Economics Project Semester 2

WTO and its effect on Indian Pharmaceutical Companies

Flow of Presentation
• • • • • • • • • • • • • Overview of WTO Overview of WTO Agreements TRIPS, Impact and Current Issues Indian Scenario TRIPS v/s Indian Pharmaceutical Companies Post 1970, Pre 2005 Features of the Patents Act 1970 Effects of TRIPS Implications of TRIPS Impact after 2005 Options Available Impact of WTO Agreements Future of Indian Pharmaceutical

Overview of WTO
• Only organization dealing with rules of trade between nations. • Fact File • Functions of WTO • Structure of WTO • The Secretariat • The Multilateral trading system •

Overview of WTO Agreements
• Tariffs • Tariff Quota • Non-Tariff Barriers
     Import Licensing Rules for valuation of goods at customs Pre-shipment inspection Rules of origin Investment measures

TRIPS

• • • • • • •

Trade-Related Intellectual Property Rights (TRIPS) Copyrights and related rights Trademarks Geographical Indications Industrial Designs Patents Lay out designs of integrated circuits Protection of undisclosed information

TRIPS

• • • • • • •

Trade-Related Intellectual Property Rights (TRIPS) Copyrights and related rights Trademarks Geographical Indications Industrial Designs Patents Lay out designs of integrated circuits Protection of undisclosed information (trade secrets)

TRIPS

• • • • • • •

Trade-Related Intellectual Property Rights (TRIPS) Copyrights and related rights Trademarks Geographical Indications Industrial Designs Patents Lay out designs of integrated circuits Protection of undisclosed information (trade secrets)

Statistics
PATENTS 1 9 9 9 2000 2 0 0 0 -0 1 2 0 0 1 -0 2 2 0 0 2 -0 3 2 0 0 3 -0 4 2 0 0 4 -0 5 2 0 0 5 -0 6 2 0 0 6 -0 7

Application 4824 Filed

8503

10,592

11,466

12,613

17,466

24,415

28,882

Application 2824 Examined

4264

5104

9538

10,709

14,813

11,569

14,119

Application 1881 Granted

1318

1591

1379

2469

1911

4320

7359

Statistics
TRADE MARKS
1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Application 66,378 Filed

84,275

90,236

94,120

92,251

78,996

85,699

1,03,419

Application 42,500 Examined

70,115

1,59,735

2,49,003

89,958

72,091

79,200

85,185

REGISTERED 8010

14,202

6204

11,190

39,762

45,015

1,84,325

1,09,361

Contd...

Trade-Related Intellectual Property Rights (TRIPS)
39 Geographical Indications products have been registered since September, 2003.  These include Darjeeling Tea, Chanderi Saree, Pochanpally Ikat, Solapur Chaddar, Mysore Silk, Kullu Shawl, Bidriware, etc

• GEOGRAPHICAL INDICATION

Contd...

Trade-Related Intellectual Property Rights (TRIPS)
– The filing of applications for Design has increased from 2874 in 1999-2000 to 5372 in 2006-07 – The number of applications examined has also gone up to 5179 in 2006-07 against the figure of 2067 in 1999-2000  – The number of Designs registered has also

• DESIGNS

TRIPS
• TRIPS and Public Health • TRIPS and Patents

IMPACT of TRIPS
 TRIPs Agreement favours the developed countries  TRIPs extends to agriculture  TRIPs extends to Micro Organism

INDIAN SCENARIO
• 20000+ companies

• Millions employed • • Highly efficient industry • • Affordable • • Rise in GPI is much less •

• 8 mn estimated HIV+ • • Officially 3.5 mn • • Highest in the world • • 85% are men

TRIPS v/s INDIAN PHARMACEUTICAL COMPANIES
 Prohibitive Costs  Recolonisation  Export hurdles  US interventions

TRIPS v/s INDIAN PHARMACEUTICAL COMPANIES
 Prohibitive Costs
 Cost of treatment is around US $ 300 p.m.  Individuals below US $ 100 p.m. cannot afford treatment.  Switzerland: Deaths due to AIDS lowered from 686 (1994) to 100 (1999)  Only 500/ 10000 get treated

TRIPS v/s INDIAN PHARMACEUTICAL COMPANIES
 Recolonisation
 Worldwide minimal standards for patent protection  Essential to enter global markets  This will eradicate Indian companies from Indian Markets 

TRIPS v/s INDIAN PHARMACEUTICAL COMPANIES
 Export hurdles
 Attractive for other countries to buy high-quality products from India at reasonable prices.  National and International patent rules  A patent  constitutes the sole right not only to produce a product but also to import it  It was ensured that the cheaper drugs did not enter developed markets

TRIPS v/s INDIAN PHARMACEUTICAL COMPANIES
 US interventions
 The generic drugs will be poorly paid  The TRIPS pact ensured that cheaper drugs did not enter markets

POST 1970 AND PRE 2005
 By 1994 pharmaceutical units reached 20000  Investment- 1973- Rs. 225 Crore to 1999- Rs. 2500 Crore  Bulk Drug - 1980-81- Rs. 240 Crore to 1999-00Rs. 3777 Crore  Formulations- 1980-81- Rs 1200 Crore to 199900- Rs 16000 Crore  Exports- 1980-81- Rs. 46 Crore to 1999-00 Rs. 6631 Crore  Profiatability - 1969-70 - 15% , 1990-91- 1% ,

Indian Patents Act, 1970

History

Features of the Patents Act 1970
• Process patent in lieu of product patent for pharmaceutical products. • Term of the patent - 7 years from DOA. • No constraints on exports. • The patent holder was under obligation to use the patent. There was also provision for revocation of patent for non-use.

TRIPS

Trade-Related Aspects of Intellectual  Property Rights

EFFECT of TRIPS ON INDIAN PHARMACEUTICAL INDUSTRY
• Implementation of product patents by January 5, 2005 • A patent term of 20 years (against the existing term of 7 years in India) implemented from Jan 5, 2001. • EMRs for a period of 5 years are granted to companies for products that are patented after 1995 and are patented in any other country already. • The burden of proof has been shifted from the plaintiff to the defendant.

IMPLICATIONS of TRIPS
• Patents granted for both- Product and Process • 20 years term applicable in all countries, against 7 year previously. • Grant of Patents. • Incase of Disputes.

IMPACT AFTER 2005
• A stronger patent regime or product patents will be uniformly applicable on the pharmaceutical innovations among the member countries of the WTO. • Good Manufacturing Practices set by WHO. • Reverse Engineering • Bolar Provision • Compulsory Licensing

OPTIONS AVAILABLE in WTO REGIME
• Manufacture off patented generic drugs, • Produce patented drugs under compulsory licensing • Produce patented and other drugs on contract basis, • Collaborate with multinationals to engage in R&D, clinical trials, product development or marketing the patented product on a contract basis.

IMPACT OF WTO AGREEMENT
 Closure of Industries on a large scale  Indian Firms concentrating on generic products  Opening of R&D bases by foreign multinational  Standardization of Products.  Increasing visibility in the Contract Research and Manufacturing Services (CRAMS) space

Future of Pharmaceutical Industry in India:

INDIAN PHARMACEUTICALS BY 2011
• Expected to double to USD14.7billion  Domestic market driven by :
– Aging population,

– Increase in consumption of life style disorder drugs, – Improving healthcare awareness of the economically growing population – New product launches • Exports to grow at 20% CAGR . • Contract research to India to grow to US$2 -3 billion (2-3% of global R$D spend)

GENERICS SEGMENT
• Mergers of Pharmacies, wholesalers - increasing bargaining power, Corporate mergers, Restructuring of product sourcing / supply chain . • Value to drift towards cost efficient, low cost countries. • Significant business in less regulated market or old generics  with scale and technology superiority • New Generic opportunities are becoming highly complex and the business shall migrate to strong India R&D players • The diversity of product dosage forms, strengths, packaging and regulatory challenge across continents offers a competitive advantage for modern Indian companies.

BIO-PHARMACEUTICALS
• India's fledging biotech industry is expected to grow still further to reach a value of approximately USD5.37 billion in 2010 • Revenues of Indian Biopharmaceuticals are expected to reach approximately US$3.90 billion by 2010 • Monoclonal antibodies, human and animal biologics will be the limelight products in the future. • The areas of clinical trials, contract research and government support will be the future growth drivers for the industry.

Contract Manufacturing and Contract Research are expected to scale up to USD2.5billion. The Indian CMO market stood at USD869m in 2007. It is expected to see a CAGR of 41.7% to reach USD2.4 billion by 2010. The loss of patent protection by 2009 of almost USD80 billion worth of top selling drugs will be the main driver of this growth. India has the highest number of USFDA approved

Future Outlook
• Exports Indian pharmaceutical market, valued at USD8.16 billion in 2006-07, CAGR of 12.36% since last five years, whereas exports grew at a higher CAGR of 20% to reach USD6.15 billion in 2006-07. While the domestic market is expected to scale up to USD14.5 billion by 2011-12 at a CAGR of 16% Exports are projected to jump much faster at 35% and reach USD25 billion. Exports Contributing over

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