Product patent regime: A threat or boon!

Domestic companies may look forward to undertake and support collaborative research with academic and research institutions. This will avoid duplication of infrastructure and optimise utilisation of our talents, say Dr Guru Prasad Mohanta, Dr Prabal Kumar Manna and Dr R Manavalan

A patent is an exclusive but temporary right granted by the competent authority to the inventor to exploit his invention. In other words, he can set its price according to his preference. Such protection is essential as huge resources and time are spent on invention. This is especially true for medicines. It is estimated that on an average the cost involved is between US $0.5 to 1.0 billion for developing a new product. Only 20 of the molecules reach a marketable state out of 100 initially tested for phase I study. Such a risky investment naturally requires protection for its invention. The patent provision in our country is regulated by the Patent Act 1970 and the rules 1972. However, the act recognised only the process patent. This provision has been opportunistically exploited in the country to promote the growth of our domestic companies. The companies utilised reverse engineering technology to copy the new medicines and made them available benefiting both manufacturers and the consumers as well.

The mid-night ordinance amending the Patent Act 1970 and passing of Patent Amendment Bill in the Parliament brought the product patent provision in force, fulfilling the country’s major obligation to World Trade Organization (WTO) signed in Marrakesh in April 1994. This marks the culmination of ten years transition period.

Though the other least developed countries have been given time to comply with WTO’s TRIPS agreements till 2016, India decided to comply in the earlier agreed date. The patent period for new medicine is now as long as 20 years.

At present, in our country there are around 20,000 pharma companies of which around 250 are in organised sector. Over the years tremendous progress has been made by the Indian pharmaceutical sector with a total production worth 10 crore at the time of independence to around 40,000 crore at present. Favourable industrial and drug policy, together with weak patent provision in a liberalised economic scenario contributed the overall growth of domestic pharma industries. It is projected that around one dozen Indian companies will have an annual turn over exceeding 1000 crore.

However, only a small number of transnational companies dominate the global production, trade and sale of medicines. The ten of these companies now account for half of all sales worldwide. Unfortunately none of the domestic companies figure among the top ten in the lists.

Changing scenario

Under the changing scenario, will our domestic pharma companies be able to compete and sustain? It is a million dollar question. We have a lot of strength but equal weakness too. Our small-scale companies have been finding it difficult to even comply with simple Good Manufacturing Practices (GMP) requirements and repeatedly pleading for extension of time.

The transnational companies may develop long-term strategies and make their new products available at an affordable price compared to alternatives available in the market. They would impress upon the prescribers to use their medicines for their patients. As they are available at a similar price as alternatives, even the most conservative prescribers will too oblige. The industries, which are now sustaining by copying the innovators product, will not find takers for their products. Always there is fancy for new products as they claimed to be superior. In such circumstances, many domestic companies will probably perish.

The last decade has witnessed a very distinct trend towards consolidation among transnational pharma companies. The compelling needs for companies to continue to discover new medicines and bring them to market and escalation in costs and risk associated with the process are the major driving force for consolidation. When the transnational giants think this way for sustaining, can our domestic pharma companies compete? Fortunately some domestic companies have realised this and have formed international alliances to compete in the changed scenario. Ranbaxy with Eli Lily, Torrent with Novo Nordisk and Sanofi, Lupin with Merck, Max with Geest Brocade etc. are few worth noting.

Companies such as Ranbaxy, Nicholas Piramal, Cipla, Glenmark Pharma and many others have been strengthening their R&D programmes in a big way and plan to increase their R&D expenditure to 7-10 per cent of the sales revenue from the present industry average of 2-3 per cent.

Opportunities

There are many opportunities available and these are required to be exploited. India has most cost effective generic manufacturing facilities. Over the past few years worlds leading pharma companies have successfully outsourced manufacturing of their products to Indian companies. India has around 65 number of US FDA approved manufacturing units which is the highest in a single country outside US.

Domestic companies may look forward to undertake and support collaborative research with academic and research institutions. This will avoid duplication of infrastructure and optimise utilisation of our talents. Indian companies can also explore the joint funding R&D work with international companies to take advantage of lower costs in this country. With the availability of very talented domestic workforce, pro-industrial economic policy and increasingly global resource strategies pursued by some companies, the prospects of domestic pharma industries appear bright. Every threat can be utilised as opportunity.

The writers are with the Department of Pharmacy, Annamalai University, Annamalai Nagar. E-Mail: gpmohanta@sancharnet.in