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Drug giants slug it out in the ‘world’s pharmacy’

Global drug giants have been fighting to defend their inventions in Indian courts, a battle that could cut supplies of affordable, essential drugs for millions of poor people and impact India’s reputation as the “pharmacy of the world.” But Monday’s Supreme Court verdict that denied Swiss drugmaker Novartis AG a patent for its leukaemia drug Glivec was met with jubilation among patient groups and health activists who considered it the most serious recent setback to “Big Pharma” in the country.

Germany’s Bayer AG, Switzerland’s Roche Holding AG and US-based Pfizer Inc have suffered a series of legal defeats that have either revoked patents or allowed local drugmakers to sell cheaper generic copies of expensive drugs. Multinationals want to tap India’s 13-billion-dollar drug market but have been upset by rulings that have underminded their ability to sell patented medicines.

Domestic drug companies, meanwhile, offer a large number of cheap generic versions in India and abroad, hurting Big Pharma’s bottom line. India’s emergence as a major global player in pharmaceuticals is attributed to its patent regime in place since 1970, which stipulated that although drugs were not patentable, processes to manufacture them were. With much lower labour and production costs, the domestic generics industry now sells medicines more than 90 per cent more cheaply than the companies that developed them.

“The years between 1970 and 2005 led to an explosion in the India pharma industry with private industry and entrepreneurs making formulations and active pharma ingredients at cheaper rates,” said Chinu Srinivasan, co-founder of LOCOST, or Low-Cost Standard Therapeutics, an organisation that manufactures and distributes generics to the poor across India. “The boom continues.”

In 2005, the country changed its patent law to comply with the World Trade Organization’s agreement on intellectual property and started granting patents on medicines. India’s drug industry is now ranked third globally in terms of volume, supplying about 10 per cent of the total global production, which also amounts to about 20 per cent of generic drugs world-wide.

Its annual sales now amount to 11 billion dollars, but that figure was expected to expand to 74 billion dollars by 2020, according to a PricewaterhouseCoopers report. Although the outlook remained favourable, the battle between foreign and local drug firms is set to escalate.

Their “patent war,” once mainly restricted to life-saving drugs, is now spilling over into treatments for chronic ailments like diabetes. Glenmark Generics Ltd was set to launch affordable versions of Merck & Co’s anti-diabetes drug Januvia, the Times of India reported. The pharmaceutical giants are also consolidating in India by buying out firms, developments that have the local industry worried. It was also closely following the outcome of talks between India and the European Union in which intellectual property rights are a major sticking point in the way of a free-trade pact.

“We are seeing a long-term economic war going on,” Srinivasan said. “Western companies do not want pharma industries from India or China to thrive. It is all about markets and bottom lines.” At the heart of the protracted dispute is the trade-off between providing for public health and affordability of life-saving medicines against rewarding research and innovation.

Foreign companies want protection for internationally patented medicines that involve years of research and are expensive to produce. Novartis India vice chairman Ranjit Shahani said the company would continue to file for patents and invest “cautiously” in India. “We hope that the ecosystem for intellectual property improves in India,” he said.

But patient groups, including the Cancer Patients Aid Association, which fought the case against Novartis, said it is crucial that poor people across the globe retain access to cheaper, life-saving drugs from India. India is the main supplier of generic malaria, cancer and AIDS medicines for the developing world. It is the second-largest source of medicines distributed by UNICEF. About 80 per cent of 8 million HIV-positive patients in developing countries also depend on Indian-made generics.

Activists defended India’s tougher standard for obtaining a patent in the 2005 Patents Act, which has been under attack by Novartis and other multinationals. The law was designed with the objective of stopping drug giants from indulging in “evergreening,” a common patenting practice in the pharmaceutical industry aimed at obtaining separate patents for different aspects of the same medicine, Medicins Sans Frontieres said.

India’s patent laws are performing as intended, according to at least one expert. “The Indian legislation should be a model for all developing countries,” said Gajanan Wakankar, an intellectual property rights analyst and former ambassador. “The [multinationals] should look at reasonable profits. There is a thin line between profit and profiteering.”

Siddhartha Kumar, "Drug giants slug it out in the ‘world’s pharmacy’," Business recorder. 2013-04-02.