Important note: Information in this article was accurate in 2004. The state of the art may have changed since the publication date.

Reuters NewMedia - December 30, 2004
Rosemary Arackaparambil

By presidential decree this week, India met a World Trade Organization commitment to recognize foreign patents from Jan. 1, the culmination of a 10-year process. The change will become law if ratified by parliament at its next session in February.

India has allowed its pharmaceutical makers to copy drugs patented abroad since the early 1970s, as long as they used different manufacturing processes.

The allowance helped a few, such as Ranbaxy Laboratories Ltd., grow into global challengers and made medications cheaper for the poorer masses who often need them most.

Multinationals such as GlaxoSmithKline Plc, Pfizer Inc., Novartis AG and Aventis, who have been forced to watch Indian firms eat into their market share, await the new environment with cautious optimism.

"It is certainly a milestone that product patents will be recognized in India," said S. Ramkrishna, senior director, corporate affairs at Pfizer India. "There is already a mindset change in the industry in India and also the global industry's perception of India."

"This will definitely encourage multinationals to invest in India, provided the product patent law is implemented and policed well," said Ranjit Shahani, president of the Organization of Pharmaceutical Producers of India and the head of Novartis India.

OLD PATENTS EXEMPT

The new rules do not apply to drugs patented before 1995, so Cipla Ltd. can continue selling its widely distributed version of the HIV treatment AZT. Even copies of drugs patented between 1995 and the introduction of the law are unlikely to be withdrawn.

Nor are foreign companies expected to introduce a flood of new products they have so far kept off the Indian market. Most are still grappling with the nitty-gritty of the proposed law and fear that questions about what is or isn't patentable will ultimately be answered in the courts.

"There is unlikely to be a steep change in the market dynamics immediately after the introduction of product patents," said a GlaxoSmithKline Pharmaceuticals Ltd. spokesman.

Still, big pharma firms see India as a lucrative new market.

"There could easily be 70 to 80 million people who can afford expensive medicines, just as they go out and buy expensive cars, branded clothes and consumer goods," said an executive at one drug manufacturer. "That is equal to the size of a UK or a Germany."

The government and foreign companies say medicine prices are unlikely to shoot up, because 95 percent of the drugs sold in India are older molecules. Supply of generic drugs would continue and be adequate to treat most needs.

Last year, more than 60,000 generic brands in 60 therapeutic areas were available in India, which accounts for 1 percent of the value and 8 percent of the volume of the world pharma market.

The new law has provisions allowing the government to force patent-holders to grant licenses to local firms in case of national emergencies or for exporting medicine to countries facing public health emergencies.

NO DEATH KNELL FOR LOCAL FIRMS

To adapt, domestic firms such as Ranbaxy, Dr. Reddy's Laboratories Ltd., Cipla, Wockhardt Ltd. and Sun Pharmaceutical Industries Ltd. have been seeking new revenue streams.

The larger companies are looking overseas as drugs worth billions of dollars go off patent, or aim to become suppliers of drug ingredients for pharmaceutical majors, besides doing contract research such as complex chemical synthesis.

India has more than 70 U.S.-approved manufacturing plants -- the most in the world outside the United States -- and could become a production hub because of its cheap, skilled labour.

Shahani of Novartis said Indian firms had developed skills for "re-engineering" drugs which can be used to forge partnerships with global companies for research.

GlaxoSmithKline has already signed a drug research partnership with Ranbaxy, India's top drug maker by sales, and Novartis has hooked up with Biocon arm Syngene.

The freedom to copy patented drugs resulted in a mushrooming of Indian pharmaceutical firms. They number some 5,000 today, and the new regime should trigger more mergers and takeovers.

"Our industry is fragmented. Consolidation will happen over a period of time," said Malvinder Singh, president of pharmaceuticals at Ranbaxy.

041230
RE041263

Always watch for outdated information. This article first appeared in 2004. This material is designed to support, not replace, the relationship that exists between you and your doctor.

AEGiS presents published material, reprinted with permission and neither endorses nor opposes any material. All information contained on this website, including information relating to health conditions, products, and treatments, is for informational purposes only. It is often presented in summary or aggregate form. It is not meant to be a substitute for the advice provided by your own physician or other medical professionals. Always discuss treatment options with a doctor who specializes in treating HIV.

Copyright ©1980, 2004. AEGiS. All materials appearing on AEGiS are protected by copyright as a collective work or compilation under U.S. copyright and other laws and are the property of AEGiS, or the party credited as the provider of the content. .