Breakingviews - India should take U.S. pharma complaints seriously

Tue Jun 25, 2013 1:10pm IST

Various medicine pills in their original packaging are seen in Ljubljana February 14, 2012. REUTERS/Srdjan Zivulovic/Files

Various medicine pills in their original packaging are seen in Ljubljana February 14, 2012.

Credit: Reuters/Srdjan Zivulovic/Files

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own)

By Katrina Hamlin

HONG KONG (Reuters Breakingviews) - U.S. drug giants are once again pushing for stronger patent protection in India. Their arguments may be transparently self-serving - but there are still good reasons for India to take note.

Recent rulings by India's Supreme Court have allowed generic drug makers to make and sell versions of branded drugs invented by the likes of Pfizer (PFE.N), Novartis (NOVN.VX) and Bayer (BAYGn.DE), even though they remain under patent in other countries. For now, those decisions are in India's interest. Only 25 percent of the country's 1.2 billion people have health insurance and there is little public healthcare. Generic drugs are cheaper and make medication more affordable. Moreover, domestic pharmaceutical companies are less dependent than Western rivals on developing new medications.

Big pharma companies are understandably alarmed. They have set their sights on a lucrative future in India. The country spent $14.3 billion on pharmaceuticals in 2011 according to IMS Health, and Reuters reports that the market is growing as quickly as 14 percent a year.

Contagion is another threat: the worry is that India's cavalier approach to intellectual property may catch on in other parts of the developing world, the industry's main source of growth. Argentina and the Philippines have taken steps to restrict patents, while Thailand and Brazil already use compulsory licensing. Pharma companies are reluctant to reduce prices in developing countries for fear of encouraging a grey market in drugs. Doing so could also make it harder to charge higher prices in other markets.

All this comes as the industry is under pressure to fund more research and development to invent the next generation of drugs. The product pipeline is drying up - researcher EvaluatePharma estimates that drugs with combined annual sales of $225 billion will see patents expire between 2011 and 2016.

India's recent rulings could also backfire. If their concerns are not addressed, companies could choose to skip the country the next time a new drug is brought to market. In the long run, greater protection of intellectual property would also benefit the domestic industry. India's top spenders on R&D invested 35.1 percent more in 2012 than in the previous year, according to a recent EU survey. Half of these were pharma companies.

India's health needs are undeniably critical, but compromising patent protection is not the cure.

CONTEXT NEWS

- U.S. Secretary of State John Kerry arrived in India on June 23 to co-chair the 4th India-US Strategic Dialogue.

- A coalition of U.S. lawmakers and business groups outlined concerns about Indian policies as a threat to American exports, jobs and innovation in a letter to President Barack Obama on June 18. Among the business groups were the Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Association. On June 14, the top Democrat and Republican on the Senate Finance Committee urged that Kerry raise trade concerns on his visit.

- The Supreme Court on May 1 dismissed attempts by Swiss drugmaker Novartis to secure patent protection for a form of the cancer drug Glevic. The court ruled that the drug did not warrant a new patent as it was not sufficiently different from a previous version.

- An Indian patent appeals board upheld on March 4 a decision to issue a compulsory license allowing a domestic company to sell a generic version of German company Bayer's cancer drug Nexavar. The court based the ruling on the WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which lets countries issue such compulsory licenses providing certain conditions are met.

- India's patent office revoked a patent for U.S. group Pfizer's cancer drug Sutent in September 2012.

- Emerging markets accounted for around 20 percent of global spending on medicines in 2011, and that figure could jump to 30 percent by 2016, according to IMS Health.

(Editing by Peter Thal Larsen and Robyn Mak)

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