Indian drug firms lobby against EU’s new directive

Indian drug companies are lobbying against a move by the European Commission to check the import of counterfeit drugs through a directive that comes into effect in about a year from now.

According to the Pharmaceuticals Export Promotion Council of India (Pharmexcil) lobby group, the country’s drug exports to the European Union (EU) were worth $1.93 billion (around Rs.10,769 crore) in 2010-11. If India fails to get an EU equivalence certificate by 2 July 2013, when the rule is set to go into effect, 30% of this could be affected, the lobby group said.

Industry and government officials say they don’t have the manpower or the resources to be able to comply with the new directive.

Under the EU falsified medicines directive, each shipment of active pharmaceutical ingredient (API) or drug raw materials from India should be accompanied with a written confirmation, vouching that the quality of the exports conforms to EU standards. The legislation was adopted by the EU Council in May 2011 with the objective of preventing the entry of fake drugs.

Failure to provide this “equivalence certificate” would mean loss of business for India, said D.G. Shah, secretary general of the Indian Pharmaceutical Alliance (IPA) lobby group.

“The EU initiative is protectionist and while they are citing safety and public health as reasons, it is clear that they want to protect their domestic pharmaceutical companies from competition,”  he said. “We can only hope that the Indian government will respond appropriately, keeping this in mind.”

The EU and the Indian drug companies have been in conflict before. In 2008, the Netherlands seized Indian drug consignments on the ground of patent infringement, triggering a trade dispute between India and the EU. The incident had prompted the Indian government to approach the World Trade Organization (WTO).

The term “falsified medicinal product” in the European Commission’s directive is of particular concern in India.

“While the directive is pertaining to API, the word ‘falsified’ could be used broadly to apply to generic drugs made in India,” said C.M. Gulati, editor of the Monthly Index of Medical Specialities, a journal on prescription drugs available in India. “If an Indian company makes a generic version of a drug patented by a multinational pharma company, it could come under this directive and be treated as a ‘falsified’ or spurious drug and be confiscated.”

At a meeting with industry representatives on Monday, the department of pharmaceuticals (DoP) sought a response from the Drug Controller General of India (DCGI) about the feasibility of training Indian drug inspectors on EU standards.

“We have sought DCGI’s position on the matter and we are concerned by the use of ‘falsified’. We have also proposed a meeting with representatives from the commerce and health ministries on the matter. We do not want to delay this any further as our exports will be adversely affected,” said Raja Sekhar Vundru, joint secretary, DoP.

The government appears to be convinced that the Indian drug companies have a case.

“We are looking at various alternatives, including approaching WTO...,” said a commerce ministry official who didn’t want to be named.

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Drugmakers criticise Mashelkar committee's report

NEW DELHI: The commerce ministry’s decision to accept the Mashelkar committee’s revised report that recommends not to restrict patenting to new

drugs has come in for strong criticism from health activists and some generic drugmakers even as patent experts supported the move that’s in line with international norms.

Earlier this month, the ministry accepted the controversial report, first released in 2007 but withdrawn over allegations of plagiarism and technical flaws.

The conclusion of the study however remains the same, recommended that granting patents only to new drugs will be a violation of the TRIPS, or Agreement on Trade Related Aspects of Intellectual Property Rights, that sets minimum standards for intellectual property regulations under the World Trade Organisation (WTO).

The adoption of the Mashelkar committee report means that India will continue to allow patent on incremental innovation under Section 3(d) of the Indian Patent Act, if it provides enhanced therapeutic efficacy.

Health activists have been seeking a ban on this provision, saying multinational drugmakers use it to extend patents for drugs by making minor innovations and, thus, blocking competition from low-cost drugmakers. This process is known as evergreening of patents.

“The government’s move may restrict global supply of cheaper medi-cine,” said Leena Menghaney, India project manager of Medicine sans Frontiers, a global social organization lobbying for easier access to es-sential medicine, as multinationals will use evergreening to extend their market exclusivity by decades. “India should progressively move towards stricter patent law to ensure that only a completely new drug is granted patent, which is possible under TRIPS,” she added.

“The commerce ministry has accepted the recommendations of the Mashelkar Committee without any debate or discussion with the domestic industry,” said B K Keayla of National Working Group on Patent Laws.

The Mashelkar committee was set up mainly to examine whether it would violate provisions of TRIPS if India restricted the grant of patents to only new chemical entities (NCEs).

But, Shamnad Basher, professor of intellectual property law at the National University of Juridical Sciences (Kolkata), supported the committee’s view. “Limiting patents only to new drugs would violate Article 27 of TRIPS, which mandates that patents shall be granted without discrimination to all inventions in all fields of technology,” he said.

It’s a major setback for the industry, said Amar Lulla, joint managing director of generic drugmaker Cipla, which is challenging the most number of patents in India.

If patents were to be granted only for new drugs, it would have fur-ther squeezed the scope of getting patents under the country’s laws, which is already one of the strictest in the world.

Another Delhi-based patent lawyer Pratibha Singh says the actual impact will be clearer if the government brings any amendment in the existing laws.

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Fake drugs from China reach Kenya now

NEW DELHI: The supply of fake drugs from China to the African sub-continent is not limited to Nigeria, it now appears. The Kenyan government has seized two container loads of medicines shipped from Shanghai bearing a 'government of Kenya' label falsely indicating that it was manufactured in Kenya, a communication from the Indian High Commission in Nairobi to the Indian government has indicated.

Although unlike the Nigerian seizures, the present impounded consignments do not bear India's name, India, nonetheless, is on the alert, as there might be other similar fake consignments in the country. The Kenyan government is trying to establish whether there are other consignments of fake drugs that have reached the country or are on the way.

“It is pretty clear by now that sub-standard drugs manufactured in China with false manufacturing labels are being shipped to African countries. Since such consignments have been seized in Kenya and there are chances that other such consignments may have reached the country or are on their way, India has to ensure that the fakes are not passed off as manufactured-in-India products, bringing disrepute to the country,” a commerce department official told a news agency.

The Nigerian government had recently seized a large consignment of fake anti-malarial drugs labelled made in India but produced in China. India lodged a strong protest with China demanding strict action against Chinese manufacturers of such spurious drugs whose names and addresses were clearly printed on the confiscated cartons.

Africa is an important market for Indian drug producers as it accounts for over 15% of India’s total generic (off-patent drugs) exports worth Rs 30,000 crore annually.

“India can’t afford to get a bad name in the African market for drugs. We have to do all possible through the diplomatic channels to stop unscrupulous Chinese producers from bringing disrepute to the Indian industry,” the official added.

Meanwhile, India will take up with Libya a complaint by Ajanta Pharma that its consignment was barred entry on the grounds that it was from a non-US, non-EU region.

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Domestic drug makers will not need GMP certificate

NEW DELHI: Domestic drug makers will no longer need a certificate of good manufacturing practice (GMP) from the World Health Organisation (WHO)
to sell their medicines within India.

The Drug Controller General of India (DCGI) has asked state drug controllers to let companies sell their brands in the country without the WHO s quality certificate, provided they comply with the quality norms set out in the Indian law.

That is, if they produce the DCGI's Certificate of Pharmaceutical Products (COPP), they can sell their brands in India. COPP and WHO certification are compulsory if the company wants to export, a government official, who asked not to be named, said. The DCGI would not issue WHO-GMP certificate to any company from now on.

"For marketing medicines within the country, only schedule M certification under the Drugs and Cosmetics Act (DCA) is required. State regulators have been directed that they no longer need to insist for a WHO-GMP certificate from manufacturers while giving them marketing permissions," the official said.

GMP is aimed at diminishing the risks inherent in pharmaceutical production. WHO GMP certificate is given based on certain guidelines laid down by WHO through which the regulator ensures that medicines and other medical products are consistently produced and controlled to the quality standards required for their best use.

The WHO-GMP certificate is a mandatory requirement in most global markets for companies to be able to sell their medicines. It is also required for specific drugs being supplied under the global disease control project to treat diseases like tuberculosis, malaria and AIDS.

However, the government claims that the Indian norms laid in the drug law is at par with the WHO-GMP guidelines and therefore there is no need to endorse the WHO norms. "We are also in talks with several international agencies in order to ensure that companies holding the COPP do not face problems in exports. It is important for the government as well to ensure that our own regulations find enough recognition in the international markets," the official said.

The drug regulator gives a COPP after conducting an inspection of the manufacturing plant. The certificate is valid for a period of two years. The Indian pharmaceutical market is estimated to be at around Rs 65,000 crore. Out of this, export accounts for around Rs 30,000 crore.

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Dutch govt in patent row, seeks clarity on EU rules

NEW DELHI: The Dutch government has asked the European Commission (EU) for a review of the EU Customs regulations, based on which a consignment
of high blood pressure drugs from India being exported to Brazil, was seized and sent back, while transiting through the Dutch ports. It had been challenged by Merck Dupont which claimed that the medicine was being imported despite the company having a patent on it.

Visiting Dutch minister of foreign trade Frank Heemskerk has said his country wanted to “avoid” such incidents in future and had written to the European Commission seeking clarity on how the EU Customs regulations could be brought in sync with the international Trips regulations which gave concessions to poor countries on the ground of public health. “My country is very much in favour of providing generic medicines, especially to the very poor,” Mr Heemskerk said in an interview to ET.

While the Netherlands is on the backfoot on the issue of seizure of drugs as the move is seen as going against the international Trips agreement, India, which recently placed a six-month ban on import of toys from China, maintained that its decision was consistent with World Trade Organisation (WTO) rules and it had taken the decision on health grounds. Addressing a press conference on Tuesday, commerce and industry minister Kamal Nath said it was open to any discussions with China on the matter. “Till the government is satisfied, the ban will not be lifted,” the minister said.

Elaborating on what led to the seizure of consignments at the Rotterdam airport, Mr Heemskerk said the Customs officials had acted on complaints of violation of intellectual property by a company not based on domestic policies, but based on European regulations. “We have asked the EU to look into the interaction between the Trips agreement, which the Netherlands fully supports, on one hand, and the European Customs regulations on the other hand. We should try to avoid these incidents,” Mr Heemskerk said.

The Dutch government has taken up this damage control exercise after developing countries strongly criticised the seizure of consignments of Losartan, a high blood pressure generic or off-patent drug manufactured by Dr Reddy's Laboratory, late last year in Rotterdam which was sent back to India.

India and Brazil criticised the incident heavily at the World Trade Organisation last week stating that the incident showed that the developed countries were circumventing global trade rules and trying to force their own tough intellectual property rules on developing countries. The Trips regulations, which are mandatory for all the 150-member countries of the WTO including the European ones, allow developing countries to source generic drugs from third countries (non-patent holding countries) on the ground of public health. Mr Heemskerk is heading a 40-member Dutch business delegation to India which will visit Delhi, Mumbai and Pune.

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India to move WTO on Dutch drug seizure

NEW DELHI: India and Brazil have decided to mount a joint offensive at the World Trade Organisation against the Netherlands for seizing a consignment in transit, which was on its way from India to Brazil.

The cargo, containing a generic drug for high blood pressure, was impounded by Dutch officials on a complaint by a local firm that had claimed it had the patent for high blood pressure drugs in the Netherlands.

Commerce minister Kamal Nath and his Brazilian counterpart Celso Amorim met on the sidelines of the World Economic Forum at Davos, and decided to take up the matter with the WTO at its general council meeting next week.

According to a joint press release, such measures have a highly negative systemic impact on legitimate trade of generic medicines, South-South commerce, and national public health policies.

Losartan, the generic drug for treating high blood pressure, manufactured by Dr Reddy’s Laboratory, was seized in Rotterdam and was sent back to India.

The Dutch company that claimed it had patent for a similar drug in The Netherlands does not have patent protection in India or Brazil.

The Indo-Brazil joint statement emphasised that the move was a setback for the internationally guaranteed principle of universal access to medicine, running against the spirit of resolution 2002/31 of the Commission on Human Rights on the right to enjoy the highest standards of physical and mental health.

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DCGI may extend pharma export licence tenure

NEW DELHI: Hurdles faced by pharmaceutical companies while accessing global markets may ease now. The drug regulator’s office is likely to extend the tenure of export licence and other approvals from one year to at least three years. The move is expected to help many pharma companies that export huge quantities by reducing compliance cost.

The industry has also approached the drug regulator to increase the tenure of another certificate that importing countries insist on –– the certificate of pharmaceutical product (COPP) –– to a minimum of five years. The drug controller general of India (DCGI), who looks after the safety and efficacy of drugs and gives marketing approval, is now looking at increasing the tenure.

“Pharmaceutical exporters have been experiencing problems in international markets on account of delays in getting government approvals,” said Indian Drug Manufacturers Association (IDMA), International Trade, chairman DB Modi.
Currently, in India, companies get a COPP for a period of two years, after which exporters and manufacturers need to go through the process all over again to get their licences and certificates renewed.

The State Food and Drug Administration (FDA) generally issues COPP after a joint inspection of the manufacturing facility by inspectors from the Central Drug Standard Control Authority and State FDA. “Re-inspection is required to get the new COPP, but many a times re-inspection is not possible in time due to various constraints like limited number of staff available,” Mr Modi said.

According to Mr Modi, regulatory authorities in most of the countries do not accept COPP with a remaining validity of 6 months. The industry has, therefore, asked DGCI to ease the process by extending the period of their test licences. The industry has suggested that NOC may be issued for exporting a specified quantity of medicines to a particular country without looking at the time limit. While DCGI is looking into the possibility of issuing consolidated export approval for a longer period, it would also have to look into other aspects so that regulatory issues do not get compromised as import laws differ from country to country.

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Indian pharma may export to Philippines

NEW DELHI: Crucial patent law reforms in Philippines may open up a goldmine of opportunity for India's generic pharma industry to export medicines for treating deadly diseases such as HIV and cancer. Domestic companies including Cipla, Natco Pharma and Strides Arcolab are already exporting anti-HIV drugs to Africa and other countries.

More importantly, these reforms strengthen the case of India's Patent Act, particularly the 'often attacked' provision Section 3(d), which prohibits patenting of known drugs.

Experts say that India's Patent Act has inspired lawmakers in Philippines to ratify new legislation 'Universally Accessible Cheaper and Quality Medicines Act of 2008'. Thanks to this new bill, essential drug prices in the Philippines are expected to go down, and become affordable. The bill aims to increase access to low cost generic medicines.

In developing countries like Thailand, China and Philippines, patents are granted far more widely than in India, heavily restricting local production of affordable generics. Widespread patenting has meant that patients are not able to access affordable generic versions of essential medicines, industry experts say.

The law seeks to prohibit the grant of new patents based only on newly-discovered uses of a known drug; allow early registration of generic versions of patented medicines prior to patent expiration; and allow government to use generic versions of patented drugs when public interest is at stake. The government will also have the power to impose price ceilings on essential drugs, and allow import of expensive drugs if it is found that another country is selling them at a lower price.

"A case in point is Co-trimoxazole an essential drug commonly used for HIV to prevent infections. The drug patented by Roche costs 15.55 pesos (Rs 14) a tablet in the Philippines. The same generic drug costs .69 Philippine pesos (.63 paise) a tablet in India," says an Oxfam official, adding that essential medicines are unaffordable in the absence of generic competition. Another drug Ciprofloxacin costs about Rs.75 in Philippines whereas it costs less than Rs.5 in India.

So, Philippines is amending its Intellectual Property Code to include a provision similar to section 3(d) of India's patent law. This will prevent companies from obtaining patents for drug that are not really new, to extend their monopolies on drugs as long as possible. In 2005, when India ushered in the new patent regime under WTO, it tried to find a balance between its international obligations to grant product patents and the need to make drugs as affordable as possible for patients and the developing world.

So, section 3(d) was introduced, which restricts companies from obtaining patents in India for medicines that are not actual inventions, but slightly improved formulations of existing medicines. "There is a clear message coming from lawmakers in India and the Philippines; fewer patents result in stronger generic competition, which is important for developing countries to increase access to affordable medicines", Shalimar Vatan of Oxfam said in a statement.

The bill also includes a "nondiscriminatory clause" which requires drug stores to carry competing products so that large firms cannot intimidate pharmacies into only carrying their products.

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BUDGET VIEW - Pharma seeks export incentives, R&D tax sops

The pharmaceutical industry wants the forthcoming federal budget to grant incentives to boost exports and extend the scope of tax breaks given for research and development work.

Last year's budget extended tax breaks of up to 150 percent of a firm's research expense by five years to 2012. Currently, only companies doing in-house research are eligible for this.

These sops should be extended by another five years to 2017, said a note from the Organisation of Pharmaceutical Producers of India, largely a group of research-led multinational firms.

Tax breaks should also be given to drug firms involved solely in R&D and should cover all expenses incidental to basic research, including clinical trials, done in India or abroad, said a note from the Federation of Indian Chambers of Commerce and Industry.

"This will catalyse the R&D industry, the innovation-based industry, which is completely lacking in India," said Swati Piramal, director of Strategic Alliances and Communications at Nicholas Piramal India Ltd.

"Pharma spends 10 times as much as the IT or auto industry and the research takes 10-12 years," she said. "So five years is not enough in an industry where 10-12 years is the gestation period."

Most of the top Indian drug firms, including Ranbaxy, Dr. Reddy's, Sun Pharmaceutical, Nicholas Piramal and Wockhardt, have either spun off or are planning to spin off their R&D wings into separate entities.

The domestic pharmaceutical industry, being a net exporter, has also taken a beating due to the rupee's rise, which gained more than 12 percent against the dollar in 2007.

The industry is hoping for some exemptions for export activities as tax breaks for export-oriented units, which were set up to encourage exports, are set to expire in 2009.

The industry is also seeking reduction of excise duties on drugs to 8 percent from 16 percent now.

The union budget will be presented at the end of February.

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India asks Indonesia to remove non-tariff barriers on Indian pharma products news

India has asked Indonesia to consider removing Non-Tariff Barriers (NTBs) on the import of Indian pharma products into Indonesia.

Union minister of commerce and industry Kamal Nath during a bilateral meeting with Indonesian trade minister Mari Elka Pangestu, said that such a step would be beneficial for Indonesia to source cost-effective Indian drugs and pharmaceutical products. He further stated that the Indian pharmaceutical products are being exported to several countries including the highly regulated markets of US, Europe, Japan and Australia.

The two sides discussed issues regarding non-tariff barriers on carbon black, wheat flour, uncoated writing and printing paper and milk products and ascertained the concerns of each other to remove barriers to free flow of trade in these goods.

Nath also underlined the potential of small and medium enterprises (SMEs) in both the countries and stressed the need to explore the opportunities in the each other's countries.

"The Indian small and medium sector is quite strong and would welcome engagement with the Indonesian counterparts and some of the Indonesian products such as wood furniture, handicrafts, traditional textile (batik), food processing, etc, that can find good market opportunities in India," he added.

The commerce minister said there was scope for widening the trade basket between the two countries, particularly in the services sector and highlighted the strengths of financial and banking sector.

He said that Indian banks were interested in taking up stakes in Indonesian banks, with State Bank of India and Bank of India having already started operations there. He also suggested that Indonesia too could think about investing in the Indian banking sector, which would enhance the confidence of Indonesian businessmen and investors to do business with India.

In October 2007 the first meeting of the India-Indonesia joint study group was held in Jakarta, which had agreed to submit a report by June 2008. The next meeting of the group is expected in February in New Delhi.

Bilateral trade between India and Indonesia rose to $6.20 billion in 2006-07, a massive jump of 41.22 per cent over the previous year. The share of India's exports to Indonesia was $2.03 billion and Indonesia's exports to India were $4.17 billion with the balance of trade in favour of Indonesia.

Bilateral trade has shown impressive growth over the last five years with Indian exports growing at a compounded annual growth rate (CAGR) of 30.6 per cent and Indian imports growing at 32 per cent.

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Swiss government not to take Novartis case to WTO

The Swiss government indicated that it was unlikely to take Novartis AG's challenge to India's intellectual property rights regime to the World Trade Organization's disputes settlement body, local papers reported. The Madras High Court Monday dismissed a petition filed by the Swiss pharma major citing provisions of the Indian Patents Act and claiming that it was non-compliant with the Trade-Related Intellectual Property Rights (TRIPS) agreement.

Doris Leuthard, Swiss Federal Councillor to the Department of Economic Affairs, told Indian media that: 'The Swiss government never gets involved in any any judicial pronouncement of other countries. We accept any case which is settled in India. It is normal litigation in which one party happens to be a company while other is a country.

'We must have a reliable TRIPS system, and the one in India is good enough,' the Business Standard quoted her as saying.

Leuthard was in India to sign a memorandum on closer cooperation for the protection and promotion of intellectual property rights with Kamal Nath, India's Minister for Commerce and Industry.

The Hindustan Times quoted Nath as saying: 'Our (Indian) patent laws are WTO compliant. It is only one company that has raised its voice. In the last two years, since Indian patent laws became WTO compliant, no one has ever made any complaint.'

The complaint centres on Novartis (nyse: NVS - news - people )' anti-cancer drug Glivec, which was denied patent protection at the Madras High Court on Monday.

Novartis had sought a patent for Glivec in India, challenging the Indian patent law which -- in its current form -- does not protect incremental innovation.

India has a unique provision in its patent law -- Section 3(d) -- which excludes 'incremental innovation' from patent protection and denies patents for modifications to known medicines.

Indian law does not grant patents for modifications to old medicines, but only to properly innovative drugs developed after 1995.

The WTO recently urged India to improve its intellectual property system during Trade Policy Review.

Novartis had reiterated on Monday that it thinks Section 3(d) will have long-term negative consequences for research and development into better medicines for patients in India.

'Medical progress occurs through incremental innovation. If Indian patent law does not recognise these important advances, patients will be denied new and better medicines,' said Paul Herrling, head of corporate research at Novartis, on Monday.

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Medicines likely to cost more

The prices of certain medicines, including vitamin B complex, are set to rise following certain changes in its export policy by China, according to sources in the pharmaceutical industry. The sources say China has recently decided to either withdraw or reduce incentives on the export of about 300 items, Medicines likely to cost more.including basic drugs used as raw material by the Indian pharmaceutical industry.

Though the Chinese authorities have made known their intention to withdraw or slash the sops sometime back, the decision has become effective from July 1, the sources say.

The price of riboflavin, used in a wide range of vitamin preparations, is being quoted at Rs 5,000 per kg in the market today as against Rs 1,000 a kg just two months ago.

The sources say as a result of unprecedented rise in the price of riboflavin several brands of multivitamin tablets will become costlier in the coming days. The major reason for the sudden spurt in price is the steep shortfall in supplies from China. They say the production of riboflavin in that country has gone down after the Chinese government enforced stricter environment and anti-pollution measures.

The Indian pharmaceutical industry has been importing active pharmaceutical ingredients (APIs) from China because many of them were about 15 per cent cheaper than those produced in India. Even many Indian API manufactures depended a lot on raw material from China, as it was much cheaper than what it costs in India.

Besides the raw material, certain types of pharmaceutical machinery like the ALU-ALU blister packing machines from China were also favourite with Indian manufacturers for its lower costs. The cost of such machinery was 25 per cent to 30 per cent lower than that in the Indian market.

Dr Sunil Sethi, managing director-cum-CEO of Sanchez Pharmaceutical, Tohana, who is also setting up a unit at Baddi in Himachal Pradesh where tax concessions are very attractive, says the recent developments will not only hit the pharmaceutical industry badly but will also make the drug formulations dearer.

Dr Sethi, who has recently come back after attending a pharmaceutical expo at Shanghai, says the move has disappointed the Chinese drug industry and it will affect the export of bulk drugs and intermediates from that country.

He says though it is not possible to assess the exact fall out of the development at this stage, but the Indian pharmaceutical industry will have to bear 10 per cent to 15 per cent extra cost on inputs.

The price of an ALU-ALU blister-packing machine from China starts from $ 15,000 while in India its price starts from Rs 10 lakh. Similarly, an automatic capsule-filling machine with an output of 1,200 capsules per minute is available for $ 20,000, which is equivalent to the cost of a semi-automatic machine in India.

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Novartis plea on patents struck down

MUMBAI/CHENNAI: In a much-awaited judgement, the Madras High Court has held as valid a legal provision unique to India, which stipulates that modifications of known medicines cannot be patented unless they make the drug significantly more effective. On Monday, the court dismissed a petition by Swiss pharmaceutical giant Novartis challenging the constitutionality of Section 3(d) of the new Indian patent law. Novartis has filed another case, an appeal against the rejection of patent for its anti-cancer blockbuster drug Glivec, which is still pending.

The Basel-based drugmaker had filed a petition with the high court last year, after the Glivec patent rejection, pleading that incremental innovation should be patented in India. While India’s patent law does allow patents for modifications of already-known medicines, Section 3(d) stipulates that these modifications must improve drug efficacy to qualify.

A division bench comprising justice R Balasubramanian and justice Prabha Sridevan, ruled that the Section 3(d) of the Act, as amended in 2005 (along with its explanation), is valid and could not be termed vague, ambitious or unconstitutional.

“The discovery should result in the enhancement of the known efficacy of the substance and the derivatives are significantly differing in properties, with regards to efficacy,” the bench ruled.

In its petition, Novartis had prayed to declare the provision as being non-compliant with TRIPS agreement, vague, arbitrary and in violation of Article 14 of Indian Constitution.

“It is a sad day for innovation,” said Novartis’s vice-chairman and managing director Ranjit Shahani. “Incremental innovation has value not just in improving therapeutic efficacy, but also in providing significant benefits in terms of drug delivery, patient safety and compliance,” he said.

Novartis has also noted that in order to compare the efficacy of the new version of a drug with the old one, clinical trials need to be conducted. But, such trials can start only after the drug is protected by a patent.

However, the court decision should not have any significant impact on the company’s financial performance, said analysts. Drugmakers such as Ranbaxy, Sun Pharmaceuticals, Cipla, Natco Pharma and Camlin Pharma were already selling generic versions of Glivec in India. Even an eventual denial of patent on Glivec would not change the current situation.

Novartis said that while it disagreed with the Madras HC’s judgement, it won’t appeal its decision to the Supreme Court. “However, we have opened an important debate on the value of incremental innovation and the World Trade Organisation may take up the issue. We feel that there are great inadequacies in the Indian patent law,” said Mr Shahani.

The now-famous Glivec case has kept alive the debate over the patentability of pharmaceutical substances. Product patenting was introduced in India two years ago through the third amendment to Patent Act. The question is about ascribing a commercial value (by way of grant of patent or its denial) to new forms, derivatives and delivery systems of existing drugs.

The domestic pharmaceutical industry welcomed the Madras HC judgement. “If Section 3(d) had been removed, a large number of frivolous patents would have been granted, denying patients access to affordable generic medicines,” said secretary general of Indian Pharmaceutical Alliance (IPA), Dilip G Shah. “At least 2,000 out of the 10,000-odd patent applications in India will be disqualified under Section 3(d),” he added.

Ranbaxy echoed IPA’s view. “Ranbaxy has consistently been of the view that the TRIPS agreement can and should be interpreted and implemented in a manner supportive of the rights of the WTO members, to protect public health, and in particular, to promote access to medicines for all,” said executive director - global corporate affairs of Ranbaxy Laboratories, Ramesh Adige.

While Section 3(d) remains unique to the Indian patent law, other countries are considering incorporating a similar provision in their patent law. “Philippines adopted a similar provision a few month ago, and more Asia-Pacific countries such as Malaysia, Bangladesh and Indonesia were waiting for this ruling to amend their patent law,” said Mr Shah.

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Novartis warns India of losing R&D biz to China

NEW DELHI: Multinational drug makers would prefer China for investments in pharmaceutical research so long as India keeps the bar for patenting a drug so high, warned drug major Novartis on Monday after the Madras High Court turned down the company’s challenge to the country’s patent law.

Novartis India vice-chairman and managing director Ranjit Shahani, who also heads a body that represents MNC companies, told ET that most of the drug majors have invested in China in the last two years in pharma research , while India did not attract any investments. “No company will go on setting up research centres on an yearly basis. Once it is set up in country , it may not look for further investments for some time,” said Mr Shahani .

A crucial patent law provision that describes what is patentable is set for more heated debates and divergent interpretations as Novartis’ appeal against the government’s denial of patent to Glivec is still pending. The provision stipulates that new forms of older drugs merits patents only if they vary significantly in terms of properties with respect to efficacy.

MNCs say that there are many inventions that may not be entirely new chemical entities but are very useful to the patients. “These have utility and value not just therapeutically, but also in terms of patient safety and compliance , cost of production and ease in transport in a country of extreme climatic conditions,” said Mr Shahani. “A large number of incremental innovations have significant practical advantages for the patient over the existing medicine, although they may not qualify as scientific breakthroughs.

Companies will invest in such improvements only if there is an assurance of ownership at the end of costly and tedious research ,” Novartis international corporate research head Paul Herrling had told ET during a recent visit.

The domestic pharma industry disagrees : “Why should a product be in the market if it cannot claim these essential qualities? And how could a company come up with another product at the end of the 20-year patent life and say the new product is more stable,” asks D G Shah, the representative of big domestic drug makers.

While lawyers would battle it out as Novartis’ appeal continues, the government is working on a new patents manual that is expected to reduce subjectivity in deciding what is ‘significantly more effective that the already known’ . “Any sort of guidelines would leave some subjectivity in deciding the newness and usefulness of an ‘invention.’ We would like the government to bring the manual in public domain for transparency ,” said Mr Shah.

THIS PILL WON’T KILL

The court decision should not have any significant impact on the company’s financial performance, analysts said Drug makers such as Ranbaxy, Sun Pharmaceuticals, Cipla, Natco Pharma and Camlin Pharma were already selling generic versions of Glivec in India Even an eventual denial of patent on Glivec would not change the current situation

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