At 10.30 am on April 1, the global pharmaceutical industry heard the verdict of a case it had been waiting seven years for. It was anything but an April Fools' prank. That Monday morning, the Supreme Court of India dismissed the plea to patent Glivec, a cancer drug of Novartis AG, and with it clarified what could be called an innovation in drugs.
"For patents, this is a watershed. After the new patent law in India it is only now that its section 3(d) is being put to test in the Indian courts. The ruling is going to fundamentally change the way new product introductions can happen in India," says Anand Nandkumar, Assistant Professor of Strategy, who has been researching patents and their influence on competition, at the Indian School of Business (ISB), Hyderabad. Nandkumar is referring to India's patent rules that came into effect in 2005 and a clause - Section 3(d) - which questions how much more efficacious a drug has to be to qualify for monopoly protection.
Yusuf Khwaja Hamied, Chairman of Cipla, a top Indian drug firm that excels at introducing copycat or generic drugs, says the April 1 ruling and the interpretation of Section 3(d) of the law means that there cannot be "evergreening" of patents, a practice to prolong a patent with small changes in the drug. "It means you cannot patent in India minor modifications of products and thereby extend patent life," he says. But Hamied insists it does not mean India - set to ring in drug sales of at least $48.8 billion by 2020, up from about $11 billion last year, according to consulting firm PricewaterhouseCoopers - is against innovation. He points out that there are just six or so out of some 5,000 patents granted that are being fought by his company. (See Not Just Glivec for some of the other drugs being challenged under Section 3(d).)
Ranjit Shahani, who heads the Indian unit of the Basel-headquartered Novartis is disturbed even if he pulls a light-hearted moment. "I need a packet of lozenges," he tells Business Today on one of the several calls he's taken on April 1. "There is only 'ever-delaying' of patents in India," he says. "If you have a patent here, it gets revoked. If you have a patent there, you are pushed for a compulsory licence or... there is price control." (A compulsory licence allows a generic drugmaker to make a patented medicine on payment of a royalty.) Glivec is priced at Rs 1.2 lakh for a month's treatment, while its generic equivalent is available for less than Rs 10,000.
The Indian judgement is worrisome for global drugmakers with potential ripples
in other countries. The Philippines has rules identical to Section 3(d) of India's patent law, Argentina has a similar provision.
Others such as Brazil and Thailand have issued compulsory licences for certain drugs. And, already there are reports of activist moves in Australia and Canada. This, at a time when the world's biggest market for drug - the United States, is facing pricing and regulatory pressures and the new drugs pipeline is getting thin.
The dismissal of the Glivec patent plea comes on top of earlier reversals for Big Pharma
, a common reference to MNC drug firms with sales more than $20 billion, in India. In November 2012, the Intellectual Property Appellate Board (IPAB) denied patent protection to AstraZeneca for its lung cancer drug Gefitinib, just after it revoked Roche's patent for Pegasys, a Hepatitis C drug. And, in March last year, in the first instance of its kind, the Indian Patent Office granted Hyderabad's Natco Pharma a compulsory licence to sell a generic version of Bayer AG's kidney and liver cancer drug Nexavar.
In the general brouhaha after the Glivec judgement, some voices on the need to protect patent rights of drug innovators stood out. "We need to keep in mind the long-term implications, for India is still not an innovator of new drugs. We need to ensure that the measures are not such that finally new drugs are not got into India," says B.S. Ajaikumar, founder of HealthCare Global, a chain of cancer care hospitals. India, instead, should seek measures to reduce the time to launch low-cost generic versions, he suggests.
One implication of the SC ruling, according to ISB's Nandkumar, is that it could trigger a review of India strategy at Big Pharma. These companies will either price drugs in India differently or enter into licensing arrangements with Indian companies.
Even there the waters can be turbid as a recent instance of Sun Pharmaceuticals and Merck dragging Glenmark Pharmaceuticals
to court over patent infringement of a Merck diabetes drug licensed to Sun shows. The churn in Indian drugs patenting is just beginning.