INDIA'S top court has rejected Swiss drugmaker Novartis's plea for patent protection of its cancer drug Glivec, a move likely to boost the prospects of Indian pharmaceutical firms over their foreign rivals.
The Supreme Court has set a legal precedent which appears not to favour patents on existing drugs sold in India, a move which does not bode well for foreign firms in ongoing intellectual property disputes in India, including Pfizer and Roche, analysts say.
Novartis makes its cancer drug Glivec at its plant in Ringaskiddy, Co Cork.
Among the chief beneficiaries of yesterday's ruling will be India's Cipla Ltd – whose shareholders include Oppenheimer Developing Markets Fund and Virtus Emerging Markets Opportunities Fund – and Natco Pharma Ltd, who both already sell 'generic' Glivec in India that costs around one-tenth 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.
The decision shows that Indian law offers "limited intellectual property protection", Novartis said in a statement.
Healthcare activists have called on the government to make medicines cheaper in a country where many patented drugs are unaffordable for most of its 1.2 billion people, 40pc of whom earn less than $1.25 a day, and where patented drugs constitute under 10pc of total drug sales.
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.
The Supreme Court's decision comes after a legal battle that began when Novartis was denied a patent for Glivec in 2006.
"It's a victory for patients who take these medicines and also for the government," said Madineedi Adinarayana, company secretary at Natco Pharma.
Shares in Novartis' Indian unit fell as much as 6.8pc after the verdict, while Natco Pharma were up nearly 11pc and Cipla up 2.5pc, outperforming the benchmark Mumbai market which ticked up 0.1pc.
India's domestic drugs market is the 14th-largest globally, but with annual growth of 13-14pc and the world's second-biggest population, international pharmaceutical firms say it has massive potential at a time when developed markets have slowed down.
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 ruling will make it tougher for them to win back patent protection.
Novartis has previously said it needs legal certainty if it is to plan further investment in drug research in India.
"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.
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 US, 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". (Reuters)