The
Indian pharmaceutical market is due for a paradigm shift
on January 1st 2005, when the country falls into line with
the World Trade Organisation's TRIPs (Trade-Related aspects
of Intellectual Property rights) agreement, which provides
for minimal patent protection. The new regime will close
down the one opportunity that allowed most Indian drug manufacturers
to flourish - reverse engineering.
The
lack of patent protection in India stems from 1970, when
the recognition of foreign drug patents was abolished. This
enabled local companies to build their businesses largely
on the manufacture and sale of drugs discovered by other
firms, often launching copies in India before the originator
had introduced them in leading global markets. To avoid
patent litigation, many developed new production methods
to avoid infringing process patents, which are valid (the
only codecil of the 1970 legislation being that the originator's
exact manufacturing process was not copied).
The
Indian industry has long been unpopular with bodies such
as PhRMA, which represents US brand pharmaceutical manufacturers.
It believes US companies lose $1.7 billion in annual revenues
because of the lack of intellectual property protection
in India. As well as the loss of sales in India itself,
the PhRMA says Indian manufacturers aggressively export
their products to other countries with poor patent protection.
Moreover,
their technical expertise has put Indian producers in pole
position to launch their generics in more lucrative developed
markets once the brand’s patents and/or exclusivity periods
have expired - perhaps ironically, the adoption of TRIPs
in their domestic market has encouraged companies like Ranbaxy,
Dr Reddy’s and Cipla to turn to the US, where a number of
blockbusters have still to go off-patent.
Changes
ahead
As of
2005, however, all this will change, and some believe many
of India’s 20,000+ drugmakers will not survive the process.
But, the majors could actually benefit, as drug prices in
the country may rise, and with 10 years to prepare for TRIPs,
a number have embarked on survival strategies, including:
- mergers
and acquisitions, both within India and overseas
- seeking
new markets for their products, particularly in the dev
- licensing
agreements, both in- and out-
- R&D
of new
chemical entities
-
establishing themselves as specialty pharmaceutical companies
- applying
drug delivery technology to reformulate old products
- working
as third-party manufacturers and suppliers
EMRs
cause a furore
One
of the precursors to TRIPs has been the granting of EMRs
(exclusive marketing rights). Applications for EMRs can
be made for new drugs not in the public domain that receive
marketing approval in India before the end of the 10-year
transitional period in 2005, and usually provide a five-year
exclusivity period; they will expire if a product patent
is later granted.
After
much delay, the first EMR was finally granted in October
2003, to Novartis for its chronic myeloid leukaemia drug
Glivec (imatinib mesylate). Novartis applied for
the EMR in 1998, and received marketing approval for Glivec
(Gleevec) in India in 2001. By the time the EMR was granted,
a number of Indian manufacturers had launched generic imatinib.
The
domestic firms did not take the matter lying down. Drugmaker
Natco and the IDMA (Indian Drug Manufacturers’ Association)
claimed that Glivec’s patents were filed before 1995, invalidating
its eligibility for EMR. Furthermore, the IDMA believes
that even if the EMR is valid, the government should grant
compulsory licences for generic copies on the grounds of
public interest; a year’s therapy with Glivec costs around
$27,000, compared with $2,700 for Natco’s Veenat
imatinib product.
Novartis
obtained an injunction from the High Court in Madras, restraining
six domestic drugmakers from manufacturing imatinib, but
not Natco; it also claimed "token" damages in
the region of Rs1 million ($22,000). Four have cooperated
and withdrawn imatinib, but a case in Chennai is ongoing,
as are appeals against the Glivec EMR, and at least three
generic versions of imatinib were still being sold as of
September 2004.
Controller
General loses job
One
of the more extreme ramifications of the first EMR was the
replacement of SN Maitu as Controller General of Patents
and Trademarks on September 1st 2004. An official from the
Ministry of Industry and Commerce stated: "There have
been reports of irregularities in the official’s functioning.
Apart from the EMR issue, which is sub judice, many
allegations have cropped up on his trademark-related decisions
also."
A month
after Glivec’s EMR, Wockhardt was granted the second, for
antibacterial cream Nadoxin (nadifloxacin). Wockhardt
said the EMR was given for its patent application filed
in 2002 for a "novel pharmaceutical composition"
containing the antibacterial ingredient, which was originally
developed by Otsuka. Wockhardt’s peers, however, argued
that since the EMR provision is a transitional arrangement,
it should only apply to NCEs patented after 1995 that would
qualify for product patent protection.
The
third EMR, for Lilly Icos' impotence product Cialis
(tadalafil), was granted in September 2004. Again, a number
of Indian firms had already launched tadalafil in India,
and tried to stop the EMR. Lilly plans to launch Cialis
in India in October 2004, and has said it is prepared to
sue local manufacturers if they do not cease the marketing
of their generic competitors. Lilly plans to charge Rs400
a tablet for Cialis, compared with Rs20 for the local copies.
Loopholes
identified
A number
of EMR applications have been rejected, including for:
- GlaxoSmithKline’s
Avandia (rosiglitazone)
- Bayer’s
Avelox (moxifloxacin)
- Roche’s
Invirase (saquinavir)
- the
drug delivery system covering Ranbaxy’s Cifran OD (once-daily
ciprofloxacin)
Some
of the manufacturers are challenging these decisions, with
the verdict for Cifran OD, for example, apparently
being at odds with the EMR granted for Nadoxin. GSK, meanwhile,
has decided to launch Avandia in India anyway, in
the first quarter of 2005; it believes the oral antidiabetic
will still have huge potential in the country. Glenmark,
Sun, Torrent etc. all market rosiglitazone products.
EMRs
are pending for, amongst others: Schering-Plough’s PEG-Intron
(alpha-interferon); AstraZeneca’s Iressa (geftinib)
and Exanta (ximelagatran); and Bayer’s gatefloxacin.
The
debate over the first EMRs has had one beneficial side-effect:
loopholes in the process have been identified. In particular,
the Patent Office had no communication with the Drug Controller
General of India, which only checked quality - so the two
bodies could send out conflicting approvals. There is also
no specific system to handle patent disputes so, for example,
the Madras and Chennai court decisions on Glivec’s EMR could
clash. Still to be decided is what will happen to generics
already on the market if the branded version is given exclusivity.
The
future looks... uncertain
According
to IMS
Market Prognosis, the initial impact of TRIPs will
be modest, not least as the Indian government is expected
to do the minimum necessary to comply, and multinationals
may keep their drug prices at the lower end of the global
scale. Nevertheless, an intense debate is expected in the
country, as the multinationals seek to have their products
protected, while others will press for the continuing manufacture
of, for example, cheap antiretrovirals.
If the patent (amendment) bill
is approved, covering data exclusivity, the Indian Pharmaceutical
Alliance claims that 15% of the products on the Indian market
could be covered - worth Rs30 billion - that local firms
will have to withdraw their drugs, and that multinationals
could raise prices. The IPA wants variations such as metabolites
and isomers excluded, and to have the rights to oppose patents
pre-granting.
The Indian market has huge potential,
but many multinationals have been cautious over their investments
in the country due to the lack of IP protection. According
to IMS MIDAS, as of June 2004 GSK ranked first in the Indian
market, with Aventis
and Pfizer the only other
international firms in the top 10. Indeed, in October 2004
AstraZeneca CEO Sir Tom McKillop commented: "India's
not there yet, not in the same category [as China or Mexico]
because it is only about to recognise IP next year. And
it will take some years... before there really is a sound
base for a multinational company to develop and launch its
new products in India with great success. But it will come
in time and I'm confident India will become an important
market."
Certainly,
opportunities appear to exist on both sides. The Indian
government is encouraging the use of the country as a base
for biotechnology and running clinical trials - at a much
reduced cost compared with the West. India also has the
largest number of FDA-approved manufacturing plants outside
the US, and a highly-skilled workforce, especially in areas
like chemistry. Bayer, Forest, GSK and Schwarz all have
R&D alliances with Indian firms. Once product patents
are in place, multinationals should be much more willing
to invest
in the country directly,
while exports, already worth $2 billion a year, could be
boosted by local R&D to make the Indian industry a truly
global player.
This
article was written by Selena Class, Deputy Executive Editor
of IMS
Company Profiles. An update of the Ranbaxy
Company Profile is being prepared, featuring an in-depth
interview with CEO Brian Tempest, and will be available
for immediate purchase and download from the IMS Online
Store before the end of 2004. For further information about
IMS' publications, please contact Rupesh Chudasama via e-mail
or call +44 207 393 5136. |
