Report from India

Swiss-based Novartis is taking India to court in a bid to seek patent protection of its leukaemia drug, Glivec (known as Gleevec in US). Novartis first applied for the patent in 2006 but was denied. In similar instances, Swiss-based Roche's anticancer drug Tarceva and US-based Gilead Sciences' HIV medicine Viread have failed to secure patent protection in India.

(PIERRE TURTAUT/FLICKR/GETTY IMAGES)

Looking back, patent laws in India have come a long way. India's patent history began in 1856 with Act VI, which encouraged innovations and sharing of creations between inventors. Based on the British Patent Law of 1852, Act VI was in effect for 30 years. When the British amended the laws in 1800s, India followed suit. In 1911, the Indian Patents and Design Acts came into effect whereby a Controller was installed to manage patent-related issues. When India gained independence from Great Britian, the Patent Act of 1970 was introduced to spur innovation and economic growth. It abolished the product patent system based on the "Ayyangar Committee Report, 1959," which examined the factors influencing the high prices of the drugs and pharmaceuticals in India. The Patent Act has been revised three times since then and made compliant with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement in 2005.

India has since enforced a set of strict patent laws, and foreign players are facing obstacles in the review process, patent tracking, and pregrant and postgrant opposition, says Ajaykumar Sharma, associate director, pharma and biotech, healthcare practice of Frost and Sullivan (South Asia and Middle East). The interpretation of different sections of the Patent Act of 2005 and review of application remain the biggest challenge. This challenge is increased by the lack of trained manpower that further delays the review process. The Indian Patent Office, additionally, does not have an efficient database system to facilitate searchable full text databases of all patents and applications. Foreign players continue to face an increase in pregrant and postgrant opposition by generic-drug companies. Litigation and infringement cases usually take longer to resolve.

India has enforced stricter patent laws compared to other countries such as South Africa. For a drug to be patentable in India, the invention has to be novel (i.e., new to the industry), inventive, and industrially applicable. In contrast, weak patent standards and the absence of a patent agency in South Africa have resulted in the granting of a high number of patents yearly. In 2008 alone, South Africa issued a total of 2442 patents.

The Indian patent agency has set a higher bar for patent approval that is frustrating pharmaceutical manufacturers who are deeply concerned over the agency's standpoint of intellectual property in the country. In Novartis' case, the company is challenging the efficacy clause stated in Section 3(d) of the Indian Patent Law. However, the Indian agency views its decision as a move to curb the "evergreening" practice, whereby a drug is tweaked slightly in a bid to extend patent protection. Specifically, the Novartis patent application was denied on the grounds that the drug lacks innovation because it is considered a salt formulation of the drug and not a new drug altogether.

If Novartis gets its way with the patent, the decision could result in a flood of new patent applications and possibly threaten patients' access to essential drugs tagged at affordable prices. More significantly, it may upset India's position as a generic-drug manufacturer and role to provide affordable drugs to other developing countries.

The Indian Patent Law has also made provisions for the Controller of Patents to issue compulsory licenses to deal with extreme or emergency situations. Recently, it gave approval to Natco Pharma to produce the generic version of Nexavar. As a result, Natco is able to price the drug at $158 for a 120-tablet package.

Despite the concerted efforts to provide low-cost drugs, the problem of poor medical access is still prevalent in the country. To date, a significant number of infants (aged 12 to 23 months) have yet to be fully vaccinated against six major childhood diseases (tuberculosis, diphtheria, pertussis, tetanus, polio and measles) even though the Indian government has made these primary vaccination programs free across the country. Tapan J. Ray, director–general of the Organization of Pharmaceutical Producers of India, an association of R&D pharmaceutical companies in India, says: "Only a short focus on the rejuvenation of the fragile healthcare delivery system, healthcare financing, and rapid development of healthcare infrastructure by the government or public private partnership will address the access issue."

It is also impractical to envisage that the granting of compulsory license will resolve the issue of access to patented medicines on a long-term basis. Granting of these licenses should only be done after exhausting all access improvement measures, Ray says.

Sharma adds, "Compulsory license should not be a benchmark for possible future decisions taken by the government. But I foresee a need and evolution of a new business model that will reach out to the masses by foreign players. This can take place possibly in the forms of differential price launches, patient assistance programs, or state medical purchase policies."

Asked whether it is possible to strike a balance between maximizing profits and providing patient access to drugs, Sharma comments that this can be achieved through differential pricing. For example, GlaxoSmithKline's Ventolin asthma inhaler is priced at the lowest level possible for the lowest-income patients, Flixotide at a lower discount for those with higher incomes, and Diskus priced highest for citizens with the highest incomes. Roche is working on details to offer discounted versions of two cancer drugs, Herceptin and MabThera, in India by early next year.

Given the current restricted parameters, foreign companies should start looking for innovative engagement models to operate on Indian soil, Sharma says. In fact, mergers and acquisitions have taken place between foreign and Indian firms. In 2010, Illinois-based Abbott Laboratories' acquisition of Mumbai-based Piramal Healthcare for $3.7 billion has brought its market share in India to approximately 7%, and the company is expecting revenues to grow an estimated 20% a year to more than $2.5 billion by 2020, propelling the company to the leading position in the Indian market. In January 2011, Bayer Healthcare has inked a joint venture agreement with Mumbai-based Zydus Cadila in a bid to enhance its presence in India.

—Jane Wan is a freelance writer based in Singapore