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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 - 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
2000

Application 4824 8503 10,592 11,466 12,613 17,466 24,415 28,882


Filed

Application 2824 4264 5104 9538 10,709 14,813 11,569 14,119


Examined

Application 1881 1318 1591 1379 2469 1911 4320 7359


Granted
Statistics

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


MARKS

Application 66,378 84,275 90,236 94,120 92,251 78,996 85,699 1,03,419


Filed

Application 42,500 70,115 1,59,735 2,49,003 89,958 72,091 79,200 85,185


Examined

REGISTERED 8010 14,202 6204 11,190 39,762 45,015 1,84,325 1,09,361


Contd...

 Trade-Related Intellectual Property


Rights (TRIPS)
• GEOGRAPHICAL INDICATION

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

Contd...

 Trade-Related Intellectual Property


Rights (TRIPS)
• DESIGNS
– 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
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 • 8 mn estimated
 HIV+
• Millions employed •
• • Officially 3.5 mn
• Highly efficient •
industry • Highest in the world
• •
• Affordable • 85% are men

• Rise in GPI is much
less

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 1999-00-
Rs. 3777 Crore
 Formulations- 1980-81- Rs 1200 Crore to 1999-
00- 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
Thank You