India's drug sector tackles new patent regime

Related tags India Pharmacology Generic drug

The Indian pharmaceutical sector has begun its seismic shake-up
following the introduction of new laws granting patent protection
to medicines on 1 January.

As expected, around 12,000 patent applications have been filed by multinational pharmaceutical companies for their patented drugs that are sold in India as generics, and companies that have built their business on copying in-patent drugs for the domestic market are expected to be hit hard.

But on a more positive note, India's top companies have welcomed the new legislation, and the international pharmaceutical industry looks like it may fulfil its promise of investing in India now that the country is compliant with World Trade Organisation rules on intellectual property.

Generics make up about 15 percent of the Indian pharmaceutical market and, according to the WTO rules agreed to by India, any generic versions of drugs patented abroad after 1 January 1995 must be withdrawn from the market immediately. It seems likely that a large number of patent lawsuits will follow, according to local press reports, and there is also likely to be considerable debate about exactly what is and is not covered under the new scheme.

For example, the large number of patent applications has led to speculation that international companies are trying to protect innovations - for example mixtures of drugs and new uses for established agents - that will not be deemed novel under India's interpretation of the WTO rules.

The big domestic players in India - such as Ranbaxy, Cipla, Dr Reddy's and Nicholas Piramal - say intellectual property protection laws are essential, a stance in keeping with their recent conversion to a big pharma model - development of a novel active substance pipeline and expansion of marketing into overseas markets. The top 10 Indian companies spent around $400m on R&D in 2003/4, suggesting that they are starting to compete with the established researched-based pharma companies, by taking advantage of India's lower cost-base and pool of research talent.

Speaking at a meeting in London recently, Shri Kamal Nath, India's Minister of Commerce and Industry, said the government has committed some $46 million (€35m) to oversight of the patent system so that it can administer and police the new regime.

And while the top Indian companies see the benefits of stronger intellectual property for their homegrown products, India's generic drugmakers are fully equipped to take advantage of the $50 billion worth of drugs going off patent in the next five years. "We'll grab a major share of this,"​ he said.

For example, Indian firms have on average accounted for about 35 per cent of all Drug Master File (DMF) applications in the US in recent years - a DMF required before a company can make a product for which the patent has expired - and ranks second only to US companies in this effort.

India has a combination of "cost-effective manufacturing, well-developed chemical industry infrastructure, strong vertical integration, abundant scientific talent and technical skills and unique synergy in fields of information technology, biotechnology and medicine,"​ he said, adding: "our objective is not only to manufacture drugs, but also to make India a hub for medical research and clinical data management."

India's $10bn drug sector has 300 large and moderate-sized firms, plus 10,000 small companies, making 8 per cent of the world's drugs. 70 per cent of production is by the top 100 firms and about a third is exports, which are rising 25 per cent a year.

Meanwhile, multinational pharmaceutical companies have been encouraged to introduce new drug products in India and invest in new facilities, according to a recently published report by McKinsey and Co.

The report has a lower estimate of the Indian drug market ($6bn) than the Indian government, but nevertheless agrees that it is due to grow enormously over the next five years, all because of patent protection.

Sankar Krishnan of McKinsey feels that R&D spending could leap from less than $1.0bn a year to perhaps $6bn in 2010 as international companies increase their spending in India on their own or partner with local companies.

Meanwhile, the 34 multinational drug companies which are now doing business in India could see their share of the market jump from the current 24 per cent to 40 per cent by 2010, according to Satish Bhujle of the Organization of Pharmaceutical Producers of India.

Merck to Set Up Indian Subsidiary

After being absent from the Indian pharmaceutical market for 18 years, Merck & Co recently applied for approval from the Indian to set up a wholly owned subsidiary. The company said it plans to invest $15m over five years and will import and produce drugs for sale in the Indian market, as well as source raw materials and pursue R&D efforts.

Meanwhile, Eli Lilly plans to introduce its erectile dysfunction drug Cialis (tadalafil) in India later this year and will follow up with its new type 2 diabetes treatment exenatide. It also plans to quadruple spending on research to $8m now that patent rules are in force, according to local press reports.

And GlaxoSmithKline says it will introduce one drug a year from 2007. While the UK company has already partnered with Ranbaxy, India's largest pharmaceutical group, to develop some new products, it is now in talks with other local drug enterprises for other potential investments that would give the firm an edge.

Without going into too much detail, the world's number of one drug company Pfizer said it plans to update its product line in India, and Novartis also intends to introduce new cardiovascular and cancer drugs now that the patent bill is passed.

Meanwhile, the Indian government has said it has been receiving 'numerous' enquiries from Japanese manufacturers, especially related to setting up of R&D facilities in the pharmaceutical sector. The reason, it claims, is that Japanese firms now view India as more conducive for investment because they can leverage the advantages, talents and strengths of the Indian pharmaceutical sector, without fearing loss of their processes and products through patent violation.

Related topics Markets & Regulations

Related news

Show more

Follow us


View more