MUMBAI/NEW DELHI: Foreign pharma companies could be forced to overhaul their strategy for the Indian market by striking more local deals and cutting sky-high drug prices after the Supreme Court slammed the door on Swiss giant Novartis’ attempts to gain a patent for its blood cancer-busting drug Glivec. But the ruling, welcomed by activists campaigning for affordable drugs and local generic companies, threatened to reinforce a narrative that India was hostile to foreign investors.

The Supreme Court on Monday denied patent protection to Glivec, saying it is an example of “incremental innovation” under Section 3(d) of the Indian Patents Act and thus not liable for protection. The court said the company failed to satisfy criteria stipulated in the Act such as research data clarifying the increased “therapeutic efficacy” of the innovation.

The ruling ends Novartis’ attempts to secure a patent for the drug and continues to keep the price of anti-blood cancer drugs low in the country. Patients would have otherwise been forced to pay 1.20 lakh for a month’s dosage if the court case had gone in favour of Novartis. Generic variants of Glivec cost 8,000 per month.

Novartis shares crashed 6.8% on Monday before ending down 1.81% at 587.95. Novartis responded to the ruling by decrying India’s patent protection laws, adding it would invest cautiously in India and R&D investment would not happen. “The atmosphere for IP in India is not good. We have been boxed in from all sides. Novartis is committed to India, but there won’t be any investment in R&D,” said Ranjit Shahani, chairman of Novartis India. The multinational pharma lobby, the Organisation of Pharmaceutical Producers (OPPI), also expressed disappointment at the Novartis verdict.

The ruling ends Novartis’ attempts to secure a patent for the drug and continues to keep the price of anti-blood cancer drugs low in the country.

India will be isolated as far as the pharma industry is concerned, considering the fact that multinationals have been at the receiving end of some adverse court judgements in the recent past. Hyderabad-based firm Natco Pharma was granted a compulsory licence for Bayer’s liver and kidney anti-cancer drug Nexavar over the German firm’s objections.

Swiss firm Roche was stripped off its patent for Peginterferon in February by the Intellectual Property Appellate Board (IPAB), eight years after it was granted. But Commerce and Industry Minister Anand Sharma defended the ruling, asserting that India’s patent laws were in line with global norms.

Celebrated lawyer Harish Salve, who represented generic maker Cipla in the Supreme Court, rubbished claims that the ruling could hit India’s image. “The ruling strikes a balance between patents and affordability.

If MNCs consider India a bad country for evergreening, it is welcome,” he told ET NOW. Moreover, patented drugs form a miniscule 1% of India’s Rs 18,000 crore a year market, experts said. Multinationals make more money by selling generics or branded generics than by selling patented products. “We believe that the event (the Novartis ruling) will have a neutral impact on the industry dynamics,” says Sarabjit Kour Nangra, vice-president research at Angel Broking. “With generics being a major proportion of the overall market, the growth of the Indian markets will not change because of the judgement.”

But India could lose out on some new products, though experts say the uncertainty of the past few years did not prevent multinationals from introducing about 20 new patented drugs in the country. Many of these products have not been challenged at all. “It is poor posturing by multinational drugmakers,” said DG Shah, secretary general of the Indian Pharmaceutical Association, (IPA), a lobby group of Indian drugmakers.