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Indian pharmaceutical industry is considered to be one of the largest and fast growing industries among the developing countries of this century. The industry is now much advanced from its initial stage and is currently the fourth largest producer of pharmaceuticals and thirteenth largest in terms of domestic consumption globally. This industry employs millions of people and ensures that essential medications are available at affordable prices to the plurality of the country's population. The industry has earned tremendous achievements in the complicated field of drug manufacturing and technology. Almost all types of drugs are manufactured now in India.

During 1947 Indian drug market was utilized by the multinational companies basically importing drugs manufactured in their country. This has been done mainly due to the Patent and Designs Act of 1911. The act provided product patent for all inventions in India, but the MNCs being the patentees were controlling the industry's market in India. Under these circumstances they began to import finished formulations of drugs into the local Indian markets. After independence in 1948, India promulgated her first industrial policy resolution including pharmaceutical industry as an essential industry in the country thereby bringing it under the central regulations. It was during these years that the National Chemical Laboratory at Pune and the Central Drug Research Institute at Lucknow were formed. Moreover, the inadequacy of indigenous technology hindered the production of modern drugs locally. Therefore the government invited FDI to enhance production. This created a situation wherein several major foreign subsidiaries were instituted in India within a short time span. Nevertheless, these foreign entities did not bring major investments to the country to enhance productivity instead they started importing bulk drugs processing it to formulations. 1947 to 1957 During this period India was proceeding with the western type patent legislation and acknowledged product patents along with process patent on drugs. A major portion of the pharmaceutical patents in the country was vested with MNCs outside India. They were distinctly benefited by the patent law, technology, financial resources and their brand names which helped them to clearly establish their monopoly in Indian markets resulting in a situation where drug prices were so high in India when compared to the rest of the world. It was in 1954 that the government established Hindustan Antibiotic Ltd. which is the first public sector drug manufacturing company in India. Later, government established Indian Drugs and Pharmaceutical Limited. These ventures did help to increase drug production and improve manpower, but the size of the national sector continued to remain very small. 1970-1985 Due to some very important strategies initiated by the government the pharmaceutical industry had undergone drastic changes during this time. Furthermore, the introduction of Drug Price

Control Order of 1970 was a major step to slow down the multinational control over the industry and helped to boost a self-reliant traditional market. In addition the Drug Policy of 1978 enhanced the availability of drugs at a relatively reasonable price. Even though the bill was proposed in parliament in 1967 the Act was enforced only in 1972. The Act did not allow product patent for chemicals, food and medicine. It provided process patents for 5 to 7 years and had helped the country to be self-sufficient in the manufacturing of basic drugs. Under these circumstances researches were done resulting in the development of new processes for numerous drugs and many manufacturing companies were established in India during that period. Besides, the DPCO limited the cost on drugs and was able to ensure that the lifesaving drugs were readily available in Indian market at affordable prices. During the 1980s due to the introduction of some important industrial and trade policies by the government, India had become a major pharmaceutical producer meeting the country's domestic needs. Thereafter the domestic sector in the country had taken control of a considerable portion of the local market. Moreover it had become necessary that the indigenous drugs and pharmaceutical industry required reorientations to be more equipped with the situations arising out of the benefits of growing economy. Under these circumstances the government revised the Drug Policy and DCPO in 1986 and 1987 respectively. Later some important policy initiatives were declared in the Drug Policy of 1984. India signed the general agreement on tariffs and trade on 1994 and became a party to the agreement on TRIPs joining the WTO. India also was a signatory to the Uruguay Round of General Agreement of Tariff and Trade (GATT) during that period. This created a situation wherein India had to bring its patent laws in compliance with the TRIPs agreement. Later India had to make several amendments and was undergoing a transition period for several years for a complete compliance of TRIPs. The IP legal regime over Indian pharmaceutical industry In January 1 2005 India in compliance with the TRIPs agreement has made a major amendment in Indian patent laws allowing product patents. This has had an important impact on the industry mainly on the pharmaceutical products and chemicals. This gave rise to serious issues effecting people's life and right of patent holders. After the amendment the industry had to face major competitions from multinational companies who manufactured patented drugs. Conventional branded generics which dominated the market had to face huge competitions from the multinational companies who produced patented drugs. A clause in the TRIPs agreement permits the governments to exercise control over patents and provide indispensable drugs to the poor in certain circumstances. The government had introduced adequate legal provision to make sure the availability of medicines at a reasonable price through compulsory licenses. India's provisions for the compulsory licensing of drugs have been considered relatively broad when compared to most of the world's patent systems.[1] While the government was making every effort to comply with the TRIPs the availability of lifesaving drugs at a reasonable price in the local domestic market was even high. Furthermore, the MNCs have started their campaign to protect their rights from the emerging situations.

The impact of TRIPS agreement in Indian pharma industry basically involves two questions. (a) The effect of IPR legislation under this agreement on public health. (b) Its effect on the industry and the economy of the country. The first question may give rise to a situation wherein the patent drugs would increase the cost of medicines in local markets and would lead to the non-availability of essential drugs to the common public and could damage public health. A counter argument would suggest that this may lead to encouraging research and production of new drugs through international investment. The industry being highly fragmented involving numerous small investors who were very much depended on making generic drugs were more concerned about having the required capital and technology to support an invention of a new patented drug by themselves. As a result they apprehended that the market will divide in favor of foreign multinationals or major companies within the country. But the larger companies in the country were in support of the patent hoping that it will bring more foreign investment and stimulate joint activities. This was supported by the fact that the larger companies started initiating several R&D proceedings and have already started to attain patents. Under the present scenario within TRIPS, whether its an MNC or an Indian company, success or benefit depends on their continuous efforts and initiatives put forth in the field of developing innovative products and introducing new technologies. India's new patent rule allows for both post opposition and pre-opposition procedures. Pre-grant opposition may be based on virtually all patentability criteria that can be challenged, including the lack of novelty, inventive step, utility, non-eligible subject matter, the failure to disclose the source of biological material used for the invention, and inventions which are considered traditional knowledge.[2] However, most MNCs consider this as a lengthy procedure in patent prosecution process which leads to uncertain outcomes. On one side Indian generic pharmaceutical manufacturers regarded pre-grant opposition to the new Patent's Act helps to prevent unwanted litigation and was using the procedure more frequently. During the March 2005 debates of the 2005 Patent Amendments in the Indian Parliament, the issues regarding patentability of micro-organisms and the definition of 'pharmaceutical substance' were raised.[3] The Commerce and Industry Minister referred these issues to a technical expert group (TEG) for detailed examination.[4] The TEG issued its report in December 2006 and concluded that: (1) it would not be TRIPS-compliant to limit granting of patents for pharmaceutical substances to new chemical entities (NCEs) only; and (2) excluding micro-organisms per se from patent protection would be in violation of the TRIPS Agreement.[5] With regards to NCEs, the report stressed that every effort must be made to provide drugs at affordable prices to the people of India and to prevent the grant of frivolous patents and 'evergreening'.[6] The TEG defined 'ever-greening' as 'an extension of a patent monopoly, achieved by executing trivial and insignificant changes to an already existing patented product' [7] Evergreening' was to be distinguished from 'incremental innovation', which was 'encouraged by the Indian patent regime', and defined as 'sequential developments that build on the original patented product'[8].

In response to the report, public health groups voiced unease that the recommendations would encourage frivolous patents and threaten access to medicines [9]. On the other hand, many of the MNCs found that the report vindicated many of their concerns. However, the report was later withdrawn amid accusations that it had been plagiarized [10].


In 2006 the Swiss pharmaceutical company Novartis AG filed a complaint in Madras High Court seeking an order against the rejection of its patent application under s3(d) for its anti-cancer drug Glivec. The petition also challenged the constitutionality of s3(d) in breach of India's TRIPS obligations. The Madras High Court dealt with the issue of constitutionality and the issue related to the question of patentability was referred to the Intellectual Property Appellate Board. The Madras High Court ruled against Novartis holding that: (1) s3(d) is not unconstitutional; and (2) it did not have jurisdiction over the TRIPS issue, and the WTO would have to decide whether s3(d) is TRIPS-compliant [11]. The decision has precipitated a favorable reaction from India's generic pharmaceutical manufacturers and the world's public health community who feel that if the judgment had gone the other way, there would have been a dearth of affordable drugs in other nations [12]. However, Novartis have now moved the Supreme Court for refusing patent protection for its new drug Glivec following the footsteps of Roche. [13] A panoramic view of Indian generic pharmaceutical industry reviles the changes through which it has emerged in the past years after the 2005 Patent Amendments and the pharmaceutical patent protections. As a result of that many of the Indian pharmaceutical industries have reinforced the IP legal system and have been constantly increasing their R&D efforts investing in new innovations. While 10 years ago Indian companies invested only about 1% of their revenue on research and development, many of those companies are now contributing much more capital to this goal, typically spending 6-8% of their turnover on R&D [14]. MNCs initially had been reluctant to set up their company in India inter alia due to the lack of patent protection. The present scenario adapted by the government in granting strong patent protection maybe one of the factors that changed the prior reluctance. Furthermore, the presence of MNCs in India with their research and technologies is growing day by day. Conclusion The commencement of pharmaceutical product patent recognition in 2005 has brought tremendous changes in the pharmaceutical industry in India. From the early stages of the postpatent period the industry had a long way to run up to the present stage. Research and development starting from reverse engineering paved the way to the development of new novel drugs and discovery of new research and technologies which are highly essential to safeguard the general health of the public, especially in a developing country like India. Presently the Indian companies are trying to put a hand on the high profile generic market of the developed countries taking advantage of the favorable position accorded by the intensity in which several drugs in the US drug markets going off patent. The market has become the most

remunerative markets for the Indian companies at present. The industrys US FDI compliant also creates a favorable circumstance in the arena of contract manufacturing and R&D among other things which will certainly lead to tremendous growth and new technology innovations within the industry.

Sources: [1] Mueller, supra note 4, at 107. [2] 5 India Patents Act 1970 (2005) ss25(1)(a-k). [3] RA Mashelkar, Report of the Technical Expert Group on Patent Law Issues, s1.1, Dec 06. [4] Ibid. [5] Ibid at ss5.16; 5.28 (emphasis in original). [6] Ibid at s5.16. [7] Ibid at s5.10. [8] Ibid. [9] [10] ism_row/articleshow/1653926.cms [11] [12] ecaa558b34ed0fa&ei=5123&partner=BREITBART [13] Novartis challenges Glivec patent decision in Indian Supreme Court [14] Mueller, supra note 4,at 7 nn 11-12.