The Indian IPR Policy – Fitting enough for the Pharma Industry?

India’s stance on IPR has been globally criticized by many companies, majorly including the big wigs of the global pharmaceutical industry. We know that India has a poor track record in terms of honouring IP rights. As per the US Chamber’s of Global Intellectual property Centre (GIPC), India stands at the bottom for the handling of IP rights followed by China and Russia.

Lately, Indian Prime Minister Narendra Modi at the recent Indo-US CEO summit stated that the new ecosystem will nurture innovation and protect intellectual property. It seems this strategy is predominantly aimed to attract foreign investors to India. The global pharmaceutical industry has been very apprehensive about venturing into the Indian market which is indirectly impacting the pharmaceutical FDI.

This is unnerving for the Global Pharmaceutical companies as compulsory licensing allows domestic companies to come out with the cheaper variants of the patented drugs. In March 2012, the first compulsory license was granted to an Indian pharmaceutical company for a cancer drug developed by Bayer. It didn’t take long for Roche to withdraw its India patent for breast cancer drug Herceptin. Perhaps, they feared that the Indian government would soon issue a compulsory license for their drug as well. In a time where Indian economy is witnessing an exponential growth, many foreign investors are shying away from investing in India because of its commandeering stance on IPR.

Since India is a fast growing economy it should definitely not be seeking to undermine the IPR in a longer run.  But this is not the case. In a way, India has been otherwise benefiting the generic manufacturers in the name of Consumer Right Protection. According to PWC’s report India’s pharmaceutical Industry is likely to be in the top 10 global markets in terms of value by 2020. According to section 84 of the patents act, anyone can file a petition for the compulsory licensing of a patented technology/invention if it is not available at a reasonable price or if the reasonable requirements of the public are not met.

The US has been putting pressure on India to bend its IPR to foster innovation. US companies are reluctant to launch new drugs in India due to compulsory licensing.  Indeed, of the 268 drugs approved by the US Food and Drug Administration since the product patent regime came into effect in India a decade ago, only 48 have been introduced in the country. The Indian pharma industry, however, points out that all the 268 drugs have not been launched in any market other than the US. There is no guarantee that American companies would bring them to India, whether compulsory licensing existed or not, they assert. Besides, those who can afford these high-priced medicines have already been importing them from the US, they add. “The decision to introduce a new drug in a market like India is taken based on several factors including disease and drug profile,” says Ranjit Shahani, Vice Chairman and Managing Director of Novartis India.

This altruistic move of subverting patent rights to let Indian consumers benefit from inventions may otherwise discourage Pharma companies to innovate at all. There’s a lot of research, time and money that goes into inventing a new drug. Also, the time enjoyed by a patented drug in the market is quite less as compared to other patented inventions because by the time a company gets over with the clinical trials for any novel drug, they might only be left with 10-12 years before the patent expires. Also, not every drug is able to make it to the final stages of clinical trials due to which they have to bear huge losses. If there would be no ROI, how could we expect innovation to happen in the pharma industry?

Apropos of the recent Indo-US CEO summit, it seems that India’s stance on IPR would change in the coming years. The Indian government might have to get rid of “compulsory licensing” so as to let outside firms bring their technology to Indian market. We might soon witness Indian government paying more attention to issues related to healthcare infrastructure and healthcare insurance than issues related to cutting down the prices of the novel drugs.

But, India has been the lifeline of patients in developing and poorest parts of the world. These Indian generic drugs help patients not just in India but in many other countries. There are millions that depend on affordable generic medicines that would disappear if India acceded to US proposals, including many beneficiaries of US-funded programmes. It might be tricky yet wise to devise strategies which can make drugs available to the consumers at affordable prices without discouraging pharmaceutical R&D at the same time.

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