Washington Times-11.01.

2006 A brave new world Indian drug industry

By Indrajit Basu
UPI Business Correspondent

Calcutta, India, Jan. 11 (UPI) -- For India's over $5 billion drug industry, consisting of 24,000 large, small, and very-small manufacturers, about 500,000 chemists, and over one billion plus people using medicines, the year 2005 could be a momentous year that could change the face of the drug industry.

After a gap of three decades India has returned to a new product patent protection regime to comply with the Trade Related Intellectual Property (TRIPS) agreement of the WTO that India signed in 1994. Under this agreement India is committed to adopt a product patent for food and medicines from 2005 that, from the drugs industry's perspective, will not only allow multinationals drug makers to launch new products and manufacture them exclusively in India, but will also force the local players to withdraw drug clones from the market. Among other things, the new law defined what a patent is, which means that now the country would recognizes intellectual property rights relating to inventions, grants a patent for any invention, and gives an inventor the right for a limited time to stop others from making, using or selling the invention without permission. Between 1970 and 1994 India had only process patents for food and the drug industry. The local drug companies used this to their advantage for any drug discovered elsewhere in the world. An Indian drug company for instance, could copy any drug as long as it found a new process to make it, and over the years as local scientists became masters in process technologies, every major blockbuster drug in the world ended up in

at least 10 brands in India. The local industry gave this practice the fancy name of "reverse engineering", but to the global drug industry, it was a simple practice of copying. Then things changed in 1994 when India signed the TRIPS agreement, which mandated India to adopt a product patent regime for food and medicines but was granted a 10-year grace period to do so. Beginning Jan. 1, 1995, drug companies were allowed to apply for product patents and from 1999 they were allowed exclusive marketing rights for patented medicines. As hoped, the patent law includes some vital safeguards, but as feared, it is vague on some critical issues. While the industry is largely glad with a transition is finally taking place; some say that the new laws -although still an ordinance called the Patents (Amendment) Ordinance, 2004 -- is a balancing act, not as protective as the Indian pharmaceuticals industry wanted it to be, or as carefully formulated as the multinational drug companies would have liked it to be. "Pharmaceutical product patents are advantageous to multinational companies like Pfizer, Glaxo, Novartis and research-based Indian drug companies such as Ranbaxy, Dr. Reddy's and Wockhardt," said Mustafa Safiyuddin of attorney firm DSK Legal that specializes in patent laws. "However, the grant of such product patents may be detrimental to small indigenous generic drug manufacturers." According to the Indian Pharmaceutical Alliance (the main local industry lobby) India's older patent regime -that recognized only a process patent -- struck a proper balance between the property of a patentee and the public interest involved in cheap availability of medicines. The omission of public interest litigation in the new laws kill that balance and leaves scope for a runaway price rise on certain crucial medicines like the AIDS drugs. Another flaw in the new law is that it proposes to do away with an effective pre-grant opposition procedure that allows a local company to dispute a patent before it is granted. This denial, say local industry sources, will lead to the grant of patents to most of the 6,000 odd applicants -- who have applied for patents in India from 1995 to 2004 -- and expose local manufacturers to patent infringement charges. This is one reason why Krishna Sarma, president of Corporate Law Group, which represents the powerful MNC drug lobby is happy with the ordinance. She has been campaigning vigorously against pre-grant opposition. Yet another bone of contention is that "patentability" is still open to interpretation under the new law. Although IPA say it has won part of the battle against "evergreening" or the patenting of incremental innovations, legal experts say that patentability remains a grey area. The new law has introduced a new term called the "mere new use" rather than just "new use", which, say legal pundits, allows an applicant to claim a patent by just adding a new chemical reactant instead of inventing new chemical entities -- NCE in drug industry parlance -that is, completely new drugs. The overwhelming majority of industry, as represented by the Indian Drug Manufacturers Association and the Bulk Drug Manufacturers Association, wanted the scope of patentability to be restricted to new chemical entities.

They argued the global majors have, over the past decade, been resorting to "evergreening" -- making variations on the same drug through the use of different salts and derivatives -- to extend the patent life beyond the original 20 years. This delays the entry of generics into the market inordinately -- and generics are Indian drug industry's strength. Small wonder then that local industry fears that the new law will result in a series of litigations. "The Indian courts will have to fill in the gaps left by the law," said Kiran Mazumdar Shaw, president of the Association of Biotechnology Led Enterprises adding that the new laws are full of gaps open to interpretation.