CHAPTER -1: INTRODUCTION TO THE TOPIC

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India's pharmaceutical sector is currently undergoing unprecedented change. Much of this is due to the country's introduction, on January 1, 2005, of a system of product patents; before that, only patents for processes were permitted to be issued, a fact that has been Instrumental in the domestic industry's huge success as a worldwide exporter of high quality generic drugs. The new patent regime has also led to the return of the pharmaceutical multinationals, many of which had left India during the 1970s. Now they are back, and looking at India not only for its traditional strengths in contract manufacturing but also as a highly attractive location for research and development (R&D), particularly in the conduct of clinical trials and other services. Both multinational companies (MNCs) and domestic players are also examining the prospects offered by the local market as the government moves forward with initiatives aimed at providing India's more than one billion i nhabitants, for the first time, with access to the life -saving drugs they need. A further huge boost to the local market is coming from the rise of India's new affluent consumers, who lead more Western-style lives and are demanding innovative drugs to trea t the chronic illnesses that these changing lifestyles may produce. The Indian Pharmaceutical Industry was expected to undergo phenomenal changes after 1 January, 2005, when international patent laws will be implemented. India¶s domestic pharmaceutical companies have experienced a significant increase in R&D spending to be competitive in the world market. Although the Indian pharmaceutical market is very small and does not have enough funding for drug discovery programs, the Post-TRIPS period (1995-2008) had shown major changes in the performance of the Indian pharmaceutical industry on several fronts including annual turnover and exports. Indian companies are exporting their products to more than 200 countries around the globe including the highly regulated markets of US, Europe, Japan and Australia. Indian Export of drugs and pharmaceuticals was worth around US$ 8 billion in 2008 -09, most of which was made to the US and Europe, followed by Central and Eastern Europe, Latin America and Africa.

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Indian pharmaceutical industry has also been increasing the R&D expenditure significantly in the recent years. With an increase in R&D spending, Indian companies could file large number of Drug Master Files (DMF) and Abbreviated New Drug Application (ANDA) with USFDA. Indian Pharma companies are increasing the number of regulatory filings such as DMF and ANDA, intellectual rights including patents, as these enable them to manufacture and market drugs in the regulated market such as the US and Europe and earn good profit. The trend of patent filing in our country has tremendously increased as Indian Industries have filed 6040 applications in the last fiscal year (Economic Times, Jan.7, 2009). Various Indian Research organizations have filed patent application regarding products in various global Intellectual Property Organization like US Patent Office, WIPO and European Patent Office. India stood at 18th position according to their number of PCT international applications (IAs) filed in 2008. The study showed that the Research &Development spending of some of the leading firms, in particular, Ranbaxy and Dr Reddy¶s had shown increase in Post- TRIPS period. As a result, R&D intensities of the firms have improved significantly. Sunil (2006) in his study had undertaken a detai led mapping out of the sectorial system of innovation of India¶s pharmaceutical industry. The study showed that the TRIPS compliance of the intellectual property right regime has not reduced the innovation capacity of the domestic pharmaceutical industry w hich has visualized an increase in both research budget and patenting. In his working paper, R&D expenditure has dramatically increased for a segment of the Indian pharmaceutical industry after TRIPS came into effect. It was not only that the amount of R&D expenditure has increased, but there has been a drastic shift in the structure of R&D activities of the Indian companies. Earlier they were primarily engaged with the development of new processes for manufacturing drugs, now these also involved the investments for the development of new chemical entities (NCE). The growth in R&D for larger pharmaceuticals is greater than the growth for the general pharmaceutical sector. Larger pharmaceuticals have the resources to devote more investment for R&D and can afford to think about the future. Smaller pharmaceuticals do not have these resources and might not be able to survive in the market. Indian Pharmaceutical Industry has exciting Opportunities in Post -TRIPS
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period. Indian companies are increasing their r ate of DMF filings every quarter. Indian generic players are also increasing their participation in the advanced markets, particularly the US. The results of research study (2007) by EXIM Bank¶s Occasional Paper Series explored that the favourable Governme nt policies along with industry level initiatives have helped the industry to post high growth rates over the years. Many Indian pharmaceutical companies have not only shown good performance domestically but have also been able to establish their foothold in overseas markets. Despite challenges posed by the WTO regime, the growth momentum has continued in this sector. The Indian firms are adapting to the changing environments. R&D has now been recognized as the µsurvival kit¶ in the post -TRIPs scenario. They observed that Indian firms are investing in R&D not only for new drug discovery but for developing capabilities to assimilate and exploit knowledge available externally. They are also positioning themselves as a partner of choice for technology savvy national and multinational firms. India is now emerging as a preferred supplier of Active Pharmaceutical Ingredients (APIs) to many global companies for considerations beyond costs. It is today the third largest API player after China and Italy. India is way ahead of its competitors in Drug Master File (DMF) filings. The proportion of DMF filings by Indian players has gone up more than three times in the last few years. India has the largest(being outside the US) US FDA approved facilities. Indian firms are ab le to tackle complex synthesis in relatively short periods of time with cost efficiency. From the literature review, it can be seen that till recently there has not been enough research covering firm wise ANDA filings and approvals, DMF filings and approva ls with US FDA.

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000 registered units. Also. while the Indian sector represents just 8%of the global industry total by volume. There are approximately 250 large units and about 8000 small scale units. capsules. According to data published by the Department of Pharmaceuticals. pharmaceutical formulations.04 billion. and its drug exports have been growing 30% annually. quality and vast range of medicines that are manufactured. which form the core of the pharmaceutical industry in India (including 5 central public sector units). Of this the domestic market was worth US$12. iv . orals and injectable s. putting it in fourth place worldwide.CHAPTER-2: INTRODUCTION TO INDIAN PHARMACEUTICAL INDUSTRY (AN OVERVIEW): India currently represents just U. The Indian Pharmaceutical industry currently tops the chart amongst India¶s science based industries with wide ranging capabilities in the complex field of drug manufacture and technology. It has expanded drastically in the last two decade. Almost every type of medicine is now made in Indian pharmaceutical industry. compared to 7% annual growth for the world market overall. drug intermediates. The pharmaceutical industry in India is an extremely fragmented market with severe price competition and government price control. it accounts for 13% by value. It ranges from simple headache pills to sophisticated antibiotics and complex cardiac compounds. Ministry of Chemicals and Fertilizers. $6 billion of the $550 billion global pharmaceutical industry but its share is increasing at 10% a year.26 billion. in terms of technology . tablets. The pharmaceutical industry in India meets around 70% of the country¶s demand for bulk drugs. It ranks very amongst all the third world countries. The Indian Pharmaceutical sector is highly fragmented with more than 20.S. the total turnover of India¶s phar maceutical industry between September 2008 and September 2009 was US$ 21. chemicals.

The Indian pharmaceutical market is expecting to reach US$ 55 billion in 2020 from US$ 12. Moreover. Union Minister of Commerce and Industry and Minister for Trade and Industry. v . which seeks to fast-track the registration process for Indian generic medicines in Singapore. Some of the major Indian Pharmaceutical firms. has been the front runner in a wide range of specialities involving drug manufacture.59 billion by 2020. including Sun Pharma. Cadilla Healthcare and Piramal Life Sciences. will open a potential US$ 8 billion market for MNCs selling costly drugs by 201 5.60 billion in 2009. Singapore. the Indian generic drug market to grow at a CAGR of around 17% between 2010-11 and 2012-2013. With the advantage f being a highly organised sector. the increasing population of the higher -income group in the country. indicating a growing interest in new drug discovery research. The Indian diagnostic services are projected to grow at a CAGR of more than 20% during 2010-2012. the domestic pharma market is estimated to touch US$ 20 billion by 2015. the Indian Pharmaceutical Industry one of the world¶s largest and most developed. The market has the further potential to reach US$ 70 billion by 2020 in an aggressive growth scenario. development and technology. 2010. had applied for conducting clinical trials on at least 12 new drugs in 2010. Besides. The Indian pharmaceutical industry. have signed a µSpecial Scheme for Registration of Generic Medicinal Products from India¶ in May. Moreover. making India a lucrative destination for clinical trials for global giants. registering further growth of 8 -9% annually. Further estimates the healthcare market in India to reach US$ 31. the pharmaceutical companies in India are growing at the rate of US$ 4.5 billion. particularly. India tops the world in exporting generic medicines worth US$ 11 billion and currently.

 Increasing western work methods and mind -set. the Indian pharma industry revenues US$ 16 billion in 2009 and is expected to reach US$ 40 billion by 2014.  Underdeveloped healthcare infrastructure.  Cheap/skilled English -speaking labour force.  The Indian pharma industry is expected to be ranked the 10 th largest market of the pharmaceuticals in the world by 2015. B) WEAKNESSES:  Low pharma consumptions per capita.  Low R&D costs.  Long-established trade patterns with Western Europe and US.  According to reliable sources.000 registered units are fragmented across the country and reports say that 250 leading Indian pharmaceutical companies control 70% of the market share with stark price competition and government price regulations. vi . China and South Korea.50 billion by the end of 2011. CURRENT MARKET SITUATION OF INDIAN PHARMACEUTICAL INDUSTRY:  Currently India is ranked as the 4 th largest pharmaceutical market in the Asia pacific region behind Japan.  The Indian clinical trials market was estimated to be US$ 400 million in 2006 and is expected to reach US$ 1. SWOT ANALYSIS OF THE INDIAN PHARMACEUTICAL INDUSTRY: A) STRENGTHS:  Vast market growth potential.  Low cost production.  Governmental focus and investment in the R&D area.  India ranks 3 rd in Asia in clinical trials with around 350 clinical studies behind China and Japan.  Strong local manufacturing sector.  The Indian pharmaceutical drug production accounts to around 10% of the global drug production.  Innovative manpower.More than 20.  Biased drug pricing and bad compensation policy.

 India¶s capita spending a year on medicine is expected to increase from US$ 15 in 2009 to US$ 31 in 2014.  Increased demand for APIs (active pharmaceutical ingredients). The population in India is even forecast to become larger than China (today 1.3% till 2020.  Increased R&D activity by Indian firms. C) OPPORTUNITIES:  Large and growing population.  Many pharma MNCs already supplying the market at lower prices. thus becoming the world¶s most populous country with 1.  Weak copyright policies threatening the legal entities in the industry.  Government imposing further price controls on essential medicines.4 billion by 2020. Vast region disparities in healthcare coverage. vii .3 billion) after 2035.60 billion Indians.  The percentage of people aged 65 and above will increase from 4.3% to 6.  Rising demand for generic drugs globally. GROWTH POTENTIALS: The Indian pharmaceutical industry has the following growth drivers:  The Indian growing and aged population is expected to reach more than 1.  The healthcare expenditure in India is expected to increase from approximately US$ 44 billion in 2009 to US$ 60 billion by the end of 2011.  India¶s patent laws threatened by litigation. D) THREATS:  Failure to properly enforce WTO compliant patent legislation (product patents) for drugs.

Patalganga. 257 million viii 14o million .Ranbaxy Laboratories Anti-infective drugsFexofenadine.Intas Therapeutic drugs Matoda. Chandigarh 69 million 40 million 5. Hyderabad 1. Pain relievers. Tugain Mumbai. Baddi Hyderabad.Venus Remedies Anticancer drugsEpirubicin. Chennai. 1. Baddi 426 million 170 million 7.Torrent Pharma Antibiotics such as Nicorandil. Vatva. Goa.2 billion 3. ciclohale. Hyderabad. Cipla Therapeutic drugs such as Nadibact.5 billion 297 million 4. Docetaxel Himachal Pradesh. Oxaliplatin.TABLE-1: KEY INDIAN COMPANIES IN THE PHARMACEUTICAL INDUSTRY: Company name Products manufactured Manufacturing locations Total group turnover in US$ Turnover in US$ for India In 2009 1. Ulcer drugsGlimepiride. Finasteride. Ciprofloxacin. Chennai 817 million 530 million 6. Mumbai. Resperidone Mehsana. Amoxiclav Mumbai. Supradyn Ismo. Vizag 22 billion 1. Dr Reddy¶s Laboratories Antibiotics. Omeprazole.50 billion 293 million 2.Piramal Healthcare Phensedyl.

Skin care drugs Ahmedabad 8 billion 323 million ix .Pharma such as Hifenac. Vivem Dehradun 8.Cadila Healthcare Herbal drugs.

trade and firm strategy. it opened up opportunities for the industry in terms of investment in Research and Development (R&D) of new molecules. The industry had to adopt product patent in all fields of technology from 2005. and economic development in emerging markets. this study is not primarily about the pharmaceutical sector¶s role in economic development in India. Many Indian pharma companies viewed product patent system with a positive attitude and earn marked budgets for basic R&D. affordable pricing are all necessary components in achieving better access to medicines. WHO advises that rational selection. On one hand. Although this study highlights the impact of intellectual property on foreign direct investment. an analysis which requires looking at the probable strategic scenarios and options available to firms in the country (with inevitable implications for the industries as a whole. 1970. and for economic development). which was restricted to process patent and a term of 5-7 years under Indian Patents Act. A wide literature exists debating the positives and negatives of the introduction of patent laws on the development of the pharmaceutical industry. on the other hand. the implementation of TRIPS put restriction on Indian pharma industry in terms of producing generic drugs. This study is primarily about what will happen to import ant sources of low-cost quality medicines coming from India. sustaina ble financing. x .CHAPTER-3: IMPORTANCE OF STUDY: A). reliable systems and finally. For example. technological development. with inevita ble consequences for industrial development.SCOPE OF THE STUDY: India¶s accession to WTO and obligation to implement Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement has seen the change in Indian pharma industry. It is in the recent years that Indian companies started charting their growth path. It must be recognised that the paper¶s focus on pharm aceutical supply and pricing is only one part of a multi-faceted system determining levels of access to medicines.

B). xi .It would be interesting to see how Indian pharma ceutical companies sustain theirynnn momentum of growth and develop new competencies to overcome the challenges posed by product patents regime. OBJECTIVE OF THE STUDY: The basic objective behind this study was to analyse the product patent implicatio ns and its impact on Indian pharmaceutical industry in terms of ±  Growth of pharmaceutical industry in India in post -TRIPS era.  Competencies of pharmaceutical industry in India in post -TRIPS era.  Considerations for access to medicines in India and worldwide.

For this purpose. DESIGNING OF DATA COLLECTION PROCESS: Data collection sources are an important tool to identify the sources of information. ORGANISING AND ANALYSIS OF DATA: The study included the responses from big-. This study did not include any responses from MNCs as comparison with MNC could lead to a bias analysis. medium.e. RESEARCH PROCESS: 1. B). 3. produced by Indian firms). competencies and access of medicines in country as well as worldwide (i. generic drugs. Secondary data for this study was collected from available trade journals. TYPE OF RESEARCH: A good research design ensures that research project is conducted effectively and efficiently. xii . The types of data used in this study were based on categorical variables. the research type used in this work is an Explanatory Research as qualitative analysis derived from the study. ordinal and nominal. such as.and small-scale pharmaceutical companies in India. 2. legal papers and all other available literatures.CHAPTER-4: RESEARCH METHODOLOGY: A). SPECIFICATION OF RESERCH OBJECTIVE: I have chosen this topic to find out the effects of product patent regime which is posed by WTO on Indian pharmaceutical industry in terms of their growth.

hindering the growth of industry or providing impetus to R&D. on March 22. The role of Indian pharma companies in the era of product patent is crucial. Final agreement was reached on TRIPs ground rules for patent protection among WTO member countries. Taking into account India¶s status as a developing country. I attempted to identify how Indian pharma companies view product patent regime. India's parliament approved the Patents (Amendment) Act 2005. This study was undertaken with the objective of identifying the situation in India after product patent regime was implemented. Patent is the most contentious issue which is deliberated in several international flora. in this study. The new regime protects only products arriving on the market after xiii . stating that both processes and products should be protected. which effect from 1 January 1995. Patents are pharmaceutical field.CHAPTER-5: RESULTS AND DISCUSSION: Instruments of Intellectual property rights (IPR) are considered to achieve economic. The measure taken by these companies to survive and grow product patent regime have also been analysed. mostly debated for their role in Patents and Intellectual Property Rights: India's new product patent regime is the re sult of the WTO's Doha Round of negotiations in 2001. Of all the instruments of IPR. social and technological advancements for a country in all aspects. it was imperative for Indian pharma companies to embrace product patents. bringing in a system of product patents backdated to January 1. 2005. With this shift. 2005. including Product Patent. India was granted a transition period of 10 years from 1995 to 2005 to switch over from process patent to product patent. Subsequently. India signed General Agreements on Tariffs and Trades (GATT) in 1994 agreeing to implement the IPR in all fields of technology.

fully compliant with TRIPs provisions. it says. will have long -term beneficial effects. Elsewhere in the world. managing director of Pfizer India. the process by which the TRIPs agreement permits governments. to examine issues such as whether it would be TRIPs-compatible for the patent regime to limit the granting of patents to New Chemical Entities or New Medical Entities involving one or more inventive steps. new rules are being framed under the Patents Act 1970 amendments introduced from April 1. it would be the endeavour of the government to simplify procedures and shorten the timelines of various approvals. for those who can afford to do so. 1995. The draft National Pharmaceuticals Policy 2006 states that the government is committed to making India's laws and policies relating to IPR. ³Under these rules. Director General of the Council for Scientific and Industrial Research . Of crucial importance is the issue of patentability. which has been set up under the chairmanship of RA Mashelkar. The industry is keenly awaiting the publication of the Technical Expert Group. but adds that a number of big issues remain to be addressed. the trade treaty allows compulsory licenses to be xiv . abolishing the previous process patent system established by the 1970 Patent Act. for product patents. which. The industry is also waiting to see whether the government will follow international guidelines governing compulsory licensing. in special cases. Since the introduction of product patents the MNCs have largely returned. the most recent being Merck & Co.January 1. It will also force domestic players to focus on R&D. including d ata protection. Also. 2005. Kewal Handa . and these will be brought into law soon.´ says the draft Policy . Assocham (an Indian pharma company) believes the new patent regime will enable the development of innovative new drugs. to waive the patent on a pa rticular medicine. applauds the introduction of India's product patent regime at the start of last year as a very positive mov e by the government in honouring its TRIPs commitments. which inaugurated its wholly owned subsidiary MSD India Pvt Ltd in July 2005 after being absent for approximately 20 years. he says. which will increase profitability for MNC s.

Roche became the first company in India to receive a patent under the product patent regime. 1997. among other issues. Girish Telang. which also has a good patents protection regime and a bigger domestic market than India). forecast the development would ³usher in the next wave for the Indian pharmaceutical space.issued in response to a national emergency. the industry must have high levels of confidence in the country's regulatory framework. xv . but in India they may currently be invoked due to factors such as the reasonability of a product's price. the TRIPS Agreement includes a second directly relevant issue for the pharmaceutical industry concerning protection of test and other data that are submitted for obtaining marketing approval. A further disincentive is that drug prices on the Indian do mestic market are the lowest in the world. Thi s issue has figured prominently in the discussions in India over the past few years and our endeavour would be to focus on the issues that are involved. The patent is valid for 20 years from May 15. for R&D activities to e xpand as the government wishes. Pfizer is one of the longest-established MNCs in India and was the first to set up R&D facilities there. Besides patents. Government policy in this area needs to be more clearly defined. by way of a flow of newer innovative molecules in the Indian market. India's First Pharmaceutical Patent Goes to Roche: In March 2006. and its potential for export and local manufacturing. A major drawback is that India offers no data protection (although it is provided by China. under the country's ³mailbox´ facility for post-1995 inventions. during which time no other firm can launch a generic version in India. managing director of Roche Scientific India Pvt Ltd. complemented by increased investments in R&D towards drug development efforts. but he believes that. The product patent has been granted for Pegasys (peginterferon alfa-2a) for the treatment of hepatitis C.

with tuberculosis and malaria having shares of 6 and 4 per cent respectively. xvi . which are used for indicating the extent of market penetration of the Indian generic firms. The participation of the Indian generic firms in the Global Fund to Fight AIDS. This analysis has limited itself to HIV/AIDS since 90 per cent of the Global Fund has been used for responding to this disea se. As would be indicated in the following section. The second section of the study provides two sets of analysis to indicate the performance of the firms in the Indian pharmaceutical industry following the changes in the patent regime necessitated by the Agreement on TRIPS.3 of the TRIPS Agreement. In the first instance. 2. 1970 relies on inputs from a few respondents from the industry. This section would also bring out the discussions centring on the implementation of the data protection regime tha t is required under Article 39. The analysis of the amendments in Patents Act. The second set of analysis is based on data from the regulatory agencies from in the United States and the UK. the study would use data from the annual reports of 18 leading firms of the industry to comment on their performance since the Agreement on TRIPS became operational in India. India was required to accept product patent applications for pharmaceutical products from January 1. i. In the first.SECTIONS OF STUDY: The study has two substantial sections: 1. a. Tuberculosis and Malaria has been used to indicate the status of these in the global market for the focus diseases. 1995. b. I would try to discuss the structure of the patent regime that India has introduced in keeping with its obligations under the TRIPS Agreement. 1995.e.

3. xvii . The specific implications of lack of obligations on the patentee would be discussed in a later section. Enforcement of IPR. Acquisition and Maintenance of IPR and related Inter Parties procedures. in addition to the preamble.Key Features of the Agreement on TRIPS: The Agreement on TRIPS includes seven sets of provisions . This implies that in case of the most important form of intellectual property. 5. General Provisions and Basic Principles 2. these are: 1. while the Member States have been subjected a set of obligations that they must fulfil while granting rights to the owners of intellectual property. This Article is significant for it is only here that the Agreement on TR IPS alludes to "obligations" in explicit terms. Transitional arrangements. owner s of technology would be able to exercise their dominance arising out of this imbalance that the TRIPS Agreement has introduced. 4. Standards concerning the Availability. the latter would not have to meet any reciprocal obligations in return for the rights that they would enjoy. Developing countries. have historically seen foreign patentees take an overwhelmingly large number of patents. who own few patentable technologies. A set of eight substantive Articles of the Agreement on TRIPS. While the preamble provides the broad set of intents. 6. 7.Institutional arrangements. Thus. . the major elements are covered by the substantive articles. Scope and use of Intellectual Property Rights (IPR). Article 1 of the Agreement on TRIPS provides the nature and scope of obligations that the WTO member countries are expected to meet towards protecting the rights of the owners of the forms of intellectual property that the Agr eement recognises. Disputes prevention and settlement. The absence of any obligations on the right holders has particular significance for the developing countries in the area of patents. underline the basic principles of the new intellectual property regime.

Members shall comply with Articles 1 through 12. 1970 introduced the requi rements under the ³transitional arrangements through Section 5(2). in laying down this stipulation. which required India to introduce two provisions in its Patents Act.8 of the TRIPS Agreement required India to provide ³a means´ by which product patent applications can be filed from January 1. five years exclusive marketing rights (EMRs) had to be granted by India before the patent on the product was either granted or rejected in India. according to Article 70. and 5. xviii . Article 70. of the Paris Convention (1967)". In Article 6. The articles referred to form the substantive parts of Paris Convention. while Chapter IVA provided for the grant of EMRs. Article 8 present s the principles underlying the Agreement. then.9. If the products figuring in these applications were granted a patent in any of the WTO member countries and the products had obtained marketing approval in any of the WTO Me mber countries. Two key Articles of the Agreement on TRIPS are Articles 7 and 8. III and IV of this Agreement. have been put down as the guiding principles of the Agreement .Article 2 of the Agreement makes it mandatory for the WTO members to accept the principal provisions of the Paris Convention on Industrial Property of 1883 (as amended through the Stockholm Act of 1967). the cornerstones of the GATT framework. Article 2 of the Agreement. The first amendment of the Patents Act. which allowed product patent applications to be filed. Amendments of the Indian Patents Act under the TRIPS Regime: The above-mentioned Articles are included in the ³Transitional Arrangements´. In Articles 3. 1995 ("mailbox"). 4. states: "In respect of Parts II. an important dimension of the new regime relating to the exhaustion of rights of the rights holder has been provided. On January 1. 2000. a Second Amendment had to be introduced for bringing the Patents Act in conformity with all the substantive provisions the TRIPS Agreement. The inclusion of this provision i s a pointer to the move towards harmonization of standards of IPP that was alluded to earlier. and Article 19. While Article 7 lays down the objectives of the Agreement. National Treatment and the Most-Favoured-Nation (MFN) provisions.

in particular. the provisions in the TRIPS Agreement. xix . which provide flexibility for this purpose. Among the major issues included in the Third Amendment were provisions relatin g to opposition to the grant of patents.barring those related to the introduction of product paten ts. The outcome of this process was the Ministerial Declaration a dopted at the conclusion of the Doha Ministerial Conference held in 2001 on TR IPS Agreement and Public Health (henceforth. The first was that the provisions of the TRIPS Agreement should ³be read in the light of the object and purpose of the Agreement as expressed. A third amendment had to be introduced by January 1. in particular. to the full. including pharmaceuticals that were hithe rto covered by process patents. Two critical issues were particularly emphasised in the Doha Declaration : 1. in its objectives and principles´. The key issues included in the Second Amendment were. A PROSPECTIVE FOR INDIA¶S TRIPS-COMPLIANT PATENT LAW: It may be noted that two of the three amendments of its Patents Act that I ndia had undertaken were adopted in the backdrop of s ignificant global developments. 2005 to introduce product patent regime in areas. Growing concerns in developing countries regarding access to medicines at prices that their citizens could afford led to considerable confabulatio ns amongst the WTO members. to promote access to medicines for all´. re-defining patentable subject matter. extension of the term of patent protection to 20 years and amending the compulsory licensing system. Doha Declaration). It was emphasised that the WTO Members have the right to use. The Ministers further stated ³that the Agreement can and should be interpreted and implemented in a manner supportive of WT O Members¶ right to protect public health and. the Government used the opportunity to undertake yet another review of the Pate nts Act. Although the Third Amendment had a narrow remit. The Doha Declaration unequivocally stated at the outset that ³TRIPS Agreement does not and should not prevent Members from taking measures to protect public health´ (emphasis added).

The purpose of the "mailbox". was to provide inventors with a m eans of filing applications for pharmaceutical product patents during the tran sition period (i. until 1 January 2005). SCOPE OF PATENTABILITY: It may be argued that it is critically important to define scope of patentability since in many jurisdictions. The second area of focus of the Doha Declaration was compulsory licences. 2. Opposition proceedings. Upon termination of the transition period. And as a later discussion would indicate. and in particular. as based on Article 70. and (iv) provisions relating to providing immunity to generic producers that are already in the market. TRIPS Agreement. 4. the process of examination of the product applications that are currently in the ³mailbox´ has revealed that patents on IMDs could be a real threat. 3. The ³mailbox´ provisions. which would have to be addressed by all relevant stakeholders in a concerted manner. as for instance. the instrument that could have a vital role to play in determining the future prospects of the Indian pharmaceutical industry.2. the grant on patents on IMDs. required India to accept applications for product patents in the area of pharmaceuticals and agro-chemicals even before the product patent regime was put in place. all applications in the mailbox then have to be examined. Defining the scope of patentability to address among other issues. The effect of the "mailbox" is a legal fiction: according to Article 70. xx .8 (b).8. Th e following is a non exhaustive list: 1. introduced through the amendment of the Patents Act in 1999. those existing in developed count ries. Provisions for the grant of compulsory licences. the definitions adopted are often so open -ended that they have undesirable consequences. patents on IMDs.e. Specific exceptions as for example ³parallel imports´. ANALYSING THE AMMENDMENTS: The above discussion suggests that several issues would need careful consideration as India implements a TRIPS-compliant patent regime.

Narrowing down the scope of patentability. is laid down in clear and unambiguous manner. and this implies that an overwhelming majority of the applications in the ³mailbox´ cover IMDs. It is vitally important that the scope of patentability. Director General. particularly in respect of pha rmaceuticals is seen as the first step for ensuring that the I MDs do not get patent rights in India. This required that the amended law provide appropriate definition s/clarifications in respect of the three criteria used for assessing whethe r or not a claimed invention is patentable.000 product patent appli cations. viz. implying thereby that the WTO Member countries are free to adopt their own definitions. the patentabilit y criteria of novelty. a significant proportion of which is in the area of pharma ceuticals that would have to be examined according to the provisions of the recently amended Act 16. This step would go a long way in reducing the number of patent litigations. Mashelkar. The obvious targets are patents that are being sought for drugs can be used for treating xxi . novelty.TRIPS Agreement.A. inventive step and industrial ap plication. only 274 new chem ical entities have been granted marketing approval by the United States Federal Drug Administration (FDA). definition of pharmaceutical entity. inventive step and industrial applicability shall be applied after the transition period a s if they were being applied on the date of filing/date of priority. Council of Scientific and Industrial Research (CSIR). It has been pointed out that between 1995 and 2003. R. which are threatening to increase. The "mailbox" provision has attracted more than 9. It needs to be noted here that the TRIPS Agreement is does not define any of these three criteria. The Group was given the following terms of reference:  Whether it would be TRIPS (Trade -Related Intellectual Property Rights) compatible to limit the grant of patents for pharmaceutical substance to new chemical entity or to new medical entity involving one or more inventive steps. The Government of India had set up a five -member ³Technical Expert Group on Patent Law Issues ´ in April 2005 under the Chairmanship of Dr.  Whether it would be TRIPS compatible to exclude micro -organisms from patenting.

diseases like HIV/AIDS. a fixed-dose combination of two AIDS drugs (zidovudine/lamivudine. In recent months. protects the interests of such generic producers whose business interests may be affected in the product patent regime. These producers would have to cease operations in India should patent rig hts be granted to such products under the new dispensation . two significant developments have taken place. the Indian groups¶ case: GlaxoSmithKline¶s Combivir . however. 1970. The Indian groups opposing the patent are arguing that Glaxo's Combivir (AZT/ 3TC) is not a new invention but simply the combination of two existing drugs. Product patent application for Gleevec was made using the ³mailbox´ provisions . Subsequently. The EMRs were granted in November 20 04. cancer and TB. The opposition was based both on technical and health grounds28 . the Indian Network of People Living with HIV/AIDS and the Manipur Network of Positive People. GlaxoSmithKline vs. but the grant of the patent was opposed and the opposition was upheld by the Patent Office in January 2006. Novartis challenged the decision of the Patent Office in the courts. and ³which continue to manufacture the product covered by the pat ent on the date of xxii . 2006 by a two civil society groups. as amended. or AZT/3TC). 2005. which meant that Novartis could enjoy five-years of EMRs on the basis of this application. This section states that ³the patent holder sha ll only be entitled to receive reasonable royalty from such enterprises which have made significant investment and were producing and marketing the concerned product´ before January 1. but the High Court of Madras gave a ruling against the petitioners . Gleevec. Section 11A of the Patents Act. FUTURE OF GENERIC PRODUCERS: One of the more contentious issues that the third amendment of the Patents Act had to address was the future of the generic producers in India who are currently producing the products and whose product patent applications are in the ³mailbox´. Opposit ion to the grant of this patent was submitted on March 31. The first involved the Novartis patent on a drug used for the treatment of cancer.

Developments over the past few years indicate that the point of view of developing countries has been getting better support from the global community. this view is maintained for the reasons explained below: The Indian Patents Act provides that an application for the grant of compulsory licence can be made only after three years from the date of grant of the patent unless exceptional circumstances like national emergency or extreme emergency can be used to justify the grant of a licence on an earlier date. the instrument of compulsory licence provides an opportunity to the prospective users of technology.grant of the patent «´ (emphasis added). It has been well recognised that comp ulsory licences are expected to play an important role in preventing abuse of patent rights that may arise when the patent holder tries to pre-empt entry of competitors using his statutory rights. The compulsory licensing system could be immensely useful for the generic firms in the Indian pharmaceutical industry for they can no longer meet t heir technology-requirements by taking recourse to reverse engineering. COMPULSORY LICENSING: In the context of the on -going debate on the patent law reforms. a key issue. The compulsory licence system provided by India in its amended Patents Act may not fully meet the requirements of the domestic pharmaceutical industry. In 2001. legal uncertainties in respect of the use of compulsory licensing provisions for public health concerns were effectively removed by the Doha Declaration on TRIPS Agreement and Public Health. The Declaratio n stated unequivocally that ³Each Member has the right to grant compulsory licences and the freedom to determ ine the grounds upon which such licences are granted´. Viewing from it a more functional perspective. In addition to this. xxiii . in particular the developing countries. to gain access to proprieta ry technologies. which is often glossed over. it is provided that ³no infringement proceeding s shall be instituted against these enterprises´. is that the compulsory licensing system is one of the essential pillars of the patent system.

Three broad grounds for the grant of the compulsory licences have been spelt out thus: 1. in South Africa. In an age when a web of patents covering a single product (better known as patent thickets) have become commonplace. Within the fr amework of the TRIPS Agreement. there are evidences galore of developing countries being unable to afford proprietary technologies because the high cost of acquiring such technologies. The patented invention is not worked in the territory of India. which is explicitly mentioned as xxiv . regulation of licensing agreements is critical to promote access to medicines and the transfer of technology. A higher royalty will increase the price of generic drugs and this. multiple licences are often required to be negotiated before any enterprise can commence production. voluntary license and compulsory license.condition before applying for compulsory license in the normal course. Therefore. Patent thickets have also given rise to another problem. royalty stacking. REGULATION OF LICENSES: Licensing is the most common mode of transferring a patented technology. in the ultimate analysis would militate against the existence of the generic producers whose raison deter is to supply medicines at affordable prices. Royalty payments would be a critical issue in the implementation of the compu lsory licensing system as is provided in the Indian Patents Act. viz. commercial license. Besides the problems alluded to above. The patented invention is not available to the public at a reason ably affordable price. Generally. Reasonable requirements of the public with respect to the patented invention have not been satisfied. licensing agreements are important because the Ag reement promotes commercial and voluntary licensing by making compulsory that effort to obtain license as a pre . 3. Firms have reported that in some cases royalty payments can exceed 20% of their net sales39. 2. This situation has occurred primarily because the owners of technology have been able to use their superior bargaining position to seek terms that have suited their interests37. GlaxoSmithKline demanded a royalty of 25% before the courts intervened. speaking license of patents hap pens in three ways viz. And.

use of any process other than the non -patented process. or his nominees. lessor. use of a non -patented article other than that supplied by the licensor.one of the principles of the Agreement on TRIPS. lessor or licensor or his nominee. Often licensing agreements comes with various conditions to prevent the competition in the market. it obligates members to engage in consultation if the intellectua l property owner belongs to one country and indulges in practices that violate the regulati ons on licensing agreements and vice versa. and exclusive grant back. lessor. The Patents Act has addressed this issue in Section 140. lessee. xxv . lessee or licensee from using or to restrict in any manner or to any extent the right of the purchaser. Further. or licensor. Accor ding to the provisions of this section. lessee or licensee. exclusive dealing on non patented article. or to prohibit from acquiring or to rest rict in any manner or to any extent his right to acquire from any person or to prohibit him from acquiring except from the vendor. Certain conditions in the licensing agreeme nt can eliminate the purpose of technology transfer. or licensee to acquire from the vendor. which is not supplied by the vendor. to use an article other than the patented article or an article other than that made by the patented process. lessee or licensee from using. Or  To prohibit the purchaser. the following conditions in a licensing agreement are unlawful:  To require the purchaser. Or  To prohibit the purchaser. or licensor or his nominees. lessee or licensee to use any process other than the patented process. or to restrict in any manner or to any extent the right of the purchaser. any article other than the patented article or an article other than that made by the patented process. The Agreement does not prevent members from regulating licensing practices or conditions that may particularly constitute an abuse of intellectual property rights and have an adverse effect on competition in the relevan t market.

THE TWO EXEMPTIONS: Section 107A of the Patents Act. BOLAR EXEMPTION: One of the less focused areas of the Indian Patents Act. selling or importing 54 a patented invention solely for uses reasonably related to the development and submission of information required for the time being in force. 1970. The relevant provision. use. 1970 has taken the initiative to include the provision of parallel imports. In particular. in India or in a country other than India. provided under Section 107A (b) reads as follows: ³Importation of patented products by any person from a person who is duly authorised under the law to produ ce and sell or distribute the product´ As has been explained by the Government. sale or import of any product´. is the provision providing for the so-called ³Bolar exemption´49. 1. Section 107A (a) of the amended law contains the relevant provisions: ³Any act of making. that regulates the manufac ture. the ³Bolar exemption´ assumes considerable importance for the future of the generic producers in India. this provision of parallel import of patented product was introduced for ³ensuring availability of patented products at cheaper price to the consumers´. as amended. With the leading firms in the Indian pharmaceutical showing considerable degree of dynamism in recent years. construction. The ³Bolar exemption´ was included in the Second Amendment of the Indian Patents Act. 1970. although the specific circumstances under which such imports can take place have not been defined. using. reference to a person "duly authorised under the law" to produce and sell or distribute the product seems to indicate that parallel imports may xxvi . The first relates to what is better known as the ³Bolar Exemptions´ and the second exemption seeks to define the contours of ³Parallel imports´. constructing. 2. PARALLEL IMPORTS: The Agreement on TRIPS allows for the parallel imports. The Indian Patents Act. The basic idea behind the ³Bolar exemption´ is to create conditions so that the generic drug manufacturers can introduce their products immediately after the patent on a drug lapses50. as amended contains two notable exemptions. which we shall discuss in the following section.

It may be argued however.include products produced under compulsory license. xxvii . OECD countries have traditionally provided by the Agreement on TRIPS were exploited fully so as to provide the space for the Indian pharmaceutical industry to expand. Excluding such possibility. The TRIPS Agreement is silent on this issue. would be the manner in which domestic firms would be able to evolve strategies for meeting the challenges posed by the introduction of the TRIPS-consistent patent regime. as for example. access to medicines at affordable prices are addressed. which have introduced a TRIPS consistent patent regime in the country. The three amendments to the Indian Patents Act. were brought about in the backdrop of intense debates that were focused on the need to establish a balance between the rights of the patent holders and the interests of the public at large. limiting parallel imports to products marketed abroad with the consent of the patent holder. The following Section analyses the performance of the Ind ian pharmaceutical industry for making an assessment of how the domestic firms are meet the post-TRIPS challenges. Although the TRIPS-consistent Patents Act has been in operation for about a year now. This portends to the uncertain times that await pharmaceutical firms. Holding the key to the realisation of the objective of access to medicines was the existence of a viable pharmaceutical industry in the country. These debates have emphasised the point that with the rights of the patent holders getting strengthened through Agreement on TRIPS there is an urgent need to ensure a balance through the introduction of more effective instruments so that the public interest concerns. The determining fa ctor. there is growing evidence that its implementation wou ld be ³litigation-ridden´. in our view. while the flexibilities are in the nature of necessary conditions for the future prospects of the pharmaceutical industry i n the post-TRIPS patent regime. they are not sufficient conditions.

The Commission on Intellectual Propert y Rights (CIPR) recommends that ³Countries may allow health authorities to approve equivalent generic substitutes by ³relying on´ the original data. This demand is linked to the implementation of Article 39.3 should be interpreted in a manner that provides statutory protecti on spanning a period of time to data submitted for obtaining marketing approval.3 of the TRIPS Agreement. has come through pressures brought by the US and the EU for the introduction of d ata exclusivity. whilst providing appropriate protection for confidential data. In addition. Members are required to protect such data against ³disclosure. Even two independent int ernational commissions share the same view on data exclusivity. against ³unfair commercial use´ when such data are submitted for seeking marketing approval for products using ³new chemical enti ties´. Thus the protection against unfair commercial use does not prevent government authorities for using the data for subsequent market approval and the prohibition is against the use of data by private parties for unfair commercial advantages as mentioned in Article 39. which requires WTO Members to protect undisclosed test or other data. Developing countries need not enact legislation the effect of which is to create exclusive rights where no patent protection exists or to extend the effective period of the patent monopoly beyond its proper term´ xxviii . Devel oping countries should implement data protection legislation that facilitates the entry of generic competitors. the pharmaceutical industry associatio ns in the United States and the European Union. developed with ³considerable effort´.DATA EXCLUSIVITY AND ACCESS TO MEDICINES: The most recent affronts on the rights of the dev eloping countries like India to provide access to medicines at affordable prices to its citizens. except where necessary to protect the public or unless steps are taken to ensure that the data are protected against unfair commercial use. representing the larger firms.3 of TRIPS. which may be done in a variety of TRIPS-compatible ways.3 is in accordance with Article 10bis of the Paris Convention.´ While Article 39. The obligation to protect data against unfair commercial use under Article 39. among others.3 is clearly intended to ensure that ³undisclosed test data´ was not misappropriated. have arg ued that Article 39.

Table 1 below provides the details. is net worth. The first indicator that I shall use. What appears are most striking is that this robust performance by the Indian pharmaceutical firms . fiv e of the top ten pharmaceutical firms (in terms of sales turnover) were foreign affiliat es. The first indicator for analysing the performance of the pharmaceutical industry that I shall use is the net worth of th e firms. India and South Africa do not provide data exclusivity. xxix . has come during a phase whe n they were facing an uncertain future. which is a reflection of their respective market values.Therefore. it was the set of leading generic producers that were relatively more active as compared to the leading firms that are affiliates of foreign firms. the large firms in the industry have performed strongly on all fronts. This is evidenced by the fact that while in 1995. During this phase. with the process patent regime being dismantled following India¶s accession to the WTO. in 2004 GlaxoSmithKline was the only foreign affiliate in the top ten list. one which provides evidence of the market value of the firms. and in particular the generic segment of the industry. India should emphasise on the public health aspects of data exclusivity rather than looking at corporat e gains of a few pharmaceutical firms. The following discussion provides the evidence in support of the above-mentioned point. I shall use several performance indicators to provide evidence regarding the performance of the leading firms in the Indian pha rmaceutical industry. RECENT INDUSTRY: PERFORMANCE OF INDIAN PHARMACEUTICAL Post-1995. many developing countries including Argentina. Brazil . Currently.

Dr.4 78.3 Chemicals 116. Orchid Ltd. Cipla Ltd.0 51.7 247. Aventis Ltd.7 18. Reddy's Laboratories Ltd Pfizer Ltd.9 49.5 31.2 78.0 39.9 23.2 30.1 46.Table-2: Growth in Net Worth of Leading Firms in Indian Pharmaceutical Industry: Firms 1995-2006 1995-2000 2000-2006 Aurobindo Pharma 178.5 112. Abbott India Ltd.3 141.6 41.5 35.0 99.9 143.9 xxx .7 36.4 91. Ltd. 30.8 7.5 15.0 24.1 & Pharmaceuticals 21. AstraZeneca Pharma India Ltd.3 48.0 Pharma 32.9 Ltd.2 48.0 3.4 Healthcare 166. Cadila Ltd.6 47.3 3.8 83. Merck Ltd. Lupin Ltd. Sun Pharmaceutical Inds.9 19.3 18.

And.CMIE. Prowess database As can be seen from the table. most of the generic manufacturers consolidated their positions in the industry. 23. Ranbaxy Laboratories.3 1.8 9.GlaxoSmithKline Pharmaceuticals Ltd. had net worth below this threshold in 2006.1 Piramal 22. Dr Reddy¶s Laboratories had grown to a size comparable to that of t he industry leader. An interesting observation th at can be made from the d ata on net worth of the leading firms in the industry is that in 2006.2 -11. Dr Reddy¶s and Cipla. experienced very high rates of growth of net worth during the 11 years for which data have been presented in the Table. viz.0 42. the industry was div ided into two segments. while six of the eight associates of foreign firms. Novartis India Ltd.0 17.2 -0. The larger among them.0 22.3 23. In other words. Ranbaxy Laboratories was the largest Indian pharmaceutical firm during the entir e period.5 14. All the generic firms were US $ 100 million-plus net worth firms. however. Cipla was fast catching up with the leaders. Table 2 shows that measured in terms of its market value. 1995-2006. In contrast. the generic manufacturers had secured a prominent position in the Indian pharmaceutical industry. Nicholas India Ltd. Ranbaxy Laboratories Wyeth Ltd. Wockhardt Ltd.3 15. at the same time.1 SOURCE: .7 2.1 4. did not experience comparable increase in market value. the largest among the Indian firms.6 32.3 25.2 12. But as was evident from the increase that its net worth has seen during this period.6 4. xxxi .

Reddy 75.0 75. in US $ million) Firms Dec95 Dec96 Dec99 Dec01 Dec02 Dec03 Dec04 Dec05 Dec06 Ranbaxy 204. 8 303. 8 29.5 GlaxoSmithKlin e Nicholas Piramal Wockhardt 74. 2 213.0 13.0 315. 4 216.4 60. 8 320. 9 137. 9 187.5 479. 8 106.4 97.0 107. 2 101.7 122.6 110.0 76.1 13.4 89. 6 249. 2 Dr. 5 151. 4 392. 6 91.8 83. 7 63.Table-3: Net worth of leading pharmaceutical firms during select years: (Figures. 2 156.7 114.1 0. 4 Aurobindo Pharma Orchid Chemicals Cadila 9.4 82. 6 100.7 536. 1 96.6 74. 4 440. 1 201. 5 52. 4 219. 5 272.2 73.6 72.0 85. 3 373. 3 123.8 62.3 545.2 118.7 73.7 Cipla 26. 4 112. 0 143. 9 175.2 82. 8 504. 6 266.2 20. 1 181. 3 201.9 32. 3 121. 9 78. 1 xxxii . 2 137.8 0. 9 115. 6 81.8 13. 5 348. 3 184. 8 77. 9 Sun Pharma 29. 9 178. 6 90. 0 164. 7 214.2 39.4 77. 1 326.0 152.6 47.8 135.0 334. 3 523. 5 445. 2 164. 9 468.

2 19.3 30.CMIE.5 5. Prowess database.3 32.6 15.0 15.9 114.3 61.1 25.6 28.4 15.2 21.0 97.8 54.3 64.6 12.2 48.6 20.7 28.9 25.0 55.7 53.1 87.8 19. 0 95.6 14.7 41.1 21.9 24. Novartis India Abbott India Wyeth Ltd.6 Aventis Pharma 28.9 52.6 34.6 50.0 43.5 54.7 79.2 79.3 54.2 32.2 36.6 11.0 55.7 SOURSE: .5 52.9 20.5 87.3 15.9 67.8 76.3 7.Lupin 10.0 37.4 62. AstraZeneca Pharma 15. 8 143.7 31.0 71.6 75.5 180.0 38.6 40.8 28.3 45.9 54.7 13.1 58.8 31.8 67.6 46.0 65.9 28.7 35. 6 132. 5 Pfizer Merck Ltd. xxxiii .

R&D spending of the organised pharmaceutical industry as a whole was nearly US $ 340 million. The authors noted that while this group of countries were not active in discovering new chemical entities. Another group of seventeen countries were identified as countries having inn ovative capabilities. India was identified as on e of the countries belonging to this group. The figures for R&D intensities90 of the leading firms in the pharmaceutical industry are presented in Table 5. The industry has taken definite strides towards development of innovative processes and discovery of new drugs. however. In 2004. The table shows that the leading firms in the industry can be divided into two groups. This sec tion explores this dimension of the industry in detail. intermediates and formulations. as we shall see in subsequent discussion. The pharmaceutical industry can be divided into thre e product groupings. A typology of the world's pharmaceutical industries was provided by Ballance et al 89. the associates of foreign firms have shown very little change in their R&D intensities. the R&D profile of the Indian pharmaceutical industry has undergone major changes. During the past decade. particularly sin ce the beginning of the current decade. viz. as countries havin g sophisticated pharmaceutical industry and a significant research base. While bulk drug production can be sustained over a long period only through sustained involvement in research and development (R&D) activities. all of which were developed. xxxiv . the Indian pharmaceutical industry has come a long way since the above-mentioned characterisation was made. which was an increase of more than 300% from the level existing in 2000 . again based on the ownership pattern. bulk drugs. However. The most obvious of these is the manifold increase in the spending on R&D that was witnessed. They identified ten countries.THE TECHNOLOGY DIMENSION: A major factor driving the progress of the leading firms in the Indian pharmaceutical industry was their emphases on the technology. they had the necessary technological capabilities to reverse engineer existing drugs.. While most firms belonging to the generic segment of the industry have been displaying upswings in their R&D intensities over time. formulations production can be carried out relatively low level technological sophistication.

5 5.9 3.2 6. In fact.3 4.5 5.9 11. In sharp contrast. 02 Dec.8 3.0 4.6 2.6 4.9 1.6 11.5 1.7 2. 99 Dec.5 5.2 17.4 2. 95 Dec.1 3.0 4.0 2.9 8.4 9.1 17.9 8.3 6.6 11.2 7.1 3.9 7.9 4.7 5.2 0.3 1.2 1.1 4. 03 Dec.0 8.5 9.0 4.3 7.6 2.2 6. 01 Dec.0 3. Table-4: R&D intensities of leading pharmaceutical firms: (Figures in % of sales) Firms Dec.The two largest among the Indian pharmaceutical firm s.1 7. 05 Dec.8 8.9 6. Reddy¶s Laboratories registered the sharpest increase among the leading firms in the Indian industry.1 11.9 0. viz. which have remained well below the 1% level. 97 Dec.8 4.2 7.6 3. This indicates that the increase in R&D propensity of the generic industry is having a spread -effect. 04 Dec. with the latter spending more than 17% of their sales on R&D in 2005.8 5.3 3.7 6. Perhaps the more important dimension here is that some of the medium sized enterprises.0 xxxv .1 1.1 9. Reddy Cadila Orchid Chemicals Lupin Ltd Nicholas Piramal 0. R&D intensity of Dr.6 3. like Glenmark Pharmaceutical and Torrent Pharmaceuticals are among the highest spenders on R&D.0 7.9 2. Sun Pharma Ranbaxy Dr.7 11.1 2. firms like GlaxoSmithKline.6 10.0 0. Ranbaxy and Dr.0 0.2 3.6 5. 06 Wockhardt Ltd.3 6.9 6. Pfizer and Aventis have shown remarkable stagnancy in their R&D intensities.4 4. Reddy¶s Laboratories showed the most impressive increase in their R&D intensities.3 12.5 4.9 7.

1 3.6 1.5 0.5 0.7 3.4 0.1 0.2 0.CMIE.8 3.4 0.Aurobindo Pharma Cipla Ltd.7 3. xxxvi .6 0.8 0.2 0.1 0.4 0.1 2.3 0.5 0. R&D ACTIVITIES OF INDIAN GENERIC INDUSTRY: Analysis of the R&D activities of generic firms requires examination of two dimensions.9 0.7 5. With the R&D activities remaining confined to the generic industry.3 2.7 2.1 0.8 3.5 0. Prowess database.0 2.3 0.8 0.3 0.2 0.7 0.4 0.7 1.9 0.  Specific areas of involvement.2 0.0 3.0 0.2 1.9 2.6 0.4 3.3 4.3 0.5 0. Pfizer AstraZeneca Pharma Merck Ltd.0 0.3 0. the following discussion would provide a detailed account of th e various dimensions of the R&D activities of generic industry.1 0.6 0.4 1.5 0.9 1.1 0.6 2.4 0.0 0.3 0.1 0.8 0.3 2.3 0.2 0.5 0.0 0.2 6.1 0.2 0.0 0.3 0.6 0.4 0. Abbott India GlaxoSmithK line Aventis Pharma Novartis India Wyeth Ltd 0.8 4.8 3.3 0.9 5.0 0.3 0.0 3.6 0.7 4.7 3.4 0.4 0.2 SOURCE: .5 0. These are:  The organisation of R&D activities.9 0.4 3.3 0.3 0.1 0.

there have also been R&D based alliances. including contract research being undertaken by the firms in India.  Novel drug delivery systems. These are:  Development of generics.  Development of new processes. This dimension would be explored in the concluding part of this section. R&D efforts of the industry have received support from the Government. which is evident not only from their increased R&D spending indicated above. The following discussion provides the main features of R&D activities undertaken by the domestic firms. DEVELOPMENT OF GENERICS: During the past few years. Second. the global market for generics has been expanding at a substantially higher rate than the proprietary medicines. which has initiated measures for supporting pharmaceutical R&D. AREAS OF R&D SPENDING: The R&D structure built by the leading firms in the generic industry has four dimensions. as also the range of activities that the firms have been engaged in. Perhaps the most significant driver for the expansion of the generic industry was the acceptance of its low priced products by the consumers. these firms have started entering into alliances with foreign firms. their in -house R&D activities have been beefed-up. First.It is pertinent to note in this context that in recent years. Although thes e alliances are focused essentially on product development. According to estimates xxxvii .  New drug discovery and research. This includes exploration of collabor ation between the pharmaceutical firms and the large network of public sector research institutions. ORGANISATION OF R&D ACTIVITIES: The leading firms in the generic industry have ado pted a three-pronged strategy to strengthen its technological sinews. which wou ld help the Indian firms expand their presence in the global market.

US consumers saved $ 8 -10 billion on retail prescription drug purchases in 1994 by purchasing gene ric equivalents.provided by the Congressional Budget Office. Year -wise approvals obtained by the top 5 firms are provided in Table 6. Abbreviated New Dru g Application (ANDA). It was further noted that ³with patents set to expire within the next four years on brandname drugs that have combined retail sales of almost $20 billion. This is done only by FDA reviewers in conjunction with their review of a specific Investigational New Drug Application (IND). It appears that these moves taken in the world¶s largest market for drugs have enabled the Indian firms to extend their pres ence in markets in Europe. The information contained in a DMF is kept confide ntial until such time as an FDA reviewer requests a review of the DMF. A Drug Master File (DMF) is a package of proprietary information t hat is voluntarily filed by a firm with the FDA. most notably in the UK. and Biological License Application (BLA) or for an Active Pharmaceutical Ingredient (API). And. the already substantial savings are likely to increase dramatically´93. it is in this lucrative market for generic medicines that the leading Indian firms have established their presence. The second set of data relates to the ³Drug Master F iles´. Two sets of data indicate the extent to which generic firms have been seeking opportunities to market their products in the US. Data on market approvals in the US provided by the FDA show that seven Indian firms have obtained approvals for their product thus far. New Drug Application (NDA). The DMFs can therefore be seen as an expression of inter est that firms that have filed them have in obtaining marketing approval in the US. xxxviii . Data obtained from the FDA show that the leading Indian firms have taken measured steps towards establishing themselves as important playe rs in the ever-expanding market for generics in the US. The first set of data pertains to the market approvals that the leading generic firms have rec eived for their products in the US.

Ranbaxy and Aurobindo Pharma. viz. A significant recent development for the Indian firms is their entry in the market for antiretroviral (ARV) drugs in the US. But in the following six years. In case of Ranb axy. Reddy Lupin Aurobindo 24 1 0 0 17 3 0 0 4 7 11 0 0 2 27 5 0 0 0 39 5 9 0 4 34 11 1 13 0 26 8 14 7 5 174 44 24 20 22 Wockhardt 7 SOURCE: .Table-5: Market Approvals obtained by the Leading Indian Firms in the US: FIRMS BEFORE 2000 2000 2001 2002 2003 2004 2005 TOTAL Ranbaxy Dr. have been able to obtain tentative or full approval from the US Department of Health and Human Services (HHS) and the FDA for five ARV drugs during 2004xxxix . Two firms.US FDA Orange Book database . As can be seen from the Table 6 an overwhelming proportion of the approvals obtained by the Indian firms were in the post-2000 period. which has the largest number of approvals among the Indian firms. 4 of their 44 FDA approved drugs belong to the OTC category. An interesting aspect of the FDA approvals obtained by Ranbaxy and Dr. is that most of their approved drugs are prescription drugs96. Ranbaxy. Reddy¶s Laboratories. the two largest firms in terms of number of a pprovals. the firm had obtained approvals for another 150 drugs. For instance. while for Dr. Reddy¶s. It is the effect of new product patent regime. only 6 of the 174 approved drugs are OTC (over-the-counter) drugs. had only 24 approvals prior to 2000.

Cadila Healthcare Ltd. 2000-05. Cipla Ltd. highquality anti-retroviral therapy (ART) to the patients. OF DMF FILING Dr. These drugs were approved as a part of the Emergency Plan for AIDS Relief 97 that President George Bush had announced in 2003 for bringing low -cost. during a more recent period viz. Matrix Laboratory Ltd.05.. xl 63 59 53 48 41 37 34 25 22 . Sun Pharmaceuticals Lupin Ltd. Aurobindo Pharma Ltd. intermediates. Table-6: DMF Filings by the top 10 firms in the Indian generic industry: FIRMS NO. The database maintained by the FDA provides an ³ac tive list´ of ³Type II DMFs´ by pharmaceutical firms that supply drug substances. The Indian firms had also marked their significant presence in the implementation of the Global Fund to Fight AIDS. Table 14 provides a list of firms from the generic industry that were most active in ³active Type II DMFs´ filings. Orchid Chemicals Ltd. The details in this regard are given in the following section : The second indicator of the increased interest of the generic industry in the US market was sharp increase in the filings of Drug Master Fi les (DMFs) in recent years. Indian generic firms have a share of almost 13%. Reddy Laboratories Ltd. Tuberculosis and Malaria that was established in 2002. Ranbaxy Laboratories Ltd. and material used in their manufacture. their share had increased to 22%. While in the overall list of ³active Type II DMFs´. drug products.

mhra. Reddy¶s Laboratories (57).uk/home). Here again. Table-7: Year-wise Approvals Obtained from MHRA by the top-3 Firms (2001. SOURCE: . Medicine and Healthcare Products Regulatory Agency (http://www.UK.gov.Wockhardt Ltd. Nicholas Primal and Orchid Healthcare.gov/cder/dmf/). The generic drug manufactures from India have also started establishing their presence in Europe. Aurobindo Pha rma. The number of approvals. including approvals as ³first time generics´ .US FDA database (http://www. 18 The above discussion indicates quite cogently that the firms from the Indian generic industry have been improving their presence in the market for generics in the US. that some of the leading firms in the industry have obtained particu larly since the beginning of the current decade is a testimony of this fact.2005): FIRMS 2001 2002 2003 2004 2005 TOTAL Ranbaxy Dr. however.fda. and in particular the UK. followed by Dr. Ranbaxy obtained the largest number of approvals (204). xli . viz. been yet another dimension of the dynamism that the Indian firms have shown in the US markets lately and this relates to the challenges they have mounted on th e patent holders while seeking approval for their generic products. There has. Department of Health. Table 15 gives the year wise approvals obtained by the top three Indian firms to have obtained approvals from MHRA. Reddy 62 0 24 7 0 32 13 0 65 20 2 21 17 17 204 57 19 Aurobindo 0 SOURCE: . the two leading firms. have led the way and they have been joined by three other firms. Ranbaxy and Dr Reddy¶s. Data obtained fr om the Medicines and Healthcare Products Regulatory Agency (MHRA) for the period 2001-2005 confirms this fact.

as would the conventional drug. ciprofloxacin.. Ranbaxy. Ranbaxy Laboratories was able to produce a once -a-day formulation instead of the multiple-dose a day therapy promised by the Bayer formulation. NDDS of an existing drug could be developed in 3-4 years with an investment of $20-50 million. i. means that the drug in its new mode of delivery should provide similar concentrat ions in the blood. Neuland Laboratories and Aurobindo.The above discussion points to the increasing presence of the leading firms from the generic industry in some of the larger markets for drugs in the world. The second area is the production of innovative drugs. which was developed by Bayer AG and was under patent protection until 2003. drugs on which the firms have sought patent protection. has experienced landmark successes. Several Indian firms are working t owards this end ± JB Chemicals. viz. This implies that the consolidation o f the operations of the leading pharmaceutical firms seen during the past decade had a key role to play in increasing their presence in the global markets. Cadila Healthcare. NOVEL DRUG DELIVERY SYSTEM (NDDS): Novel drug delivery systems (NDDS) have been the focus of activities of most leading firms in the generic industry. an activity in which the leading generic firm. It would appear that seeking global markets is only one aspect of the strategy adopted by the leading Indian firms.. besides. of course the degree of expertise required. especially in some of the developed countries. The other aspect of the strategy is to deepen the R&D activities in order that the firms can benefit from dynamic efficiencies. Zydus Cadila. The xlii . The first is the area of Novel Drug Delivery Systems. Morepen Laborat ories. the increase in the market penetration by these firms has tak en place since the beginning of the current decade. Regulatory requirements in case of a drug with NDDS would involve establishing its bioequivalence with the µnormal¶ brand. In the area of NDDS. Ranbaxy recorded the most noteworthy success. The firm was able to develop an improved version of one the new generation antibiotics.e. viz. Developing a new drug de livery system is far simpler in terms of the costs incurred and the time expended. Interestingly. This. in simple te rms. The R&D activities were focused on two areas.

Ranbaxy formulation assured bett er patient-compliance and was hence. Global patent filings of the firm increased from a mere 14 during 1999 to more than 250 during 2005. Table 9 gives the details. Reddy¶s have also contributed to the increase in t he patent applications filed by the leading Indian firms. xliii . patenting activities of top 10 spenders on R&D have improved consistently since 1999-2000. generic drugs. Ranbaxy. The US drug delivery industry is t ransforming ordinary drugs into better drugs optimised for a broad range of applicatio ns. Bayer recognised the improvement and entered into a licensing agreement with Ranbaxy for its version of ciprofloxacin. T hat the Indian firms have shown considerable promise in this rapidly expanding segment of the industry augurs well for their future prospects. The current global market for products with NDDS is estimated to be about $ 20 -22 billion. significant progress was made by the firm towards developing platform technologies and products in the area of Oral -Controlled Release system. Cipla and Dr. with an initial payment of US $ 10 milli on. but in several developed countries as well. viz. Major pharmaceutical firms are using the technology to extend their drug product life cycles. As with other activities described in the foregoing. considered to be a major step forward. Under the agreement. Ranbaxy Laboratories received US$ 65 million from Bayer over a four year period. which in 2005 had in creased to nearly 500. Besides Ranbaxy. DEVELOPMENT OF INNOVATIVE DRUGS: The propensity of the leading firms in the generic industry to increase their R&D intensity is possibly best reflected in their drive to obtain patents not only in India. In 2001. Drug delivery is helping to expand other pharmaceutical industry sub -sectors such as biotechnology drugs. The agreement allowed Bayer AG to have the worldwide marketing rights over ciprofloxacin. Ranbaxy initiated the process of clinical development of its once-a-day formulations of Ofloxacin by filing an IND application with the US FDA in late 2001. The best among the performers is the top spender on R&D. except in India and the CIS countries where Ranbaxy Laboratories had the marketing rights. specialty pharmaceuticals and more. Some estimates have indicated that by 2009. the market for NDDS in the US will be worth $91 billion.

org/patents/patent -information. Reddy Lupin Cadila Wockhardt Orchid Pharma Nicholas Piramal Sun Pharma Aurobindo Pharma TOTAL 0 0 1 7 4 8 11 1 0 2 0 2 8 4 0 0 0 5 6 9 2 33 53 91 156 300 458 492 SOURCE: .EPO database (http://www. Dr Reddy¶s.Table-8: Worldwide Patent Filings of leading Indian generic firms: (Number of applications) FIRMS 1999 14 0 3 12 1 2 0 2000 31 5 5 9 2 0 1 2001 53 15 5 8 3 3 1 2002 69 12 25 8 9 14 7 2003 127 21 69 12 14 14 31 2004 208 38 77 25 19 18 48 2005 259 56 49 32 29 25 25 Ranbaxy Cipla Dr.epo. This is evidenced by the fact that almost 50% of the applications made by both Ranbaxy and Cipla have been made through the PCT route (Patent Cooperation Treaty) .html) The top three firms in terms of the patent applications made have increasing tendency to seek international patents. shows a different xliv . however.

Ranbaxy had emerged as the only other manufacturer of Cefaclor besides the patent holder. Eli Lilly. This was an interest case for it involved the first commercially viable process that came out of the Ranbaxy R&D stable involving Cefaclor.epo. This antibiotic was one of the best selling drugs in 1980s.EPO database (http://www. Although the initial forays of Ranbaxy Laboratories into research and development (R&D) activities began in the late 1970s. was owned by Eli Lilly obtained in 1 979.org/patents/patent -information. Patent for Cefaclor. Not only did Ranbaxy produce the product successfully. a cephalosporin antibiotic . it also managed to obtain high yields from its process. Ranbaxy started work on developing a new seven -stage process for the production of Cefaclor in 1989. In 1993. with the share of PCT applications in the total patent applications falling during 2004 and 2005 (Table 10). Eli Lilly and Ranbaxy Laboratories agreed to set up two xlv .html) ALLIANCE BUILDING EFFORTS: The first significant of these alliances between Indian and foreign firms in the area of pharmaceuticals was the one involving Ranbaxy.tendency. After spending nearly Rs. Reddy 2 0 6 15 3 8 21 6 4 27 4 20 47 8 38 105 22 15 129 25 17 SORCE: . Table-9: PCT applications made by the top three firms in terms of patent applications: (Number of Applications) FIRMS 1999 2000 2001 2002 2003 2004 2005 Ranbaxy Cipla Dr. it was not until t he late 1980s that the firm had made some progress in this area through the development o f a novel process for Cefaclor. 20 million o n a three-year project.

with permission from its collaborator). Contract research arrangements have included activities related to product development as well. What started as exceptional collaborative venture more than a decade and a half back has now become the most happening event in the generic ind ustry. Clinical trials in India are considered to be cheaper and faster than those in developed markets. the Indian population provides a vast diversity in terms of ethnicity as well as the disease profile. The first involves contract research arrangements. Ranbaxy successfully chal lenged GlaxoSmithKline¶s patent on Ceftin. Not only are the leading firms in the Indian industry involved in R&D collabo rations with some of the global pharmaceutical majors. contract research organisations can hire the required personnel at less than a third of the wages prevailing in most developed countries. Among the successful cases of product development through contract r esearch that has been recorded thus far. In March 2003. Similarly. Novartis is working with Dr Reddy¶s in various R&D areas. contract manufacturing and outsourcing arrangements. despite an on-going lawsuit over a generic version of Novartis¶ antifungal cream Lamisil. while Ranbaxy would have the rights over Indian markets (although Ranbaxy could co -promote in the US and the EU. xlvi . the second. According to the agreement. overall clinical development costs in India are estimated to be 40±60% lower than those in most developed countries. GlaxoSmithKline assumed exclusive commercialisation responsibilities worldwide. One of the critical components in this regard is clin ical trials.joint ventures in India. Because of these advantages. their exertions have prompted smaller enterprises to enter into a variety of collaborative ventures with foreign enterpr ises. but. two cases involving Ranbaxy and Dr Reddy¶s are the most interesting. GlaxoSmithKline hired Ranbaxy to research on molecules that could become the building blocks for dru gs. soon afterwards. Available estimates indicate that in India. These collaborations have taken two principal forms. One was to conduct research in India and the other was to market Eli Lilly¶s products in the South Asian market. Besides.

The agreement outlines a multi -year joint drug development program whereby the firm would prepare compounds to determine the lead compound and supply samples to a Rigen.  Panacea Biotec Ltd entered into a tie -up with U. have been undertaking contract jobs for global pharmaceutical majors along with their larger counterparts firms like Orchid Pharmaceuticals. Orchid will provide research and development services to Pfizer¶s Animal Health business. Industry estimates suggest that the Indian firms bagg ed manufacturing contracts worth $75 million in 2004. GSK. Divis Laboratories and Matrix Laboratories. there have been several large firms that have also entered into the fray. Collaborative Ventures Involving Foreign and Indian Pharmaceut ical SOME COLLABORATIVE VENTURE INVOLVING FOREIGN AND INDIAN PHARMACETICAL FIRMS:  Matrix Laboratories Ltd. Top global firms like Pfizer.  Dr Reddy's teamed up with the UK's Argenta Discovery to jointly develop a novel approach to the treatment of chronic obstructive pulmonary disease.K. Merck. are largely depending on Indian firms for many of their Active Pharmaceutical Ingredient (APIs) and intermediates.  Orchid Chemicals and Pharmaceuticals entered into a seven ±year Master Research and Development agreement with Pfizer International LLC. The Boston Consulting Group has estimated that the contract manufacturing market for global firms in India would touch $900 million by 2010. the mid-sized firms in the industry. for a new drug delivery system. Sanofi-Aventis.  Themis Medicare Ltd signed a long -term agreement with Schering -Plough Animal Health Corp. Although most of the firms active in this area belong to the group of the smaller and emerging firms. including Dishman Pharma. Novartis and Teva etc. title and interests.Contract manufacturing has emerged as a major growth area in the pharmaceuticals sector. Under this agreement. Thus. patent rights and formulations to the worldwide animal health business of Schering -Plough Corp. xlvii .-based Cambridge Biostability Ltd for manufacturing of vaccines using th e "stable liquid technology". signed a collaborative agreement for drug discovery with Japan's a Rigen Inc. (SPAH). Themis would transfer all ownership rights.

a molecule for the treatment of type-2 diabetes.  Ranbaxy licensed uroselective -blocker to Shwarz Pharma AG.  Torrent sold first right of refusal for an advanced glycosylation end (AGE) breaker compound being developed primarily for hypertension to Novartis  Glenmark licensed a PDE-4 compound for asthma and COPD to Forest Labs.  Dr Reddy¶s licensed two anti-diabetic compounds to Novo Nordisk and one to Novartis between 1997 and 2001. Dr Reddy's Laboratories entered into a co-development and commercialisation agreement with the Denmark-based Rheoscience A/S for joint development and commercialisation of Balaglitazone. xlviii .

since the late 1980s. the focus of the Drug Policy adopted by the Government was more on providing market-based incentives to the Indian generic industry. providing incentives to the pharmaceutical industry for inc reasing R&D spending. INCENTIVES FOR INCREASING R&D SPENDINGS: The Government has provided incentives to the pharmaceutical firms to increase spending on R&D principally in two forms. would be eligible for exemption from price control for a period of 15 years from the date of the commencement of its commercial production in the country. products of the firms that have been more actively involved in R&D activities were exempted from the price control mechanism. Secondly. those fu nctioning under the Council for Scientific and Industrial Research (CSIR). The pharmaceutical industry in India had been subjected to rigorous price controls since 1970 through the adoption of the Drugs Price Cont rol Order or DPCO.GOVERNMENTAL MEASURES FOR PROMOTING PHARMACEUTICAL RESEARCH & DEVELOPMENT: Government¶s role in promoting pharmaceutical R&D has been two -fold. One. if developed through indigenous R&D. new drugs that were products of original research in India112 . in particular. 1970. xlix . and. The first and more obvio us objective was to ensure that drugs were available at reasonable prices in India. fiscal instruments have been used to provide incentives for R&D spending. the number of drugs under price control was reduced. facilitating collaboration between the private sector an d the large network of publicly funded research institutions. Accordingly. However. Some of the criteria that were used to exclude drugs from being covered by the DPCO were as under:  A manufacturer producing a new drug patented under the Indian Pate nts Act. The DPCO was aimed at fulfilling two objectives. as active ingredients. The second was to create an incentive structure for domestic producers to produce new formulations and to use. two. In the first pl ace.

any firm carrying on scientific R&D is allowed 100% deduction on profits for a period of 10 years if it is approved by the Ministry of Science and Technology before April 1. R&D units can enjoy exemption from income tax for the same period. The main argument of the industry has been that results of R&D efforts can be realised only after a considerabl e lag and therefore it would be appropriate to extend the tax exemptions and other concessions that the Government provides at present by another 10 -years. For several years. for process patent. A manufacturer producing a drug in the country by a process developed through indigenous R&D and patented under the Indian Patents Act. would be eligible for exemption from price control in favour of the patent holder formulator from the date of t he commencement of its commercial production in the country until the expiry of the patent. funded largely by the Government. PUBLIC-PRIVATE PARTNERSHIP IN PROMOTING R&D: During the past six decades. And. the industry has been arguing for extending the fiscal benefits that the Government has been providing. Under the existing laws. pharmaceutical (and biotechnology) firms having in -house R&D facilities can benefit from a weighted deduction of 150% on any expenditure on scientific research (excluding cost of land or building) until March 31.  A formulation involving a new delivery system developed through indigenous R&D and patented under the Indian Patents Act. around 25 universities and a few pharmacy colleges. 1970. Furthermore. In addition. the Indian Council of Medical Research (ICMR). 1970 would be eligible for exemption from price control until the expiry of the patent from the date of the commencement of its commercial production in the country. provided the additional sine ws to the R&D efforts. With the maturing of private enterprise in the country. there was recognition of the need to build effective synergies between R&D efforts undertaken by the state funded organisations and those that the private sector had put in place. The second dimension of Government¶s incentive for firms engaging in R&D activities was the tax breaks that firms could enjoy. 2007. India¶s R&D infrastructure has been built around the network of institutions created und er the CSIR. l . 2007.

they are: 1. 2. the Pharmaceutical Research and Development Committee (PRDC) under the Chairmanship of Dr.. the Government set up a Committee. 2. The more important of these were: 1. animal and herbal based preparations to reduce risks. it tried to set India¶s priorities for pharmaceutical R&D. among other things was expected to ³sugg est mechanisms for establishing organic linkages betwee n private sector and government organisations/laboratories/universities with a view to synchronising and synergising national R&D efforts in pharmaceuticals´. Enhancing the basic research component with special emphasis on risk taking in discovery and development of new drug delivery systems. Providing international co -operation in discovery and development of new drug delivery systems and plant. PRDSF was eventually operationalized in 2004-05 with an initial corpus of Rs 15 million. as li . plant based preparations. which should have an ini tial corpus of Rs 5 million to be funded by the Government. the concrete manifestation of this need came relatively r ecently. costs. the Committee tried to identify the institutional mechanism that was needed to undertake R&D activities. Secondly. which. First. R.A.However. The PRDC made two major contributions. and perhaps more importantly. The management of the PRDSF was entrusted to Drug Development Promotion Board (DDPB)116 that comprised of all the relevant Ministries/Departments of the Government and had. A key element of the latter exercise was the identification o f the publicly funded research facilities that were in existence. The PRDC also recommended that the Foundation should be financed through the Pharmaceutical R&D Support Fund (PRDSF). and development duration. Mashelkar. Director General. In 1999. The most prominent among the recommendations made by the PRDC was the setting up of an autonomous Drug Development Promotion Foundation (DDPF). would have several key responsibilities. CSIR. etc. mineral. It was suggested that the Foundation be managed jointly by the industry and the Government-supported institutions.

. We had mentioned at the outset that the major concerns i n India about the future of its domestic pharmaceutical industry in the new TRIPS -consistent patent regime arose from this above-mentioned perspective. The real issue is wheth er this partnership can delivers efficiently as has been provided in its blueprint. Indian Institute of Chemical Technology (IICT). Central Drug Research Institute (CDRI). At the same time. there are others. which are most active in area of pharmaceuticals viz. which have remained unimplemented. The discussion in the foregoing indicates that the future holds much promise for the Indian generic firms. Hence. particularly when the perspective is one of acces s to medicines at affordable prices. which could be used to address critical issues like access to medicines. however.industry representatives. several issues of concer n remain. have established several collaborative ventures with the pharmaceutical firms. lii . While a number of fle xibilities were included in the amendments introduced to usher in a TRIPS-consistent patent regime. The three laboratories. there are growing evidence of collaboration Government institutions and pharmaceutical firms in recent years. only the three associations representing largely the ³Indian´ pharmaceutical industry The eventual outcome of the initiatives taken by the PRDC to encourage publ icprivate partnerships in the area of pharmaceutical R&D not withstanding. policy makers were intensely lobbied by the public interest groups to evolve a patents regime th at fully took cognisance of the flexibilities in the TRIPS Agreement. These ventures are a pointer to the fact that the public-private partnerships in the generic industry have overcome the limitations of the policy -induced initiatives for promoting pharmaceutical R&D in the country. and Centre for Cellular and Molecular Biology (CCMB).

As a result. The high cost of patented ARV drugs threatened the sustainability of free ARV progra mme. The fall in the pric es of ARV drugs encouraged many governments and non-governmental organisations to initiate f ree ARV treatment programmes. Thus Brazil introduced first generic version of ARV drugs.000 for per person per year (ppy). This led to fall in the price of ARV drugs. Presently a first line triple combination is available at US$132 ppy. This shattered many myths on drug prices. Even though. Cipla. Cipla announced that it would sell the triple combination for US$ 350 ppy. Firstly. Even the announcement itself forced brand name firms to cut ARV drug prices.000 to 15. it later shifted to generic drugs to ensure the sustainability of the programme . free treatment programmes were beyond the reach of most of the countries. INDIAN DENERIC INDUSTRY AND ARV (ANTI RETRO VIRAL) DRUGS: The generic firms in India have brought three path breaking contribution to the availability and accessibility of ARV drugs . Brazil started the free ARV treatment programme using drugs from the bra nd name firms. The high cost of patented ARV drugs forced the Brazilian government to start the domestic production of ARV drugs. The cost of ARV drugs till 2000 was between US$10. to reduce the prices of ARV drugs. Generic ARV thus became the focal point of all free ARV treatment programmes including USA¶s PEPFAR. which triggered the ³Domino effect´ . Thi s liii . In February 2001. This showed for the first time that ARV drugs can be produced at a lower price than the patented drugs and it accelerated the demand for cut in the A RV drug price. These three paths are: 1.ACCESS TO HIV/AIDS DRUGS AND THE INDIAN PHARMACEUTICAL INDUSTRY: Universal access to drugs is a well-recognised strategy to counter the spread of HIV/AIDS. Indian firms started the production and marketing of the generic version of first line tipple combination drugs at an affordable price. which was priced at US$ 3000 ppy. It was a bold decision of the Brazilian go vernment in 1996 that paved the way for free ARV treatment movement. It was the initiative taken b y the Indian firm.

8 firms are active only in the API segment of ARV production. Following the lead given by Cipla. other generic firms also entered in the ARV drugs segment. Table-10: Firms active in ARV Drugs Production: FIRMS API FORMULATION Cipla Ranbaxy Aurobindo Pharma Strides Arcolab Ltd. It was Cipla which first to announce the introduction of generic ARVs in February 2001. Hetero Drugs Ltd. As result. Producers of ARV drugs in India benefited from the fact that the Indian Patents Act did not allow patenting of pharmaceutical products until the Act was amended in 2005. Secondly. 3. Out of these 14 firms.triggered the price war in ARV drugs segment. Indian firms introduced fixed dose combinations (FDCs) of ARV drugs. 2. Currently there are 14 firms active in the ARV drugs production. The following table shows the list of firms active in the ARV drugs production. FDCs not only improved the adherence but also reduced the price of ARV drugs. the number of pills had been reduced from six pills per day to two per day. Thirdly. Emcure Zydus Cadila Sun Pharma X X X X X X X X X X X X X X liv . Indian firms also introduced the paediatric formulation of ARV drugs.

(last update on 25 th October. lv . Possibly the most significant dimension of the operations of the Indian firms in the market for ARV drugs is that they have emerged as a major source of supplies to the affected countries. the Regulatory status of Antiretroviral Drugs Database. Eastern Surgical Company Emcure Pharma Hetero Drugs Ltd.WHO.Samarth Pharma Matrix Laboratories IPCA Laboratories Eastern Surgical Company Mac Leods Dr. Six firms have obtained registration s for supplying ARV drugs as of October 2008. 2008). Reddy Laboratories X X X X X X SOURCE: Annual Reports of Firms (various years). Table-11: Approvals Received by Indian Firms for supplying ARV Drugs: FIRMS TOTAL DRUG REGISTERED WHO pre-qualified DRUGS Aurobindo Pharma Cipla Ltd. Ranbaxy Strides Arcolab 41 31 22 16 23 21 11 3 10 0 0 1 7 4 SOURCE: . the details of which are provided in Table 12 .

Table 13 gives the list of top 10 suppliers of ARV drugs under the Global Fund. Tuberculosis and Malaria (Henceforth ³Global Fund´). Since the Global Fund to Fight AIDS. Tuberculosis and Malaria Global Fund (http://www. more than 1300 consignments of ARV drugs were supplied using the Global Fund and of these Cipla is the largest supplier. which has the largest number of WHO pre -qualified drugs.theglobalfund. During the period June 2003 and January 2006. Indian firms emerged as the major suppliers of ARV drugs. although it is Cipla. which is by far the most affected region.org/en/about/procurement/list/ ). Abbott Laboratories Merck Ranbaxy Laboratories Ltd. The Indian firms have also proved their capabilities in terms of suppl ying the ARV drugs to the affected countries. have registered thei r presence in most countries of Africa. Table-12: Top 10 Suppliers of ARV Drugs under Global Fund in terms of Consignments (June ¶03 to Jan ¶06): FIRMS NUMBER OF CONSIGNMENTS Cipla Ltd Aspen Pharmacare Bristol Myers Squibb GlaxoSmithKline Ltd. started providing funds for the free treatment programme. the Global Fund provided nearly US $ 34 million for procurement of ARV drugs and the share of the Indian firms was lvi .The largest number of registrations has been granted to Aurobindo Pharma. The other noteworthy feature of the registrations granted to the Indian firms is that all firms. Between June 2003 and January 2006. Hetero Drugs Ltd. with the exception of Eastern Surgical and Emcure. Roche Boehringer Ingelheim SOURCE: - 342 221 158 144 88 73 45 35 32 25 to Fight AIDS.

close to 25%. do not possess the technical e xpertise to produce ARV drugs. therefore.  Whether India can export ARV drugs to countries having no or insufficient manufacturing capacity in the pharmaceutical sector. many countries that are among the worst affected by HIV/AIDS. Brazil and China for the supply of ARV generics. These countries have. Hence.  Whether Indian firms can produce ARV drugs. In other words the access to drugs in many countries depends upon the flexibility available in the patent laws of major generic producing countries. but now as its pivotal position as global suppliers of ARV drugs to some of the most affected regions. which are currently available. My contention is that introduction of product patent in India raises several concerns. The following section looks at the future of India¶s ARV drugs production capacities under the products patent regime. even in the absence of a product patent protection at the domestic level.  How will Indian firms produce new ARV drugs in pipeline? FUTURE OF EXISTING SUUPPLY: All ARV drugs. Further. These include:  Whether product patent regime would affect supply of generic ARVs from India. but are not produced in India. Generic availability of ARV drugs is required to meet both the domestic and export markets. to depend upon the c ountries like India. PRODUCT PATENTS AND FUTURE OF INDIAN ARV GENERICS: Introduction of product patent regime in India has created serious doubts on the future supply of generic ARV drugs. This establishes the po int that Indian firms have become major global suppliers of ARV drugs. which are currently available for the treatment were invented and patented in the USA or other developed countries before 1995. The future of the generic firms therefore becomes important not only for the fact that it has a criti cal role to play in the India¶s quest for obtaining drugs at affordable prices. particularly in the recent years. these drugs are not eligible for patent protection in India because the TRIPS Agreement requires lvii .

esters. it needs to be pointed out that the Indian Patent Office is yet not well equipped to evaluate claims on efficacy. unless they differ significantly in properties with regard to efficacy)´ The above mentioned section. The Controller accepted the efficacy argument but rejected Nov artis claim on lack of evidence in this regard. In this context. Table 14 provides a non exhaustive list of pending patent applications on ARV drugs in the mailbox. as amended. As result. polymorphs. it was observed that the patent applicant Novartis relied on the efficacy argument to defend their claim on a beta-crystal format of a known substance invented in 1993. however. patents are filed before the marketing approval of drugs therefore. Further. According to the provisions of section -3 of TRIPS agreement. particle size. patent can be granted on the invention concerned. In India.India to consider grant of products patents on drug s which were invented after 1st January 1995. ethers. if the applicant proves that the claimed invention incr eases the efficacy of the known substance. Indian lviii . 1970. it says: ³ The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process. combinations and other derivatives of known substance shall be considered to be the same substance. qualifies the exclusion with efficacy requirements. pure form. For instance. several firms have filed patent applications claiming that their inventions constitute improvements of known substances in India. isomers. in the dispute on the patent on Gleevec . metabolites. Indian Patents Act. complexes. it is not possible to make claim on efficacy at the time of filing. which was discussed earlier. and that the patent applicants may eventually get a favourable nod from the authorities. machine or apparatus unless such known process results in a new product or employs at least one new react ant (for the purposes of this clause. salts. mixtures of isomers. Pharmaceutical firms could use this exception to claim patents on the known substance to extend the patent monopoly.

given that the language of Article 11A of the Patents Act. These applications have claimed patents either in the salt form or in the f orm of combinations or isomers. PRIORITY DATE APPLICANT Lamivudine+ Zidovudine Pharmaceuti cal composition 2044/cAL/1997A 31/10/1996 UK GlaxoSmithKl ine Nevirapine/Hemihyd rate Pharmaceuti cal suspension comprising Nevirapine Hemihydrate 2485/DEL/1998 A NA Boehringer Ingelheim Trizivir Antiviral Combination 1206/CAL/1997 A NA GlaxoSmithKl ine lix . Table-13: Pending Product Patent Applications for ARV Drugs filed in India: SUBSTANCE NAME TITLE INDIAN APPLICATION NO. patent on such drugs would increase the cost of such drugs since payment of royalty to the patent holder is entailed.Patents Office is currently examining these patent applications. Therefore patents on any of these claims may affect t he availability of existing ARV drugs. These supernormal rents could reflect in the price of generics price. in the absence of clear ceiling on royalty the pat ent holder may raise the higher % of royalty. allows such possibilities. This may lead to situation where the existing patients on the ARV treatment may end up in paying an increased price. We had argued earlier that the patent holder could try to extract supernormal rents by way of royalty payments. Further. which operationalizes the ³immunity provision´. Even though the Indian Patents Act provides immunity to the existing producers of ARV drugs.

Dipivoxil Lamivudine Pharmaceuti cal composition Amprenavir +AZT+ Antiviral Ziagen Amprenavir+AZT+ FTC Amprenavir Pharmaceuti cal formulation Abacavir A novel salt 872/CAL/98 combination Vaccine 1206/CAL/1997 A 2172/MAS/1998 A 272/DEL/1997A 479/CAL/1998A or 25/7/97/US Gilead 24/03/1997 & 26/03/1997 NA GlaxoSmithKl ine GlaxoSmithKl ine 26/09/1997 GlaxoSmithKl ine 22/03/1996 US GlaxoSmithKl ine 17/5/97UK GlaxoSmithKl ine Lexiva Fosamprenavir Calcium Calcium(3S) IN/PCT/2001/00 039 18/7/1998G B GlaxoSmithKl ine lx .Tenfovir-3 application Nucleotide analogue composition Nucleotide analogue composition 986/DEL/2002A 25/7/97/US Gilead 963/DEL/2002A 25/7/97/US Gilead A method for 989/DEL/2002A Preparing FORM-2 Form-4 crystalline Adefovir.

nic.in/). of India.Govt.patentoffice. Controller General of Patents D esigns and Trade Marks (http://www. lxi .Lopinavir Process and Intermediate s for preparing retroviral protease inhibitor 259/MUMNP/20 03 31/8/2000 Abbott SOURCE: .

There is a negative perception about the IPR Agreement because of the vigorous campaign that would have an adverse impact on the prices of drugs and pharmaceuticals. The system of granting Patents in India is governed by the Patents Act 1970 which contains the lxii . A delay of 3 to 5 years for registration is normal. A strengthened IPR regime may not be disadvantageous to our country. What is now required is strong and full support to research institutions and the strengthening of institutional arrangements to help the industry to derive maximum benefits from the new IPR regime.000 in 2008. Only after the Board is set up. hardly 2000 patents are being issued. An IP Appellate Board is also required to be set up under the trademarks Act to hear appeals against the decisions of the Regist rar of Trademarks. The backlog of patents is something like 36. There is a proposal to recruit more examiners. The prospect of securing a good share of world trade is also much better in pharmaceuticals. but unless we modernize our system there will perpetually be a backlog. It is obvious that the implementation of the Intellectual Property regime can be effective only if we have a very good support structure. especially if the basic concern regarding accessibility to essential drugs is taken care of. The position is no better in respect of trademarks. While around 10.DIFFICULTIES IN ENACTMENT OF PRODUCT PATENT REGIME IN INDIA: A major problem in our country is the enormous delay in the processing of patent applications. The modernization of the offices and the improvement of the systems do not brook delay. Record management t oo is quite poor in the patent offices and digitization has not been completed. can the notification for the Geographical Indication Act an d Rules be issued in our country. Implementation and enforcement of IPR will also encourage investment in the country.000 patents are being filed. since it is a knowledge based industry. India has long and credible record of protection of Intellectual (IPR) through a system of well -developed substances laws and also well established and administrative infrastructure for the enforcement of IPR.

The patent righ t is territorial in nature and inventors/ their assignees will have to file separate patent applications in countries of their interest. Further. manufacture or market the invention without the consent of the patent holder. The principal objective of the Indian Patent Act. food. As the right is conferred by the state. 1970 is stated in section 83 of the said act. along with necessary fees. it can be revoked by the state under very special circumstances even if the patent has been sold or licensed or manufactured in the meantime. manufacture and market the invention. provided the invention satisfies certain conditions stipulated in the law. use. use. Exclusivity of right implies that no one else can make.necessary provisions for the protection of invention as well as prevention of abuse or misuse of patents rights. security etc. namely that (a) Patents are granted to enco urage inventions and secure the working of inventions of India on a commercial scale and (b) Patents are not merely granted to enable patentees to enjoy a monopoly on the patented article. inherited. for obtaining patents in those countries. These laws may relate to health. can be gifted. A patent in the law is a property right and h ence. assigned sold or licensed. lxiii . existing patents in similar area may also come in the way. A patent is an exclusive right granted by a country to the owner of an invention to make. Patents and IPR System are a very vast and broad based concept providing safety services to the various sectors of the country so that no one exploits their mastermind inventions. safety.

Dr. 2. This would give Indian companies a strong foothold to already establishe d manufacturing. marketing and distribution network in US and Europe in addition to technology of the target company. Reddy¶s-Novartis. The Indian pharma industry has the highest number of plants appro ved by the US Food and Drug Administration (FDA) outside US. lxiv . As against the global average of developing a block buster molecule. 5. Several new developments have already taken place in their R&D and strategic efforts. Torrent-Novartis and Cadila -Schering AG are representative examples to make a case in this regard. Ranbaxy-Bayer. Reddy¶s-Novonordisk. The advantages of new patent regime can be concluded through following points and these are as follow: 1. Top Indian companies have devised unique R&D models to significantly decrease and risks involved in the discovery of new drug or New Chemical Entity. Major companies have been establishing offshore production facilities.ADVANTAGES OF PRODUCT PATENT REGIME OVER INDIAN PHARMACEUTICAL INDUSTRY: Many Indian pharma companies have already geared up for facing the product patent. Some of the high profile acquisitions by Indian pharma majors abroad are listed in table number 16. 3. Dr. Indian companies will be able to do it at just US$ 300 -400 million. Indian companies are acquiring generic share of global players or Niche R&D start-up companies in US and Europe. Collaboration/alliances in discovery research and product development tie ups between Ranbaxy-Eli Lilly. It increases efficiency of R&D investment of Indian firms to survive in the global market. 4.

TABLE-14: RECENT MAJOR ACQUISITIONS ABROAD BY INDIAN PHARMACEUTICAL COMPANIES:

ACQUIRERE COMPANY

TARGET COMPANY

DEAL(US$ million)

Ranbaxy Wockhardt Wockhardt Cadila Health Care Jubilant Organosys Dabur India

Aventis(France) CP Pharmaceuticals(UK) Espharma GmbH(Germany) Alpharma SAS(France) PSI Supply(Belgium) Redrock(UK)

70.00 17.72 11.00 6.18 16.52 5.02

6. India could well become the hub of clinical research for pharmaceutical companies across the globe in coming years. India offers a 40% cost advantage for doing bioequivalence study when compared to US. But if the recent decision by WHO to remove anti-AIDS drugs manufactured by Indian companies (Ranbaxy, Cipla and Hetero drugs) due to unsatisfactory bioequivalence data, is any indication then Indian clinical research organizations should upgrade their good laboratory and good clinical practices including documentation and data storage. It is often accepted that Indian clinical research organizations that do bioequivalence studies for less , actually compromise on data storage and documentation. As a result, retrospective analysis of data and reconstruction of the study results are not possible. 7. Contract manufacturing is another area where Indian companies are bound to excel. Setting up a plant is 40% cheaper in India compared to developed countries and the cost of bulk drug production is 60 -70% less. The MNCs prefer to outsource the bulk drugs as well as formulations, as it is the lowest value added activity in the pharmaceutical business, contributing not more than 6-8% of selling price. The global players focus their own resources on
lxv

research and outsource manufacturing of formulations. Outsourcing cuts down on their capital investments. According to International Medical
Statics (IMS), half of the big pharmaceutical companies worldwide have

moved towards outsourcing through long -term strategic alliances. Only 28% of pharmaceutical companies across the globe went in for in -house capacity expansion of bulk activities over the last two year s. Some of the global pharmaceutical companies that outsource extensively are American Home products, Pharmacia & Upjohn, Bristol Myer Squibb and Glaxo -Wellcome. Indian companies like, Ranbaxy, Lupin labs and Nicholas Piramal are the first Indian companies to have obtained manufacturing contracts from MNCs. The trend is expected to accelerate in the future. 8. NEWER R&D INITIATIVES: Leading companies are investing on R&D to generate their own IPR(Intellectual Property Rights) and come with new products. Compa nies realize that it will take a number of years to develop their own pharmaceutical products. They are eager to join hands with MNCs for co -developing and/ or co-marketing of patented products of MNCs. Developing their own IPR is a very important component of their long -term strategy today. Member companies of Indian Pharmaceutical Association, which also include all the research based Indian pharma majors, have increased their R&D spending by 4 times in the last 4 years. Dr. Reddy¶s lab and Ranbaxy have been the prominent spenders for several years with an investment of 18% and 16% of their revenue in R&D for the year 2009. Nicholas Piramal has commissioned a new R&D centre with Rs 100 crores investment in Mumbai and Wockhardt has commissioned a Biotechno logy park at Aurangabad with an investment of Rs 200 crores, catering to the development of Biopharmaceuticals. Zydus Cadila has started Zydus research centre with an investment of over Rs 50 crores. Cadila pharma plans to invest around Rs 150 crores in re search facilities in the coming years. Glenmark, Aurobindo and Orchid have increased their R&D spending to Rs 22.4, 46 and 39.6 crores respectively in the year 2008.
lxvi

Companies like Glenmark, Torrent, Dr. Reddy¶s and Ranbaxy have already out-licensed some molecules to MNCs for advanced clinical trials in return for milestone payments.

lxvii

clini cal research and manufacturing. the Indian Pharma Industry would have to contend with several challenges particularly the:  Effects of new product patent. and all. There are opportunities in expanding the range of generic products as more molecule come off-patent. Today Indian pharmaceutical industry can look forward to the years to come. as the industry confronts lower corporate stock prices and an increasingly cost-averse customer. patent expiration of number of block buster drugs. increasing legal and regulatory concern. lxviii . Transformations in the business model of larger pharma industry spell more opportunities for Indian pharma companies. Current global financial conditions and the threat of a broad recession accelerated the timetable for implementing transformational changes in global organizations.  Regulatory reforms. Indian pharma industry is expected to continue with its good performance. The core issue for most of drug companies are declining productivity of in-house R&D. At the same time. pharmaceutical companies have entered a difficult period where shareholders.  Drug price control. the market and regulators have created significant pressure for change within the industry. and pricing issue. Riding on better sales in the domestic and export markets.  Quality management and. As a result larger pharma companies are shifting to new business model with greater outsourcing of discovery services. Pharmaceutical production costs are almost 50% lower in India than in western nations. outsourcing. CHALLENGES: Over the past decade. in focusing into drug discovery as more profits come from traditional plays. The Indian stock market may be dreading a possible recession but Indian pharma companies seem unfazed by showdown fears. with great expectations. while overall R&D costs are about 1/8 th and clinical trial expenses around 1/10 th of western levels.CHALLENGES AND FUTURE GROWTH: 1.

and has shown strong growth of 21. but this will accelerate soon. Zydus Cadila (24. Piramal Healthcare (18.61 billion. The sale of all types of medicines in India stands at US$ 9.7). the domestic market will grow to US$ 49 billion. GSK India (19%).3% for the 12 months ending September 2010. Pfizer (23. Cipla maintained its leadership position in the domestic market with 5. Abbott (25%). owing to increase middle class population and rapid urbanisation.6%) and Lupin (18. at a compounded annual growth ra te (CAGR) of 15%.2%. India¶s domestic market is valued approximately at US$ 12 billion in 2010. followed by Ranbaxy.22 billion by 2012.4% over the previous year¶s corresponding period on a Moving Annual Total (MAT) basis for the 12 months ended July 2010. lxix . It estimates that over the next 10 years. Alkem Laboratories (23.8%) had impressive growth during July 2010.6%).27% share. Leading companies in the domestic market such as Sun Pharma (25.3%). with a value -wise growth rate of 20. The formulations industry is expected to prosper parallel to the pharmaceutical industry. The industry is currently growing at the rate of 12%. Conformance to global standards. which is expected to reach around US$ 19. It is expected that the domestic formulation market in India will grow at an annual rate of around 17% in 2009 -2011.4 billion in size.1%). 2. GROWTH: The pharmaceutical market reached US$ 10. which grew 37. The highest growth in the domestic market was for Mankind pharma.

India is under pressure to introduce data exclusivity. The analysis showed that the leading generic firms of the industry have been showing considerable dynamism since 1995. The consolidation o f the Indian firms. particularly with the emergence a strong gene ric industry. only process patents were allowed for chemical entities.CHAPTER-6: CONCLUSION AND RECOMMENDATIONS: CONCLUSION: The Indian pharmaceutical industry has witnessed considerable changes over the past few decades. the ter m of patent protection was made shorter for the pharmaceutical patents. including pharmaceuticals. The process patent regime enabled the generic manufacturers to develop alternative processes for products that were already in the market. improved considerably since the beginning of the current decade. The patents regime that Patents Act. 1970 had two key features that facilitated the growth of the generic industry in India. which began in the first half of the 1990s. Particularly noteworthy was the increase in the R&D spending lxx . the act of reverse engineering that the generic firms were engaged in was tantamount to counterfeiting. This study analysed the performance of the Indian pharmaceutical industry in the post. and two. ten of which were gene ric manufacturers and remaining were associates of the global majors operating in India. 1970 had introduced underwent a change following the implementation of the commitments India had t aken under the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). The TRIPS-consistent patent regime brought with it uncertainties for the generic manufacturers for their ability to reverse engineer products would be limited to a considerable extent.e. Patents Act. Furthermore.TRIPS patent regime. First. In our analysis we included 18 leading manufacturers in the industry. none of the generic manufacturers could be challenged by the global firms whose products they were reverse engineering. The growth of the industry and its subsequent consolidation was largely cont ributed by the Patents Act that was enacted in 1970. the period since India acceded to the WTO. The analysis in the study covers the post-1995 period. Although the critics. i. a move that could also affect the future prospects of the generic manufacturers.

As a result. the industry should b e looking at major gains. Supplying these drugs at prices that the population of the affected regions can afford has become a priority and several of the Indian firms have met considerable success. We have indicated that the penchant for patenting. R&D intensities of the firms have improved significantly. These efforts taken with a view to strengthening the technological sinews of the Indian generic industry should stand the industry in good stead a s it evolves strategies to meet the challenges posed by the post-TRIPS patent regime. which have opened the doors for collaboration with the pioneer producers. Both Ranbaxy and Dr Reddy¶s have developed i mproved generics and Novel Drug Delivery Systems (NDDS). in particular. involving the incrementally modified dru gs at that. This activi ty could be strengthened by the increased efforts made by the Government to participate i n the R&D activities involving the industry. the firms seem to be on course for major developments even on this front given the sharp increase in their patenting activity of late. India is fast emerging as th e hub for contract research and manufacturing with a number of pharmaceutical majors e stablishing joint ventures with the Indian generic producers. Improvements in the generic versions of proprietary drugs has become the established strength of the generic industry in India and with the prospects of faster growth of the market for generics in the near future. like the one existing in India. With the global community now focused on obtaining drugs at af fordable prices. it does appear increasingly probable that the pharmaceutical industries in the developing world. in particular. have i ncreased in the past few years. Ranbaxy and Dr Reddy¶s. One area where the Indian industry has got its act in place is the market for ARV drugs. These successful forays of the generic firms would have to be assessed in the context of its role in accessing medicines at affordable prices.of some of the leading firms. lxxi . would offer the m uch-needed solutions. Although Indian firms are yet to make a mark in the area of new drug discovery. Market approvals in both the US and the UK. The R&D efforts of the leading generic firms have borne considerable fru its.

by way of intr oducing a process patent regime cannot be replicated in a TRIPS-determined patent system. In the first instance. that the advantages that the Indian policy makers could provide to their nascent pharmaceutical industry in the 1970s. The study dwelled on the possible implications of a data exclusivity regime and tried to argue that its ramifications can be quite considerable on the Indian generic industry. Particularly affected in this process would be the ³neglected diseases´.3 of TRIPS Agreement nor Article 10 of the Paris Convention require that the WTO Member Countries need to introduce regimes of data lxxii . The discussion in this study has pointed to the fa ct that neither Article 39. The above-mentioned concerns arising from the successes of the Indian pharmaceutical industry has important policy lessons for the developing count ries. It is particularly important to point out that the positions taken by industry an association of the pharmaceutical majors. But at the same time.3 of the TRIPS Agreement.does focus on the bleak side of the industry. the R&D priorities are bein g increasingly set in tune with the global trends. which have been dependent on the industries. it is necessary to provide sufficient flexibilities in the p atent laws so that the domestic pharmaceutical industries can get a chance to develop. Introduction of a data exclusivity regime of the kind prev ailing in the United States and the European Union would be a death knell for the generic firms in India. however. is a violation of the multilateral system. The study also analysed the implications of introducing a data exclusivity regime in India while implementing Article 39. and this focus has increased since the firms have enhanced their level of collaboration with the foreign firms. The consequences of this threat faced by these industries would be felt by most sections of the populations in not only the countries that are home to these industries but also other countries. Besides. This Article requires WTO Member countries to provide protection to test an d other data when such data are submitted to the regulatory authorities for obtaining marketing approval. which has been endorsed by the United States Trade Administration through its annual Special 301 Reports. these countries can provide an enabling environment for the domestic industries by carefully designing provisions that relate to patentable subject matter and compulsory licences. It must be recognised.

 The breakthrough drugs typically come out of government -funded laboratories. The attempts to impose global standards of data exclusivity are aimed at ensuring that the pharmaceutical majors get protection for their products into perpetuity.  Indian Govt. should give more tax deductions for expenses related to research and development. lxxiii . and other regulatory bodies can play a significant role in determining the success of drug dis covery research in India. Therefore.exclusivity of the kind that the United States and the European Union provide. government funded research organizations have to expand their role by partnering with the private sector. RECCOMONDATIONS:  Pharmaceutical companies must focus on R&D so that they can get their product patent and capture a large market. thus maintaining their stranglehold over the markets for pharmaceutical products.  The govt.

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