US business groups say verdict to impact pharma innovation in India

Sector observers refute, call response a bluff

Business groups in the US have sharply criticised the Supreme Court of India judgment against Swiss drugmaker Novartis in denying patent protection to the company’s anti-cancer drug Glivec. They maintain Monday’s ruling will hurt the sector’s innovation in India, but industry observers describe their response as a bluff that can be called.

Disappointed with the verdict, John Castellani, president and CEO of PhRMA, a leading pharmaceutical industry association based in Washington, DC, said in a statement the ruling marked “yet another example of the deteriorating innovation environment in India”. Describing the protection of intellectual property rights as fundamental to the discovery of medicines, he said, “It is critically important that India promote a policy environment that supports continued R&D of new medicines for the health of patients in India and worldwide.”

The US-India Business Council said over 40 countries, including China and Russia had granted a patent for Glivec and that India now stood out as unique for not granting the same to this “incremental innovation”. USIBC President Ron Somers said, “We recognise the importance of generics to the contribution of health once patents expire, but believe that in order for India to become the innovation nation of the 21st century, it should reward and encourage innovation, including incremental innovation.”

However, pharma sector observers say India is nowhere close to becoming an innovation powerhouse in this sector in the near future, and therefore the ruling is likely to help, not hurt, the Indian pharmaceutical industry for now. Raghuram Selvaraju, managing director and head of Healthcare Equity Research at the New York-based Aegis Capital Corporation, said India’s homegrown pharma companies have not yet been as successful in developing new drugs as they have in copying other companies’ drugs.

“The Indian Supreme Court rendered this decision on behalf of the Indian people,” Selvaraju said, adding the court could step up to protect patents when required. “I think what is much more likely to happen is obviously that the Indian Supreme Court, as and when innovation truly starts to be practiced by Indian pharma companies, will engage in a little bit of two-facedness of its own and say ‘Yes, we know there was this prior decision that was rendered against Novartis, but that does not mean all Indian pharma patents cannot be upheld, only the ones where there’s a clear humanitarian issue at stake’.”

All sides agree that Novartis was bound to put up a fight with respect to Glivec. It’s a multi-billion dollar blockbuster drug for the company, and its development was considered so critical for treatment of certain forms of leukemia that it had one of the fastest ever approval processes in the US. “Every avalanche starts with a single snowflake,” said Selvaraju. “Novartis truly felt this was a dangerous situation because if they let this fly, then it’s just the start of the problem.”

That problem may be starting, with other developing countries likely to draw strength from the Indian ruling to change their patent laws to protect public health, according to Tahir Amin, co-founder and director of the Initiative for Medicines, Access and Knowledge or I-MAK, a group in New York that works towards reforming the present patent system and increasing access to affordable medicines.

“It’s a great decision from the point of view of access to medicines but also from the point of view of a much needed rethink of how the patent system works both for India and also in other countries,” said Amin. He dismissed the response from pharma companies about reconsidering their plans for India as “hot air” and said the main impact in India was likely to be on the pace of takeovers and mergers of Indian companies with bigger MNCs. “This may give Indian companies some breathing room to bring products out and keep their independence. When you have laws which allow more patenting then basically you’re blocked and you say what’s the point in fighting them, I might as well sell out and go, whereas if there’s room to operate the decision may give them the opportunity,” Amin said.

While the true impact of the Supreme Court’s decision won’t be known immediately, the ruling has sharpened the divide between developed and developing countries over drug pricing, with several other conflicts pending. The USIBC referred to this concern among major pharmaceutical corporations, noting in its statement that, “The denial of the patent may now exclude from patentability many other significant inventions in the pharmaceuticals area.”