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Pharma: Product patent dilemma - Views on News from Equitymaster
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  • Aug 14, 2007

    Pharma: Product patent dilemma

    The product patent law was introduced in India on January 1, 2005 and is expected to put an end to the reverse engineering practices followed by Indian companies and prompt them to focus on discovery-led research to introduce patented molecules in the long term. While this has been a positive development in terms of encouraging introduction of new products by the MNCs from their parent's product stable and ushering in of more contract manufacturing and research related activities, the law has been mired in its share of controversies.

    The most recent example was a suit filed by the Swiss company Novartis challenging the provision of the patent law with respect to incremental innovations. The company has also challenged the non-grant of a patent to its anti-cancer drug 'Glivec'. In this article, we shall take a look at some of the grey areas in the product patent law, which have been the subject of much debate.

    Definition of 'patentability': Currently, the patent law provides patents only to new chemical entities (NCEs) and not to incremental innovations. Besides, salts, isomers and polymorphs are not granted patent by the Government. The industry has opposed this provision demanding patents for incremental innovations as well. This is because Indian research is still in its nascent stages and the Indian pharmaceutical industry is more capable of innovative adaptation rather than coming with a path-breaking new molecule.

    Scope of compulsory licensing: The current patent law permits compulsory licensing in circumstances other than national emergencies and public health crises. The contention of the MNC pharma companies is that this provision could be abused for commercial gain. The Organisation of Pharmaceutical Producers of India (OPPI) holds the view that compulsory licensing needs to be restricted to national emergencies and extreme urgent situations, public health crisis and anti-trust situations and that the scope should not be broadened.

    Pre-grant and post-grant opposition: As per the product patent law, a patent can now be opposed at two stages i.e., after its publication but before its grant and after the grant within one year. The opposition could be on various grounds including lack of novelty, inventiveness and industrial applicability amongst others. This provision has also been opposed to by the pharmaceutical industry especially the MNC pharma majors. The most recent example was that of Novartis' anti-cancer drug 'Glivec' for which a patent was rejected as it was claimed that the drug was granted a patent before 1995.

    Lack of data protection: There has been a heated debate on the law related to data exclusivity as well. The industry, especially the MNCs (and now R&D focused domestic companies as well), have taken a stand that data exclusivity has to be provided for a minimum of five years atleast in confirmation with the global industry standards. Novartis India has stated that at present no country has data exclusivity for less than five years.

    However, there is another side of the coin, which is to be considered. The demand for data exclusivity or data protection, if implemented, would lead to ever-greening of patents, thereby extending its normal life beyond 20 years. Furthermore, it is likely to result in blocking of Indian exports to countries where patent laws are yet to be implemented.

    To conclude...
    The impact of the product law has different implications for domestic and MNC pharma companies. For the former, it will mean increased focus on R&D. However, it will be a while before these efforts translate into commercial launches. Hence, in the meantime, considering the fact that R&D involves huge investment, domestic pharma companies are focusing on the global generics market to boost revenues and fund their R&D programmes. Those having a strong marketing network in the domestic market are entering into in-licensing deals with global pharma companies to keep the product portfolio fresh. For MNC companies, product patent law offers opportunities to launch products from the global parents' portfolio and also conduct clinical trials in the country. That said, we believe that pricing of the patented products and clarity on issues relating to the product patent law will be key factors in determining the success of these launches.

    From a government's perspective, making sure medical care is available to all at affordable prices is the main aim. Thus, going forward, considering the differing views of the government and the pharma industry on the above mentioned issues, there will have to be some sort of compromise by both the parties in the future.



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