AFTERMATH OF PRODUCT PATENT IN PHARMA

1) Looming Concerns over the New Patent Regime

It has also been opined that the introduction of product patent may alter the landscape of the
pharmaceutical industry to the era before the enactment of the Patent Act wherein, the foreign companies
will own two-thirds of the market.1 Second, creation of a new right will further increase litigation in the
field of patent claims.2 Third, creation of monopoly owing to product patent will subsequently result in
the medicines being priced at a higher cost. 3 The biggest concern is regarding increased ‘accessibility of
drugs’. The creation of monopoly on branded drugs will result in absence of cheaper variants. Therefore,
the only drug available for purchase will be a high priced branded drugs, which a significant section of
the Indian population that falls in the low-income bracket will not be able to afford. There are various
arguments against the introduction of product patent in the field of pharmaceuticals. First, the domestic
companies will have to compete with the global giants and hence, the small and medium players are
exposed to the risk of non-survival.4

The extension of patents in pharmaceuticals prevented domestic pharmaceutical companies from the act
of reproduction of products produced by the foreign market players. 5 Heavy reliance of Indian
pharmaceutical companies on reverse engineering resulted in difficult transition phase from merely
process patents in pharmaceuticals to product patents. There is significantly divided opinion on whether
the impact of grant of product patent in pharmaceutical has been beneficial or detrimental to the industry
as a whole.

Basic economic theory concludes that grant of monopoly, through grant of patents, would result in
increased price.6 It is based on the premise that being the only seller in the market, a monopolist will
always set a price which is much higher than the market price obtained through the regular forces of

1 ibid.

2 ibid.

3 ibid.

4 MD Janodia, Impact of Patents on India’s Pharma industry’s Growth and Competency: A Viewpoint of
Pharamaceutical Companies in India, 14 JOURNAL OF INTELLECTUAL PROPERTY RIGHTS 434 (2009).

5 FEROZ ALI KHADER, THE LAW OF PATENTS : WITH A SPECIAL FOCUS ON PHARMACEUTICALS IN INDIA (LEXIS
NEXIS  2007).

6 William Nordhaus, Invention, Growth and Welfare: A Theoretical Treatment of Technological Change,
CAMBRIDGE MASS-MASSACHUSETTS INSTITUTE OF TECHNOLOGY PRESS (1969).
demand and supply in the market.7 It was estimated that the grant of monopoly in the pharmaceutical
industry would lead to an increase in price by 100 % to 400 %.8

7 ibid.

8 Shubham Chaudhuri, Gia Panle & Pinelopi Goldberg, Estimating the Effects of Global Patent Protection in
Pharmaceuticals: A Case Study of Quinolones in India, 96(5) AMERICAN ECONOMIC REVIEW 1514 (2006).