Outsourcing to India is one thing; getting patent protection is another. Big pharma is entrenched in several high-profile cases in the Indian court system, including:
- Bayer’s challenge to a decision by the patent office that forces it to license its drug, Nexavar, to an Indian firm
- The patent office revoked Roche’s patent for Valcyte, which the company is appealing
- India rejected two patent applications by Gilead for its HIV drug Viread; the case is under appeal
- In 2006 India refused to grant Novartis a patent for its leukemia drug Glivec—Novartis is now challenging that decision in court
The big issue in these cases is patent protection. India is a rapidly expanding market for pharmaceuticals, with sales expected to reach $74 billion in 2020, according to Price water house Coopers. But companies want to be sure their intellectual property is protected before bringing new drugs to this market— especially with India’s robust generics industry in high gear, cranking out generics that control most of the consumer market. These actions are supported by the Indian government, which wants to be sure expensive drugs are also affordable for the poor.
In 2008 Bayer won an Indian patent for Nexavar, its kidney-cancer drug. According to The Economist (September 8), “in MarchIndia’s patent controller issued the country’s first compulsory license. He wrote that Bayer had not made Nexavar reasonably affordable, that the company failed to provide enough of the drug, and in a protectionist nod, reckoned that importing Nexavar further hurt Bayer’s case. The controller ordered an Indian company, Natco, to sell Nexavar for one-thirtieth of Bayer’s price.” Bayer will receive a 6% royalty.
This decision by the controller general of patents, designs, and trademarks was the first time a so-called compulsory license of a patented drug had been granted in India. “Legal specialists and patient advocates said it could open the door to a flood of other compulsory licenses in India and possibly in other developing countries, creating a new supply of cheap generic drugs,” write Vikas Bajaj and Andrew Pollack in The New York Times.
Roche is also frustrated by generic infringements on its drug Tarceva, which has patent protection in many other Western nations; in fact, Delhi’s High Court recently dismissed a patent infringement case by Roche. This could be viewed as a go-ahead signal to Indian drug companies to aggressively sell low-cost generic versions of Tarceva.
Roche may still appeal the decision.
Western drug companies are likely to see these recent decisions as examples of how India is not providing the intellectual property protection necessary to recoup the cost of developing medicines. Further, India plans to widen the scope of its price controls beyond generic medicines to include, for first time, patented drugs.
This is starting to change the risk profile of India for some pharmaceutical firms.
“Any attempt to restrict prices of patented drugs likely will rankle foreign pharmaceutical companies,” writes Rumman Ahmed in the Wall Street Journal. “Protecting patented products is crucial to foster innovation, so ‘any price control in that area will stifle [research and development] initiatives seriously, adversely affecting patients’ interests in the long run,’ said Tapan Ray, director general of the Organization of Pharmaceutical Producers of India, a trade group that represents multinational drug companies.”