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India: An Innovator’s Dilemma

Issued: April 01 2013

India’s Supreme Court has handed down a landmark decision, refusing to grant a patent to Novartis’s cancer drug Glivec.
On April 1, 2013, the Supreme Court of India handed down a landmark decision refusing to grant a patent to Novartis’s cancer drug Glivec. After a seven-year long fight, the Swiss pharmaceutical giant finally lost its suit in India.
The court held that,imatinib, chemical form of Glivec, or Gleevec in the United States, is not significantly different from the previous version, and that Novartis has not shown sufficient proof that the efficacy has been significantly proved in the new version. Hence the denial of patent, a provision in India’s patent law to prevent the practice of “evergreen.”
In fact, Novartis was never able to get Glivec patented in India. The country started granting pharma patents in 2005 to comply with the world’s intellectual property framework when it joined the WTO, but only for drugs created after 1995. Imatinib was discovered before 1995, which made it unpatentable in the country.
Novartis argued that the new version has significant amendments, including the chemical stability to make the compound into pills, which it said was breakthrough progress and cost years of research and investment. Outside India, Glivec has been patented in nearly 40 countries including the US, Russia and China.
Pravin Anand, managing partner at Anand and Anand in New Delhi, who represented Novartis in the case, tells Asia IP that he finds it difficult to understand the logics behind the court’s action of rewarding innovation only based on the drug’s molecular mechanism.
“What about the ingenuity involved in ensuring that a drug is not in unstable form sitting in a bottle and it does not pass through the body like a hard pebble or turn to liquid?” asks Anand.
The ruling essentially means that generic drug manufacturers now are entitled to make their versions of Glivec and sell them at 5% the original price. Immediate beneficiaries Cipla and Natco Pharma are by no means strangers to anyone who has been following last year’s patent fights in India’s pharma sector.
Big Pharma indeed had a tough year in 2012 in India. Roche’s Tarceva patent infringeme claim against Cipla was dismissed by the Delhi High CourtPfizer’s Sutent patent was revoked by the Patent Office, and Merck lost its infringement case of the Januvia patent against a generic drug maker. Bayer was ordered to license Natco the right to produce Nexavar under the country’s first compulsory licence.
India’s health care activists and relevant public organs have welcomed the judgment as it helps increase the public access to life saving drugs. Nearly one-third of India’s 1.2 billion population lives under US$1.25 a day. Public affordability becomes a major defense for India’s reluctance in granting medical patents.
But there is more.
India is home to the world’s largest generic drug basis. The billion dollar business is no charity. According to a Reuters’s report, shares in Novartis’s Indian unit fell 6.8% after the verdict and ended 1.8% lower on April 1, 2013, while Natco ended 5.4% higher after hitting nearly 11% gain and Cipla was up 1.3%, beating the benchmark’s 0.15 rise. Once given the permission, Indian generic companies could also export to countries where the drugs are not patented.
Disagreeing with the activists, some observers say that the impact of the ruling could be completely opposite. “Protecting intellectual property is fundamental to the discovery of new medicines,” the Pharmaceutical Research and Manufacturers of America commented after the ruling.
“To solve the real health challenges of India’s patients, it is critically important that India promote a policy environment that supports continued research and development of new medicines,” says the group.
“I can see the scientific creative community deeply depressed by the outcome in the case,” says Anand. “If India needed to create an innovationbased economy, the signal to our inventors and scientists ought to have been that their inventions are strongly protected. Now we have failed to give such signal.”
The Indian government has announced various actions to cultivate an innovative culture among businesses. President Pranab Mukherjee has declared 2010-2020 as the “Decade of Innovation” and Prime Minister Manmohan Singh also unveiled the Technology and Innovation Policy 2013, aiming to make India one of the world’s five scientific powers by 2020.
But innovators are not impressed. Ranjit Shahani, head of Novartis India, said in an interview with the BBC that his company was “disappointed” and suggested the possibility of the company pulling investment out of the country.
Novartis said that about 16,000 people, about 95% of patients using the drug in India, have free access to the drug through a special support programme, and the other 5% are either covered by a medical scheme or paying lower than usual prices.
“It is not a question of price or access; it is a question of innovation,” said Peter Pitts, head of the Center for Medicine in the Public Interest, while commenting on the case. “I don’t think the Indian Supreme Court understands the basic concepts of the pharmaceutical innovation and really, India does want innovation.”