 "Judgement on Novartis a positive for generic companies")
Over the last few years, large multinational pharmaceutical companies, also referred to as Big Pharma, have been focusing on emerging markets, as growth in developed markets has slowed on patent expiries. But the going in these markets has not been smooth. The Supreme Court refusing to grant a patent to Novartis for its cancer drug, Glivec, is another episode in this battle between emerging markets and Big Pharma. The large multinationals want to retain their pricing power by making minor modifications to their existing molecules but patent laws in countries like India don't allow this.
The development is unlikely to be a major setback for India from a product rollout point of view, as Big Pharma is used to such outcomes in emerging markets. Drug pricing in emerging markets is regulated, unlike in the US, a reality most global companies are aware of. For instance, AstraZeneca has seen "extraordinary volume growth" in China but pricing has not been strong.
Large multinational players have had to step down on pricing even for patented products in countries like Thailand. So, the apex court's refusal to grant a patent to Novartis' cancer drug Glivec has not come as a surprise to the Street, as Indian patent laws do not grant patents to existing molecules with minor modifications. A modified molecule has to demonstrate substantial improvement in its efficacy in order to seek a patent.
As is evident from the share price movement, the judgment will be beneficial for generic drug-makers in India like Natco (5.4 per cent) and Cipla (up 1.2 per cent), which manufacture copycat versions of Glivec. In countries like Thailand, regulators have forced MNCs to lower prices of patented products even. Deepak Malik of Emkay Global says: "The outcome has not come as a surprise. There are several instances in other emerging markets as well as developed ones where the government has gone for compulsory licensing or restricted the ever-greening of patents. Multinational pharma companies will now be very careful in India regarding the pricing of products."
Some industry watchers view this as a negative development. In fact, an analyst with a leading foreign brokerage says had the judgment gone the other way, it would have been negative for generics players. Even though a senior official at Novartis told the Financial Times a day before the judgement that rollout of new products in India would be hit if the apex court "refused to grant a patent for Glivec, its cancer drug," few expect the company to hold back products which are relevant for India.
The development is unlikely to be a major setback for India from a product rollout point of view, as Big Pharma is used to such outcomes in emerging markets. Drug pricing in emerging markets is regulated, unlike in the US, a reality most global companies are aware of. For instance, AstraZeneca has seen "extraordinary volume growth" in China but pricing has not been strong.
Large multinational players have had to step down on pricing even for patented products in countries like Thailand. So, the apex court's refusal to grant a patent to Novartis' cancer drug Glivec has not come as a surprise to the Street, as Indian patent laws do not grant patents to existing molecules with minor modifications. A modified molecule has to demonstrate substantial improvement in its efficacy in order to seek a patent.
As is evident from the share price movement, the judgment will be beneficial for generic drug-makers in India like Natco (5.4 per cent) and Cipla (up 1.2 per cent), which manufacture copycat versions of Glivec. In countries like Thailand, regulators have forced MNCs to lower prices of patented products even. Deepak Malik of Emkay Global says: "The outcome has not come as a surprise. There are several instances in other emerging markets as well as developed ones where the government has gone for compulsory licensing or restricted the ever-greening of patents. Multinational pharma companies will now be very careful in India regarding the pricing of products."
Some industry watchers view this as a negative development. In fact, an analyst with a leading foreign brokerage says had the judgment gone the other way, it would have been negative for generics players. Even though a senior official at Novartis told the Financial Times a day before the judgement that rollout of new products in India would be hit if the apex court "refused to grant a patent for Glivec, its cancer drug," few expect the company to hold back products which are relevant for India.