Novartis Fights India for Cancer Pill PatentRumman Ahmed; Sharma, Amol. Wall Street Journal (Online) [New York, N.Y] 19 Aug 2012: n/a.Turn on hit highlighting for speaking browsersFull Text

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NEW DELHI--Novartis AG goes to India's Supreme Court on Wednesday to seek patent protection for its blockbuster cancer drug Glivec in a case that could deliver far-reaching ramifications for multinational pharmaceutical companies operating in India.

The Swiss company's legal fight, which began after India rejected its application for a patent six years ago, is the most prominent of several high-stakes drug-patent battles that will determine how much protection foreign companies can get from Indian competitors that make lower-cost, generic versions of their products.

Foreign producers see great potential in India's pharmaceutical sector, which is expected to grow to $74 billion by 2020 from $11 billion last year, according to PricewaterhouseCoopers LLP. But intellectual-property disputes are among several factors clouding multinational drug companies' prospects. Foreign firms were dismayed when India's patent office earlier this year ordered Germany's Bayer AG to issue a license allowing an Indian generics company to copy its patented cancer drug Nexavar and market it at one-thirtieth the cost. Bayer has appealed the ruling and India's Intellectual Property Appellate Board is scheduled to hear the case this week.

Foreign companies are uneasy about India's shifting approach to foreign investment. In 2002, the government allowed foreign drug firms to own 100% of ventures in India. The government, in a shift away from that liberal policy, is now scrutinizing all cross-border deals and is considering forcing companies that acquire Indian assets to meet certain conditions. These may include maintaining a certain level of local research-and-development spending and promising to keep low-price drugs on the market.

The moves are in response to several acquisitions by foreign drug makers of domestic pharmaceutical firms in recent years, which have prompted activists and others to worry that the foreign takeovers could lead to higher drug prices. India also is considering a proposal to have its antitrust regulator review all major pharmaceutical mergers.

Regardless of the merits of the concerns, the government's inconsistent policies "send the wrong signal to the foreign investors about unpredictability of the investment climate in India, the impact of which could be felt even beyond the pharmaceutical sector of the country," said Tapan Ray, director

general of the Organization of Pharmaceutical Producers of India, a trade group that represents major multinational drug companies.

Meanwhile, India's government is considering changes in drug-price regulation that would increase the number of medicines covered by price caps from 74 to 348--a level not seen since 1979. This would reflect a major unwinding of liberalization policies undertaken since the 1990s.

Critics say the rising barriers to foreign firms come at a bad time, when India is desperate to attract new foreign investment to boost growth, lift its sagging currency and create high-paying jobs. But backers of the government's moves, including health activists, say India is simply trying to ensure that its generic-drug companies can continue making life-saving drugs available to its poor at affordable prices.

The Novartis case dates to 2006, when India rejected the company's patent application for Glivec, developed in the 1990s and considered a major breakthrough in the treatment of certain cancers, such as chronic myeloid leukemia and gastrointestinal tumors. The drug is marketed in the U.S. as Gleevec. India argued the latest version of the drug isn't a significant enough improvement to warrant patent protection under its laws. Novartis sued India, saying the move violates India's World Trade Organization obligations.

To protect public-health interests, the Indian Parliament added language into the 2005 legislation to guard against "evergreening," the tactic that critics say pharmaceutical firms employ to extend patent protections on drugs by reformulating them or changing the delivery system. In doing so, the critics say, big drug companies delay the arrival on the market of similar, cheaper nonbranded drugs.

India's new law applied a stricter standard for granting patents--forcing companies to prove new versions of their products were therapeutically more beneficial than earlier versions on which patents had expired. It is under this section of the patent law that the patent authority and the Indian courts have thus far refused to patent Glivec.

Novartis says India is discouraging innovation by weakening patents--reducing the incentive for big companies to invest time and money to discover new drugs.

"We are seeking clarity on the application of patent law in India," said Novartis India's managing director, Ranjit Shahani. "Knowing we can rely on patents in India benefits government, industry and patients because research-based organizations will know if investing in the development of better medicines for India is a viable long-term option," he added.

Novartis's critics, including Médecins Sans Frontières [Doctors Without Borders], say that if the company prevails, it could set a legal precedent that allows pharmaceutical giants to patent a range of drugs in India that are now available from generic producers, including HIV medicines. That would demolish a thriving low-cost industry and lead to higher prices, not just in India, they say, but elsewhere in the developing world where India is a major exporter of drugs. MSF says Indian generics producers have helped drive the cost of HIV medicines down from $10,000 per patient a year to $150--and now supply 80% of the HIV drugs that it uses.

"If we lose, we don't know if we can continue sustaining a large number of patients in developing countries," said Leena Menghaney, India manager of MSF's advocacy program, which pushes for greater access to lifesaving medicines. "You could have existing drugs [in India] being patented and newer drugs about to go off patent being extended. It could be a big problem for us in the coming decade."

Novartis's Mr. Shahani disagreed, saying the issue of access to medicines was unrelated to acknowledging innovation by granting patents. In India, other factors, such as poor diagnosis, infrastructure and distribution, are more significant barriers to access to medicines and should first be addressed, he added.

Besides Glivec, India's patent office has also rejected patent applications from Gilead Sciences Inc. on its HIV medicine Viread.

And Roche Holding AG has been unable to get Indian courts to stop the sale of copycat versions of its anticancer drug Tarceva, which has patent protection in many other Western nations. Both companies have appealed.

Write to Rumman Ahmed at and Amol Sharma at

Credit: By Rumman Ahmed and Amol Sharma

(c) 2012 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.

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