(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)
By Jeff Glekin
MUMBAI, March 13 (Reuters Breakingviews) - India has joined
Thailand and Brazil in granting a licence to a local generic
drug maker at the expense of a global player. The likes of Bayer
may protest but a compromise -- with multinationals
obliged to take a price hit in return for continued patent
protection -- is probable.
Bayer may not lose too much sleep over losing 200 customers
in India -- even if they were paying a whopping $5,600 per month
for its cancer treatment, Nexavar. But the precedent that
India's patent office has set in granting Natco, the
local generic maker, the right to breach Bayer's patent could
give big pharma players a serious headache. If the ruling goes
unaltered, Bayer will earn a 6 percent royalty on a drug sold
for $176 a month.
It is the first time India has used its 2005 Patent Act to
this effect. Other cases are pending, though, and this ruling
could open other avenues for India's vibrant generic makers such
Dr Reddy's and Cipla.
Multinationals -- not just Bayer -- might decide that the
downsides in India, and other emerging markets, are too high to
launch expensive new drugs. In India, after all, local generic
makers cannot apply to force the patent open unless the drug is
already marketed in the country. But will multinationals really
want to cut themselves off from such markets? And in fact,
India's Patent Act can only be used after the drug has been
marketed locally for three years. That still gives big pharma
some time to sell at higher price points.
It's probable that patent-holding pharma multinationals will
continue to operate in India. But in-patent drug prices may,
eventually, drop to stave off compulsory revocations of
protection. Meanwhile gains made on higher volumes will
compensate for lower pricing. Besides, as emerging market pharma
companies start to develop valuable intellectual property
themselves, they are likely to be more careful when trying to
force open other firms' patents.
Big pharma needs to build a new compact with emerging
markets. With imaginative, strategic, thinking both sides could
benefit. The quality and quantity of end-user health services
should also improve.
-- Germany's Bayer has lost a landmark ruling in India,
forcing it to grant a licence for Nexavar, its cancer treatment,
to Natco Pharma, a local generic drug producer, Reuters reported
on March 12.
-- The Indian Patent Office issued its first ever compulsory
licence to Natco in a move that could end the German drug
maker's Indian monopoly over the kidney and liver cancer
treatment. In exchange for the licence, Natco must pay Bayer a 6
percent royalty on its net sales and must sell the drug for $176
a month. Bayer currently charges around $5,600 a month of the
drug. Natco's drug will be for use only in India, the decision
said. Bayer has said it is considering an appeal.
-- Fewer than 200 Indians used the drug in 2011, according
to the New York Times.
-- Reuters: Bayer loses landmark Indian drug case over
-- For previous columns by the author, Reuters customers can
(Editing by Robert Cole and David Evans)