Indian
pharmaceutical industry is considered to be one of the largest and fast
growing industries among the developing countries of this century. The
industry is now much advanced from its initial stage and is currently
the fourth largest producer of pharmaceuticals and thirteenth largest in
terms of domestic consumption globally. This industry employs millions
of people and ensures that essential medications are available at
affordable prices to the plurality of the country's population. The
industry has earned tremendous achievements in the complicated field of
drug manufacturing and technology. Almost all types of drugs are
manufactured now in India.
During
1947 Indian drug market was utilized by the multinational companies
basically importing drugs manufactured in their country. This has been
done mainly due to the Patent and Designs Act of 1911. The
act provided product patent for all inventions in India, but the MNCs
being the patentees were controlling the industry's market in India. Under these circumstances they began to import finished formulations of drugs into the local Indian markets.
After
independence in 1948, India promulgated her first industrial policy
resolution including pharmaceutical industry as an essential industry in
the country thereby bringing it under the central regulations. It was
during these years that the National Chemical Laboratory at Pune and the
Central Drug Research Institute at Lucknow were formed. Moreover, the
inadequacy of indigenous technology hindered the production of modern
drugs locally. Therefore the government invited FDI to enhance
production. This created a situation wherein several major foreign
subsidiaries were instituted in India within a short time span.
Nevertheless, these foreign entities did not bring major investments to
the country to enhance productivity instead they started importing bulk
drugs processing it to formulations.
1947 to 1957
During
this period India was proceeding with the western type patent
legislation and acknowledged product patents along with process patent
on drugs. A major portion of the pharmaceutical patents in the country
was vested with MNCs outside India. They were distinctly benefited by
the patent law, technology, financial resources and their brand names
which helped them to clearly establish their monopoly in Indian markets
resulting in a situation where drug prices were so high in India when
compared to the rest of the world. It was in 1954 that the government
established Hindustan Antibiotic Ltd. which is the first public sector
drug manufacturing company in India. Later, government established
Indian Drugs and Pharmaceutical Limited. These ventures did help to
increase drug production and improve manpower, but the size of the
national sector continued to remain very small.
1970-1985
Due
to some very important strategies initiated by the government the
pharmaceutical industry had undergone drastic changes during this time.
Furthermore, the introduction of Drug Price Control Order of 1970 was a
major step to slow down the multinational control over the industry and
helped to boost a self-reliant traditional market. In addition the Drug
Policy of 1978 enhanced the availability of drugs at a relatively
reasonable price.
Even though the bill was proposed in parliament in 1967 the Act was enforced only in 1972. The
Act did not allow product patent for chemicals, food and medicine. It
provided process patents for 5 to 7 years and had helped the country to
be self-sufficient in the manufacturing of basic drugs. Under these
circumstances researches were done resulting in the development of new
processes for numerous drugs and many manufacturing companies were
established in India during that period. Besides, the DPCO limited the
cost on drugs and was able to ensure that the lifesaving drugs were
readily available in Indian market at affordable prices.
During
the 1980s due to the introduction of some important industrial and
trade policies by the government, India had become a major
pharmaceutical producer meeting the country's domestic needs. Thereafter
the domestic sector in the country had taken control of a considerable
portion of the local market. Moreover it had become necessary that the
indigenous drugs and pharmaceutical industry required reorientations to
be more equipped with the situations arising out of the benefits of
growing economy. Under these circumstances the government revised the
Drug Policy and DCPO in 1986 and 1987 respectively. Later some important
policy initiatives were declared in the Drug Policy of 1984.
India signed the general agreement on tariffs and trade on 1994 and became a party to the agreement on TRIPs joining the WTO. India
also was a signatory to the Uruguay Round of General Agreement of
Tariff and Trade (GATT) during that period. This created a situation
wherein India had to bring its patent laws in compliance with the TRIPs
agreement. Later India had to make several amendments and was undergoing
a transition period for several years for a complete compliance of
TRIPs.
The IP legal regime over Indian pharmaceutical industry
In
January 1 2005 India in compliance with the TRIPs agreement has made a
major amendment in Indian patent laws allowing product patents. This
has had an important impact on the industry mainly on the
pharmaceutical products and chemicals. This gave rise to serious issues
effecting people's life and right of patent holders. After the amendment
the industry had to face major competitions from multinational
companies who manufactured patented drugs. Conventional branded generics
which dominated the market had to face huge competitions from the
multinational companies who produced patented drugs.
A
clause in the TRIPs agreement permits the governments to exercise
control over patents and provide indispensable drugs to the poor in
certain circumstances. The government had introduced adequate legal
provision to make sure the availability of medicines at a reasonable
price through compulsory licenses. India's provisions for the compulsory
licensing of drugs have been considered relatively broad when compared
to most of the world's patent systems.
While the government was making every effort to comply with the TRIPs
the availability of lifesaving drugs at a reasonable price in the local
domestic market was even high. Furthermore, the MNCs have started their
campaign to protect their rights from the emerging situations.
The impact of TRIPS agreement in Indian pharma industry basically involves two questions.
(a) The effect of IPR legislation under this agreement on public health.
(b) Its effect on the industry and the economy of the country.
The
first question may give rise to a situation wherein the patent drugs
would increase the cost of medicines in local markets and would lead to
the non-availability of essential drugs to the common public and could
damage public health. A counter argument would suggest that this may
lead to encouraging research and production of new drugs through
international investment.
The
industry being highly fragmented involving numerous small investors who
were very much depended on making generic drugs were more concerned
about having the required capital and technology to support an invention
of a new patented drug by themselves. As
a result they apprehended that the market will divide in favor of
foreign multinationals or major companies within the country. But
the larger companies in the country were in support of the patent
hoping that it will bring more foreign investment and stimulate joint
activities. This was supported by the fact that the larger companies
started initiating several R&D proceedings and have already started
to attain patents. Under the present scenario within TRIPS, whether it’s
an MNC or an Indian company, success or benefit depends on their
continuous efforts and initiatives put forth in the field of developing
innovative products and introducing new technologies.
India's
new patent rule allows for both post opposition and pre-opposition
procedures. Pre-grant opposition may be based on virtually all
patentability criteria that can be challenged, including the lack of
novelty, inventive step, utility, non-eligible subject matter, the
failure to disclose the source of biological material used for the
invention, and inventions which are considered traditional knowledge. However,
most MNCs consider this as a lengthy procedure in patent prosecution
process which leads to uncertain outcomes. On one side Indian generic
pharmaceutical manufacturers regarded pre-grant opposition to the new
Patent's Act helps to prevent unwanted litigation and was using the
procedure more frequently.
During
the March 2005 debates of the 2005 Patent Amendments in the Indian
Parliament, the issues regarding patentability of micro-organisms and
the definition of 'pharmaceutical substance' were raised. The Commerce and Industry Minister referred these issues to a technical expert group (TEG) for detailed examination.
The TEG issued its report in December 2006 and concluded that: (1) it
would not be TRIPS-compliant to limit granting of patents for
pharmaceutical substances to new chemical entities (NCEs) only; and (2)
excluding micro-organisms per see from patent protection would be in
violation of the TRIPS Agreement.
With regards to NCEs, the report stressed that every effort must be made
to provide drugs at affordable prices to the people of India and to
prevent the grant of frivolous patents and 'ever-greening'.
The TEG defined 'ever-greening' as 'an extension of a patent monopoly,
achieved by executing trivial and insignificant changes to an already
existing patented product'
Ever-greening' was to be distinguished from 'incremental innovation',
which was 'encouraged by the Indian patent regime', and defined as
'sequential developments that build on the original patented product'.
In
response to the report, public health groups voiced unease that the
recommendations would encourage frivolous patents and threaten access to
medicines. On the other hand, many
of the MNCs found that the report vindicated many of their concerns.
However, the report was later withdrawn amid accusations that it had
been plagiarized.
NOVARTIS'S CHALLENGE TO SECTION 3(d)
In
2006 the Swiss pharmaceutical company Novartis AG filed a complaint in
Madras High Court seeking an order against the rejection of its patent
application under s3(d) for its anti-cancer drug Glivec. The petition
also challenged the constitutionality of s3(d) in breach of India's TRIPS
obligations. The Madras High Court dealt with the issue of
constitutionality and the issue related to the question of patentability
was referred to the Intellectual Property Appellate Board. The Madras
High Court ruled against Novartis holding that: (1) s3(d) is not
unconstitutional; and (2) it did not have jurisdiction over the TRIPS
issue, and the WTO would have to decide whether s3(d) is TRIPS-compliant. The
decision has precipitated a favorable reaction from India's generic
pharmaceutical manufacturers and the world's public health community who
feel that if the judgment had gone the other way, there would have been
a dearth of affordable drugs in other nations. However,
Novartis have now moved the Supreme Court for refusing patent
protection for its new drug Glivec following the footsteps of Roche.
A
panoramic view of Indian generic pharmaceutical industry reviles the
changes through which it has emerged in the past years after the 2005
Patent Amendments and the pharmaceutical patent protections. As a result
of that many of the Indian pharmaceutical industries have reinforced
the IP legal system and have been constantly increasing their R&D
efforts investing in new innovations. While 10 years ago Indian
companies invested only about 1% of their revenue on research and
development, many of those companies are now contributing much more
capital to this goal, typically spending 6-8% of their turnover on
R&D.
MNCs
initially had been reluctant to set up their company in India inter
alia due to the lack of patent protection. The present scenario adapted
by the government in granting strong patent protection maybe one of the
factors that changed the prior reluctance. Furthermore, the presence of
MNCs in India with their research and technologies is growing day by
day.
Source: legalonline
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