CASE ANALYSIS

by


Amitkumar Gandhi
13PGP017











Analysis of Supreme Court Judgement on Novartis Vs. Union of India case
The Novartis Vs. Union of India case has been viewed as de novo, a matter that has not been questioned
before, by the supreme court of India. The Supreme court looked into both the matters of fact and law in
consideration of the case.
The first test for issuing a patent is to check for novelty. The court looked into Zimmerman patent in question of
prior art. Upon examining the documents, the court decided that imatinib mesylate is a known substance from the
Zimmerman patent. The pharmaceutical properties of the salt have also been discussed and published in academic
articles. Therefore the court dismissed the appeal as not qualifying the test of invention as covered by section 2(1)(j)
and section 2(1)(ja) of the Patents Act, 1970.
Since the patents act does not define efficacy in section 3(d), the court decided to interpret the term efficacy as
therapeutic efficacy because the patent is regarding a medical compound. Even though the court acknowledges
that the physical efficacy of the beta form of imanitib mesylate has increased 30% in terms of bio availability and
increased in terms of stability, it pointed out that no material has been given to show that higher therapeutic
efficacy on molecular basis can be achieved by the compound with respect to the free base form that is already
available. So the court decided that the appeal does not qualify for section 3(d)
Thus the Supreme court of India rejected the patent appeal for beta form of crystalline salt of imanitib mesylate by
Novartis and further attached the test of efficacy to the traditional tests of prior art, inventive step and application.

Companys perspective of the judgement
Investors want returns, but intellectual property environment is unfavourable in India. So, big pharmas would not
want to invest, said Ranjit Shahani of Novartis.

Reactions of stakeholders-
Pfizer-

We are disappointed with the decision of the Supreme Court, and remain concerned about the environment for
innovation and investment in India.

Global Intellectual Property Center Executive Vice President Mark Elliot-

The decision against patent rights in India today will negatively impact businesses ability to invest in tomorrows
medical and technological advancements. Unfortunately, this high (Supreme) court decision is a symptom of a much
larger problem in inadequate protection of intellectual property rights in India

IPA Secretary General D G Shah-
This is a landmark judgement that will serve to set at rest the controversy that was raised regarding the scope of
section 3(d) in the Patents Act, which is a crucial safeguard against the extension of patent monopolies of known
drugs and the consequent delay in the availability of affordable generic versions.



IDMA Secretary General Daara B Patel-

It is a good judgement. It is in favour of the countrys poor patients and is in support of Indian generic companies.
Though I feel sorry for Novartis but I feel happy that rules of the country have prevailed and this help the poor
patients.

Anand Grover, senior counsel and director of Lawyers Collective HIV/AIDS Unit-

This verdict means that generic drug companies can produce quality drugs at low prices a breather for generic
drug manufacturing companies and a boon to the numerous poor in developing countries who cannot afford the
high priced original patent drug,

YK Sapru of CPAA-

We are very happy that the Apex Court recognized the rights of patients to access affordable medicines over profits
for big pharmaceutical companies through patents. Our access to affordable treatment will not be possible if the
medicines are patented. It is a huge victory for human rights.

Leena Menghaney of Medecins Sans Frontieres-

Novartis attacks on the elements of Indias patent law that protect public health have failed. The Supreme Courts
decision prevents companies from abusing the patent system to get secondary patents on existing medicines to
block price-busting generic competition

Analysis of Novartis position in India-
Novartis has various factors going in its favour as it is one of the biggest pharmaceutical companies in the
world. Though it lost the patent of Glivec in India yet it is having ZOMETA (used for the treatment of bone cancer) in
its basket along with many other life-saving drugs. It also received huge publicity because of this case which has
made it very popular.
However, the prices of its products are almost 10 times the prices of the generic drugs. Also, most of its patents are
getting expired by 2016.
Going forward, Novartis can do aggressive marketing for Zometa in an ethical way to become more popular all over
the globe. There is also a lot of scope for R&D because R&D expenditure of Novartis is 0.03% of its total expenditure
in India. They should also make more and more people aware about the medicine & researches they are doing.

However, it faces a lot of competition from the cheaper generic versions of Glivec products available in India. Also,
other Countries have appreciated the Judgement of SC of India, which makes its progress difficult in other parts of
the world. The delay in this judgement has already caused a lot of losses in its revenue.







What Novartis should have done?
Novartis feels that the Indian Supreme court has been unfair in rejecting the appeal for patenting its
product. It has even threatened India that it will withhold all its investments and its products from the country. This
kind of reaction on the part of Novartis is understandable because patents are very essential for a pharmaceutical
industry and also considering the fact that 40 countries have already given patent for the same product, Novartis can
feel hurt.
But the reaction of Novartis is not realistic. The supreme court of India made a decision that will help India at
present. It may seem unfair for Novartis, but the benefits that the country gets from generic drug makers are far
greater than the penalties that Novartis threatens to impose. But this doesnt mean that world class drug companies
like Novartis cant make profits in India. They will just have to be innovative with their business model as much as
they are with their products.

Novartis filed its case in 2006 after Indian authorities denied its patent application for Gleevec on the grounds that
existing drugs could be patented only if the updated formulations significantly improved efficacy. According to
Novartis, new Gleevec was safer than original Gleevec. As Novartis points out, 40 countries have given patent
protection for new Gleevec. But those countries arent India.
The vast majority of Indias 1.2 billion people cant afford patented drug prices -- for instance, $2,200 for a months
supply of Gleevec is 2.3 times the average months income. And Indias generic drug companies are happy to pump
out discounted pills, such as generic Gleevec for $175. This robust, $26 billion industry also produces generics for the
rest of the developing world, which is a big reason global health advocates were thrilled by the Indian courts
decision.
At this point, rather than try to punish India, Novartis should accept the reality of the pharmaceutical market there.
A high-price/high-profit model complemented by drug giveaways for the very poor just wont work in India, or any
other emerging economy.
What will work? Indias thriving generics market may suggest an answer. It shows that Indians will pay for drugs,
though not as much as what people pay in Zurich.
Just as pharmaceutical companies worked with global health advocates to develop tiered pricing for HIV drugs based
on national income, they will need to establish different prices for income groups within a single, large country, such
as India.
This wont be easy. The companies will need to work closely with governments to ensure that the elite who can pay
patented prices do so, that the middle class pay less but something, and that the very poor get a free or subsidised.
Pharmaceutical companies complain that this approach is impossible, that a gray market would drive out anything
but the cheapest price. However, Novartiss experience with COARTEM, its drug treatment for malaria, suggests
otherwise. Novartis sells the drug two ways to the developing world: to the private market in nice packaging, for
dispensing in drugstores to wealthy clientele; and to the public sector in blister packets, at a fraction of the cost, for
distribution to the poor.




The growing health insurance system in India will make tiered pricing easier. About one in four people have
insurance, much of it government sponsored, which means Indians in the middle class can afford patented
pharmaceuticals -- as insured people do the world over, by paying largely indirectly, through their premiums.
As this insurance system grows, along with Indias entire economy, the country will become a bigger market for
prescription drugs. By 2020, the pharmaceutical industry expects emerging markets to make up 38 percent of
revenue.
Its increasingly clear that, in the short term, patents wont guarantee drugmakers profits. Before the Novartis
decision, India had begun compelling pharmaceutical companies to issue licenses to domestic generic companies to
make their patented drugs. China amended its law last year to allow Chinese companies to make low-cost versions
of medicines under patent protection.

In years to come, though, these countries will want to provide strong patent protection: Their own inventors will
need it, and the cost of lost investment will begin to outweigh the public health advantages of weak patents. Rather
than expect these countries to play entirely by industry rules now, companies like Novartis should stick around for
that day and find ways to make a profit in the meantime.

Reference:
i. http://www.novartis.com/
ii. Supreme Court Judgement against ( Novartis Vs UNION OF INDIA & OTHERS)CIVIL APPEAL Nos. 2706-2716
of 2013
iii. http://www.novartisvaccines.com/
iv. http://www.youtube.com/watch?v=hls24QQPbW0
v. http://articles.economictimes.indiatimes.com/2013-08-18/news/41422694_1_cancer-drug-glivec-
compulsory-license-nexavar