patents ordnance brings in strenuous criticism from Indian
and MNC firms, but for different reasons.
a new generation drug for curing malarial fever was introduced
in India in the late eighties. This drug was discovered
by a multi national corporation (MNC) and at that time
the drug was available at more than Rs80,000 per tonne.
patent laws provide intellectual property protection to
only product patents and not process patents. That means
no drug manufacturer could manufacture ciprofloxacin without
paying royalty but they could produce a similar version
of it by adapting a different manufacturing process.
good time, pharma companies like Dr Reddy's Laboratories
and Ranbaxy were able to produce similar versions of the
drug and market them, bringing the price of the drug down
to Rs20,000 per tonne.
time later, scores of companies began manufacturing similar
versions of the drug and the price fell to Rs6,000 per
is how the Indian pharma industry was able to take advantage
of the patents regime and produce many essential medicines
at affordable costs.
January 1 2005, the party will be over bar the
shouting. In order to be WTO-compliant, India had assured
that it would amend the Patents Act, thereby providing
protection to process patents also. To fulfill its assurance,
the previous NDA government formulated a draft bill for
the new law to become effective from January 1, 2005.
bill has brought in a sharp divide between the domestic
industry and the MNC manufacturers. The Left parties are
also against the proposed patents regime, their argument
being that such protection will tend to encourage monopolies
and lead to prices becoming unaffordable for the common
of tabling the bill in the previous session of parliament,
the government promulgated an ordinance on December 26,
bringing in process patent protection effective from January
1, 2005. The act is likely to be amended in the next session.
The government has bought time for negotiating with its
proposed bill does contain a clause that in case of medical
emergencies, compulsory licenses shall be granted for
manufacturing essential drugs; as for the treatment of
AIDS. However, the procedures for granting compulsory
licenses are long and cumbersome and it is doubtful if
it will be effective in a case like the tsunami tragedy.
contentious issue was the proposal in the bill that objections
to the grant of patents can be raised only after the patent
has been granted, not prior. Moreover, the person or entity
objecting becomes a party to the patenting process and
is present at all the hearings. This has the potential
of opening the floodgates to frivolous objections, litigation
and delay the patent granting process, out of commercial
rivalry. The December 26 ordinance, however, says that
objections can now be raised before a patent is granted
but the objector will not be a party to the process. Such
a clause seems to be neither here nor there.
pharmaceutical companies are objecting to the inclusion
of various chemical entities, which are going to be brought
under the ambit of the patents law. MNC manufacturers,
on the other hand, are of the opinion that even the drafting
of the bill is loose and some companies (read, Indian
pharma companies) may take advantage of the loopholes
and manufacture medicines by evading paying royalties.
argue that today 95 per cent of the drugs identified by
the WHO as essential drugs will be out of the purview
of the new patents law and will be available at affordable
prices. Moreover, there is a 'national pharmaceutical
pricing authority', which will keep monitoring prices.
be the merits in the arguments of various parties, the
reality of the matter is that the new patents regime is
here to stay. Domestic manufactures will now have to take
stock and evolve new strategies for surviving and thriving
under the new regime.
the global pharma scenario rising production and R&D
costs are resulting in MNCs shifting their production
and R&D bases to low cost countries like India through
outsourcing. The advantages of low cost capital, raw material
and labour, has made India one of the favourite destinations
for outsourcing of pharmaceutical products.
the major areas of growth Indian companies should look
rung companies could target markets in the US and Europe.
In fact companies like Ranbaxy have already established
level companies have opportunities to partner with MNCs
to supply bulk drugs and formulations on contract basis.
players should be in a position to offer contract manufacturing
and contract research facilities to international pharma
majors in order to help them reduce their costs.
companies could also enter into license agreements for
drugs held under patents by MNCs to market such drugs
in India. This would mean companies upgrading their
marketing net work to offer value to their MNC partners.
is no longer an option, so Indian companies will have
to get their act together as far as R&D is concerned.
Currently, the pharma industry is fragmented and it
has to look at mergers and consolidation to improve
while there are over 5000 patent applications awaiting
consideration, it is not as if patents will be granted
patents examiners are relatively inexperienced and granting
of patents will take time. Indian companies can utilise
this time to catch up.