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Big pharma´s patent wars in India

India, a country of 1.2 billion people, is a huge potential market for multinational pharma companies. The domestic pharma market in India is expected to grow at 15 to 20 per cent annually to be a US $49 billion to $74 billion market by 2020[1]. India is a big hope for the future, at a time when margins of the pharmaceutical industry decline. But in India this huge potential is now seriously undermined by intellectual property issues.

Earlier this month, India’s Supreme Court rejected a key Novartis patent application for the cancer drug Glivec®, ending a seven-year long battle for the Swiss drugmaker to get a patent granted in India on its leukemia drug[2]. The medication, which was approved for use in the U.S. back in 2001, and in the US branded as Gleevec, has been produced generically by Indian pharmaceuticals for years at a fraction of the Swiss drug’s cost.

The Supreme Court’s ruling is one of the most significant verdicts on patent law in India. The verdict has the potential to dramatically change the global conversation about patents and patients.

Glivec is an effective cancer treatment for chronic myeloid leukemia and other cancer therapy, the patent has been granted in 40 other countries including China, Russia and Taiwan – but not in India.

Glivec can now be legally manufactured and sold as generica by India´s pharmaceutical industry and sold at a fraction of Novartis´ price. Indian drug manufacturers such as Natco, Cipla and Ranbaxy enter the market with generic variants at only one-tenth of the Novartis´ price[3].

Novartis is not the first multinational drug player losing key patents in India. In a series of patent cancellations, the list of victims includes Nexavar[4] (Bayer, cancer drug), Sutent[5] (Pfizer, cancer drug), Pegasys[6] (Roche, Hepatitis drug), Viread[7] (Gilead, HIV/AIDS),  and even more cases are still pending. India also revoked a patent already granted for an asthma drug of Merck[8]. Typically, in these cases, patent offices in many countries all over the world have thoroughly examined and granted patents – but not in India.

The Glivec ruling will boost India’s generic drug industry and impact the operations of multinational drug companies in India. It is a decisive victory for India’s pharmaceutical industry which is being described as a stunning defeat for intellectual-property rights and may have serious repercussions on India’s attempts to attract foreign investment[9].

The pharma industry complains[10] there is an agenda to undermine patent protection in India and the industry would be forced to surrender key patents in the Indian market which would  considerably discount their profits.

In the West, the Indian position on intellectual property rights is seen with growing concern.

EFPIA  (European Federation of Pharmaceutical Industries and Associations) commented in a statement that the verdict “confirms the deteriorating standards in India regarding intellectual property protection and that these are not well-adapted to the realities of pharmaceutical R&D…. The verdict also stated that the purpose of a patent law is to support local industry, which is clearly protectionist and not to the benefit of innovation and patients”

Ulrich Ackermann, of Germany´s industry association VDMA (Verband Deutscher Maschinen- und Anlagenbau) noted that „India´s patent law does not meet international standards…..This will keep foreign investors from conducting R&D in India”.

Novartis responded[11]  “This decision discourages innovative drug discovery essential to advancing medical science for patients”.

The pharmaceutical industry invested more than USD 71 billion in research and development in 2011. According to Novartis, “only one of every 10,000 compounds investigated makes it through the R&D pipeline and is approved for clinical practice. The R&D process can take up to 15 years and cost USD 1 billion to create a single drug. “

In India generic medicines account for more than 90 percent of drug sales. Generics in India is a market currently worth 26 bio USD. Generics companies do not invest significantly in  R&D, which keeps their cost low and allows them to sell generic medicines at considerable lower prices. The R&D process is very expensive and risky, but creates a reward when pharmaceutical companies invest in long-term R&D for innovative medicines.

In case of the Glivec ruling the Indian Supreme court decision was based on the judgment that the patent was considered as a marginal improvement only, compared to a earlier version of the drug, not good enough to warrant a patent in India.

Novartis clearly disagrees “in India, there is a misconception that Glivec was an incremental improvement or ‘evergreening’ rather than a novel drug.”

“Evergreening,” is an alleged practice of pharma multinationals by making only marginal changes to an existing drug to prolong a company’s hold on a patent and protect it from being produced by other firms as a cheaper generic version once the original patent has expired.

Glivec is the ß-crystal form of the mesylate salt of the active ingredient imatinib [12].

Originally, a patent was granted in 20 years ago outside India for the synthesis of the active ingredient, the molecule imatinib. Subsequently Novartis fine-tuned the drug and developed the ß-crystal form of the mesylate salt of imatinib, to make the drug more suitable for patients to take in a pill form that would deliver consistent, safe and effective levels of medicine. The active ingredient alone, according to Novartis, could not safely be administered to patients and represented only the first step in the process to develop Glivec as a viable treatment for cancer. Novartis claims “this process, which took years, was more than just an incremental improvement – it was a breakthrough”.

It is certainly worth a discussion to what extent the ß-crystal mesylate salt is a real innovation worth patenting. Generally, if it is new and has a non-obvious advantage, it should be eligible as a patent by international standards. India’s patent law provides patent protection for new innovative drugs, but sets a very high threshold for patenting modified versions of existing drugs, requesting evidence of improved efficacy.

Health activists have called the top court’s decision a win for patients seeking cheaper treatment. “It is a huge victory for human rights” commented a representative of the Cancer Patients Aid Association[13]. “The court has recognised the right of patients to access affordable medicines over profits for big pharmaceutical companies.”

However, Novartis claims that 95% of the more than 16,000 patients currently taking Glivec in India will continue to receive drug free of charge through the company’s donation program, dismissing allegations that they would deny access to the drug for the Indian poor.

India´s commerce and industry minister Anand Sharma defends India’s decision [14]: “developing countries bear a disproportionate burden of poverty, hunger and disease and, therefore, must be provided with inherent flexibilities in its international obligations to provide affordable healthcare solutions for their citizens”.

India is not only a big domestic market for drug consumption, for the global pharmaceutical industry. India  is also a prime custom manufacturing base for active ingredients and a testing base for clinical trials. India has become an important supply base for the worldwide pharma business. Often the foreign companies have brought know-how in exchange for a cheap manufacturing base. Later know-how leaked and local generics manufacturers  copied the products.

With the increasing patent issues, in future multinational pharma companies will balance risks (leakage of know-how) and rewards (cheaper manufacturing). If rewards get less because of serious IP problems and more local competition, why should they continue to risk know-how leakage by outsourcing manufacturing to India? There may be other markets ready for exploration, or some may even consider to reverse the outsourcing to India.

Big pharma companies including Novartis, Roche, Sanofi, Pfizer, GSK, Astra Zeneca and Elli Lilly, already have started to redirect their R&D investments away from India, towards China, according to Ranjit Shahani, vice chairman and managing director of Novartis India¹.

Novartis even threatened to stop supplying India with new medicines if the patent was not approved¹³. However, it remains to be seen whether multinational companies would carry out their threat and refuse to roll out new drugs in India, and whether they reverse the outsourcing trend to India.