NATCO P H A RM A L T D .

V.
BAYER C O R P AT I O N
EFFY SKARIA
PRESENTED BY : ST
ROLL NO. 54
10TH BBA LLB (B)
INTRODUCTION
• INDIA BECAME A SIGNATORY TO THE TRIPS AGREEMENT IN 1995 , FOLLOWED BY
THE INTRODUCTION OF PATENTS (AMENDMENT) BILL, 2005 IN THE PARLIAMENT.

• COMPULSORY LICENSE – A CONCEPT UNDER TRIPS AGREEMENT.

• PHARMACEUTICAL INDUSTRY AND IPR DEBATES HAVE BEEN PREVAILING FOR A
LONG TIME.

• WHETHER GRANTING OF CL WOULD RESULT INTO THE WEAKENING OF IPR

PROTECTION IN INDIA? OR; WHETHER IT SHOULD BE GRANTED WITH THE
BENEFIT FOR PUBLIC IN MIND?
BACKDROP OF THE CASE
• FIRST CASE OF COMPULSORY LICENSE IN INDIA – PHARMACEUTICAL FIELD OF
DISCIPLINE IN 2012

• ELEMENTS OF THE CASE:

• PATENTEE: BAYER CORPORATION.
• APPLICANT: NATCO PHARMACEUTICAL LTD.
• DRUG: NEXAVAR ( ORIGINAL DRUG - ‘SORAFENIB’)
• TIMELINE OF THE CASE

• 1990: BAYER CORP. INVENTED A DRUG NAMED ‘SOFRANEIB TOSYLATE’.

• 1999: BAYER HAD ORIGINALLY APPLIED FOR THE PATENT IN THE UNITED STATES.

• 2000: BAYER FILED A PCT INTERNATIONAL APPLICATION. (PATENT COOPERATION TREATY)

• 2005: BAYER LAUNCHED THE DRUG, WITH BRAND NAME ‘NEXAVAR’.

• 2008 (MARCH): FOR BAYER, PATENT WAS GRANTED IN INDIA FOR THE DRUG - STARTED IMPORTING
AND SELLING NEXAVAR IN INDIA. - A MONTH’S DOSAGE OF THE DRUG = US$ 5,608.4 (APPROX. RS.
2.80 LAKH) - NATCO APPROACHED BAYER FOR A VOLUNTARY LICENSE TO PRODUCE AND SELL THE
DRUG CITING THE HIGH RATES BEING CHARGED BY BAYER, NATCO PROPOSED TO SELL THE DRUG
AT A PRICE LOWER THAN US$ 200 (APPX RS.8,800) - REQUEST WAS DENIED BY BAYER.
• 2010: M/S CIPLA, ANOTHER DRUG MANUFACTURER, STARTS SELLING A GENERIC VERSION OF NEXAVAR

• 2011 (JULY): NATCO APPLIED FOR A COMPULSORY LICENSE TO THE CONTROLLER OF PATENTS TO
MANUFACTURE AND SELL A GENERIC VERSION OF NEXAVAR UNDER SECTION 84(1) OF THE INDIAN
PATENT ACT, 1970 (AMENDED IN 2005).

• 2012 (MARCH): FIRST COMPULSORY LICENSE GRANTED IN INDIA PERMITTING NATCO TO PRODUCE
AND SELL A GENERIC VERSION OF NEXAVAR.

• 2012: BAYER APPEALED AGAINST THE CONTROLLERS DECISION TO THE INTELLECTUAL PROPERTY
APPELLATE BOARD (IPAB) IN THE BOMBAY HIGH COURT WITH THE CONTENTION THAT THE ORDER
WEAKENS THE INTERNATIONAL PATENT SYSTEM AND ENDANGERS RESEARCH.

• THE CONTROLLER GRANTED THE LICENSE TO NATCO PHARMA ON 9TH MARCH, 2012 AGAINST WHICH
BAYER CORPORATION MOVED TO INTELLECTUAL PROPERTY APPELLATE BOARD (IPAB) WITH AN
APPEAL, THIS APPEAL WAS REJECTED BY IPAB.
ISSUES
1. WHETHER BAYER CORPORATION FAILED TO FULFIL THE REASONABLE
REQUIREMENTS OF THE PUBLIC WITH REGARD TO THE DRUG?

2. WHETHER NEXAVAR (THE DRUG) WAS NOT AVAILABLE TO THE PUBLIC AT A

REASONABLY AFFORDABLE PRICE?

3. WHETHER BAYER HAD NOT WORKED ITS DRUG (NEXAVAR) IN THE TERRITORY OF
INDIA?
COMPULSORY LICENSING
• MECHANISMS NEEDED TO PROTECT IP + ADDRESS NEEDS OF POOR.

• TYPES OF LICENSING –
1. VOLUNTARY LICENSE
2. COMPULSORY LICENSE

• ENABLES GOVERNMENT TO BALANCE RIGHTS OF PATENT HOLDER , ENSURING:

WORKING OF PATENDS
AVAILABILITY OF PRODUCTS AT REASONABLE PRICE
PROMOTION AND DISSEMINATION OF TECHNOLOGICAL INVENTION; AND
PROTECTION OF PUBLIC HEALTH AND NUTRTION.
LEGAL PROVISIONS
• INTERNATIONAL PROVISIONS
• ARTICLE 54 (2) – PARIS CONVENTION (1883)
• ARTICLE 30 & 31 – TRIPS AGREEMENT (1995)

• INDIAN PROVISIONS
• CHAPTER XVI (SECTIONS 82-98) – INDIAN PATENT ACT, 1970 (AMENDED IN 2005)
( SEC. 84(1))
ANALYSIS OF THE CASE
• ISSUE 1: FAILURE TO FULFIL REASONABLE REQUIREMENTS OF PUBLIC WITH
REGARD TO THE DRUG:

1. THE CONTENTION OF NOT HAVING SUFFICIENT TIME TO MAKE THE DRUG AVAILABLE WAS
REJECTED.

2. LITTLE EFFORT TO SELL THE DRUG IN INDIA.

3. SALES OF THE DRUG IN INDIA ACCOUNTED LESS THAN 1.6% OF ITS TOTAL GLOBAL SALES
WORLDWIDE.
• ISSUE 2: NEXAVAR WAS NOT AVAILABLE TO THE PUBLIC AT A REASONABLY
AFFORDABLE PRICE:

1. PRICE OF THE DRUG - $5,608/MONTH.

2. BAYER’S DEFENCE – HUGE R&D COSTS INVOLVED IN THE DRUG’S DEVELOPMENT

3. NATCO COUNTERED THE ARGUMENT – REASONABLY AFFORDABLE PRICE TO BE SEEN

FROM PUBLIC’S PERSPECTIVE – NOT PATENTEE’S.
• ISSUE 3: BAYER HAS NOT WORKED ITS DRUG, NEXAVAR, IN THE TERRITORY OF
INDIA:

1. “WORKED IN THE TERRITORY OF INDIA” – NO EXPLICIT DEFINITION IN THE INDIAN

PATENT ACT.

2. AMENDMENT WAS NOT IN ACCORDANCE WITH TRIPS.

3. BAYER’S INTERPRETATION – “ENSURING AN ADEQUATE SUPPLY TO INDIAN MARKET”

4. NATCO + PATENT CONTROLLER’S VIEW -

WORKING PRECLUDES IMPORTATION OF
DRUGS – TO BE LOCALLY MANUFACTURED.
DECISION
• COMPULSORY LICENSE WAS GRANTED TO NATCO PHARMA WITH CERTAIN
CONDITIONS IN RELATION TO SECTION 90 OF THE PATENTS ACT.

• CONDITIONS:
1. NO SUB-LICENSING
2. DRUG TO BE SOLD ONLY FOR TREATMENT OF LIVER AND RENAL CANCER
3. ROYALTY TO BE PAID @ 6% (LATER INCREASED TO 7%)
4. PRICE SET AT RS. 84 PER TABLET, THAT IS, RS. 8800/- PER MONTH
5. BAYER TO PROVIDE DRUG FOR FREE TO AT LEAST 600 NEEDY PATIENTS PER YEAR
6. CL IS NOT ASSIGNABLE + NON-EXCLUSIVE – NO RIGHT TO IMPORT
7. NO RIGHT FOR REPRESENTATION; PUBLIC OR PRIVATE
8. BAYER FREE OF LIABILITY FOR NATCO.
CONCLUSION
• THE INDIAN GOVERNMENT WOULD GRANT MORE COMPULSORY LICENSES IN
ACCORDANCE TO THE RULING BY INTELLECTUAL PROPERTY APPELLATE BOARD (IPAB). 

•  HERCPTIN, SPRYCEL AND IXEMPRA IN LINE FOR GRANT OF CL.

• AROSE A POSSIBILITY OF FALL IN THE PRICES AS MORE GENERIC VERSIONS WOULD NOW
BE AVAILABLE.

• THE COMPANIES THAT INVENTS DRUGS WOULD FEEL INSECURE TO INVEST WITHIN INDIA.
• THE SOLUTION COULD BE THAT THE GOVERNMENT ALLOWS BOTH THE GENERIC VERSION
AND ORIGINAL VERSION BE SOLD IN THE MARKET.

• NATCO PHARMA V BAYER CORPORATION BEING THE FIRST CASE OF COMPULSORY

LICENSE IN INDIA OPENED DOORS FOR MANY DEBATES.