Indias Intellectual Property Rights

Regime And The Pharmaceutical

Industry
Prepared By:

Rishi Raninga
Ronald Kiro
Shailie Naik
Shivani Nehru
Mittal Parmar

(2014C03)
(2014C04)
(2014C08)
(2014C10)
(2014C31)

Archit Kannan
Dony Joseph
Gauri Singh
Harsha Tandure
Jery Eapen

(2014C44)
(2014C52)
(2014C54)
(2014C55)
(2014C59)

Contents
Overview of the Case
Patents in Pharma Industry
Patent Act 1970
Indian Pharma Industry
Comparative Study

Global Environment
Other Pharma Cases

Overview of the Case

Cipla Ltd., Bombay based Indian Pharmaceutical drug
manufacturing company offered to sell Triple-therapy
AIDS drug cocktails in Africa for $350 a year per
patient in February 2001.
$600 a year to larger government programs.
$600 offer to African government was $400 below the
price set by pharmaceutical firms that held the
patents for those drugs.

Impact of Ciplas Move

This move ignited firestorm Storm in the West.
MNCs in agreement with WHO had agreed to cut down
their prices for AIDS drug combinations to African
countries to $1000 a year per patient, below the $10,000
to $15,0000 amounts normally charged in developed
countries in May 2000.

Cipla price cut forced some MNCs to reduce the price

again.
Ciplas move political trick compassionate shrewd
The controversy between Indian Pharmaceutical
Companies and the larger US and European MNCs
Marrakesh Agreement.

Patents In Pharma Industry

To promote development and innovation in drug
therapies to improve human health.
This discovery made Pharma companies to make
huge, long term financial investments in R&D.
It took almost 10-15 years and $500 million to develop
and bring a new drug to the market.

Concept of Patent
The English word patent was derived from the Latin
patere (to be open) and referred to an open letter of
privilege from a sovereign.
In 1474, the Venetian Senate regularized the practice
of granting patents with rules and administrative
procedures.
In 1641, the first patent in the American colonies was
issued in Massachusetts for a method of
manufacturing salt.
With the Industrial Revolution, patent protection
became an increasingly important device for
encouraging innovation that allowed society to
progress.

Patent Protection in Pharma

Industry
To promote development and innovation in drug
therapy's to improve human health. This discovery
made Pharma companies to make huge investments
in R&D.

Patents that resulted from R&D projects, moreover,

were never successfully commercialized due to a
number of factors, such as the discovery of even
better therapies that would make other research
projects obsolete.

Early Patent Law In India

British enacted the EXCLUSIVE PRINCIPLES ACT(1856) to
protect invention in India.
Exclusive rights were given to the manufacturer to
sell, make and authorize others to do so.
PATENT AND DESIGN ACT OF 1911:
The 1911 act codified the patent regime in much greater
detail, establishing for the first time in India a system of
patent administration under the office of controller of
patents.

Challenges to Patent Act

Dependency on imported products, they argued,
resulted in exorbitant drug prices, which were among
the highest in the world.
Many commentators in India supported the concept
of patent protection for inventors, but wanted a
regime that primarily rewarded the domestic industry,
not MNCs.
Pharmaceutical MNCs saw the patent issue as a direct
threat to their livelihood and felt the situation
demanded a forceful political response.

1970 Patent Act

Time period of patent coverage shortened from 16 to 5 years.

Products were no longer patentable.

Compulsory licensing changed wrt to third party access

Eliminated equating imports with working a patent.

Related Government Policies

Price Controls (Drug Price Control Offer
DPCO)
Measure to promote self-reliance
DPCO placed price ceiling on certain mass products.
Drugs divided into 4 categories:
1) Lifesaving

2) Essential
3) Less essential
4) Non-essential

Foreign Exchange Regulation Act of

1973
Aimed to reduce dominance of foreign countries.
Allowed equity investment of 40% by foreign firm in
Indian venture.

Evolution of Indian
Pharmaceutical Sector

Top Pharmaceutical Companies

Mergers and Acquisitions &

100% FDI

2014: Sun Pharma takeover Ranbaxy for $3.2B

Joint Ventures

Multinational companies are collaborating with Indian

Pharma firms to develop new drugs
Pfizer partnered with Aurobindo Pharma to develop generic
medicines

Six leading pharmaceutical companies have formed an

alliance LAZORR to share their best practices, so as to
improve efficiency and reduce the operating costs

Research and Development

Indian pharmaceutical companies spend 6 per cent of their
total turnover on R&D

Creation of a New Global

Environment
Creation of WTO : permanent successor institution to
oversee global trade
WTOs primary function Resolve trade disputes (among
142 member nations)
Rules of new international trade regime:
GATT. Trade in goods
GATS, General Agreement for Trade in Services
TRIPS, Agreement on Trade Related Aspects of
Intellectual Property Rights

Significance

of TRIPS

IPR in 7 areas :
Copyrights

Trade secrets

Patents

Industrial designs

Trademarks

Layout designs for ICs

Geographical indications

Products and processes patentable for 20 years

Redefinition of Patent New, inventive, with industrial applications

Provision No nation to discriminate based on technology

Induced Trade Tensions

India listed on US priority watch list
1990 Indian patent protection weak; adverse effect on US
Pharma
1992 Indias denial of patent protection unreasonable
Imposed penalty suspended duty free privileges

India's intellectual property rights related decisions have affected

the biopharma industry much more than the other sectors
- John J Castellani, CEO, PhRMA (Pharmaceutical Research and Manufacturers of
America), a group of US-based drug makers

Points of Contention
If countries show scant respect for IP protection, the future of new
medicines is at risk
Incentives for the research-based pharmaceutical industry to
invest over $ 1 billion and 10-15 years in the development of a
single new medicine will be undermined
Challenges to the IP ecosystem in India are seen as a serious
concern to the future climate for innovation across several
sectors.
India is being seen as an outlier in recognising and enforcing
patent rights, and this perception could weaken India's
investment climate.

Special 301 Report

USA did not move India to the priority

foreign country (Danger zone),
because they hope
Positive solution:
New government will address the issues. Even they knew
Congress wont come in power again. As such, USTR
reviews the trading partners on annual basis. But for
India, USTR has planned an Out-of-Cycle Review (OCR)
of India, in fall 2014 (i.e. Late September 2014). So, if Modi
takes strong initiatives to enforce IPR in MNCs favor, well
be removed even from the priority watch list- just like
South Korea, Philippines etc.

Worst case scenario:

Modi continues status quo, Obama puts India on priority
foreign country status = puts sanctions under US trade
law. Then India can retaliate by dragging them to WTO,
after all, our patent regime is compliant with TRIPS (Trade
related intellectual property rights). Besides India can
also adopt tit-for-tat, sanctions for sanction then USA
industries will be hurt more. Hence Worst case scenario
unlikely.

Developing Countries and

Indian IPR

Developed Countries and

Indian IPR

Internal Debate on Indian

Patent Act 1970
BJP strongly protested the revival in the
Indian Patent Act 1970 then.
One of the most prominent opponent of
TRIPS was Dr. Hamied owner of Cipla
Cipla was earning by selling Pfizers Sidenafil
-viagra tablet at 1c per pill in developing
countries as Erecto that Pfizer was selling at
10 $ per pill!
To Henry Mackinnel, CEO of Pfizer, the
business model of Cipla was the reason to
support the strong patent laws to carry out
international business.

Dr. Reddys view

Dr. Reddys was lobbying the indian government to
enforce and adopt international rules.
Dr. Reddys founder Dr. Anji said: If you spend Rs. 10
Crore, you can start developing new molecule and
thus this way MNC would focus on research where
margin is higher and might give its generic drug
business away to the local drug manufacturers in the
developing countries.
Dr. reddys itself had licenced its two molecules to
Danish company
Difficulty is to carry out the clinical development in the
developed part of the world. Product can also be
licenced. MNC gives 10% profit on such products.

Facts to gauge the impact of

the introduction of
pharmaceutical patents in India
Consistent growth rate of the Indian economy
Rising income levels
Increasing penetration of insurance on all fronts,
especially after allowing entry of private players
For the 60% of the "poor" in India, who currently do not
have access to pharmaceuticals, price rise and demand
sensitivity due to patent introduction is irrelevant. Thus
only a small part of the market will be affected by the
new regime
India is governed by a government which relies more on
populist politics for survival and this would ensure that the
best interests of the population is kept in mind without
buckling too much under international pressures. All in all,
India stands to gain more in the new patent regime with
the inherent costs being marginalized by several factors

Merck unit sues Glenmark

Pharmaceuticals for infringing patent
on diabetes drugs
US-based MSD (Merck Sharp & Dohme) Pharma, the third-largest
pharma company in the world by revenues, asked the Delhi High
Court to bar Mumbai-based Glenmark from selling two popular antidiabetic drugs.

MSD's move came a week after Glenmark Pharma launched generic

versions of a range of anti-diabetes products sold by the US company
under the brand names Januvia and Janumet. Glenmark branded its
medicines Zita and Zita Met.

 Januvia and Janumet are patented and enjoy IP protection of 20

years in India. However, under the Drugs and Cosmetics Act of
India, a company can apply for approval to market a patented
drug four years after its launch. Glenmark has used this route to
get an approval to launch the drug. Under the Drugs and
Cosmetics Act, state-level regulators can grant marketing
approval even if a patent exists, as long as the drug has been
around for four years.
Glenmark is the third Indian company to use this route to launch a
patented drug. Earlier, Cipla and Natco Pharma had tried to
launch anti-cancer drugs in the Indian market through this route.
From the drug regulatory side, there is nothing that stops Glenmark
from launching the drug. A drug regulator cannot hold back an
approval because of an existing patent, the courts have made it
clear.

Quia Timet Injunction

Novartis filed a quia timet suit against Ranbaxy for its patented
antidiabetic drug Galvus.

What is Quia Timet Injunction:

An injunction to restrain wrongful acts which are imminent but have
not yet commenced .
The standard of proof for quia timet injunctions and what constitutes
genuine threat for infringement is still ambiguous in India.

 Ranbaxys move:
Applied for revocation of Novartis patent in Intellectual
Property appellate board (IPAB).

Novartis counter move:

One of Ranbaxys managers quote vildagliptin is at the
developmental stage and is being actively pursued for
development.

Delhi HCs current decision:

Delhi court has granted the injunction observing that
applying for patent revocation is indicative of imminent
intent to launch of generic version.

Contradiction:
Applying for patent revocation may also be construed as
an act of good faith by the generic company; to have
the validity of the patent adjudicated before launching
the generic version.

THANK YOU