Landmark ruling in India drug patent case
Published 01/04/2013 | 13:19
INDIA’S top court dismissed Swiss drugmaker Novartis AG's attempt to win patent protection for its cancer drug Glivec, a blow to Western pharmaceutical firms targeting India to drive sales and a victory for local makers of cheap generics.
The decision sets a benchmark for intellectual property cases in India, where many patented drugs are unaffordable for most of its 1.2 billion people, and does not bode well for foreign firms engaged in ongoing disputes in India, including Pfizer Inc and Roche Holding AG, analysts said.
Among the chief beneficiaries of Monday's Supreme Court ruling will be India's Cipla Ltd and Natco Pharma Ltd , which already sell 'generic' Glivec in India at around one-tenth of the price of the branded drug.
"The multinational companies will have to find new ways of doing business in India," said Deepak Malik, healthcare analyst at brokerage Emkay Global, suggesting they may consider licensing agreements with local firms to offer cheap versions of branded drugs like Glivec.
Ranjit Shahani, managing director of Novartis India Ltd , the firm's locally listed unit, said it will still file patents and carry on investing in the country, but with caution, and will continue to refrain from research and development activities there.
"The intellectual property ecosystem in India is not very encouraging," Shahani told reporters in Mumbai after the ruling.
Healthcare activists have called on the government to make medicines cheaper in a country where many patented drugs are too costly for most people, 40 percent of whom earn less than $1.25 a day, and where patented drugs account for under 10 percent of total drug sales.
"This appears to be the best outcome for patients in developing countries as fewer patents will be granted on existing medicines," said Leena Menghaney, Medecins Sans Frontieres' Access Campaign manager for India.
Over 16,000 patients in India use Glivec, the vast majority of whom receive it free of charge, Novartis says. By contrast, generic Glivec is used by more than 300,000 patients, according to industry reports.
"It's a victory for patients who take these medicines and also for the government," said M. Adinarayana, company secretary at Natco Pharma.
The Supreme Court's decision comes after a legal battle that began when Novartis was denied a patent for Glivec in 2006.
Novartis had argued it was entitled to a patent for the amended version of Glivec because the original patented compound was never suitable for making into a pill. Developing the final chemically stable form took years of extra work and it was this effort that marked the real breakthrough in developing Glivec as a life-saving cancer medicine, the Swiss company said.
Shares in Novartis' Indian unit ended 1.8 percent lower after falling as much as 6.8 percent after the verdict. Natco Pharma stock ended 5.4 percent higher after earlier gaining nearly 11 percent and Cipla gained 1.3 percent, beating the benchmark index which ticked up 0.15 percent.
India's domestic drugs market is the 14th-largest globally, but with annual growth of 13-14 percent and the world's second-biggest population, international pharmaceutical firms say India has massive potential at a time when traditional developed markets have slowed down.
The ruling may dampen that enthusiasm in the short term, said S. Majumdar, head of law firm S. Majumdar & Co based in the eastern city of Kolkata.
"But they (foreign pharmaceutical firms) will have to get used to it and learn to live with the law," he said.
NOT SO EVERGREEN
Pfizer's cancer drug Sutent and Roche's hepatitis C treatment Pegasys lost their patented status in India last year, decisions the companies are fighting to have reversed. The Supreme Court's latest ruling will make it tougher for them to win back patent protection.
"Henceforth, multinational pharma companies are likely to want that their patents are first recognised in India before launch of a patented product," said Ameet Hariani, managing partner at Mumbai-based law firm Hariani & Co.
Novartis has been fighting since 2006 to win a patent for an amended form of Glivec. In 2009 it took its challenge against a law that bans patents on newer but not radically different forms of known drugs to the Supreme Court.
India has refused protection for Glivec on the grounds that it is not a new medicine, but an amended version of a known compound. By contrast, the newer form of Glivec has been patented in nearly 40 countries including the United States, Russia and China.
Indian law bans firms from extending patents on their products by making slight changes to a compound, a practice known as "evergreening".
The Supreme Court said Glivec does not satisfy a patent's "novelty" requirement, Pravin Anand, lawyer for Novartis, told reporters.
Novartis can file a review petition within 90 days.
"The Supreme Court has taken a strong stand against evergreening. This will pave way for affordable medicines in India," Y.K. Hamied, chairman of Cipla, told television channel ET Now. Cipla's major shareholders include Oppenheimer Developing Markets Fund.Indian Trade Minister Anand Sharma called the ruling "a historic judgment" that reaffirmed provisions in Indian law mandating the need for substantial innovation before new patents are issued on medicines.