Reuters Events | Pharma

Thought leadership and innovation for the Pharmaceutical Industry

India’s Supreme Court rejected Novartis’ patent application for the cancer drug Glivec yesterday. A victory for the Indian drug industry, but the result may have repercussions on India’s attempts to attract foreign investment

By Louise Kelly on Apr 2, 2013

In 1970, the Indian government prohibited the patenting of drugs, paving the way for Indian pharmaceutical companies to freely produce medicines developed by foreign drug companies at a fraction of the cost. As a requirement of admission into the WTO in 2005, India re-introduced patent protections for intellectual property, yet the government has continually asserted its preference for generic competition ever since. Last year, the Indian patent office stated that if a patented drug in the Indian marketplace is not made widely available at a reasonable price, then generic manufacturers are entitled to make their own versions of the drug and pay a royalty to the patent holder. Generic versions of Novartis' cancer treatment Glivec cost about $2,500 for a year's supply in India, in comparison to almost $70,000 in the US where only the branded version is sold.

EyeforPharma reported last week of the impending court decision over Novartis’ seven year struggle for intellectual property rights. The drawn-out case has been closely watched by a global industry that, despite signals that the Indian government were relaxing their policies, is growing increasingly frustrated with the nation’s seeming reticence to recognize these rights. The battle’s end means more than a loss for the Swiss company as the result will no doubt send shockwaves through the international pharma industry that are striving for profit within the region.

Paradoxically, the same day the decision came down, Finance Minister Palaniappan Chidambaram, in an attempt to woo Japanese investors, told reporters that India would welcome an annual $50 billion in foreign direct investment and echoed the government’s afore-stated commitment to make the process easier for investors. India is relying on foreign resources to finance the Current Account Deficit (CAD), which has widened to record high of 6.7% in October-December quarter of the current fiscal driven by heavy oil and gold imports and muted exports.

Calling for more Japanese investment in India, Chidambaram said: "We are governed by the rule of law. We are a democracy. We have free press...We have a system of law and courts. Any dispute will be resolved through legal suit...that is what makes India not only an attractive destination but a safe destination."

While generic drug manufacturers and health activists in India will be celebrating the power of their legal system following the patent decision, Big Pharma will be questioning its fairness. How long will they continue to push for growth in a region that seems to be quashing their brand at every turn?