The grant of EMR to Novartis for its anti-cancer drug, Glivec, has been challenged by Natco Pharma. Natco, which has a generic version of Glivec in the Indian market, has challenged the EMR on the grounds that it does not meet the product patent norms, under which EMRs can be granted only for molecules filed after 01 January, 1995.
Therefore, if the filing has been done prior to 1995, the product will not be applicable for patent protection post-2005 and Natco can continue marketing its product. The catch here is that there is lack of clarity on when Novartis filed for a patent on the molecule of Glivec with the US Food and Drugs Administration (FDA).
Under the WTO norms, India has agreed that products that enjoy patents under FDA rules will also enjoy patent protection in countries that have agreed to the WTO norms.
According to analysts, filing with the domestic authorities does not hold much value except for the EMR. According to Novartis, the company filed for EMR with the Indian authorities in November 2002.
Analysts say that the average time to market for a molecule is around 8-10 years. But Novartis received the approvals from the FDA within three years. Hence, the EMR acts as a stop-gap measure until the patent laws come into force.
Natco launched its generic product recently in January 2003. If the EMR to Novartis is a valid one, it will result in a loss of revenue and margins for Natco for a couple of reasons. First, with the product launched only recently, it will take more than a year for the product to payback the investments in developing the product and brand building.
With slightly less than two years to go before patents laws come into force in April 2005 (under the WTO), it will be a wasted investment for Natco or else the company expects to earn very high margins.
Secondly, the segment is a niche low volume and high margin segment. Natco