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Big pharma's uncertain future in India | Sushmi Dey | New Delhi April 16, 2013

Multinationals are worried about the country’s patent regime, but India is too big a market to be ignored

India’s drive towards compulsory licensing, increasing patent challenges and denial of patent protection to anti-cancer drug Glivec have not gone down well with multinational drug makers who are grumbling that India has become a difficult market for them to operate, bring newer drugs and make investments in research. Their contention is patents are inadequately protected in India, which not just discourages research and development but also makes it a low-priority market for innovator companies.

While earlier this year, the Intellectual Property Appellate Board upheld the compulsory licence granted to Natco for manufacturing the generic version of Bayer’s Nexavar, the Supreme Court denied patent protection to Novartis beginning of this month for Glivec. This is not all. The government is also considering a proposal to invoke compulsory licences for three more patented drugs, while another drug maker, BDR Pharma, has approached the Patent Controller seeking a compulsory licence for US-based Bristol-Myers Squibb’s anti-cancer drug Sprycel. BDR Pharma has offered to sell the cancer medicine at a price 95 per cent cheaper than that of the multinational. The latest is the legal battle between Merck Sharp & Dohme and Mumbai-based Glenmark. Merck has challenged Glenmark in the Delhi High Court alleging patent violation of its anti-diabetes drugs Januvia and Janumet.

The increasing number of conflicts in the intellectual property space has led to some multinationals warning India that they may divert investments to other markets or at least start acting “cautious” in their approach. Novartis has repeatedly said that if intellectual property is not adequately protected in India then it will be “cautious” while making investments in innovation here. Merck has also indicated that patent protection is essential for attracting investments from companies in research and development. “Strong intellectual property protection is essential for growing India’s innovative capacity and economic growth. As an innovative pharmaceutical company, protection of our intellectual property is vital to ensure that we continue to assume the tremendous monetary risks associated with the discovery of innovative medicines,” it had said after challenging Glenmark in the Delhi High Court recently.

Making a case for patent
Kewal Handa, former managing director of Pfizer India and currently promoter-director of Salus Lifecare, says the apex court’s judgement against Novartis and various patent challenges against Roche, Bayer and other multinationals could be a huge setback to the innovation and research ecosystem of India. “We would be perceived by the world as a country that doesn’t recognise, respect and reward research and innovation,” Handa says. “This one judgement may have also larger consequences on global investments, particularly in the area of manufacturing, clinical research and BPO.”

However, market analysts opine that all multinationals may not be as much impacted or discouraged by the latest moves. According to Nitin Agarwal of IDFC Securities, companies such as GlaxoSmithKline, Pfizer and Sanofi are seen to be less impacted as they already have a presence in India and have established their products. They have also made substantial gains from their patented products here. “So, their strategy and businesses may not be impacted much due to the latest developments or mood,” he says.

Industry estimates show that multinationals have established their key brands over the years across therapies. Not all of these products are patented. In fact, the share of patented products is not more than 2 per cent of the total market, including those pushed by them through their own retail and access programmes. Foreign players such as Abbott, GlaxoSmithKline, Novartis and Pfizer account for five of the top-10 brands in the Indian market. According to a study conducted by IDFC Securities, Abbott’s anti-diabetic drug Human Mixtard, which was launched in 1992 and currently occupies the top-slot of best-selling brands, garnered revenue of around Rs 219 crore last year. Similarly, Pfizer’s cough medication Corex, launched a year later in 1993, clocked annual sales of Rs 215 crore in 2011. Even older brands like Voveran and Revital clocked significant sales. While Voveran earned Rs 194 crore for Novartis, Revital contributed Rs 182 crore towards Ranbaxy’s sales last year. Abbott, which leads the top-300 list, now has 28 brands in that bracket aided by its acquisition of Piramal Healthcare’s domestic formulations business.
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