Indian Pharmaceutical Industry Strategic Options

INDIAN PHARMACEUTICAL INDUSTRY: STRATEGIC OPTIONS AFTER 2005
A Project Report Submitted in Partial Fulfillment of award of MBA Degree
TABLE OF CONTENT
1. #. '. Executi e !ummar" $i!tor" of P%armaceutical &ndu!tr" P%armaceutical &ndu!tr" in &ndia Major pla"er! Dome!tic trade (%e E)&M !cenario a. &mport! b. Export! Pricing R*D Patent * R * D +. ,lobal p%armaceutical indu!tr" Europe and generic! mar-et .. &PR Mi!conception and fact! M"t%! of /%ig% priced medicine after c%ange in patent law0 M"t% of /Damage to local indu!tr"0 1. Patent! and it! impact on p%armaceutical indu!tr" in &ndia and on it! con!umer! 2. Product patent Definition of patent ("pe! of patent! 3%at doe! patent! do 4 5riteria for patentabilit" ,eneral procedure! to obtain a patent 6. &PR in ,A(( 7. (%e propo!ed patent regime 18.Patent in &ndia 11.(R&P! * P%armaceutical 9 &mplication for &ndia 1#.:oo- at (R&PS agreement 1'.(R&PS p%armaceutical * &ndia 5on!e;uence of (R&PS 9 M"t%! * realit" &mpact of (R&PS on global bu!ine!! &mpact of (R&PS on &ndian firm!
1+.(R&PS 9 A ailabilit" * Price! of Drug! 1..5onclu!ion 11.Recommendation! 12.Porter fi e force model 16.Porter diamond model 17.PES( Anal"!i!
EXECUTIVE SUMMARY
(%e P%armaceutical &ndu!tr" in &ndia i! t%e large!t in t%e de eloping world. &ndia produce! nearl" 6..< of t%e world0! drug re;uirement! in term! of olume and 1.. < in term! of alue= and ran-! among!t t%e top 1. drug manufacturing countrie! in t%e world. (%e p%armaceutical indu!tr" in &ndia meet! around 28< of t%e countr"0! demand for buldrug!= drug intermediate!= p%armaceutical formulation!= c%emical!= tablet!= cap!ule!= oral! and injectable!. (%e p%arma indu!tr" in &ndia i! %ig%l" fragmented bot% in term! of number of manufacturer!= wit% o er #'=888 licen!ed unit! a! well a! t%e ariet" of product!. > er '.8 unit! in t%e organi?ed !ector and man" more in t%e unorgani?ed !ector. Bul- drug unit! concentrated around t%ree area!9 Bomba" @ An-le!%war= $"derabad @ 5%ennai= 5%andigar%. Furt%er= about '#< of t%e total export! are to 1# de eloped countrie! namel" ASA= 5anada= Mexico= ,erman"= AB= &tal"= Cet%erland!= France= Dapan Au!tralia= Bra?il and Argentina. &ndian export! are de!tined to more t%an #88 countrie! around t%e globe including %ig%l" regulated mar-et! of AS= Europe= Dapan and Au!tralia. Dome!tic pla"er! account for o er 28< mar-et !%are and t%e re!t i! accounted for b" MC5!. (%e leading dome!tic companie! are Dr. Redd"E! :aboratorie! FDR:G= Ranbax" :aboratorie! FR::G= Sun P%armaceutical!= 5ipla= :upin :aboratorie!= >rc%id 5%emical! and 3oc-%ardt w%ile t%e leading MC5! are ,laxo!mit%-line= Pfi?er= A enti! P%arma and Merc- &ndia. &f one con!ider! t%e entire %ealt%care !cenario= allopat% account! for .8< of t%e o erall &ndian mar-et= a"ur eda account! for '8< and !id%a= unani= %omeo and ot%er !"!tem! !%are t%e re!t. (%i! i! t%e rea!on w%" &ndia %a! low per capita expenditure i.e. onl" ' ASH= compared to +1# ASH of Dapan. (%e traditional &ndian !"!tem i! ba!ed on proce!! dri en. (%i! lead! to proce!! de elopment of buldrug!.
3e %a e tried to anal"?e t%e &ndian P%arma &ndu!tr" b" appl"ing t%e !trategic model! li-e PES(= Porter fi e force! and Porter Diamond. (%e
major finding! of t%e application of model! are t%at t%ere i! a great amount of potential a ailable in P%arma &ndu!tr" in dome!tic a! well a! export mar-et. &n order to ac%ie e !uc% a %ig% growt% t%ere i! a need to ta-e initiati e! b" go ernment a! well a! compan" to o ercome it! wea-ne!!e! and concentrate on !trengt%! to trap upcoming opportunitie!. After #88.= patent act will be implemented. So= patented buldrug! will not be allowed to produce. (%e &ndian companie! are good at proce!! de elopment but= due to product patent= t%e" will not be able to produce !ome of buldrug!. Major c%allenge! in t%e P%arma &ndu!tr" are low price reali?ation= fragmented !mall pla"er!= dumping from !ome of countrie!= lac- of brand building exerci!e= low product de elopment focu!= etc. &ndia %a! alread" reali?ed t%e problem! in t%e P%arma &ndu!tr" and %ad ta-en t%e action in it! E)&M Polic" b" focu!ing more on export of buldrug! b" de eloping Export >riented Anit! FE>AG in !elected area near b" &nternational airport!. &n t%e end= we %a e gi en !ome !ugge!tion! to impro e t%e current !ituation of P%arma &ndu!tr". >ne of t%e i!!ue! i! con!olidation of !mall firm! !o t%at t%e" can compete to t%e world le el. (o ta-e ad antage of c%eap labor= &ndian firm! !%ould emp%a!i?e on contract manufacturing. ,o ernment !%ould de elop t%e polic"= w%ic% boo!t! t%e new product de elopment. A! R*D i! crucial in upcoming future due to patent act= t%e role of go ernment will be er" important. :a!tl"= we %a e co ered !ome of t%e current i!!ue! related to t%e buldrug indu!tr". Patent! pla" an important role in encouraging Re!earc% and De elopment. (%e new 3(> rule! impl" t%at &ndia will %a e to !witc% to a product patent regime po!t #88. from it! current proce!! patent regime. (%i! would alter t%e !cenario in t%e &ndian mar-et o er t%e next 18I1. "ear!. ,o ernment policie! will pla" an important role in defining t%e future of t%e P%armaceutical indu!tr". (%e product patent regime coming into effect from Danuar" #88. will lead to longIterm growt% for t%e future.
RESEARCH METHODOLOGY
A.) St !" O#$%&t'(%): (%e !tud" of &ndian P%armaceutical &ndu!tr" (%e !tud" t%e impact of product patent regime on &ndian
P%armaceutical &ndu!tr" (o find out t%e !trategic option after #88. related to &ndian Patent Act B.G M%t*+!) +, D-t- C+..%&t'+/: J Secondar" data wa! collected from ariou! !ource! !uc% a! journal!= maga?ine!= web!ite!= boo-! J Primar" data wa! collected per!onall" t%roug% !tructured ;ue!tionnaire. 5.G L'0't-t'+/) : J (%e data i! collected t%roug% !econdar" !ource !o it ma" %appen t%at it doe! not matc% t%e actual data. J (%e data collected from t%e concerned per!on in t%e compan" i! onl" a! pro ided b" t%em.
HISTORY OF PHARMACEUTICAL INDUSTRY

Antil about 1688= t%ere were few drug companie!. P%armaci!t! t%em!el e! made almo!t all t%e drug! t%e" !old. (%en two re olution!= one in drug! and t%e ot%er in indu!trial de elopment= ga e birt% to t%e modern drug indu!tr". (%e di!co er" of more and more drug! t%at re;uired !pecial training and e;uipment to produce made it increa!ingl" difficult for a p%armaci!t to prepare drug!. At t%e !ame time= t%e &ndu!trial Re olution in Europe led to t%e de elopment of manufacturing met%od! t%at could be u!ed to ma!!I produce drug!. A! a re!ult= man" drug companie! were e!tabli!%ed in Europe= and European companie! dominated t%e world drug mar-et for man" "ear!. (%e beginning of t%e Anited State! drug indu!tr" can be traced bac- to t%e Re olutionar" 3ar in America F122.I126'G. (%e c%ief p%armaci!t of t%e American arm"= Andrew 5raigie= !et up a laborator" in 5arli!le= Penn!"l ania= to !uppl" drug! to t%e militar". After t%e war= 5raigie opened %i! own laborator" and began a w%ole!ale drug bu!ine!!. Soon ot%er p%armaci!t! !et up drug companie!. (%e!e companie! grew a! t%e" adopted t%e ma!!Iproduction tec%ni;ue! de eloped in Europe. (%e American 5i il 3ar F1611I161.GIIli-e t%e American Re olutionII created a great demand for drug! and !o furt%ered t%e growt% of t%e A.S.
p%armaceutical indu!tr". But European companie! continued to dominate t%e world drug mar-et until 3orld 3ar & F171+I1716G. Before t%e war= t%e Anited State! imported mo!t of it! drug! from ,erman". But !uc% import! !topped w%en t%e Anited State! joined t%e war again!t ,erman" in 1712. (%e American p%armaceutical indu!tr" t%en expanded rapidl" to meet t%e countr"E! drug need!. (%e Anited State! !oon began to export drug! and became one of t%e worldE! leading producer!. (oda"= t%e Anited State! lead! all countrie! in drug production. Drug! toda" benefit u! tremendou!l". (%e" al!o pre!ent u! wit% !ome of our wor!t problem! and greate!t c%allenge!. Drug! %elp pre ent or control man" di!ea!e!. (%e" al!o relie e pain and ten!ion and %elp t%e bod" function properl". But mi!u!e of alco%ol= narcotic!= and ot%er drug! %a! led to addiction for million! of people. &n addition= wide!pread illegal u!e of drug! %a! become a major problem. (%e c%allenge! t%at drug! offer lie in t%e di!co er" of better medicine! for treating cancer= cardio a!cular di!ea!e!= A&DS= and ot%er crippling and deadl" di!order!. &n t%e 1768E! and 1778E!= p%armaceutical re!earc%er! increa!ed effort! to find !uc% drug!. Someda"= !cienti!t! ma" de elop drug! t%at lengt%en life b" !lowing t%e aging proce!!. (%e p%armaceutical indu!tr"= w%ic% i! centred around Kadodara FBarodaG= A%medabad= and Atul FKal!adG= produce! oneIt%ird of t%e national total.
PHARMACEUTICAL INDUSTRY IN INDIA

(%e &ndian P%armaceutical !ector %a! come a long wa"= being almo!t nonIexi!tent before 1728 to a prominent pro ider of %ealt%care product!= meeting almo!t 7.< of t%e countr"E! P%armaceutical! need!. (%e &ndian P%armaceutical &ndu!tr" toda" i! in t%e front ran- of &ndia0! !cienceIba!ed indu!trie! wit% wide ranging capabilitie! in t%e complex field of drug manufacture and tec%nolog". &t ran-! er" %ig% in t%e t%ird world= in term! of tec%nolog"= ;ualit" and range of medicine! manufactured. From !imple %eadac%e pill! to !op%i!ticated antibiotic! and complex cardiac compound!= almo!t e er" t"pe of medicine! i! now made in &ndia. (%e dome!tic P%armaceutical !ale! %a e increa!ed from R!+bn in 1728I21 to R!#1+bn in #88#= at a 5A,R of 1'.2< per annum. (%e total &ndian production con!titute! about 1.'< of t%e world mar-et in alue term! and= 6< in olume term!. (%e per capita con!umption of drug! in &ndia= !tand! at ASH'= i! among!t t%e lowe!t in t%e world= a! compared to DapanI ASH+1#= ,erman"I ASH### and ASAI ASH171. During 1728= t%e &ndian Patent! Act F&PAG and t%e Drug Price 5ontrol >rder FDP5>G were pa!!ed. Alt%oug%= t%e DP5> acted a! a buffer again!t P%armaceutical companie! b" ma-ing free pricing illegal= it fulfilled t%e goal of pro iding ;ualit" drug! to t%e public at rea!onable rate!. (%e introduction of t%e &PA w%ic% did not recogni?e product patent but onl" proce!! patent pro ided a major t%ru!t to t%e &ndian P%armaceutical! indu!tr" and t%e &ndian companie!= w%o t%roug% t%e proce!! of re er!eIengineering= began to produce buldrug! and formulation! at lower co!t!. (%i! led to %ig% fragmentation in t%e &ndian P%armaceutical indu!tr" due to t%e emergence of a number of !mall
&ndian firm!. (%u!= t%ere are about #+=888 companie! big= medium and !mall fig%ting for a more t%an H AS . Billion mar-et. (%e &ndian P%armaceutical mar-et i! ran-ed about 1#t% worldwide. About '88 firm! in t%i! indu!tr" are in t%e organi?ed !ector= around 1.=888 being in t%e !mallI!cale !ector and t%e remaining being er" !mall wit%out an" economie! of !cale. &ndia manufacture! o er +88 buldrug! and around 18=888 formulation! being di!tributed b" .= 88=888 c%emi!t! all o er t%e countr". (%e P%armaceutical &ndu!tr" i! pa!!ing t%roug% a wa e of con!olidation in &ndia. (%e objecti e i! to !trengt%en t%eir brand e;uit" and di!tribution reac%ing t%e &ndian mar-et= w%ic% i! e!!entiall" a brandedIgeneric! mar-et. (%e organi?ed !ector of t%e P%armaceutical &ndu!tr" %a! pla"ed a -e" role in promoting and !u!taining de elopment in t%i! ital field. &nternational companie! a!!ociated wit% t%i! !ector %a e !timulated= a!!i!ted and !pear%eaded t%i! d"namic de elopment in t%e pa!t fift"It%ree "ear! and %elped to put &ndia on t%e P%armaceutical map of t%e world. (%e P%armaceutical &ndu!tr" in &ndia pro ide! excellent facilitie!. &t %a! ;ualit" producer! and man" unit! are appro ed b" regulator" aut%oritie! in ASA and AB. &t %a! a pool of per!onnel wit% %ig% managerial and tec%nical competence a! al!o !-illed wor-force. &t! trac- record of de elopment= particularl" in t%e area of impro ed co!tIbeneficial c%emical !"nt%e!i! for ariou! drug molecule! i! excellent. &t pro ide! a wide ariet" of buldrug! and export! !op%i!ticated buldrug!. &n t%e pre!ent !cenario= t%e growt% of a dome!tic P%armaceutical compan" i! criticall" dependent on it! t%erapeutic pre!ence. (%e old and mature categorie! li-e antiIinfecti e!= itamin!= analge!ic! are deIgrowing w%ileL new life!t"le categorie! li-e 5ardio a!cular= 5entral Cer ou! S"!tem F5CSG= Anti Diabetic are expanding at doubleIdigit growt% rate!. (%e &ndian mar-et %a! !ome uni;ue -!(-/t-1%). &ndia %a! a .' "ear old democrac". &t %a! an educated wor- force and Engli!% i! commonl" u!ed. &t %a! a !olid legal framewor- and !trong financial mar-et!. Profe!!ional !er ice! are ea!il" a ailable. (%ere i! alread" an e!tabli!%ed international indu!tr" and bu!ine!! communit". &t %a! a good networ- of worldIcla!! educational in!titution! and e!tabli!%ed !trengt%! in &nformation (ec%nolog". (%e countr" i! now committed to a free mar-et econom" and globali?ation. >ut!ourcing in t%e field! of R*D and manufacturing i! t%e next be!t e ent in t%e P%armaceutical indu!tr". Spiraling co!t= expiring patent!= low R*D co!t and mar-et d"namic! are dri ing t%e MC5! to out!ource bot% manufacturing and re!earc% acti itie!. &ndia wit% it! apt c%emi!tr" !-ill! and low co!t ad antage!= bot% in re!earc% and manufacturing coupled wit% !-illed manpower will attract a lot of bu!ine!! in t%e da"! to come. For t%e fir!t time
in man" "ear! t%e international P%armaceutical indu!tr" i! finding great opportunitie! in &ndia. (%e proce!! of con!olidation= w%ic% %a! become a generali?ed p%enomenon in t%e world P%armaceutical indu!tr"= %a! !tarted ta-ing place in &ndia. (%e P%armaceutical &ndu!tr"= wit% it! ric% !cientific talent! and re!earc% capabilitie!= !upported b" &ntellectual Propert" Protection regime= i! well !et to mar- it! place a! a Sunri!e &ndu!tr". MA2OR PLAYERS: (%e top fi e companie! in t%e indu!tr" IRanbax"= ,laxo= :upin= $oec%!t and 5ipla account for onl" 17 percent of t%e indu!tr"E! turno er= and t%e top ten control around '1 percent of t%e mar-et. (%e major multinational pla"er! in t%e organi?ed !ector of t%e indu!tr" are E Merc- F&ndiaG= Par-eI Da i! F&ndiaG =Pfi?er =R%oneIPoulenc F&ndiaG= ,laxoI3ellcome= Co arti!= and Smit%-line Beec%am P%armaceutical!. (%e main &ndian buldrug! and formulation! manufacturer! in t%e organi?ed !ector are Dr. Redd"E! :aboratorie!= &pca laboratorie!= D B 5%emical! * P%armaceutical!= Cic%ola! Piramal &ndia= Ranbax"= 5ipla= Sun P%armaceutical!= and 3oc-%ardt. (%e unorgani?ed !ector account! for '8 percent of t%e total indu!tr" !ale!. Mo!t of t%e pla"er! in t%e unorgani?ed !ector are in ol ed in formulation! manufacturing= !ince t%i! i! not tec%nolog" inten!i e. (%e!e pla"er! mainl" cater to local demand and compete on price. (%e &ndian p%armaceutical! indu!tr" i! e!!entiall" a proce!! re!earc% dri en indu!tr". (%e indu!tr" i! %ig%l" fragmented. Some of t%e di!ea!e! for w%ic% new drug! are continuou!l" re!earc%ed globall" include A&DS= Al?%eimer0! di!ea!e= art%riti! Fr%eumati!mG= cancer= depre!!ion= diabete!= %eart di!ea!e= o!teoporo!i! and !tro-e. &ndia i! pre!entl" one of t%e top 1. drug producer! worldwide. &ndian p%armaceutical companie! %a e progre!!ed b" leap! and bound! in recent time!. (%i! i! e ident from t%e fact t%at w%ile t%e MC5! mar-et !%are in t%e &ndian p%armaceutical mar-et %a! plummeted from 2.< in 1721 to approximatel" '.< at pre!ent= t%e mar-et !%are of t%e &ndian companie! %a! increa!ed to 1.<. Dome!tic pla"er! account for o er 28< mar-et !%are and t%e re!t i! accounted for b" MC5!. (%e leading dome!tic companie! are Dr. Redd"E! :aboratorie! FDR:G= Ranbax" :aboratorie! FR::G= Sun P%armaceutical!= 5ipla= :upin :aboratorie!= >rc%id 5%emical! and 3oc-%ardt w%ile t%e
leading MC5! are ,laxo!mit%-line= Pfi?er= A enti! P%arma and Merc- &ndia. &f one con!ider! t%e entire %ealt%care !cenario= allopat% account! for .8< of t%e o erall &ndian mar-et= a"ur eda account! for '8< and !id%a= unani= %omeo and ot%er !"!tem! !%are t%e re!t. B .3 !4 1): About t%reeIfift%! of &ndia0! buldrug! output i! !old o er!ea!. $owe er= mo!t of t%e &ndian p%armaceutical companie! a! well a! t%eir MC5 counterpart! import buldrug! from abroad a! dome!tic companie! t%at export formulation! are eligible for dut" free import! of buldrug!. Ander patent drug! are primaril" exported to de eloping countrie! w%ile t%e generic! are exported to de eloped nation!. F+40 .-t'+/): About 6.< of t%e dome!tic production i! con!umed locall". 3it% t%e exception of certain life !a ing= new generation underIpatent formulation!= &ndia i! relati el" !elf !ufficient in formulation!. (%e current &ndian formulation! mar-et i! wort% about R!.78 billion and %a! a growt% rate of about 1.I11< pa. (%e main mar-et! for &ndian formulation! include de eloping countrie! !uc% a! 5%ina= Sout% Africa= and 5&S. &ndia %a! al!o bagged a 18I"ear tran!ition period to introduce (rade Related &ntellectual Propert" Rig%t! F(R&PSG. During t%i! timeIframe= new molecule! patented for t%e fir!t time in t%e world after Danuar" 1= 177.= w%en t%e (R&PS agreement came into force will be granted recognition= for w%ic% an application need! to be made in &ndia. (%e de eloper would be entitled to exclu!i e mar-eting rig%t! for fi e "ear! during t%e tran!ition period. Some of t%e main ad antage! w%ic% t%e &ndian p%armaceutical companie! %a e o er t%eir MC5 counterpart! include9

Re!triction to parent compan"0! portfolio and lac- of freedom to re er!e engineer an" ot%er MC50! product!. More DP5> FDrug! Price 5ontrol >rderG co erage owing to a more mature product range. :ac- of initiati e on part of parent compan" to introduce new product! due to ab!ence of patent protection and t%reat of proce!! pirac" and compul!ion to price t%e product lower in &ndia compared to ot%er countrie!. $ardl" an" export opportunitie! due to parent0! global pre!ence. Expen!i e manufacturing co!t due to parent compan"0! in!i!tence on !tricter compliance of ,MP F,ood Manufacturing Practice!G.
DOMESTIC TRADE: More t%an 6.< of t%e formulation! produced in t%e countr" i! !old in t%e dome!tic mar-et. &ndia i! largel" !elfI!ufficient in ca!e of formulation!. Some life !a ing= new generation underIpatent formulation! continue to be imported= e!peciall" b" MC5!= w%ic% t%en mar-et t%em in &ndia. > erall= t%e !i?e of t%e dome!tic formulation! mar-et i! around R!118bn and it i! growing at 18< p.a. GRO5TH INDICATOR
THE EXIM SCENARIO: Cearl" 7. < of &ndiaE! buldrug need! are met t%roug% indigenou! production. $owe er= in!pite of %a ing a wellIde eloped p%armaceutical indu!tr"= it continue! to import not onl" intermediate! and c%emical! re;uired b" t%e buldrug indu!tr"= but al!o !ome of t%e buldrug! and !pecialt" formulation!. >ne po!iti e factor= %owe er= i! t%at o er t%e la!t decade or !o= t%e overall exports by the pharmaceutical industry have been more than its imports. &n fact= t%e bul- of t%e growt% of t%e p%arma !ector %a! come
t%roug% export!. I06+4t): &ndia0! p%armaceutical! import! Fincluding buldrug!= formulation!= intermediatiate!= c%emical!= !ol ent! etcG were to t%e tune of R!'1.'bn. &mport! %a e regi!tered a 5A,R of nearl" 278 '/ t*% 6-)t 5 "%-4). &mport! of formulation! %a e increa!ed !ignificantl" in t%e pa!t . "ear! regi!tering 5A,R of '#.7< in t%e pa!t . "ear!. &n FM77 '06+4t +, ,+40 .-t'+/) grew b" 25.58 "o". &mport of buldrug! %a e !lowed down in t%e pa!t #I' "ear! mainl" due to two rea!on! @ fir!tl" t%ere i! o er capacit" in t%e dome!tic mar-et and !econdl" t%e ;ualit" of buldrug! manufactured b" t%e local manufacturer! %a e impro ed !ignificantl" and t%e" act a! import !ub!titute for MC50! re;uirement!. E96+4t)9 > er 18< of &ndia0! buldrug production i! exported. (%e balance i! !old locall" to ot%er formulator!. &ndia0! P%armaceutical export! are to t%e tune of R!62bn= of w%ic% formulation! contribute nearl" ..< and t%e re!t +.< come! from buldrug!. &n financial "ear #888= %96+4t) 14%: #" 2;8. &ndia0! P%armaceutical! import! were to t%e tune of R)20.7#/ '/ FY200;. &mport! %a e regi!tered a 5A,R of onl" #< in t%e pa!t . "ear!. &mport of buldrug! %a e !lowed down in t%e recent "ear!. (%e export! of P%armaceutical! during t%e "ear 1776I72 were R! +7268 million. From a meager R! +1 crore! wort% of P%armaceutical!= Drug! and Fine 5%emical! export! in 1768I61= P*-40-&% t'&-. %96+4t) %a! 4')%/ t+ -664+9'0-t%." R! 11.# 5rore! FPro .1776I77G= a ri!e of ;;.<;8 -1-'/)t t*% .-)t "%-4 %96+4t). Among!t t%e total export! of &ndia= t%e percentage !%are of Drug!= P%armaceutical! and Fine 5%emical! during AprilI>ctober F#888I#881G wa! +.1<= an increa!e of 2<.
PRICING
Drug! and formulation! are under price control for more t%an t%ree decade! now. (%e economic reform! initiated b" t%e ,o ernment of &ndia in Dul" 1771= tric-led down to t%e P%armaceutical &ndu!tr" onl" in 177+ and t%at too partiall". Price control in a large number of indu!trie! %a! alread" been aboli!%ed. (%e P%armaceutical indu!tr" in &ndia i! t%e onl" indu!tr" being !ubjected to a t%reeItier control= i?. 1. &temIb"Iitem control on t%e price! of buldrug!= #. ProductIwi!e control on t%e price! of formulation! and an o erall control on t%e profitabilit" of formulation!. '. Admini!trati e and rigid price control %a! certainl" retarded t%e de elopment of t%i! e!!ential indu!tr". &n toda"0! liberali?ed economic en ironment= determining Nco!t!O of 2+ buldrug! and %undred! of t%eir formulation! and fixing ceiling price! i! outdated. (%e co!t plu! formula of fixing price! lead! to inefficienc" @ lower t%e efficienc"= %ig%er t%e co!t and more t%e mar-Iup. &ndependent profe!!ional !tudie! %a e re ealed t%at at t%e &ndu!tr" le el= after Drug! FPrice! 5ontrolG >rder= FDP5>G 177.= o erall price increa!e during t%e period 177.I76 on "ear o er "ear ba!i!= i! mode!t and muc% below t%e a erage rate of inflation. 5ompetition %a! -ept price! under control e en in t%e ca!e of decontrolled formulation!. (%e fear t%at price! will ri!e !teepl" if t%e indu!tr" i! deregulated i! di!pro ed b" t%e!e independent !tudie! o er a period of time. Mar-et competition i! t%e be!t regulator of price!. Medicine! bear a %ea " burden of taxe!. (oda" almo!t e er" P%armaceutical product i! taxed to t%e extent of '8I'. percent t%roug% cu!tom! dut"= exci!e= !ale! tax= octroi and ot%er taxe!. (%i! burden on t%e con!umer -eep! ri!ing "ear b" "ear. &n a wa"= t%e tax on medicine i! tax on !ic-ne!!. &deall"= t%ere !%ould be no tax on medicine!. Alternati el"= t%e tax !%ould be reduced !ub!tantiall".
&n t%e emerging bu!ine!! !cenario= a mar-etIoriented approac% !%ould be adopted. (%ere !%ould be a !%ift from t%e pre!ent !"!tem of control to management and monitoring drug price!. (%e indu!tr" !%ould be encouraged to fo!ter !elfIregulation and concentrate on de elopment i!!ue! rat%er t%an
being !ubjected to detailed and admini!trati e control. (%e traditional approac%e! and con!er ati e idea! of control= regulation! and admini!tration will %a e to gi e wa" to free enterpri!e= flexibilit"= tran!parenc" and !peed" implementation of public policie!.
RESEARCH AND DEVELOPMENT

Re!earc% * De elopment i! t%e -e" to t%e future of P%armaceutical indu!tr". (%e P%armaceutical ad ance! for con!iderable impro ement in life expectanc" and %ealt% all o er t%e world are t%e re!ult of a !teadil" increa!ing in e!tment in re!earc%. R * D in t%e P%armaceutical indu!tr" in &ndia i!
critical to find an!wer! for !ome of t%e di!ea!e! peculiar to a tropical countr" li-e &ndia and al!o for finding !olution! for unmet medical need!. (%e R = D %96%/!'t 4% b" t%e I/!'-/ P*-40-&% t'&-. '/! )t4" i! -4+ /! ;.<8 +, t*% '/! )t4">) t 4/+(%4. (%i! ob iou!l" i! er" low w%en compared to t%e in e!tment on R = D #" ,+4%'1/ 4%)%-4&* #-)%! P*-40&+06-/'%). (%e" )6%/! ;0 ? ;@8 +, t*% t 4/+(%4 +/ R = D . $owe er= now t%at &ndia i! entering into t%e Patent protection area= man" companie! are !pending relati el" more on R * D. (%ere i! con!iderable !cope for collaborati e R * D in &ndia. &ndia can offer !e eral !trengt%! to t%e international R * D communit". (%e!e !trengt%! relate to a ailabilit" of excellent !cientific talent! w%o can de elop combinatorial c%emi!tr"= new !"nt%etic molecule! and plant deri ed candidate drug!. &ndu!trial R * D group! can al!o carr" out limited primar" !creening to identif" lead molecule! or e en candidate drug! for furt%er in i o !creening= preIclinical P%armacolog"= toxicolog"= animal and %uman P%armaco-inetic! and metabolic !tudie! before ta-ing t%em up for %uman trial!. &n !uc% collaboration!= %armoni?ed !tandard! of !creening can be a!!ured following e!tabli!%ed good laborator" practice!. 3%en it come! to clinical e aluation at t%e time of multiIcentre trial!= &ndia would pro ide a !trong ba!e con!idering t%e real a ailabilit" of clinical material! in di er!e t%erapeutic area!. Suc% acti e collaboration will be mutuall" beneficial to bot% partner!. According to a !ur e" b" t%e P%armaceutical >ut!ourcing Management A!!ociation and BioPP%armaceutical >ut!ourcing Report= P%armaceutical companie! are utili?ing !ub!tantiall" t%e !er ice! of 5ontract Re!earc% >rgani?ation! F5R>!G. &ndian P%armaceutical &ndu!tr"= wit% it! ric% !cientific talent!= pro ide! co!tIeffecti e clinical trial re!earc%. &t %a! an excellent record of de elopment of impro ed= co!tIbeneficial c%emical !"nt%e!e! for ariou! drug molecule!. Some MC5! are alread" !ourcing t%e!e !er ice! from t%eir &ndian affiliate!. (%e P%armaceutical and Biotec%nolog" &ndu!tr" i! eligible for weig%t deduction for R*D expen!e upto 1.8<. (%e!e R*D companie! will al!o enjo" tax %olida" for 18 "ear!. A promotional re!earc% and de elopment fund of R!.1.8 crore! i! !et up b" t%e ,o ernment. (%e &ndian P%armaceutical indu!tr" i! %ig%l" regulated. (%e ,o ernment control! price! of a large number of buldrug! and formulation!. Profit margin! of pla"er! ar" widel" in bot% dome!tic and export !ale! due to man" factor!.
PATENT AND R = D
(%e P%armaceutical indu!tr" i! a -nowledge dri en indu!tr" and i! %ea il" dependent on Re!earc% and De elopment for new product! and growt%. $owe er= ba!ic re!earc% Fdi!co ering new molecule!G i! a time con!uming and expen!i e proce!! and i! t%u!= dominated b" large global multinational!. &ndian companie! %a e recentl" entered t%e area and initial re!ult! %a e been encouraging. Patent! pla" an important role in encouraging Re!earc% and De elopment. (%e new 3(> rule! impl" t%at &ndia will %a e to !witc% to a product patent regime po!t #88. from it! current proce!! patent regime. (%i! would alter t%e !cenario in t%e &ndian mar-et o er t%e next 18I1. "ear!. ,o ernment policie! will pla" an important role in defining t%e future of t%e P%armaceutical indu!tr". (%e product patent regime coming into effect from Danuar" #88. will lead to longIterm growt% for t%e future. &n t%e global P%armaceutical mar-et= we!tern mar-et! are t%e large!t and fa!te!t growing due to introduction of newer molecule! at %ig% price!. A wellIe!tabli!%ed reimbur!ement and in!urance !"!tem implie! t%at per capita drug expenditure i! abnormall" %ig% in 3e!tern 5ountrie! a! compared to t%e de eloping nation!. (%e &ndian P%armaceutical indu!tr" i! %ig%l" fragmented= but %a! grown rapidl" due to t%e friendl" patent regime and low co!t manufacturing !tructure. &nten!e competition= %ig% olume! and low price! c%aracteri?e t%e &ndian dome!tic mar-et. Export! %a e been ri!ing at around '8< 5A,R o er la!t fi e "ear!. (%ere i! a !%ift in export profile toward! alue added formulation! from low alue buldrug!. (%e Drug Pricing 5ontrol >rder FDP5>G %a! been t%e mill!tone around t%e nec- of &ndian indu!tr" a! it %a! !e erel" re!tricted profitabilit" and %ence inno ation. $owe er= t%e go ernment %a! been relaxing control! in a !low but progre!!i e manner. (%e !pan of control of DP5> %a! come down from 78< in 1768! to .8< in 177. and i! li-el" to be furt%er reduced a! per t%e late!t propo!ed c%ange!. &ndian companie! are putting t%eir act toget%er to tap t%e generic drug! mar-et! in t%e regulated %ig% margin mar-et! of t%e de eloped countrie!. (%e AS mar-et will remain t%e mo!t lucrati e mar-et for t%e &ndian companie! led b" it! mar-et !i?e and t%e inten!it" of bloc-bu!ter drug! going off patent. An e!timated ASH+.bn of drug! expected to go off patent b" #882 in AS alone. &n t%e dome!tic mar-et= old and mature categorie! li-e antiI infecti e!= itamin!= analge!ic! are degrowing or !tagnating w%ile new life!t"le
categorie! li-e cardio a!cular= 5CS= anti diabetic are growing at doubleIdigit rate!. (%e growt% of a compan" in t%e dome!tic mar-et i! t%u! criticall" dependent on it! t%erapeutic pre!ence.
GLOBAL PHARMACEUTICAL INDUSTRY

Some of t%e worldE! large!t P%armaceutical companie! too- a %it on fourt%I;uarter profit! la!t "ear a! a re!ult of patent expiration! and manufacturing problem!. Eli :ill" * 5o.= for example= !aw it! annual !ale! plummet dramaticall" after it lo!t patent protection on it! antidepre!!ant Pro?ac in Augu!t. $owe er= t%e P*-40-&% t'&-. '/! )t4" ') 6+')%! ,+4 - ;0 6%4&%/t )-.%) 14+:t* '/ 2002= -&&+4!'/1 t+ 2002 Industrial Outlook= a report b" &ndu!trial &nformation Re!ource!= $ou!ton. (%e A.S. P%armaceutical indu!tr" will in e!t in capital and maintenance expenditure! for manufacturing
capacit" expan!ion!= a! well a! for re!earc% and de elopment FR*DG laboratorie!. &ncrea!ing manufacturing capacit" and expanding R*D are -e"! to continued indu!tr" !ucce!!= !a"! t%e report. AN%: 64+! &t) -4% t*% .',%#.++! +, t*% P*-40-&% t'&-. '/! )t4"BA !a"! 5arl Berg!ten= ice pre!ident= P%armaceutical! and biotec%nolog" for :oc-wood ,reene= Spartanburg= S.5. P*-40-&% t'&-. &*%0'&-.): (%e o erall P%armaceutical indu!tr" i! managing to !ta" a%ead of t%e P%armaceutical c%emical! mar-et. (%e world P*-40-&% t'&-. &*%0'&-.) 0-43%t :'.. '/&4%-)% @.7 6%4&%/t -// -.." t+ CD7.5 #'..'+/ '/ 2005B !tate! a new report from (%e Freedonia ,roup= 5le eland. World Pharmaceutical Chemicals cite! generic competition= downward profit pre!!ure! and tig%ter price control! a! dri er! t%at will prompt A.S.= Dapane!e and 3e!tern European drug ma-er! to pur!ue greater production efficiencie!. A! a re!ult= P%armaceutical c%emical co!t! will fall under greater !crutin" and decrea!e a! a percentage of total drug !%ipment!. An increa!ed emp%a!i! on pre ention= !a"! t%e Freedonia ,roup report= will broaden opportunitie! for !e eral cardio a!cular agent!= e!peciall" new !econdIgeneration ti!!ue pla!minogen acti ator! for pre enting !tro-e! and %eart attac-!. >t%er new P%armaceutical c%emical! projected to enjo" !trong growt% include leu-otriene bloc-er! for a!t%maL monoclonal antibodie! for tran!plant rejection= and !erotonin .$(' antagoni!t! for irritable bowel !"ndrome and accine! for influen?a.
Q(%e P%armaceutical c%emical !egment i! !eeing !omew%at le!! inten!e re!earc% becau!e of t%e boom in biologicall" produced product!=Q !a"! :oc-wood ,reeneE! Berg!ten. Q(%e intere!t in t%e $uman ,enome Project and in de eloping product! coming out of t%i! effort %a! di erted !ome of t%e re!ource! traditionall" applied to product! deri ed b" c%emical !"nt%e!i!.Q E 4+6%-/ -/! 1%/%4'&) 0-43: (%e European P%armaceutical indu!tr" i! expected to grow 6.1 percent from 1777 !ale! to reac% H1.8 million b" #88.= !a"! European Pharmaceutical Industry= a report from Corwal-= 5onn.Iba!ed Bu!ine!! 5ommunication! 5o. &nc. (%e ri!ing co!t of R*D %a! increa!ed t%e co!t of inno ati e drug! and impo!ed added pre!!ure on t%e abilit" of drug manufacturer! to mar-et in t%e European Anion. Anli-e t%e A.S. P%armaceutical !ector= European national go ernment! are t%e main purc%a!er! of P%armaceutical product!L t%erefore= t%e" dictate re!triction! or co!t containment mea!ure! on drug producer!. Q(%e role of generic companie! al!o i! %a ing an impact on t%e indu!tr"=Q !a"! Dennifer 5a!a??a= global mar-eting manager for P>:M>) 3ater Soluble Re!in! at t%e Dow 3ater Soluble Pol"mer! P%armaceutical ,roup= Qand will continue to do !o gi en t%e number of large brand! t%at are coming off patent RworldwideS. &n fact= analge!ic!= aminopenicillin!= cep%alo!porin!Igeneration
anti%i!timine!= acid reducer!= %erbal and related extract! and calcium and iron mineral! are among t%e P%armaceutical c%emical! expected to fare well on t%e open mar-et= t%e Freedonia ,roup report affirm!. QAl!o= generic! are concentrating on not ju!t de eloping Eme tooE er!ion! of t%e branded product!=Q continue! 5a!a??a= Qbut de eloping uni;ue deli er" !"!tem! for differentiation andPor %ig%er performance T t%i! add! more complexit" to t%e traditional competiti e en ironment.
T+6 20 P*-40-&% t'&-. C+06-/'%) #-)%! +/ 2000 P*-40-&% t'&-. 4%(%/ %) 1. ,laxoSmit%Bline H#'.. billion #. Pfi?er H##.1 billion '. MercH16.1 billion +. A!traUeneca H1..2 billion .. A enti! H1..# billion 1. Bri!tolIM"er! S;uibb H1+.+ billion 2. Do%n!on * Do%n!on H1#.8 billion 6. Co arti! H18.7 billion 7. P%armacia H18.6 billion 18. American $ome H18.6 Product! billion 11. Eli :ill" * 5o. H18.# billion 1#. F. $offmanI:a H6.1 Roc%e billion 1'. Sc%eringIPloug% H6.' billion 1+. Ba"er A, H..6 billion 1.. (a-eda 5%emical H..# &ndu!trie! billion 11. Sanofi S"nt%Vlabo H..8 billion 12. Boe%ringer H+.. &ngel%eim billion 16. Abbott :aboratorie! H+.8 billion 17. San-"o 5o. :td. H'.6 billion #8. S%ionogi * 5o. H#.6 billion
2000 R=D E96%/!'t 4%) 1. Pfi?er #. ,laxoSmit%Bline '. A enti! +. Do%n!on * Do%n!on .. Co arti! 1. A!traUeneca 2. F. $offmanI:a Roc%e 6. Merc7. Ba"er A, 18. Eli :ill" * 5o 11. P%armacia 1#. Bri!tolIM"er! S;uibb 1'. American $ome Product! 1+. Abbott :aboratorie! 1.. Sc%eringIPloug% 11. (a-eda 5%emical &ndu!trie! 12. Sanofi S"nt%Vlabo 16. Boe%ringer &ngel%eim 17. San-"o 5o. :td. #8. S%ionogi * 5o. H+.+ billion H'.6 billion H'.1 billion H#.7 billion H#.7 billion H#.1 billion H#.. billion H#.' billion H#.' billion H#.8 billion H#.8 billion H1.7 billion H1.2 billion H1.' billion H1.' billion H21# million H678 million H66+ million H.6+ million H#'8 million
INTELLECTUAL PROPERTY RIGHT EIPR)

(%e dri ing force w%ic% will c%ange t%e c%aracter and !%ape of t%e P%armaceutical indu!tr" will be t%e impending Product Patent regime. At pre!ent= under t%e &ndian Patent! Act= 1728= t%ere i! no Product Patent protection for P%armaceutical!. (%ere i! onl" Proce!! Patent protection. (%e duration of proce!! patent protection in &ndia i! !e en "ear! from t%e date of filing or fi e "ear! from t%e date of !ealing of t%e patent= w%ic%e er i! !%orter= for P%armaceutical!= food product! and agroc%emical! a! again!t fourteen "ear! for all ot%er item!. &ndia !igned t%e ,eneral Agreement on (ariff! and (rade F,A((G on April 1.= 177+ along wit% 1#+ Cation!. After &ndia0! member!%ip of 3orld (rade >rgani!ation F3(>G= it i! obligator" for &ndia to compl" wit% t%e re;uirement! of ,A(( including (rade Related A!pect! of &ntellectual Propert" Rig%t! F(R&P!G. (%i! !%ould be done wit%out an" furt%er dela". &ndia %a! an excellent pool of !cientific talent!. Earl" adoption of world cla!! &PR will moti ate !ome of t%e di!tingui!%ed &ndian Scienti!t! wor-ing abroad to return to &ndia and engage t%em!el e! in re!earc%. >nce a !trong &PR regime i! e!tabli!%ed &ndia can a ail of t%e a!t !cope of e ol ing collaborati e re!earc% arrangement!.
MISCONCEPTIONS AND FACTS

(%e antiIPatent lobb" %a! propounded !e eral m"t%!. Mo!t of t%e!e
are ba!ed on conjecture and are un!upportable on fact!. (%e two mo!t fre;uentl" emplo"ed are Q$ig% Price!Q and Q&mpact on :ocal &ndu!tr"Q. Bot% of t%e!e are addre!!ed below9 M"t* +, FH'1* P4'&%! M%!'&'/%) -,t%4 C*-/1% '/ P-t%/t L-:)> : A m"t% i! propagated t%at after introduction of Patent Act= in compliance wit% (R&P! pro i!ion!= t%e price! of medicine! will accelerate and medicine! will become unaffordable for people. (%i! fear i! due to a lac- of under!tanding of %ow t%e tran!ition to a Patent Regime wor-! and %ow P%armaceutical price! are determined. Patent! can ne er be awarded retro!pecti el". Patent! can onl" appl" to new di!co erie!. (%e tran!ition pro i!ion! of (R&P0! en!ure t%at patent! in &ndia will onl" be granted for totall" new di!co erie!= po!t 1!t Danuar" 177.. >nl" item! for w%ic% no patent %a! e er been granted in an" ot%er 3(> countr" before 1!t Danuar"= 177. or for w%ic% no application wa! pending for a patent in an" ot%er 3(> countr" a! on 1 !t Danuar" 177. will e er be patentable in &ndia. (%i! mean! t%at an" medicinal product alread" a ailable in t%e &ndian mar-et on t%e date of coming into force of t%e new law= cannot= and will not= e er be patented in &ndia. &t !%ould be noted t%at it ta-e! an"w%ere between 6I1# "ear! for a new drug to be granted regi!tration b" Drug Aut%oritie! of an" countr" after w%ic% mar-eting permi!!ion i! gi en. (%i! regi!tration period come! out of t%e o erall patent life of t%e medicine!= w%ic% i! now almo!t uni er!all" #8 "ear! from t%e date of application. A di!co erer t%u! enjo"! at be!t onl" 6I1# "ear! of Exclu!i e Mar-eting for reco ering t%e co!t of re!earc%. (%e number of new drug! regi!tered worldwide eac% "ear i! between #.I'..
5*-t t*') %))%/t'-.." 0%-/) '): A. 3it%in t%e tran!ition period F177.I#88+G allowed for &ndia= not more t%an a %andful of new drug! will actuall" ;ualif" for an" form of
exclu!i it". B. E en after &ndia commence! granting patent!= b" t%e time patented product! become a !ignificant proportion of t%o!e alread" a ailable locall"L it will be anot%er 18I1. "ear! i.e. #81.I#8#8. 5. &t i! not correct to belie e t%at Multinational 5orporation! FMC5!G %a e onl" one price for a product e er"w%ere in t%e world and a! !uc% t%e price c%arged in &ndia will be exorbitant. (%ere are !e eral example! to !%ow t%at e en w%en t%e product i! uni;ue= it i! introduced in &ndia at a price !ignificantl" lower t%an in 3e!tern countrie!. Mo!t international manufacturer! will ba!e t%eir pricing !trateg" for countrie!= li-e &ndia= on Qaffordabilit" criteriaQ. (%ere i! empirical e idence FStud" b" t%e Cational Economic Re!earc% A!!ociate! @CERA= 3a!%ington @ Danuar" 1776 and Stud" b" Dr. $ein? Redwood entitled /Cew $ori?on! in &ndia0 I 177+G to !%ow t%at price! do not ri!e after &PR. M"t* +, FD-0-1% t+ L+&-. I/! )t4"> : A! %a! been !tated earlier= t%e effecti e period of exclu!i it" enjo"ed b" a patent %older i!= at be!t= 6I1# "ear!. >nce patent life end!= ot%er manufacturer! are free to mar-et /generic er!ion!0 of t%e !ame product!. 3orldwide= generic mar-et! are growing at a rate fa!ter t%an t%at of patented product!. (%ere will t%erefore alwa"! be a large generic mar-et in &ndia and t%i! will continue to be dominated b" &ndian companie!.
PATENTS AND ITS IMPACT ON PHARMACEUTICAL INDUSTRY IN INDIA AND ON CONSUMERS
PRODUCT PATENT: (%e !weep of intellectual propert" rig%t! i! er" a!t a! it embrace! man" !ector! of global econom" and tec%nolog" !uc% a!= p%armaceutical= food= mec%anical= c%emical= bioItec%nical= en ironmental= energ"= agriculture= textile= etc. $ere t%e di!cu!!ion i! limited to t%e p%armaceutical patent!. (%e ad ent of protection of inno ati e wor- for a limited period under t%e &ntellectual Propert" S"!tem F&PSG permit! t%e full di!clo!ure of wor-= in!tead of -eeping it !ecret. Suc% an en ironment facilitate! !%aring of t%e inno ati e wor- wit% ot%er! and at t%e !ame time en!uring certain amount of reward to t%e inno ator. &n recent time!= due to ad ancement of communication facilitie!= t%e flow of -nowledge %a! al!o increa!ed tremendou!l" and t%e !"!tem of &ntellectual Propert" F&PG permit! !%aring and commercial tran!action of t%e new -nowledge gained. >ne of t%e important factor! in t%e tremendou! growt% of p%armaceutical indu!tr" worldwide %a! been t%e protection afforded b" t%e patent!. Patent! %a e gi en t%e in entor t%e nece!!ar" incenti e to de elop new proce!!e! or molecule!= w%ic% are now widel" u!ed in t%erap". (%e nation! wit% !tronge!t patent !"!tem %a e introduced t%e large!t number of new drug! into t%e world mar-et. DEFINITION OF PATENT: (%e patent i! granted b" t%e go ernment= w%ic% confer! on t%e applicant a guarantee for a limited period of time= t%e exclu!i e pri ilege of ma-ing= !elling= di!tributing and u!ing t%e in ention for w%ic% t%e patent %a! been granted and al!o of aut%ori?ing ot%er! to do !o. (%e grant of patent! for in ention! in &ndia i! go erned b" t%e Patent Act 1728 and t%e Patent Rule 172#. (%e patent! granted under t%e Act are operati e in w%ole of &ndia.
TYPES OF PATENTS: (%ree -ind! of patent! are granted under t%e pro i!ion! of t%e Act= i?.= An ordinar" patent A patent of addition for impro ement in or modification of an in ention
for w%ic% a patent %a! alread" been applied for or granted A patent granted in re!pect of con ention application= w%ic% i! ba!ed on an application= made in a con ention countr" in re!pect of !ome in ention (%e con ention application %a! to be made wit%in one "ear from t%e date of t%e fir!t application made in a con ention countr" in re!pect of t%at in ention.
5HAT DOES PATENTS DOG : (%e patent gi e! t%e owner t%e rig%t to ta-e legal action to pre ent ot%er! from exploiting a patented in ention wit%out t%e proprietor0! con!ent. (%i! rig%t can be u!ed to pre ent competition w%il!t t%e proprietor de elop! a bu!ine!! ba!ed on t%e in ention. Moreo er anot%er per!on or compan" ma" be allowed to exploit t%e in ention and pa" ro"altie! under a licen!ing agreement. CRITERIA FOR PATENTABILITY: An" in ention= w%ic% !ati!fie! t%e definition of t%e Nin entionO gi en in t%e act= ma" be patented. For !ecuring a patent under t%e Act= t%e in ention mu!t be N+(%.t": no elt" of an in ention i! judged ta-ing into account t%e -nowledge a ailable an"w%ere in t%e world in t%e rele ant field at t%at time of filing t%e application for patent. (%e in ention !%ould not be publicl" -nown an"w%ere in t%e world prior to t%e date of filling t%e application for t%e patent. I/(%/t'(% )t%6: An in ention i! con!idered to %a e an in enti e !tep or i! non ob iou! if w%en compared to w%at i! alread" -nown= t%e in ention would not be ob iou! to one wit% rea!onable -nowledge and experience of t%e !ubject. I/! )t4'-. -66.'&-t'+/: &n ention mu!t %a e utilit" and mu!t ta-e practical form !uc% a! an apparatu!= de ice a product !uc% a! new material= compound or an indu!trial proce!! producing !aid product or an" impro ement of t%e abo e.
GENERAL PROCEDURE TO OBTAIN A PATENT :
(%e following are t%e !ucce!!i e !tage! of procedure for obtaining a patent. o o o o o o o o Filling an application for a patent accompanied b" pro i!ional or complete !pecification. Filling t%e complete !pecification if a pro i!ional !pecification accompanied wit% t%e application. Examination of Applicant. Acceptance of application and ad erti!ement of !uc% acceptance in official ga?ette. > ercoming oppo!ition= if an"= to t%e grant of a patent. Sealing of t%e patent. Amendment of application and !pecification if needed. Filling application for t%e patent out!ide &ndia
THE PROPOSED PATENT REGIME : Following t%e !igning of ,A(( in 177+= &ndia %a! to compl" wit% t%e (R&PS accord= w%ic% call! for replacement of Proce!! Patent! wit% !tricter Product Patent! wit%in a certain time frame. April 1777 9 A! per (R&PS Article 28.6 and 28.7 &ndia %ad to W &ntroduce a /Mail box0 !"!tem accepting filling for Product Patent! from 1 Danuar" 177. W Pro ide for EMR in re!pect of Patent! co ered b" !uc% filling!= on !ati!faction of certain condition!. &n t%e recent deci!ion= t%e 3(> made it mandator" for &ndia to pro ide for /mail box0 and EMR pro i!ion! b" mid April= 77. D%&%0#%4 ;<<<: A! per (R&PS Article 1.= &ndia %a! until December '1= 1777 to bring Patent :egi!lation in conformit" wit% (R&PS. 2-/ -4" 2005: A! per trip! Article 1. t%e actual implementation of product patent pro i!ion! can be dela"ed until Danuar" 1= #88..
INTELLECTUAL PROPERTY RIGHTS EIPR) IN GATT

&ndia i! one of t%e founder member! of ,eneral Agreement on (ariff! and (rade F,A((G. ,A(( la"! down a !et of multilaterall" agreed rule! to go ern international trade. (rade Related &ntellectual Propert" Rig%t! F(R&PSG agreement under t%e ,A(( pro ide! for uni er!al protection of &PR of t%e firm! and indi idual!. &t bind! t%e countrie! to modif" t%eir law! to compl" wit% t%e pro i!ion! of t%e (R&PS agreement. &ndia being !ignator" of 3(>= t%e pro i!ion of 3(> !tand enacted from 1 !t Danuar" 177.. Ander t%e agreement= &ndia %a! been gi en a c%ange o er period of 18 "ear! from proce!! patenting !"!tem to product patenting !"!tem. (%erefore= from 1!t Danuar" #88. product patent regime will be enforced in &ndia. &n addition= Exclu!i e Mar-eting Rig%t! FEMRG will %a e to be granted for a period of . "ear! for p%armaceutical! and agricultural c%emical product! in fa or of foreign patent %older! w%o %a e applied for and obtained product patent and
mar-et appro al of !uc% product! in ot%er member! countrie! of t%e 3(>. (%i! will appl" to newl" patented product! coming in t%e mar-et during t%e tran!ition period of t%e 18 "ear! i.e. up to 1!t Danuar" #88..
INDIAN PATENT ACTB ;<H0: P*-40-&% t'&-. I/! )t4" '/ I/!'- (%e &ndian Patent Act= 1728 wa! t%e in!trument t%at made it po!!ible for t%e dome!tic P%armaceutical indu!tr" to expand rapidl". Becau!e= t%e Act legali?ed /re er!e engineering0 of drug! t%at are patentable a! product! t%roug%out t%e indu!triali!ed world but unprotectable in &ndia. FR%(%4)% %/1'/%%4'/1I ') - 0%t*+! +, %(-. -t'+/ +, - 64+! &t '/ +4!%4 t+ /!%4)t-/! 't) , /&t'+/-. -)6%&t) -/! /!%4."'/1 '!%-). (%i! tec%ni;ue ma" be u!ed to de elop a !imilar For e en identicalG product. 3ell e;uipped wit% tec%nological experti!e= &ndian !cienti!t! and bu!ine!!e! !ei?ed t%e opportunit" to do /re er!e engineering0 on t%erapeuticall" inno ati e drug! di!co ered el!ew%ere= and launc%ed t%em on t%e dome!tic mar-et a! well exporting t%em to ot%er countrie! wit% !imilar gap! in t%eir patent co er. For example= t%e &ndian &n!titute for 5%emical (ec%nolog" de eloped AU(= t%e A&DS drug t%roug% t%i! proce!! wit%out replicating t%e patentI
%older Burroug%!I3ellcome0! proce!!. (%e tec%nolog" wa! pa!!ed on to 5&P:A= t%e fourt% large!t P%armaceutical manufacturer in &ndia. &t wa! al!o !old to a Bra?ilian manufacturer. (%e co!t of t%e crucial medicine t%roug% t%i! route %a! come down to le!! t%an a t%ird of t%e Burroug%I3ellcomeE! price. Anot%er factor i! t%at of !trategic abdication of man" tran!national corporation! w%o refu!ed to compete wit%out t%e patent co er. For example= t%e SterlingI3int%rop 5ompan" wound up t%eir bu!ine!! in &ndia in 1728! and !old t%eir !%are! to t%e &ndian partner De"0! Medical 5ompan". Furt%ermore= /!%4 t*% I/!'-/ P-t%/t A&tB ;<H0B t*% ,+..+:'/1 6+'/t) -4% 6%4t'/%/t9
N+ 64+! &t 6-t%/t) -4% -..+:%! in P%armaceutical= agroIc%emical and food proce!!ing !ector!= w%ere onl" proce!! patent! are admi!!ibleL (%e &ndian patent term of 1+ "ear! from t%e date of filing for P%armaceutical proce!!e!= i! curtailed to 2 "ear! from t%e date of filing or . "ear! from t%e date of !ealing a patent= w%ic%e er i! !%orterL and P%armaceutical proce!! patent! are automaticall" deemed to be endor!ed :icen!e of Rig%t for ' "ear! from t%e date of !ealing a P%armaceutical patent. 3it% t%e coming of (R&P! Agreement= di!pute! ari!e wit% regard to t%e protection of P%armaceutical patent!. (%e main pro i!ion! of (R&P! Agreement wit% re!pect to P%armaceutical product! are a! follow!9 (%e 0'/'0 0 6-t%/t t%40 :'.. #% 20 "%-4) ,4+0 ,'.'/1J Patent protection i! to be extended to P%armaceutical product!L &mportation mu!t be accepted a! a wor-ing patentL 5ompul!or" licen!ing i! relegated to !pecial circum!tance!L &n infringement !uit! o er proce!! patent! t%e /burden of proof0 i! re er!ed. Pro ide tran!itional arrangement!Tdeferment of t%e acceptance of P%armaceutical product patent! b" de eloping countrie! for ten "ear!L and :imited exclu!i it" i! granted to de eloping countrie! for P%armaceutical product! w%o!e patent application! are filed after t%e
enforcement of t%e (R&P! Agreement.
TRIPS ETRADE RELATED INTELLECTUAL PROPERTY RIGHTS) AND PHARMACEUTICALS: IMPLICATIONS FOR INDIA
A LOOK AT THE TRIPS AGREEMENT 5ontrar" to popular belief= intellectual propert" legi!lation! not onl" co er patent! but al!o t%e ac;ui!ition and u!e of a range of rig%t! co ering different t"pe! of creation! including t%at of an ae!t%etic c%aracter Fe.g. arti!tic wor-! and indu!trial de!ign!G and information and !ign! of a purel" commercial alue Fe.g. trademar-!G among ot%er!. &ntellectual propert" rig%t! F&PR!G include t%e following categorie! F!ee Box 1. Al!o !ee Annexure 1 for detail! about t%e categorie! of intellectual propert" rig%t!G9

5op"rig%t and related rig%t!= (rademar-!= ,eograp%ical indication!= &ndu!trial de!ign!= Patent!= :a"out de!ign! of integrated circuit!= (rade !ecret!=
Breeder!E rig%t!= and
Atilit" model!. $owe er= t%e ,A(( Agreement on (rade Related A!pect! on &ntellectual Propert" Rig%t! F(R&P!G co er! t%e fir!t !e en categorie! onl". Per%ap! t%e indu!triali?ed nation! Fand t%eir bu!ine!! lobbie! t%at acti el" promoted t%e (R&P! negotiation!G %ad little intere!t in t%e excluded categorie!. A! mentioned in Box 1= patent i! t%at t"pe of intellectual propert" rig%t a major application of w%ic% occur! in t%e P%armaceutical !ector. According to t%e Anited Cation! definition= a patent i! a legall" enforceable rig%t granted b" a countr"E! go ernment to an in entor. &n !imple word!= t%e content of intellectual propert" i! information= and t%i! i! exerci!ed wit% re!pect to t%e product! t%at carr" t%e protected information. A patent exclude! ot%er per!on! from manufacturing= u!ing or !elling a patented product or from utili?ing a patented met%od or proce!!. And= becau!e of t%i! intellectual propert" rig%t! ma" %a e a direct and !ub!tantial impact on indu!tr" and trade. Before t%e conduct of t%e (R&P! negotiation! wit%in t%e ,A(( t%ere exi!t a number of international organi?ation! and con ention! regarding t%e protection of intellectual propert". (%e 3orld &ntellectual Propert" >rgani!ation F3&P>IIa Anited Cation! !peciali?ed agenc"G %a! been particularl" acti e in t%e de elopment of new form! of protection Fla"out de!ign! of integrated circuit!G a! well in t%e application of new tec%nologie! of patent! Fe.g. biotec%nological application!G and cop"rig%t Fe.g. computer programme!G. $owe er= t%e following are t%e rea!on! for w%ic% t%e indu!triali?ed nation! pre!!ed for t%e (R&P! negotiation!= c%o!e t%e organi?ation !etting rule! for world trade F3orld (rade >rgani!ationIIa forum wit%out an" tradition of wor- in t%e field of intellectual propert" rig%t!G a! t%e forum for implementation of t%e (R&P! Agreement9
(%e de eloped countrie!= t%roug% patent! and ot%er protecti e in!trument!= are pro ided wit% t%e po!!ibilit" of exporting product! incorporating inno ation! under exclu!i e or monopoli!tic rig%t!= i.e. tec%nolog"I%older! can exclude competition from dome!tic producer! in importing countrie! or ot%er foreign firm! F!ee Smit%= Pamela= &ntellectual Propert" Protection and Anited State! Export!9 E idence in t%e Data= Paper pre!ented at t%e 5onference on &nternational Relation!
on &ntellectual Propert"9 5%allenge! at t%e (urn of t%e 5entur"= (%e American Ani er!it"= 3a!%ington D. 5.= 177.. (%e !tud" indicate! !ignificant increa!e in t%e AS export! to countrie! w%ere intellectual propert" protection %a! been enforcedGL and
An Agreement wit%in t%e ,A((P3(> facilitate! recour!e to cro!!I retaliation for nonIfulfilment of !pecific obligation!. &n !imple word!= countrie! failing to compl" wit% (R&P! could be !ubject to trade retaliation if t%e 3(> di!pute !ettlement mec%ani!m determined t%e exi!tence of a ca!e of nonIcompliance wit% t%e (R&P! Agreement.
B+9 ;: S #$%&t M-tt%4 -/! M-'/ F'%.!) +, A66.'&-t'+/ +, I/t%..%&t -. P4+6%4t" R'1*t) T"6%) +, I/t%..%&t -. P4+6%4t" R'1*t)
S #$%&t M-tt%4
M-'/ F'%.!)
5%emical!= drug!= pla!tic!= engine!= Cew= nonIob iou!= indu!triall" Patent! turbine!= electronic!= applicable indu!trial control and !cientific e;uipment Sign! or !"mbol! to identif" good! (rademar-! All indu!trie! and !er ice! Printing= entertainment Faudio= ideo= motion 5op"rig%t >riginal wor-! of aut%or!%ip picture!G= !oftware= broadca!ting &ntegrated MicroIelectronic! >riginal la"out de!ign! circuit! indu!tr" Breeder!E Cew= !table= %omogeneou!= Agriculture and food rig%t! di!tingui!%able arietie! indu!tr" (rade !ecret! Secret bu!ine!! information All indu!trie! &ndu!trial 5lot%ing= automobile!= >rnamental de!ign! de!ign! electronic!= etc. ,eograp%ical ,eograp%ical origin of good! and 3ine!= !pirit!= c%ee!e indication! !er ice! and ot%er food product! Atilit" model! Functional model!Pde!ign! Mec%anical indu!tr"
Source: The TRIPs A reement: A !uide "or the South# South Centre# !eneva# $%%&
TRIPSB PHARMACEUTICALS AND INDIA Except in t%ree !ector!9 food proce!!ing= P%armaceutical and agroI c%emical! t%e &ndian patent law allow! product patent!. &n t%e!e !ector! onl" proce!! patent! are allowed. A! on toda"= &ndia %a! a proce!! patent regime regarding P%armaceutical product!. (%erefore= t%e &ndian Patent Act= 1728 %a! to be c%anged to bring it in line wit% t%e international law! on patenting of P%armaceutical Fand agroIc%emicalG product!. Being a de eloping nation= &ndia %a! a grace period of fi e "ear! to c%ange it! patent law! under t%e Agreement on (R&P!. &n ot%er word!= t%e &ndian Patent Act= 1728 will %a e to be amended !uitabl" b" '1!t December 1777. At t%e !ame time= de eloping countrie! li-e &ndia are gi en a grace period of ten "ear! for tec%nologie! pre iou!l" unprotected in it! mar-et. During t%i! interim period of ten "ear!= all patent application! will be put in a /blac- box0. $owe er= P%armaceutical corporation! can appl" for an exclu!i e mar-eting rig%t FEMRG for t%eir product! for fi e "ear! onl" e en before t%e countr" in ;ue!tion %a! full" p%a!ed into t%e new patent protection !"!tem. (%e pro i!o i! t%at t%e product mu!t %a e been regi!tered for a patent and %a! recie ed mar-eting rig%t! in an" of t%e 3(> Member countrie!. (%u! it i! a bac-door met%od for granting t%e monopol" rig%t!. Furt%ermore t%ere i! a gre" area %ere too. &f mar-eting rig%t! are granted onl" for fi e "ear!= w%at will be it! po!ition for t%e remaining fi e "ear! until t%e countr" in ;ue!tion actuall" amend! it! patent law!. A! for example= t%ere i! lig%t at t%e end of t%e tunnel for &ndiaE! /patentE muddle= and particularl" t%e P%armaceutical patent. (%e idea i! to amend t%e exi!ting patent law wit% a pro i!ion w%ic% will allow it! drug indu!tr" to cop"
world cla!! /pre!criptionE medicine! for re!earc% purpo!e! e en before a patent expire!. &n lieu of t%i! pro i!ion= &ndia can offer incenti e! to world drug manufacturer!= e.g. t%e exten!ion of exclu!i e mar-eting rig%t! for an extra "ear. A careful peru!al of pro i!ion! of t%e (R&P! Agreement re eal! t%at !uc% a mo e will not iolate t%e (R&P! Agreement under t%e aegi! of t%e 3(>. Suc% a deci!ion would come under Article '8 of t%e Agreement w%ic% deal! wit% t%e exception! to rig%t! conferred9 QMember! ma" pro ide limited exception! to t%e exclu!i e rig%t! conferred b" a patent= pro ided t%at !uc% exception! do not unrea!onabl" conflict wit% a normal exploitation of t%e patent and do not unrea!onabl" prejudice t%e legitimate intere!t! of t%e patent owner= ta-ing account of t%e legitimate intere!t! of t%ird partie!.Q (ran!national corporation! FMC5!G control 78 percent of all regi!tered patent! in t%e world. Effecti el"= gi en !uc% monopol" power o er patent! and t%e EMR clau!e= &ndia or for t%at matter an" de eloping countr" doe! not %a e an" tran!ition period. (%i! i! true for protected tec%nolog"= and if one interpret! t%at from t%e patentPproductIoriginating countr" angle. (%i! i! t%e %a?ie!t part of t%e (R&P! Agreement wit% re!pect to t%e P%armaceutical and al!o t%e agroIc%emical !ector!. An in!tance of %a?ine!! i! t%at t%e Agreement i! !ilent on t%e content and !cope of t%e EMR clau!e. Furt%ermore= it ma-e! no reference to action! w%ic% t%ird partie! would be permited to ta-e Ffor in!tance= wit% re!pect to product! alread" mar-eted or to product! manufactured b" a proce!! different from t%e patented proce!!G. (%ird partie! ma" interpret t%e EMR clau!e a! not including a iu! pro%ibendi= i.e. not including t%e rig%t to exclude ot%er! from u!ing t%e in ention= a! in t%e ca!e of patent!. Apart from t%e %a?ine!! mentioned abo e= for t%e de eloping countr" li-e &ndia= t%e following are clear concern! of t%e (R&P! Agreement i!IXI i! t%e P%armaceutical !ector9
(%e introduction of product patent! ma" impl" !ignificant !ocial co!t! due to t%e %ig%er price! c%arged for medicament!L (%e acce!! to local firm! of protected tec%nolog" will become more difficult becau!e of t%e enforcement of t%e patentI%olderE! bargaining po!ition t%roug% in e!tment! in R*DL and (%ere i! t%e po!!ibilit" t%at t%e mo!t d"namic !egment! of t%e P%armaceutical mar-et= w%ere t%e pro!pect! of growt% are %ig%e!t= will
be excluded from dome!tic firm!. (%i! i! li-el" to be true for drug! ba!ed on biotec%nolog" w%ere in enting around Fi.e de eloping drug! wit% !imilar compo!ition!G i! relati el" more difficult. $owe er= gi en t%e pre!ent da" political econom" !et up= it i! futile for a de eloping countr" li-e &ndia to adopt a reacti e !tance wit% re!pect to P%armaceutical patent!. &n ot%er word!= t%e rational polic" would be to cope wit% t%e !ituation proIacti el". Furt%ermore= in realit" t%e fear! expre!!ed abo e ma" not come true F!ee page +II5on!e;uence! of (R&P!9 M"t%! and Realit"G. E en if t%e fear! %a e come true t%ere are po!!ible wa"! out if one approac%e t%e i!!ue proIacti el". An example of t%e proIacti e approac% i! to go for compul!or" licence! FArticle 6 of t%e (R&P! AgreementG on ground! of competition= %ealt% and public intere!t F!ee Box +G. Article 6 of t%e (R&P! Agreement !tate! t%e rig%t of partie! to Qadopt mea!ure! nece!!ar" to protect public %ealt% and nutrition= and to promote public intere!t in !ector! of ital importance to t%eir !ocioIeconomic and tec%nological de elopment= pro ided t%at !uc% mea!ure! are con!i!tent wit% t%e pro i!ion! of t%i! AgreementQ Femp%a!i! addedG. For example= in 1771 a ,erman 5ourt granted a compul!or" licence in fa our of a ,erman firm wit% re!pect to a patent Frelating to interferonG %eld b" a AS firm on ground! of public intere!t. (%e purpo!e of t%e licence wa! to allow t%e mar-eting of a t%erapeutical application of interferon t%at %ad been de eloped b" t%e ,erman firm. Anot%er FproIacti eG wa" out i! t%ere in Article '8 of t%e Agreement Fexception! to rig%t! conferredII!ee Box #G. (%e following are t%e exception! w%ic% ma" be deemed legitimate under Article '89
&mportation of a protected product t%at %a! been legitimatel" put on t%e mar-et el!ew%ereL Act! carried out pri atel" and on a nonIcommercial !cale or for a nonI commercial purpo!eL A!e of an in ention for re!earc% and experimentation and for teac%ing purpo!e!L Preparation of medicine! for indi idual ca!e! according to a pre!criptionL 5ompul!or" licen!ingL and
A!e of t%e in ention b" a t%ird part" w%o !tarted= or too- !eriou! precautionar" action= before t%e application for t%e patent For of it! publicationG. (%e t%ird wa" out i! wit%in Article #2 of t%e Agreement w%ic% deal! wit% patentable !ubject matter. Article #2.1 !tate!9 QSubject to t%e pro i!ion! of paragrap%! # and '= patent! !%all be a ailable for an" in ention!= w%et%er product! or proce!!e! in all field! of tec%nolog"= pro ided t%at t%e" are new= in ol e an in enti e !tep and are capable of indu!trial application...Q $ere= in enti e !tep and capable of indu!trial application ma" be deemed b" a Member to be !"non"mou! wit% t%e term! nonIob iou! and u!eful= re!pecti el" F!ee Annexure 1G. Article #2.# !tate!9 QMember! ma" exclude from patentabilit" in ention!= t%e pre ention wit%in t%eir territor" of t%e commercial exploitation of w%ic% i! nece!!ar" to protect order public or moralit"= including to protect %uman= animal or plant life or %ealt%...Q FEmp%a!i! originalG. Furt%ermore= Article #2.' FaG !tate!9 QMember! ma" al!o exclude from patentabilit"9 diagno!tic= t%erapeutical and !urgical met%od! for t%e treatment of %uman! or animal!.Q
CONSELUENCES OF TRIPS: MYTHS AND REALITY (R&P! doe! not pro ide for t%e retro!pecti e patenting in &ndia of drug! t%at are alread" on t%e mar-et or co ered b" exi!ting patent application! el!ew%ere. (a-ing into account t%e tran!itional period= t%ere will be le!! impact on price! of newIpatented drug! on t%e &ndian mar-et during t%e 1778! and onl" a minimal effect until #88.. (%ereafter it will build up graduall" from a pool of new drug!. ,lobal progre!! in re!earc% and de elopment i! repleni!%ing t%i! pool at a !tead" but moderate pace a! older drug patent! expire F!ee Box 'G.
Phar a!"uak# as Pat#nts E$%ir# A#+ t M0 US !4 1) :'t* C;@#/ )-.%) '/ ;<<@ -4% )%t t+ .++)% 6-t%/t 64+t%&t'+/ #" t*% "%-4 2002. T*') :'.. t*4+: t*% 1-t% +6%/ ,+4 &+06%t't'+/ ,4+0 1%/%4'& !4 1). 5%eaper drug price and bonan?a for generic drug! will alter t%e re!earc% and bu!ine!! of P%armaceutical major!. T+ ,'.. t*% 6-t%/t 1-6B !4 1 0-$+4) -4% t 4/'/1 0+4% t+ #'+t%&*/+.+1" !%(%.+60%/t -/! +t*%4 6-4t/%4). (%e pre!!ing need! for new drug! %a e led to t%e earlier -!+6t'+/ +, /%: t%&*/+.+1'%). T+ -(+'! t*% FT-1-0-t C4')')> E.+)) +, 6-t%/t))B t*% &+06-/'%) -4%
'/&4%-)'/1." '/(%)t'/1 '/ 4')3'%4B & tt'/1N%!1% t%&*/+.+1'%). Smit%-lineI Beec%am i! one of t%e fir!t !uc% companie! to leap into new tec%nologie! for geneI%unting. Again= ,laxo= after reali?ing t%e futilit" of bloc-bu!ter dependenc"= i! contemplating to de elop broader /portfolio0 of drug!. (%e rationale i! to minimi?e ri!-! a!!ociated wit% t%e de elopment of new drug!. $ere= one %a! to con!ider t%e moderate pace of P%armaceutical inno ation and of ob!tacle! for mar-et penetration b" new drug! in &ndia. S &* &+/)'!%4-t'+/ .%-!) t+ t*% &+/&. )'+/ t*-t '/ (-. % t%40) /+t 0+4% t*-/ ;5 6%4&%/t +, t*% I/!'-/ 0-43%t :'.. #% &+(%4%! #" 6-t%/t) )+0% t'0% -,t%4 2005. (%e 4%0-'/'/1 D5 6%4&%/t +, t*% 0-43%t :'.. &+/t'/ % t+ #% %96+)%! t+ t*% '06-&t +, 1%/%4'& &+06%t't'+/ F!ee Redwood= $ein?= and Cew $ori?on! in &ndia9 (%e 5on!e;uence! of P%armaceutical Patent Protection= >ldwic- Pre!!= 177+G. (%e time !cale of t%e introduction of P%armaceutical patent! in &ndia under (R&P! ma-e! it certain t%at= if I/!'-/ !4 1 64'&%) 4')% ! 4'/1 t*% 4%0-'/!%4 +, t*% ;<<0)B 't :'.. /+t #% ,+4 4%-)+/) +, 6-t%/t'/1. (%e earlie!t !tart of premium pricing for patented drug! will be in t%e earl" "ear! of t%e next decade. N+ )'1/','&-/t %,,%&t &-/ #% -/t'&'6-t%! /t'. -,t%4 2005B #%&- )% t*% :%'1*t -1% +, 6-t%/t%! !4 1) +/ t*% I/!'-/ 0-43%t :'.. #% t++ )0-.. ,+4 %&+/+0'& '06-&t. More important t%an t%e time !cale of patent protection will be fundamental /c%ec-! and balance!0 w%ic% will put a bra-e on t%e impact of premium pricing on &ndian drug expenditure F!ee Box +G. Suc% balance! are a! follow!9

(%e low purc%a!ing power of &ndian con!umer!L ,o ernment price control! under permanent or re!er e power!L and
(%erapeutic competition from c%eaper unpatented drug!. >f t%e!e t%e !econd i! t%e mo!t immediate= w%erea! t%e fir!t and t%e t%ird are t%e mo!t /durable0 !afeguard! again!t a price explo!ion. C+06 .)+4" L'&%/)'/1 +, C+00%4&'-. M%!'&'/%) P+))'#.% According to t%e 5oIordinator of t%e Forum of Parliamentarian! on &ntellectual Propert"= &ndia= B B Be"ala= compul!or" licen!ing of P%armaceutical product! /for commercial purpo!e!0 i! po!!ible wit%in t%e ambit of t%e (R&P! Agreement9 N&ndia !%ould draw !trengt% from Article! 2 and 6 of (R&P! and in!i!t on compul!or" licen!ing of
P%armaceutical product! for commercial purpo!e!.O (%e current under!tanding= under Article '1 of t%e agreement= i! t%at (R&P! pro i!ion! onl" allow compul!or" licen!ing for nonIcommercial u!e. $owe er= Article 2= w%ic% outline! t%e objecti e! of t%e intellectual propert" agreement= !tate! t%at implementation of t%e agreement !%ould inter alia /contribute to t%e tran!fer and di!!emination of tec%nolog"0. Furt%ermore= Article 6 gi e! Member countrie! t%e rig%t to adopt mea!ure! to /protect public %ealt% and nutrition0 and /promote public intere!t0. &ndia !%ould interpret t%e!e article! in t%e national intere!t !ince t%e con!titutional guarantee of t%e rig%t to life encompa!!e! t%e rig%t to %ealt%= w%ic% re;uire! a ailabilit" of medicine! at affordable price!= a!!ert! Be"ala. Source9 Pre!! (ru!t of &ndia= #1.1#.1771 $ere= it will be intere!ting to note t%at 5anada e!tabli!%ed t%e Patented Medicine Price! Re iew Board in 1762 under reform! to extend patent protection on brandIname P%armaceutical!. Antil recentl"= t%e Board reac%ed o er 188 !ettlement! wit% t%e P%arma indu!tr"= w%ic% it claim! %a! !a ed con!umer! about 5H118mn. &n a recent ca!e= it ordered a AS compan" &5C P%armaceutical!E local !ub!idiar" to cut t%e price of it! drug9 Kira?ole b" almo!t 78 percent and pa" a penalt" of 5H1.#mn. (%u!= t%ere are precedent! for !uc% price regulation!. (%ere i! ne ert%ele!! a wide!pread belief b" &ndian companie! t%at e en if t%e remaining precondition! for R*D in &ndia were met= t%e" cannot afford t%e co!t of minimum !cale operation!= and t%at onl" MC5! will be in a po!ition to benefit. E identl" MC5! %a e far greater financial re!ource!= but t%e" al!o %a e more di er!e call! on t%o!e re!ource! and are t%em!el e! obliged to ma-e difficult c%oice! w%en it come! to new R*D project!. IMPACT OF TRIPS ON GLOBAL BUSINESS A! expected= t%e propo!ed c%ange! in t%e intellectual propert" regime are welcomed b" t%e global bu!ine!! and t%eir !ub!idiarie! operating in &ndia. Big MC5! li-e $oec%!t= Co arti! etc. %a e alread" !et up 188 percent &ndian !ub!idiarie!. $owe er= mo!t of t%em are intere!ted in pla"ing a waiting game regarding t%eir in ol ement in t%e &ndian P%armaceutical! mar-et. (%e" are li-el" to introduce t%eir newIpatented drug! once t%e !"!tem of product patent become! full" operational. E en in t%at ca!e= mo!t of t%e
new drug! will eit%er be imported a! formulation! or be formulated in &ndia b" u!ing imported buldrug!. &n !%ort= &ndia i! unli-el" to be a !ite for R*D and production of buldrug!. According to ,laxoI3ellcome= it i! %olding bac- on in e!tment! in &ndia becau!e of concern! on intellectual propert" rig%t!. $owe er= it %a! plan! to build up olume! in certain t%erapeutic !egment! b" allowing t%eir &ndian !ub!idiar" to negotiate a c%eaper price for import! from t%e parent compan". Ander t%e (R&P! Agreement= &ndia %a! to accept t%e application! for t%e grant of product patent! from 1!t Danuar" 177.. According to one e!timate= up to Dul" 1771= #1+ application! were recei ed b" t%e patent office. Anot%er area of concern i! t%e pricing of drug! under t%e new patent regime. (%oug% it i! a fact t%at t%e price! of &ndian drug! are lower t%an t%o!e pre ailing in de eloped countrie!= t%e future price differential i! unli-el" to be large. (%e rea!on i! to a oid an" action again!t dumping of buldrug!.
IMPACT OF TRIPS ON INDIAN FIRMS Axiomaticall"= t%e introduction of 64+! &t 6-t%/t'/1 :'.. -,,%&t t*% I/!'-/ P*-40-&% t'&-. ,'40) t+ - .-41% %9t%/t. 5ertainl"= t%e" will be pre ented from ta-ing a circuitou! route to growt% t%roug% t%e adoption of proce!! patent!. At t%e !ame time= !ome of t%em are !eriou!l" concerned wit% t%e expan!ion of t%eir bu!ine!!. T+ -&*'%(% t*%'4 -'0B t*%" -4% '/&4%-)'/1." %96.+4'/1 t*% ,+..+:'/1 +6t'+/): -. D%(%.+60%/t +, N%: D4 1) #. P4+! &t'+/ +, O,,NP-t%/t D4 1) &. P4+! &t'+/ +, P-t%/t%! D4 1) /!%4 L'&%/)% !. M-43%t'/1 +, I06+4t%! D4 1)
-. D%(%.+60%/t +, N%: D4 1) For t%i!= a nece!!ar" condition i! to '/&4%-)% t*% %96%/!'t 4% +/ R=D -&t'('t'%). Drug di!co er" and de elopment %a e to be included in t%e R*D !trateg". &n ot%er word!= t%e focu! of R*D will %a e to be c%anged from t%e inno ation of new proce!!e! to t%at of in ention of new product!. For example= Dr. Redd"0! :aborator" Fa leading &ndian manufacturerG %a! focu!ed it! R*D expenditure on t%e de elopment of new drug! for cancer= bacterial infection! and diabete!. (%e" %a e !et up a re!earc% facilit" at t%e co!t of R! 6 crore Fapproximatel" H#.'mnG. $owe er= a couple of )t4 &t 4-. :%-3/%))%) *-(% t+ #% t-3%/ '/t+ -&&+ /t. Fir!t= gi en t%e !mall !i?e of &ndian firm!= e en a !%arp increa!e in R*D acti itie! will not generate !ufficient fund! for t%e de elopment of new drug!. Secondl"= &ndian firm! lac- manpower and ot%er in!titutional mec%ani!m! to launc% new drug! !ucce!!full" in t%e foreign mar-et.
G'(%/ ) &* .'0't-t'+/)B t*% ,+& ) +, R=D )*+ .! #% +/:
(%e de elopment of inI%ou!e drug! w%ic% %a e t%e !ame t%erapeutic alue of t%o!e exi!ting in t%e mar-etL and Production of indigenou! drug! catering to t%e need! of &ndia and ot%er tropical countrie! w%ere MC5! %a e little or no intere!t in introducing drug! according to t%eir need!.
#. P4+! &t'+/ +, O,,NP-t%/t D4 1) A reali!tic a!!umption i! t%at '/ /%-4 , t 4%B +,,N6-t%/t !4 1) :'.. %0%41% -) +/% +, t*% '06+4t-/t 0-/ ,-&t 4'/1 -&t'('t'%) +, I/!'-/ P*-40-&% t'&-. ,'40). Furt%ermore= offIpatent FgenericG drug! made b" &ndian firm! are going to meet mo!t of t%e dome!tic demand. At t%e !ame time= it i! incorrect to !a" t%at t%eir t%erapeutic alue will be le!! t%an t%e new= onIpatent drug!. 3it% increa!ing concentration of &ndian firm! in generic drug!= it! export pro!pect i! er" %ig%. 5urrentl"= t%e :+4.! 0-43%t ,+4 1%/%4'&
!4 1) ') C20#/B -/! %96%&t%! t+ 14+: t+ CM0#/ #" 2005. &n order to ta-e t%i! opportunit"= leading &ndian firm! Fli-e Ranbax"= S>:= Ea!t &ndia P%armaceutical!G are building t%eir capacitie! to produce generic drug!. For example= S>: F$"derabadG %a! !et up a !eparate di i!ion for t%e production of generic!. Furt%er= it expect! to generate more t%an '' percent of it! annual turno er from generic!. Export! of generic! will get furt%er boo!t from foreign in e!tment in t%i! area. (%e AS P%arma giant Merc- %a! !et up a 188 percent !ub!idiar" to produce and export generic!. $owe er= &ndian firm! are going to face !trong competition from ot%er de eloping countrie!= and e en !ome de eloped countrie!. (%erefore= t%e longIterm !ucce!! of &ndian firm! depend! on impro ed efficienc" and exploration of new mar-et! t%roug% Sout%ICort% and Sout%ISout% coI operation= bot% at t%e producer!0 and con!umer!0 le el.
&. P4+! &t'+/ +, P-t%/t%! D4 1) /!%4 L'&%/)% ,lobal drug de elopment and production are undergoing !tructural c%ange! in recent time!. (%e rea!on! for !uc% c%ange! are9 aG Exponential increa!e in t%e co!t of drug de elopment= bG S%ortening of product life= and cG Stiff competition from generic drug!. &n order to gain maximum re enue wit%in a !%ort period= &ndian firm! are tr"ing to get licen!e! from global P%arma bu!ine!! to produce and mar-et onIpatent drug!. $owe er= t:+ !')&%4/'#.% ,-&t) -4% :+4t* 0%/t'+/'/1:
1. ,lobal P%arma companie! not %a ing muc% !ta-e in &ndian mar-et will not %e!itate to gi e licence to &ndian firm!L and #. 5ompanie! wit% large !ub!idiarie! in &ndia Fli-e ,laxo= Pfi?erG are li-el" to introduce licen!ed drug! t%roug% t%eir !ub!idiarie! onl".
!. M-43%t'/1 +, I06+4t%! D4 1) (%e fourt% option for &ndian P%arma firm! i! mar-eting of imported drug!. Man" &ndian firm! are intere!ted in entering into longIterm arrangement! wit% global bu!ine!!. For example= Ranbax" %a! entered into an alliance wit% Eli :ill". (%e new and liberali?ed drug polic" %a! remo ed import re!triction from all but eig%t categorie! of drug!. (%e remo al of import re!triction! and propo!ed c%ange! in t%e &PR regime will lead to an increa!e in drug! import.
TRIPS: AVAILABILITY AND PRICES OF DRUGS

(%e aforementioned di!cu!!ion on offIpatent drug! re eal! t%e fact t%at t%e" will meet mo!t of t%e demand!. (%erefore= e en under t%e new patent regime Fcompatible wit% t%e (R&P! AgreementG= t%e a ailabilit" and price! of generic drug! will largel" be unaffected. $owe er= t%e !ituation i! different wit% re!pect to new FonIpatentG drug!. (%ere i! no doubt t%at t%e!e drug! will be a ailable in t%e &ndian mar-et Feit%er t%roug% production or under licenceG. But= t%e effect on price! i! ambiguou!. Ander t%e cu!tomar" t%eor" of demandI!uppl"= t%e price le el !%ould come down in future. (%e rea!on i! increa!ed !uppl" and notI!o muc% c%ange in demand. Albeit= t%i! ideal !ituation ma" not be true in practice becau!e of t%e following factor!9

(%e oligopoli!tic nature of global P%arma bu!ine!!L (%e practice of tran!fer pricing b" t%e global bu!ine!!= w%ere monitoring and regulation of price! b" t%e ,o ernment will be difficultL and (%e price !ituation al!o depend! on t%e proportion of patented drug! being !old in t%e &ndian mar-et. At t%e !ame time= t%e global P%arma
bu!ine!! %a! a large number of patented drug! w%ic% come! from t%eir own R*D F!ee (able +G. Furt%ermore= in t%e long run= medical bioItec%nolog" i! going to be t%e area of re!earc% and de elopment. Biotec%nolog" ba!e and re!earc% of &ndian firm! Fexcept t%e ,o ernmentIowned 5entral Drug Re!earc% &n!tituteG i! poor= and t%e" are unli-el" to be able to produce muc% of t%e!e drug! F!ee Box .G. 5*" I/!'- N%%!) R=D '/ M%!'&-. B'+t%&*/+.+1"G &n Marc%= 177.= t%e AS Patent and (rade Mar- >ffice FASP(>G granted t%e patenting of %ealing propert" of %aldi FturmericG. A di!pute aro!e pertaining to t%e i!!ue of patenting of Ntraditional -nowledgeO. Ander t%e Agreement on (R&P!= patenting of Ntraditional -nowledgeO i! barred. Ander t%e 3(> procedure!= an" Member countr" can !ee- re!olution of a di!pute wit% anot%er Member b" formall" a!-ing for /con!ultation!0. &f !uc% /con!ultation!0 fail= 3(> can be a!-ed to !et up a di!pute !ettlement panel to adjudicate t%e i!!ue. &n Augu!t 1771= &ndia0! 5ouncil for Scientific and &ndu!trial Re!earc% F5S&RG approac%ed attorne"! in t%e AS to c%allenge t%e American patent on turmeric. After protracted tec%noIlegal argument!= on Augu!t 1'= 1772= t%e ASP(> une;ui ocall" rejected t%e patent application. &ndia won t%e Battle of $aldig%atiTpolitician! Fand expert!YG from all %ue! Fleft= rig%t or centreG rejoiced at t%e great ictor"FYG. $owe er= t%e real i!!ue i! not t%at of &ndia won= AS lo!t. &t lie! in &ndia0! lac- of re!earc% facilitie! in exploring in and in enting wit% et%noI medicine!. Medical biotec%nolog" can pla" a crucial role %ereTnot in near future= but /now0. ,i en t%e decentrali?ed origin and nature of et%noI medicine!= bot% t%e ci il !ociet" and public !ector re!earc% in!titution! %a e a larger role in t%i! regardTw%at i! re;uired i! public action. Source9 SA3(EE Cew!letter Co.6= AugIDec.= 1771 = (%e Economic (ime!= #+.86.1772= (%e (ime! of &ndia= '1.86.1772 >n t%e ot%er %and= MC5! %a e a large ba!e for re!earc% in medical biotec%nolog" F!ee Box 1G. ,i en !uc% a dominant po!ition= price! of onI patent drug! are li-el" to go be"ond t%e reac% of t%e con!umer! at large in t%e long run. (%erefore= t%e real i!!ue i! not a ailabilit" of new drug! in t%e &ndian mar-et= but people!0 acce!! to t%em. H+%&*)t P-t%/t) A" 4(%!'& H%4# $oec%!t= ,erman" patented t%e &ndian medicinal plant 5oleu! For!-o%lii= w%ic% i! being u!ed for a"ur edic F&ndian traditional medical
!"!temG medicine. (raditional u!e! of t%i! %erb include treatment for cardio a!cular di!ea!e= abdominal colic= re!pirator" di!order!= painful urination= in!omnia and con ul!ion!. &n 172+= a large !cale !creening of medicinal plant! b" 5entral Drug Re!earc% &n!titute of &ndia re ealed t%e blood pre!!ure lowering and antiI!pa!modic effect! of extract! from 5 For!-o%lii. >ne of $oec%!t0! patent! co er! a !pecific formula of t%e plant extract and it! u!e in treating cardio a!cular di!ea!e and intraocular pre!!ure. According to a report of t%e Rural Ad ancement Foundation &nternational= 5anada= in 1772= $oec%!t will begin worldwide mar-eting of it! 5 For!-o%lii ba!ed drug. Source9 Pre!! (ru!t of &ndia= #8.8#.1772
PORTER FIVENFORCE MODEL:

ENTRY BARRIERS: (%e p%armaceutical indu!tr" %a! %ig% barrier! to entr" for !mall firm!. Sub!tantial economic= regulator"= legal= and e en per!onnel ob!tacle! blocnew competitor!. E&+/+0'%) +, )&-.%: &n t%e formulation! !egment t%e economie! of !cale %a e been mitigated for t%e SS& t%roug% exemption! from DP5>. C-6't-. I/(%)t0%/t: (%e initial capital in e!tment i! a deterrent to t%e entr" of new pla"er! on t%e indu!tr"= !ince t%e buldrug indu!tr" re;uire! %uge amount of in e!tment in capital to exploit t%e in%erent ad antage! of economie! of !cale in it! operation!. $ea " in e!tment i! re;uired in R*D facilitie! !uc% a! re!earc% laboratorie! new product!. G+(%4/0%/t 6+.'&": DPCO: &t doe! not allow independent pricing for drug! %a ing an annual
turno er of more t%an of R!.+ 5rore!. (%i! lead! to er" low margin! on drug! and ma-e! it unattracti e for large number of pla"er! to operate t%u! rai!ing t%e entr" barrier!. F+4%'1/ '/(%)t0%/t: Entr" barrier! for MC5! are %ig% due to a cap on foreign in e!tment to 2+<. I/!'-/ P-t%/t) A&t: Since t%e Act recogni?e! onl" proce!! patent!= it allow! large number of pla"er! to manufacture t%e !ame drug %a ing t%e effect of lowering t%e entr" barrier!. T%&*/+.+1" EP4+! &t'+/B R=D): (%e tec%nolog" for manufacturing buldrug! and formulation! can al!o act a! an entr" barrier. But t%e &ndian firm! %a e good proce!! !-ill! and t%i! effecti el" lower! t%e entr" barrier!. R*D will pla" an important role in t%e po!tI,A(( era. (%o!e companie! w%ic% %a e t%e nece!!ar" !-ill! and t%e financial mu!cle to carr" on t%e re!earc% will !ur i e. $ea " expenditure! on re!earc% and de elopment are re;uired for t%e arduou! proce!!e! of drug di!co er"= de elopment= manufacturing= and appro al t%roug% t%e Federal Drug Admini!tration. De elopment of a new drug can ta-e 18 to 1. "ear! and co!t o er .88 million dollar!. D')t4'# t'+/ &*-//%.): Ade;uate di!tribution c%annel i! anot%er !ignificant entr" barrier. (%e retailer! are important influencer! in t%e bu"ing proce!! a! t%e" !ometime! recommend !ub!titute product! t%at are out of !toc- and often fail to ad%ere to t%e pre!cription! e en if t%e pre!cribed product i! in !toc-. &t i! t%erefore critical for t%e p%arma companie! to !er ice bot% t%e doctor! and retailer!. (%i! re;uire! t%e p%arma companie! to %a e large !ale! force to meet t%i! c%allenge w%ile t%e MC5! %a e lagged be%ind in t%i! a!pect.
RIVALRY AMONG COM PETITORS: 5urrentl" t%ere are about #+=888 pla"er! in t%e indu!tr". (%e !mall !cale of operation! %a! reduced profit! for mo!t pla"er!. &n t%e buldrug!
!egment t%e competition i! e!!entiall" on price= a! t%ere i! low le el of product or !er ice differentiation. (%i! indu!tr" !egment i! dri en mainl" b" tec%nolog" and co!t control. 5ompanie! !uc% a! >rc%id and Morepen %a e ac%ie ed international leader!%ip in t%i! !egment. &n t%e formulation bu!ine!! %owe er t%e mo!t important dimen!ion! are brand!= di!tribution !trengt% and new product introduction capabilitie!. 5ompanie! are effecting merger! wit% ot%er companie! %a ing complimentar" product portfolio! to gain acce!! to eac% ot%er! brand!. :arge companie! entering into brand building b" pro iding !cientific information and !upport of clinical re!earc% to doctor! acro!! t%e countr".
BARGAINING PO5ER OF BUYERS: For buldrug! t%e ot%er formulation ma-ing p%armaceutical companie! are t%e bu"er!. Since t%ere are large number! of formulation ma-er! t%e" do not %a e !trong bargaining power. For t%e formulation!= t%e bu"er! are t%e retail c%emi!t!= t%e con!umer! and in!titution! li-e %o!pital!. (%e p%armaceutical product! are uni;ue in t%e !en!e t%at per!on w%o i! con!uming t%e product doe! not %a e muc% di!cerning power. &t i! t%e doctor! and to !ome extent t%e c%emi!t D+&t+4): (%oug% doctor! account for onl" 11 percent of t%e total !ale!= t%e" are t%e !ingle mo!t important influencer! in t%e purc%a!e deci!ion! of t%e final con!umer!= a! t%e" don0t -now t%e product! t%at are a ailable in t%e mar-et. (%u! t%e p%armaceutical companie! %a e to maintain large !ale! force to !er ice t%e doctor! and t%e retailer! wit% new product information= !ample! etc. R%t-'. &*%0')t): (%e c%ief influence in t%e purc%a!e of >(5 drug! i! t%e retail c%emi!t! and di!tributor!. (%e cu!tomer relie! on t%e information pro ided b" t%e abo e in %i! bu"ing deci!ion.
I/)t't t'+/-. # "%4): &n!titution! bu" drug! in large olume! and prefer to bu" unbranded product!. (%e margin! on t%e!e product! are lower t%an on t%o!e t%at are !old to t%e trade directl". Be!ide! t%e!e t%ere are re!er ation! for t%e !mall !cale !ector in t%e purc%a!e! of t%e go ernment program! !uc% a! t%e Cational Malaria and Cational 5%olera Program!. $o!pital= in!titutional and managed care cu!tomer! u!uall" pa" well below li!t price becau!e of %ea " di!counting and negotiating. (%e" can ac%ie e %ig%er ;uantit" di!count! becau!e of t%eir !uperior purc%a!ing power. Demand %a! a tendenc" to be er" ela!tic wit% t%e!e mar-et !egment!. &n contra!t= drug! !old to w%ole!ale di!tributor! and p%armac" c%ain! for indi idual p%"!ician! and patient mar-et! are priced at t%e %ig%er end of t%e price !cale. BARGAINING PO5ER OF SUPPLIERS: (%e main !upplier! for t%e p%armaceutical indu!tr" are t%e buldrug manufacturer! and ot%er ba!ic c%emical! nece!!ar" for production of buldrug!. (%e ba!ic drug! are a ailable wit%out an" con!traint!. (%ere are a large number of buldrug! manufacturer! and t%i! dilute! t%eir bargaining power. (%e t%reat of bac-ward integration b" t%e formulation! manufacturer! i! anot%er rea!on for t%eir le!! bargaining power. 3it% t%e impeding product regime= t%e buldrug manufacturer! will not be able to re er!e engineer molecule! and mu!t obtain product patent!. (%i! i! bound to bring exclu!i it" to t%e buldrug manufacturer! and increa!e t%eir bargaining power. THREAT OF SUBSTITUTES: People are turning to alternati e medicine !"!tem! t%at could affect t%e p%armaceutical indu!tr" in a !ignificant manner. &ndia %a! a ric% %i!tor" of traditional medicine !"!tem! t%at are !lowl" !taging a comebac-. (%e drug indu!tr"0! competitor! are traditional !"!tem! !uc% a! A"ur edic= Anani= $omeopat%"= Cature care !"!tem! and new age medicine !uc% a! Rei-i etc. But mo!t of t%e!e medicine !"!tem! do not %a e ade;uate cure for all t%e major -nown di!ea!e= t%erefore t%e" remain limited !ub!titute! for t%e
allopat%ic medicine !"!tem.
PEST +, I/!'-/ P*-40- I/! )t4":

POLITICAL FACTORS: G+(%4/0%/t ,-&t+4): 1. Regulator" roleI pro%ibiti e in pa!t= but it now graduall" toward! encouraging in nature= wit% re!pect to free trade. #. Co. of drug! under DP5> %a! been reduced !ignificantl" from '28 in 1767 to 21 in 177.. '. ,o ernment and municipal bodie! are !pending ''< of total expenditure on %ealt% care in &ndia. ECONOMIC FACTORS: I/(%)t0%/t: &n 172'= R). 225 &4+4% &n 1777= R). 2500 &4+4% Y%-4 ER). C4+4%)) 172' ##. 1722 +.8 1727 .88 176# 188 176. 1.8 1766 688 177' 1=818 177+ 1=#88 177. 1='68 1771 1=188 1772 1=6+8 1776 #=1.8
1777 #=.88 E06.+"0%/t: Direct9 M.@0 .-3*) &ndirect9 2M .-3*) SOCIAL FACTORS: H%-.t* '/!'&-t+4): ;<@0N@; :ife expectanc" FMear!G &nfant moralit" FPer 1888 li e birt%!G Deat% rate FPer 1888G Birt% rate FPer 1888G H%-.t* '/,4-)t4 &t 4%: ;<55N5@ Doctor! 1.=888 Cur!e! 16=.88 $o!pital! +=888 $o!pital Bed! 1=#.=88 8 Primar" $ealt% 2#. 5enter! !ubIcenter! 12=.#1 Co. of Medical +# 5ollege! TECHNOLOGICAL FACTORS: ;<<DN<< +=76=167 .=1.=171 1.=872 6=28=111 ##=#71 1='1=616 11# +1.# 1+1 ##.6 +1.2 ;<<DN << 1#.7 17 6.7 #1.+
P4+! &t'+/: (%e proce!! !-ill! are excellent and are comparable to t%e be!t in t%e world. (%i! %a! made &ndia one of t%e lowe!t co!t producer! in t%e world. 3it% t%e impeding product patent regime and a large number of bloc-bu!ter drug! going off patent in t%e &nternational mar-et e!peciall" ASA= t%e &ndian bul- manufacturer! are upgrading t%eir production facilitie! to meet AS FDA !tandard!. (%e &ndian companie! are putting emp%a!i! on in %iItec% ZAPZ5 in!trumentation and on >nline Ki!ual &n!pection mac%ine!. R%)%-4&* = D%(%.+60%/t: An experti!e in re er!e engineering Scientific pool of p%arma ba!e C+/t4-&t 0-/ ,-&t 4'/1: MC5! gi e contract manufacturing w%ic% i! ad antageou! for &ndian companie! a! it i! le!! rigorou! t%an formulation.
RECOMMENDATIONS:
T+ G+(%4/0%/t:
(a-e a proIacti e !tance wit% re!pect to t%e Agreement on (R&P!
Build capacit" for re!earc% and de elopment on indigenou! drug! of decentrali?ed origin $elp re!earc%er! to obtain patent! on t%eir product! b" adopting a !ingleIwindow approac% Adopt a %oli!tic and needIba!ed drug polic" Adopt a rational competition polic" wit% re!pect to t%e P%armaceutical !ector
T+ B )'/%)):
,i e more focu! to pre enti e a!pect! of di!ea!e control w%ile de eloping new drug! De elop Sout%ISout% cooperation w%ile de eloping and producing needIba!ed drug!
T+ C+/) 0%4): Ma-e rational u!e of drug!T/more i! better0 i! a falaciou! concept in t%i! re!pect T+ NGO): Arou!e public action= and con ince Ft%roug% networ-ing and ad ocac"G t%e polit" of t%e nece!!it" of a needIba!ed drug polic"
Reac%ing up to t%e international fora and ad ocate on t%e ariou! i!!ue!Pimplication! of (R&P! on P%arma !ector Reac%ing down to t%e ci il !ociet" at large= and ma-e t%em aware of t%eir traditional -nowledge of indegenou! !"!tem! of medicine
CONCLUSIONS
&n conclu!ion= &ndia !%ould adopt a !trong world cla!! patent law wit%out furt%er dela" for t%e following rea!on!9
FiG De elopment of Science and (ec%nolog" FiiG Attracting Foreign &n e!tment! in (ec%nolog" and Re!earc% FiiiG Re er!ing Brain Drain Fi G 5reation of 3ealt% E') D%(%.+60%/t +, S&'%/&% -/! T%&*/+.+1": &n t%e re!earc% world toda"= w%ere collaboration and alliance! are t%e order of t%e da"= abilit" to networ- wit%in t%e world communit" of !cienti!t! will be !trengt%ened onl" if we %a e !trong &PR. E'') Att4-&t'/1 F+4%'1/ I/(%)t0%/t) '/ T%&*/+.+1" -/! R%)%-4&*: 3orld cla!! and (R&P! compliant law will bring to &ndia t%e benefit! of in e!tment!= funding of R*D and tec%nological de elopment. Funding of R*D i! a major %urdle toda". &ndia can attract fund! from abroad if it gi e! t%e rig%t !ignal!. >ut of total Foreign Direct &n e!tment FFD&G Appro al! during t%e period Augu!t 1771 to December 1776= t%e P%armaceutical &ndu!tr" accounted for a meagre 8.++< of t%e total. E''') R%(%4)'/1 B4-'/ D4-'/: &PR will pro ide c%allenging opportunitie! to retain !cientific talent in &ndia and attract our !cienti!t! and re!earc%er! from abroad bac- into t%e national main!tream. E'() C4%-t'+/ +, 5%-.t*: &ntellectual Propert" create! t%e wealt% of nation!. Recognition of &PR will c%ange our !cientific culture from /cop"ing0 to /creati it"0. For all t%i! to %appen= &ndia !%ould %a e a Patent :aw= w%ic% i! clear and unambiguou! and comparable to t%e be!t !tatute! a ailable to &PR. A wellIdrafted legi!lation will minimi?e litigation and di!pute!. ,i en !uc% a %a?" !cenario it i! difficult to predict t%e future of t%e &ndian P%armaceutical indu!tr" under t%e /new0 regime of intellectual propert" rig%t! and it! relation!%ip wit% international trade. $owe er= certain broad trend! can be pa!teuri?ed. Fir!t i! t%at t%e &ndian P%arma companie! are going to face !tiff competition from t%e global bu!ine!!. (%i! de!pite t%e fact t%at at lea!t in &ndia= t%e P%arma mar-et i! not oligopoli!tic. At t%e !ame time= trend!
in re!earc% and de elopment can ma-e it !o in t%e long run. (%erefore= &ndian companie! can go eit%er for collaboration or concentrate on producing and mar-eting generic drug!. (%i! futuri!tic conclu!ion i! ba!ed on t%e reali!tic a!!umption regarding poor re!earc% and mar-et penetration !trategie! b" t%e &ndian companie!. >n t%e ot%er %and= global P%arma major! are unli-el" to con!ider &ndia a! one of t%eir ba!e! for exploring /new0 drug! t%roug% re!earc%. At mo!t= &ndia can be an /a!!embl"0 point of !ome drug!. (%e tric-ie!t part i! w%at po!ition !%ould t%e &ndian go ernment ta-e. (%e i!!ue i! a politicalI economic one= and %a! to be FproIacti el"G approac%ed from bot% angle!Teconomic! and politic!. Broadl"= t%e ,o ernment of &ndia %a! two option!9
&ntroduce an effecti e regulator" mec%ani!m for /c%ec-! and balance!0 on t%e a ailabilit"= acce!! and price of e!!ential drug!L and
De elop re!earc% facilitie! for t%e introduction of /new0 drug! catering to t%e need! of t%e countr". ,i en it! traditional medicinal plant ba!e= &ndia can ta-e a leading po!ition in de eloping= producing and exporting tropical drug!. 5ompatibilit" between t%e abo e mentioned two option! !er e! a! a ba!e for rational and needIba!ed drug polic".
ANNEXURE
A//%9 4% ;: C-t%1+4'%) +, I/t%..%&t -. P4+6%4t" R'1*t) 5op"rig%t and related rig%t!9 unli-e a patent= cop"rig%t protect! t%e expre!!ion of an idea= not t%e idea it!elf. (%i! mean! t%at= in principle= protection i! onl" extended to t%e form in w%ic% an idea i! expre!!ed Fe.g. t%e particular writing of in!truction! in a computer programmeG= but not to t%e concept!= met%od! and idea! t%at are expre!!ed. 5op"rig%t protection i! pro ided to t%e aut%or! of original wor-! of aut%or!%ip= including literar"= arti!tic and !cientific wor-!. 5op"rig%t %a! al!o been extended to protect computer !oftware and databa!e!. QCeig%bouring rig%t!Q= t%at i!= rig%t! w%ic% are related to cop"rig%t= are accorded to p%onogram producer!= performer! and broadca!ting organi!ation!. (%e owner! of cop"rig%t can generall" pre ent t%e unaut%ori!ed reproduction= di!tribution Fincluding rentalG= !ale and
adaptation of an original wor-. Protection generall" la!t! for t%e life of t%e aut%or plu! fift" "ear! or for fift" "ear! or more in t%e ca!e of wor-! belonging to corporate bodie!. (rademar-!9 trademar-! are !ign! or !"mbol! Fincluding logo! and name!G regi!tered b" a manufacturer or merc%ant to identif" good! and !er ice. A alid trademar- allow! t%e owner to exclude from commerce imitation! li-el" to mi!lead t%e public. Protection i! u!uall" granted for ten "ear!= and i! renewable a! long a! t%e trademar- continue! to be u!ed. ,eograp%ical indication!9 t%e!e are !ign! or expre!!ion! u!ed to indicate t%at a product or !er ice originate! in a particular countr"= region or place. (%ere are different t"pe! of geograp%ical indication!. (%e" are called /appellation! of origin0 if t%e c%aracteri!tic! of t%e product! or !er ice! can be attributed exclu!i el" or e!!entiall" to natural and %uman factor! of t%e place in w%ic% t%e product! or !er ice! originate. &ndu!trial de!ign!9 an indu!trial de!ign normall" protect! t%e ornamental or ae!t%etic a!pect of an indu!trial article. &ndu!trial de!ign! are c%aracteri!ed b" t%eir appeal to t%e e"e. (%ere i! a wide ariet" of re;uirement! and modalitie! of protection pertaining to indu!trial de!ign!. &n !ome countrie!= protection i! ba!ed on no elt"= w%ile in ot%er! on originalit". Furt%er= in !ome countrie! !pecific protection for an indu!trial de!ign coI exi!t! wit% or can be /accumulated to0 cop"rig%t or trademar- protection for t%e !ame de!ign. (%e term of protection generall" range! between fi e and 1. "ear! Fincluding renewalG. Patent!9 patent! are granted b" a go ernment aut%orit" conferring t%e exclu!i e rig%t to ma-e= u!e or !ell an in ention generall" for a period of #8 "ear! Fcounted from t%e date on w%ic% t%e application for t%e patent wa! filedG. &n order to be patentable= an in ention u!uall" need! to meet t%e re;uirement! of ab!olute no elt" Fpre iou!l" un-nown to t%e publicG= nonI ob iou!ne!! Fcontaining !ufficient inno ati ene!! to merit protectionG and indu!trial applicabilit" For u!efulne!!G. Patent! ma" be granted for all t"pe! of proce!!e! and product!= including t%o!e related to t%e primar" !ector of production= namel" agriculture= fi!%ing or mining etc. PatentIli-e protection i! conferred for functional model! and ot%er /minor0 inno ation! under utilit" model! F!ee definition belowG. :a"out de!ign! of integrated circuit!9 t%e protection of t%e la"out For topograp%"G of integrated circuit! i! conferred in mo!t indu!triali!ed countrie!. &t i! a !ui generi! form of protection introduced for t%e fir!t time in t%e ASA in 176+ II limited= li-e cop"rig%t= to t%e de!ign a! !uc% II t%at allow! t%e owner of t%e de!ign to pre ent t%e unaut%ori!ed reproduction and
di!tribution of !uc% de!ign!. Re er!e engineering i! generall" allowed= in accordance wit% t%e indu!tr"E! practice. (%e duration of protection i! !%orter t%an under cop"rig%t Ft"picall" ten "ear!G. (rade !ecret!9 confidential bu!ine!! information= !uc% a! li!t! of client! or recipe!= can be an enterpri!eE! mo!t alued a!!et. 5i il and criminal action! are pro ided for in mo!t legi!lation again!t t%e unaut%ori!ed di!clo!ure or u!e of confidential information Fof a tec%nical or commercial natureG. &n t%i! ca!e= t%ere i! no exclu!i e rig%t= but an indirect t"pe of protection ba!ed on a factual c%aracteri!tic of t%e information Fit! !ecret natureG and it! bu!ine!! alue. Anli-e patent!= trade !ecret! are protected a! long a! t%e information i! -ept !ecret. Breeder!E rig%t!9 t%i! i! a !ui generi! form of protection conferred on plant arietie! t%at are new= !table= %omogeneou! and di!tingui!%able. Exclu!i e rig%t!= a! a minimum= include t%e !ale and di!tribution of t%e propagating material! for around #8 "ear!. Anli-e patent!= breeder!E rig%t! permit t%e u!e b" ot%er breeder! of a protected ariet" a! a ba!i! for t%e de elopment of a new ariet" Ft%e /breeder!E exemption0G and for t%e reIu!e b" farmer! of !eed! obtained from t%eir own %ar e!t! Ft%e /farmerE! pri ilege0G. Atilit" model!9 protection i! gi en to t%e functional a!pect of model! and de!ign!= generall" in t%e mec%anical field. (%oug% no elt" and in enti ene!! are generall" re;uired= t%e criteria for conferring protection are le!! !trict t%an for patent!. (%e term of protection al!o i! !%orter Ft"picall" up to 18 "ear!G. Atilit" model! I w%ic% are concerned wit% t%e wa" in w%ic% a particular configuration of an article wor-! II are di!tinct from indu!trial de!ign!= w%ic% are onl" concerned wit% t%e ae!t%etic c%aracter of an article. Source9 A! in Box 1
GLOSSARY
EMR (%i! form! part of trip! agreement. &t !a"! t%at go ernment! w%ic% a ail of t%e ten "ear! tran!ition period for !witc%ing o er to product patent! are bound to gi e t%e rig%t of exclu!i el" !elling a particular drug in t%eir countr" to a particular compan" w%ic% fulfill! certain condition!. &t mean! t%at no ot%er manufacturer can !ell a particular drug except t%e compan"= w%ic% %a! t%e EMR. (%i! actuall" implie! a monopol"Ili-e !ituation for t%at compan".
MAIL BOX (%i! i! t%e box in w%ic% all t%e application! for t%e P%armaceutical and Agricultural product! patent are -ept. &t will be opened in #88.. (ill t%at time no examination of Application! would be po!!ible.
EMR VS PRODUCT PATENT EMR will cea!e to exi!t once product patent come!. Furt%er= product!
w%ic% were !elling under EMR ma" or ma" not be granted patent. >n t%e ot%er %and= an" product can be granted a patent irre!pecti e of w%et%er it wa! under EMR or not.
Source9 3all Street Dournal= 1'.86.1772

Indian Pharmaceutical Industry Strategic Options

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INDIAN PHARMACEUTICAL INDUSTRY: STRATEGIC OPTIONS AFTER 2005

A Project Report Submitted in Partial Fulfillment of award of MBA Degree

HISTORY OF PHARMACEUTICAL INDUSTRY

PHARMACEUTICAL INDUSTRY IN INDIA

RESEARCH AND DEVELOPMENT

GLOBAL PHARMACEUTICAL INDUSTRY

INTELLECTUAL PROPERTY RIGHT EIPR)

MISCONCEPTIONS AND FACTS

PATENTS AND ITS IMPACT ON PHARMACEUTICAL INDUSTRY IN INDIA AND ON CONSUMERS

GENERAL PROCEDURE TO OBTAIN A PATENT :

INTELLECTUAL PROPERTY RIGHTS EIPR) IN GATT

enforcement of t%e (R&P! Agreement.

Breeder!E rig%t!= and

G'(%/ ) &* .'0't-t'+/)B t% ,+& ) +, R=D )+ .! #% +/:

TRIPS: AVAILABILITY AND PRICES OF DRUGS

PORTER FIVENFORCE MODEL:

allopat%ic medicine !"!tem.

PEST +, I/!'-/ P*-40- I/! )t4":

(a-e a proIacti e !tance wit% re!pect to t%e Agreement on (R&P!

Source9 3all Street Dournal= 1'.86.1772

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