Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Novartis vs Indian Patents Act - Case decoded - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Apr 5, 2012

    Novartis vs Indian Patents Act - Case decoded

    In 1997, Novartis AG filed a patent application in India for the beta-crystalline of 'imatinib mesylate'. The brand name for the same, given by Novartis, is Glivec. The patent application for Glivec was done on the basis that the company invented imatinib mesylate. Until 2005 this application of Novartis did not make much headway. However India introduced the Indian Patent Act from 2005 and also introduced an important provision which prevented ever-greening and granting of frivolous patents (section 3(d) of Indian Patents Act). Ever-greening refers to strategies by which, innovator companies try to retain/extend their product patents even after they expire.

    Even before the Indian government considered Novartis' patent application, some generics companies along with the Cancer Patients Aids Association (CPAA) opposed Novartis' patent application for Glivec. The opposition was based on the reasons that imatinib was already a discovered form of medicine and did not improve any effectiveness. In January 2006, the Patent Controller finally gave a decision against Novartis stating that the application lacked novelty and was not patentable under section 3(d). This meant that the generics companies could produce the same medicine.

    Unhappy with the Patent Controller's decision, the company filed the case in the High court against the Indian government and 4 other Indian generics companies. Here, Novartis challenged two main aspects

    • Novartis challenged the Patent Controller's decision of not allowing the patent on Glivec. This was ultimately transferred to Intellectual Property Appellate Board (IPAB), a body which deals with special matters of intellectual property.

    • Novatis also challenged the validity of section 3(d) in the Indian Patents act, which prevents ever-greening and granting of frivolous patents.
    The High court rejected Novartis' claims and stated that section 3(d) is quite clear and is constitutionally valid. On the other aspect, IPAB overturned Patents Controller's findings and held that Glivec was new and involved an inventive step. However, IPAB concluded that the invention did not satisfy the tests of section 3(d) of "significantly enhanced therapeutic efficacy" and thus ruled against Novartis.

    Again, Novartis challenged the IPAB's order in the Supreme Court and the hearing began in August 2011. Since then there have been high voltage arguments from both the sides (for and against) and the Supreme Court has scheduled the final arguments to be discussed from 10 July 2012.

    What does this mean for both MNC and Indian players?

    The outcome of this lengthy battle by Novartis can have far reaching effects on the future stakeholders of Indian Pharma - Generic pharma, Innovator Pharma and the Indian people. A ruling in favor of Novartis will mean strong monetary gains for innovators like itself. It will also mean a strong incentive to invest in R&D. At the same time, it will negatively affect the pharma generic players in a big way and limit their scope of product expansion in the domestic market. However, the biggest jolt will come to the people of India in the form of higher medicine cost.



    Equitymaster requests your view! Post a comment on "Novartis vs Indian Patents Act - Case decoded". Click here!


    More Views on News

    Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

    Aug 14, 2017

    A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

    Lupin: Bigger Challenges or Bigger Margin of Safety? (Quarterly Results Update - Detailed)

    Aug 14, 2017

    GST impact coupled with price erosion in US leads to lower profits for the quarter.

    Dr Reddy's: US Pressure Continues to Haunt (Quarterly Results Update - Detailed)

    Aug 8, 2017

    Profits plunge due to higher raw material costs.

    Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter (Quarterly Results Update - Detailed)

    Jun 23, 2017

    Net Profit lower due to exceptional items in the previous year.

    Sun Pharma: Price Erosion in US Impacts Growth (Quarterly Results Update - Detailed)

    May 30, 2017

    US markets decline while other geographies grow in the quarter.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 (Close)


    • Track your investment in NOVARTIS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Detailed Financial Information With Charts