Big Pharma must mend its ways to succeed in India

Large multinational pharmaceutical companies are lately waking up to the realities of operating in India.

Close on the heels of the Intellectual Property Appellate Board halting Novartis’ Glivec patent application and linking it to threatening “public disorder” on account of its high prices, the Delhi High Court has dealt a body blow to German drug maker Bayer’s ambitions to monopolise the Indian market with its kidney cancer drug Nexavar.

The court not only dismissed Bayer’s petition in a very keenly watched court battle, but also imposed a penalty on the drug maker in a judgment extremely scathing in tone. Bayer has told the media it plans to take the case to the next stage and expressed disappointment at the latest outcome.

It will be a bold move by Bayer (being the innovator of the drug), but sentiments may be running high against the company, going by a spate of media reports that seem to be explicitly hailing the court’s verdict.

Challenging Bayer against its Indian patent rights was Cipla, which was also joined by voluntary health group Cancer Patients Aid Association and the generic drug makers’ lobby Indian Pharmaceutical Alliance.

It all erupted last November when Bayer sought to block the Drug Controller General of India from granting a license for Cipla’s generic version of the patented product and was granted an interim injunction by the Delhi High Court. That was an exceptional move as never before was an attempt made to prohibit the drug controller from reviewing applications for licences.

The court backed Bayer at that time, stopping the regulator from examining the application of Cipla. “This would lead to multiplicity of proceedings. Besides, it would lead to serious prejudice to the rights of the petitioner, who is the owner of the patent,” the judge noted.

Bayer had indicated in its petition that Cipla’s drug could be “spurious” as it did not hold a valid patent. Experts argued that Cipla’s attempt was to bring cheaper versions of expensive drugs in the Indian market and so going only by patent validity of a drug would deprive patients of cheap life-saving drugs.

That was a major sentimental issue that played against the German drug maker. Though Cipla also claimed to contest Nexavar on several patenting grounds, the pricing issue touched the hearts of many Indians.

Cipla’s arguments may not be entirely for charity though and there is definitely some profit element in busting multinational product patents. But unlike the very high prices of drugs marketed by multinational companies, Cipla knows where to balance the need and affordability.

Abnormal profits cannot be allowed when it comes to medicines. Affordability of drugs continues to be the bottom line for success in a country where government machinery has miserably failed to deliver basic health amenities. And so, it will be tougher to get products into India without being responsible about prices. That holds true for Indian companies too.  Multinational drug makers will definitely not like to hear this. They have been trying hard to link drug approval process with the patents held for a product. That position may not be entirely dismissed.

By becoming a member of the World Trade Organisation, India has agreed to adhere to the Trade Related Aspects of Intellectual Property Rights agreement, which makes it mandatory to honour patents held by a drug maker. The point multinational companies are failing to understand is that though India is a big country with a vast potential to grow, the country has very fragile health infrastructure and there is negligible insurance cover.

There are at least three examples where patents have been ruled out. Novartis has been losing out in its long battle for Glivec patents. The company had threatened to hold back investments and that retaliation was seen as a wrong way to register a protest against the Indian government. Roche too failed in its bid to get the patent rights on Tarceva and now Bayer has been prevented from getting patents.

These may not be healthy indicators for multinational companies to launch products in India. There is every possibility that multinational companies will not hurry into launching new products in India and blame it on an ambiguous patenting system.

The better and more reasonable option could be to introduce products in India at an Indian pricing. That way, the vast population here can afford drugs and multinational companies can make volume-based profits rather than value-based profits. It is for them to decide what works best.

Pillman is an executive closely linked to the global pharma industry