NEW DELHI - India's Supreme Court rejected Novartis AG's attempt to win patent protection for a major cancer drug, a landmark judgment roundly criticized by pharmaceutical companies but praised by public-health activists, who said it would protect India's ability to make inexpensive generics for the developing world.
The case began when India first rejected Novartis's patent application in 2006 for Glivec, known in the U.S. as Gleevec. The legal fight has been a closely watched struggle highlighting the tensions between public-health interests and intellectual-property rights.
The court's decision, viewed alongside other recent patent setbacks in India for companies such as Bayer AG and Roche Holding AG, underscores the hurdles multinational drug companies face as they try to crack India's fast-growing market.
The country's pharmaceutical sector is expected to grow to at least $48.8 billion in sales by 2020 from $11 billion last year, according to PricewaterhouseCoopers. But much of the sales today come from low-cost generics produced by local Indian companies.
India for years didn't offer patent protection for chemical compounds, but was obliged to do so after joining the World Trade Organization in 1995. In 2005, it amended its patent protection act to include such compounds, but said pharmaceutical companies had to prove significant clinical efficacy enhancements of their drugs over already-patented compounds.
In 2006, India's patent office ruled against handing a patent to Glivec, arguing that the drug's active ingredient, imatinib mesylate, was already known before Glivec's development.
Novartis fought back through various court cases and appeals, saying that Glivec's novelty was that it transformed the chemical compound to a "beta crystal" form, making it a viable treatment for cancer.
In 2009 it filed a case with the Supreme Court challenging the patent denial and aspects of Indian patent law that it said defined innovation too narrowly.
On Monday, India's Supreme Court rejected the company's arguments. A two-judge bench found Glivec had failed "in both the tests of invention and patentability."
Ranjit Shahani, vice chairman and managing director of Novartis's business in India, criticized the ruling. "This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options," he said.
Novartis added that it would have to carefully evaluate whether to launch new drugs in India in the future. "If innovation is rewarded, there is a clear business case to move forward," said Eric Althoff, a Novartis spokesman. "If it isn't rewarded and protected, there isn't."
Other big pharmaceutical companies echoed this view. In a statement criticizing the ruling, Pfizer Inc. said it was "concerned about the environment for innovation and investment in India."
The Pharmaceutical Research and Manufacturers of America, a U.S.-based lobbying group, said the decision "marks yet another example of the deteriorating innovation environment in India."
Public-health advocates such as Médecins Sans Frontières, or MSF, praised the decision, saying it gives extra legal cover to Indian companies that produce and export low-cost generics.
Charitable groups and developing nations, particularly in Africa, rely on India to supply cheaper versions of the latest treatments for HIV and other diseases.
In an interview, Jennifer Cohn, medical coordinator for MSF's access campaign, said the ruling reinforces the idea that India won't patent drugs that are "not significantly innovative," leaving generics companies free to produce many products for domestic use or for export to other countries where the drugs aren't protected by patent.
"The Supreme Court's decision now makes patents on the medicines that we desperately need less likely," Unni Karunakara, president of MSF International, said in a statement.
"This marks the strongest possible signal to Novartis and other multinational pharmaceutical companies that they should stop seeking to attack the Indian patent law."
In India, Glivec costs about $1,900 per month, compared with around $175 for a number of generic versions that Indian companies like Cipla Ltd. and Ranbaxy Laboratories Ltd. began to produce after Novartis lost its bid to register a patent in 2006.
Novartis says that 95% of patients in India - roughly 16,000 people - receive Glivec free of charge under a support program funded by the company.
Novartis says it has provided more than $1.7 billion worth of Glivec to Indian patients in its support program since it was started in 2002.
The company says that patent protection is necessary to reward companies for the decades and large investments that go into developing new drugs.
Recent patent rulings in India have favored generic producers. The country's patent office last year ordered Germany's Bayer to issue a license allowing an Indian generics company to copy Bayer's patented cancer drug Nexavar and market it at 1/30th the cost.
India's patent appeal board in March rejected Bayer's attempts to get the decision overturned. It is unclear whether Bayer plans to appeal in court.
In November, India's Intellectual Property Appellate Board dealt Roche a blow by revoking the company's patent on Pegasys, an expensive drug for hepatitis C.
Roche received the patent in 2006, but it was challenged by the Indian generic drug maker Wockhardt Ltd. and the Mumbai-based civil society group Sankalp Rehabilitation Trust.
India's patent office in 2009 rejected this challenge and upheld Roche's patent. But Sankalp filed an appeal before the appellate board, which revoked the patent, saying that the technology involved in the drug's invention was "obvious" and could be replicated easily.
Roche criticized the ruling, saying it undermined intellectual property rights.
- Ashutosh Joshi, Andrew Morse and Jonathan D. Rockoff contributed to this article.
Write to R. Jai Krishna at email@example.com and Jeanne Whalen at firstname.lastname@example.org