Impact of Patent Law on Indian Pharma Industry

Ever since I started blogging, this place has been an outlet for my vent-up feelings... so here is my first "serious" article on a "serious" topic..patent laws..wrote this for my college magazine, donno how many ppl will actually read it there...but since you are already here pls read on.

Impact of Patent Law on Indian Pharmaceutical Industry

1) Why does Dr. Reddy’s Lab invest 6.5%of its sales in research every year?
2) Why did the lawsuit in UK between pharma giants Pfizer and Ranbaxy cause Ranbaxy shares to come crashing down while those of former soared high in the Bombay Stock Exchange?
3) Why are international MNCs suddenly vying for a share in the Indian Pharma market?
To get answers to these questions, read on….

Pharmaceuticals is one of the India’s most successful industries. Almost the entire domestic demand is met by the industries’ indigenous production. Today India is amongst the top 15 pharmaceutical manufacturing countries in the world. The pharma industry enjoys a special place since it is a knowledge based and research oriented industry. The Indian industry is already a source of low cost drugs to the entire world including the largest and regulated market of USA.

The Patents Act, 1970 that came into effect in 1972 was developed against the backdrop of an economy that needed a large supply of easily affordable basic medication. Only ‘PROCESS PATENT’ existed in those times. Now, a Process Patent essentially means that anybody using a different process (developed usually through ‘reverse engineering’) could produce or sell an active pharmaceutical ingredient (API) and/ or formulation.
This enabled many low cost manufacturers to recreate drugs that were discovered by international pharma companies all over the world. The industry therefore developed drugs and made them available to Indian people at affordable prices.
However, on the hind side, such a patent regime discouraged any innovative research and development and led to bulk production of already existing drug molecules and formulations. Indian companies refrained from investing in R & D as Return on Investment (ROI) seemed too less.

India signed the agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) by the World Trade Organisation (WTO), which came into effect from 1 January 1995. But since India is a developing nation, it was allowed a maximum time of 10 years for this transition and “acclimatize” its industries, to comply with the obligations under WTO.

What does this new patent regime mean?
Under the new patent regime, a PRODUCT PATENT was introduced.
Now, “a Patent is a grant of exclusive rights for a limited time in a limited territory for a novel and useful invention”. Therefore, a Product Patent implies that the company that develops a new drug molecule will have the exclusive rights of its production for a patent life of 20 years after which the drug molecule (product) is considered “open” to generic manufacturers to produce and market. The investment of immense resources, time and technology-yielded, returns only if it is protected through the patent system in the Intellectual Property regime, especially, in regards to knowledge-based industry like pharma. In short, this system justifies the recurrence of profits for the company that has invested heavily in R & D.
According to the new regime, only molecules that are truly new developments – not just minor changes to the original – can be patented. But patent protection is provided only to applications filed after 1995. As a result, some of the popular drugs introduced in Indian market before 1995 will not be affected by change in patent regime. Drugs like omeprazole, pantaprazole, proglitazone, rosiglitazone, clopidegrel will all remain unaffected.
Once this patent system was announced in India, it was received with bouquets as well as brickbats. The impact of changes that the patent regime brings alongwith itself will have both positive and negative influences on the Indian pharma industry as well as our country.

ADVANTAGES:
1) Encouragement to innovative R & D: With the strengthening of IPRs, the incentive to invest in R & D will increase further. Forward-thinking Indian majors like Dr. Reddy’s and Ranbaxy already invest about 6-7 % of their revenues into research. Firms like Dabur and Orchid chemicals have molecules under clinical trials.
2) Greater export thrust: The increasing domestic competition is likely to drive up efforts to capture a greater share of the export market for the major Indian pharma companies.
3) Opportunity to compete against MNCs: With a stronger patent regime, Indian companies will have the opportunities to compete against MNCs and in the process encourage innovation and bring efficiencies of global standards alongwith cost-effective production as infrastructure and human resources are both cheaper by more than 40% in India as compared with global standards.
4) Clinical Research in India: India is being dubbed as the ‘hub’ for clinical research in coming times, mainly because of easy availability of vast and varied human resources and an ever increasing intellect in this field. Outsourcing R & D of many MNCs has already begun to add to our revenue. Smaller pharma firms are merging to form a consolidation within the industry. Mergers and alliances with global brands is helping the Indian industries to strengthen its market reach in India and abroad like that of Zydus Cadila’s with German Remedies in India.

But to every coin there are two sides. The single most adverse fallout of the patent era is expected to be the reduced availability of newer drugs at relatively cheaper costs. However, about 97 % of the drugs in the World Health Organisation (WHO) list of essential drugs is already off-patent and therefore will continue to be available at current prices. Also there are several therapeutic equivalents available for the rest. An important feature of the amended law is that even third parties can oppose and revoke a grant of a patent under consideration or granted. Thus, a party or an NGO that feels violated due to high prices of a new essential drug can revoke such a patent.

Thus the Indian Government and Pharmaceutical Industry have to shoulder the major responsibility of providing life-saving drugs, including drugs for treatment of AIDS, to the developing world at affordable prices. With the fast evolution of biopharmaceuticals, like erythropoietin, human insulin, Interferons and vaccines, India can address to the needs of the Third World and not just serve the elitist nations.