MNC lobby upset over Novartis patent verdict

By ZRG | Updated: Apr 02, 2013, 16:04 PM IST

Rohit Joshi and Ankita Chakrabarty/Zee Research Group

The Supreme Court decision on Monday denying Swiss drug major Novartis the right to patent its cancer drug in India has led to celebration among the Indian generic makers while expectedly there is disappointment in the MNC drug camp in India.

The sentiment is reflected amply in the stock market movement for the respective stocks of domestic and MNC pharmaceutical companies. But the verdict, which means good news for consumers in India, has also led to call for a reexamination of the patent regime in the country.

While Novartis India stock fell sharply on this news and touched 52 week low levels of Rs 558.1, shares of home bred Natco Pharma and Cipla registered gains of 5.4 per cent and 1.3 per cent respectively.

The SC judgment caps about seven year of tussle launched by Novartis seeking patent cover for its cancer medicine Glivec (imatinib mesylate). The drug was earlier denied patent by the Indian patent office on the grounds that the drug was not a new molecule but an amended version of a known compound (imatinib).

The highest judicial body examined two issues in the case: one being entitlement for the patent on the modified product, and the other issue was related to the validity of Section 3(d) which has been challenged by Novartis. Section 3(d) of the Patent Amendment Act of 2005 bars patents for incremental improvements on existing drugs unless these offer "increased therapeutic efficacy".

The apex court on Monday stated that Glivec failed test for innovation under Patent Act. It also said that “repetitive patents" were not permissible. Each country has a specific patent law. US, China, Russia allow multiple patents. However, Indian Patent Act allows patent only on original innovation, it does not guarantee on multiple patents.

P Bhaskara Narayana, director at Natco Pharma, opined, “We welcome this judgment. The judgement has sought to distinguish between a genuine invention and a so called “invention” which does not increase the efficacy of the drug. The former is eligible for a patent while the later is not.”

“ The consumers stand benefitted as they pay a lesser price for a generic version (an equivalent of the invention) of the drug while the generic drug makers get an opportunity to produce and market a generic version of the drug, thus throwing open a large market,” he added.

In sync with Narayana, Ranjit Kapadia, an analyst tracking the sector at Centrum Broking, said, “The SC has turned down the plea according to the Section 3(d) of the Indian Patent Act. Indian Patent Act recognizes the original patent to NCE and not to any other additional innovation. Multiple patents are not allowable under the Indian Patent Act.”

Who would the judgment benefit most? “This will benefit only those who have come up with a generic and substituted with a lower price. In the current case, Cipla and Natco Pharma are likely to benefit,” he added. The court also upheld the opposition to the patent by Natco Pharma Ltd, Cipla Ltd, Ranbaxy Laboratories Ltd and Hetero Drugs Ltd.

Novartis` anti-blood cancer drug Glivec`s monthly treatment package was priced at 120,000 rupees where as generic versions of the drug marketed by Indian companies came for 8,000-10,000 rupees.

However, Kewal Handa, former managing director of Pfizer India, called for introspection. “As against celebration there is a need for introspection. The issue of patentability and incremental innovation needs to be reexamined by the government. Globally out of 7- 10 patented products that are launched; seven to eight belong to the category of incremental innovation. Actually, we are restricting all patented products in India to fall into this category of incremental innovation.”

“It is not good for the country which wants to project itself as a creative, innovative and developed one. We need to respect and recognize the word ‘patent’. The loss of not building an innovative culture is far more than the price reduction of the products,” he warned.

On what would be the implication on other patent cases involving drug MNCs in India, Handa argued, “Every patent in India is getting challenged. This shows that India as a country is not willing to recognize the patent regime. There is a need to differentiate between patentability and affordability first.”

Would thus there be a real danger to pharma FDI inflow into India? Narayana at Natco, said, “At the out-set we do not believe that any MNC can afford to ignore a large market such as India.”