A new order

A ray of hope for Indian generic drug makers

Gilead Sciences, the California-headquartered biotechnology company, has authorised seven India-based drug makers - Cipla, Ranbaxy, Mylan, Strides Arcolab, Hetero, Cadila Healthcare and Sequent Scientific - to manufacture and sell the generic versions of its hepatitis C medicine, Sovaldi, in 91 developing countries. Earlier in the week, Lupin, the fourth largest Indian drug maker, announced that it will develop and supply products for the bio-pharmaceutical division of Merck. This came just days after the company had bagged the rights to sell certain products of Salix Pharmaceuticals of the United States, which specialises in gastroenterology, in Canada.

This is an interesting shift. For many years now, Indian generic drug makers and patent-holding innovator companies were at loggerheads. While the latter argued that innovation needed to be rewarded and, therefore, sought to sell their medicine at a premium, generic drug makers accused them of evergreening patents and blocking inexpensive alternatives through unfair means. In this they found support from health activists, as well as an increasing number of governments. Particularly noteworthy were Cipla's innumerable fights with patent-holding companies, including Gilead, over medicine used for the treatment of HIV/AIDS. What really caught the attention of observers was that one of the seven companies identified by Gilead for generic Sovaldi was Cipla. Has confrontation given way to cooperation? Or have Western companies figured out how to buy off companies producing generic drugs?

Health activists have said that the Gilead deal still leaves out a large population of patients in countries such as China, Brazil and Turkey. Even in the 91 countries marked out for Indian generic drug makers, the medicine will still be out of reach of many patients. Still, it is expected to bring down the cost of medication for almost half of the world's infected population. In these 91 countries, Gilead hopes to make the medicine available at $10 a day, which is one per cent of the price many patients are charged in the United States. India is one of these countries, though Gilead's Sovaldi faces pre-grant patent opposition here. With this deal, Gilead has addressed the criticism that Sovaldi is overpriced in developing markets and has, at the same time, managed to safeguard its lucrative market in the United States from potential generic challengers. With annual sales of over $10 billion, Sovaldi is well on its way to become the world's top-selling drug. Gilead will receive seven per cent royalty on sales from the seven generic drug makers.

For Indian generic drug makers, such deals open a whole new opportunity. Patent litigation is expensive. That's because the new drug pipeline of innovator companies has almost turned dry, and they know that they have to look at generics for long-term growth. And that's why they guard their turf zealously. One way they had devised was "authorised generics", which involves giving the genetic rights to an associate. Indian generic companies, as a result, found it more and more difficult to do business. The recent deals indicate that the old order could change.