Make no mistake, multinational drugmakers are very alive to markets such as India

After being the subject of heated debates in courts across the country for the past few years, issues related to patent policy have lately become mired in bureaucratic wrangling, too. So much so, the prime minister’s office (PMO) was recently forced to intervene and make sense of a few provisions of the existing laws that came into effect in 2005.

At the core of the debate is Section 3(d) of the Indian Patent Act that lays down certain criteria to become eligible for patenting of a compound.

The section stresses on significantly enhanced efficacy of a product over an existing one to rightfully claim patents. But numerous interpretations from lawyers have kept the issue unresolved and as a consequence, India is struggling to find a consensual legal structure to examine and approve patents.
In addition to Section 3(d), the PMO seems to be interested in settling the issue of patent linkages.

With reference to its anti-cancer drug Nexavar, Bayer had contended that once a patent is granted, the Drug Controller General of India should not approve registrations for any other company’s generic product. These are extremely complex issues and considering the self-pay nature of a dominant part of the Indian population, it will be very interesting to see what the government finally decides on this aspect.

More action was seen last week on a few other policies governing the Indian drug industry. The Department of Industrial Policy and Promotion (DIPP) under the commerce ministry came out, almost out of the blue, to raise concerns about the increasing share of multinational companies in the Indian pharmaceutical market.

The department fears drug prices will go on an upward spiral as multinational corporations take over leading Indian companies, thereby making essential medicines unaffordable for patients.

The department’s views are justified and steps to ensure that drugs prices remained within the reach of the common man will be welcome. But, in what it called is a discussion paper, the policy making body predicted that multinational companies may steer away from local needs and concentrate on exports.

That worry appears to be inflated for the plain reason that multinational companies are renewing their future focus on countries like India as their home markets are showing signs of shrinking rapidly. For example, Abbott, which took over Piramal Healthcare’s domestic market business, estimated that the Indian market will grow at over 20% annually and is therefore recalibrating its efforts towards India. It is the same story with GSK, Pfizer, Novartis and Eli Lilly.

Also, it will be naive to believe that multinational companies will jack up prices just because they are marketing more well-known brands. By nature, Indians are choosy and cost conscious and market forces will punish those that aspire to grow by charging high prices. Moreover, the government is itself equipped to handle any abnormal rise in drug prices.

India has been called the pill factory of the world and the department has raised concerns that if a compulsory license is to be granted in the wake of a pandemic, there should be enough eligible companies. It apprehends that if top companies are acquired, the government may not be able to depend on a company that fulfills the capacity and technology requirements in the face of an emergency need.

India has never invoked any compulsory licensing provision
until now. It appears to be a conjecture that Indian entities taken over by multinational companies will not respond to the calls of the government in times of a health emergency. Of course, the government has to be prepared with its policy framework and cannot afford to keep loose ends on the basis of assumptions.
It may therefore look at tightening the laws that make it mandatory for Indian units to contribute favorably when the government feels the need.

While Indian companies do have the ability and the inclination to cater to the local needs, most multinational companies have been seen to be more responsive to the local needs in the last few years. They have learnt their lessons after earning bad reputation internationally from pricing their anti-retroviral drugs very expensively many years ago.

Today, most executives from global companies are alive to the needs of the local population and have extended research into anti-infective and anti-malarial drugs. They perhaps understand better that global brand names are inconsequential if the local population is alienated. They have probably learnt their lessons from their Indian counterparts. For years, they looked down on generic drugs against their innovations, now they are embracing the same segment gleefully.

Pillman is an executive closely linked to the global pharma industry.