Presently, three forms of patent protection exist: molecule patents; manufacturing process patents or drug delivery technologies patents. Also, companies are pushing for patent protection for drugs which have been changed slightly or have been mixed with excipients or other drugs, also known as 'evergreening'.

India began reviewing pharmaceutical product patent applications in 2005, when it was required to comply fully with World Trade Organisation (WTO) rules on intellectual property. The Indian patent law has strict criteria regarding which inventions qualify for patenting, and allows for any party to oppose a patent before it is granted.

In 2005, cancer groups filed the first ever 'pre-grant opposition', against Novartis' patent application for Glivec. MSF has supported similar oppositions filed by patient groups in India against patent applications on key AIDS drugs.

Indian generic firms want a slice of the branded ethicals pie
Indian generic pharmaceutical manufacturers are demonstrating a major shift in their attitudes to patent protection of foreign pharma's brand name drugs. Generic firms have started to align themselves with foreign multinationals, such as Novartis, to support patents, as they are now working on their own branded pipelines of drugs and associated drug delivery technology to extend product lifecycles and augment profits.

Over the past three years, Indian pharmaceutical companies have been acquiring foreign assets to facilitate overseas expansion to gain access to the rich market territories of the EU and the US. Any hostile patent law passed now could effectively shut off avenues of business development, just as Indian pharmaceutical firms achieve the critical mass necessary for global expansion.

Increased focus on international expansion
Nicholas Piramal India (NPIL) bought the global inhalation anaesthetics business of UK's Rhodia Organique Fine for USD 14 million in 2005. The acquisition opened up the niche global inhalation anaesthetics market for NPIL, as well as adding manufacturing technology and other infrastructure, as well as Rhodia's proprietary global sales and marketing rights of Halothane and Isofluorane, worth USD 14 million in FY04. NPIL will also gain access to Rhodia's sales and marketing network of distributors in over 90 countries, including US, Europe, Japan, Australia and many emerging markets.

India's largest pharmaceutical firm, Ranbaxy, has already acquired the French generics drug company, RPG Aventis, for approximately USD 70 million (GBP 35.7 million/ EUR 53 million). The firm has also been reported to be in the process of raising USD 2 billion through American Depository Shares (ADS) to finance its proposed acquisition of German company, Merck KGaA's generics business, which posted revenues of USD 2.4 billion in FY06. Bids valued at USD 5.2 billion, have been reported to be likely by mid-March 2007. Ranbaxy has other foreign acquisitions in the pipeline, and may reveal these by Q1 2008.

Novartis' argument that incremental innovation stimulates innovation in drug development and that a hostile intellectual property environment in India will dissuade investment has shifted the debate focus in India.

The pressure is now on for the Indian government to balance the need for access to cheap, life-saving drugs and the continued successful development and expansion of the domestic pharmaceutical industry at home and abroad.