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February 1, 1999


Opinion swells in support of government stance on patents

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Muhammed Ashar Khan in New Delhi

Pharmaceutical industry consultants and experts have backed the Union Cabinet's decision to bring in an ordinance to amend the Indian Patents Act of 1970 in line with the guidelines of the World Trade Organisation.

The ordinance decision had come well ahead of the April 19, 1999 deadline for meeting the obligations. The Bharatiya Janata Party government, which opposed the patent amendment bill before it came to power at the Centre, is finally backing it.

Dr B Bhattacharya, dean, the Indian Institute of Foreign Trade, points out, "The issue is not whether it comes through an ordinance or a bill, the issue is that it is necessary for the Indian government to observe the deadline. It is going to send very positive signals to the foreigners. I don't see a reason why the amended patent bill should not help the Indian economy."

As per the ruling the WTO's Dispute Resolution Forum, India has to make its patent laws WTO-compatible latest by April 19, 1999. The Rajya Sabha passed the bill in the winter session. With the ruling BJP and the opposition Congress both committed to the bill, the Lok Sabha also is likely to pass the bill in the Budget session.

Bibek Debroy, director of the Rajiv Gandhi Institute for Contemporary Studies, says, "If we continue to stall, the only options left will be economic sanctions or exit from the WTO."

In today's world of globalisation, India cannot cut itself off from the rest of the world. Being a founder member of WTO, and a signatory to the Uruguay Round on Trade-Related Intellectual Property Rights, India has to implement its provisions, analysts said.

It has been more than four years since India accepted the WTO membership. Still it has not been able to change the Patents Bill 1970 as per the requirements of the world body. The major concern has been that if India makes its patent laws WTO-compatible, the prices of drugs will shoot up several-fold and the common man will not be able to afford them.

N B Zaveri, legal counsel for the Indian Drugs Manufacturers' Association, says: "Drugs under development for the treatment of diseases such as cancer, tuberculosis and AIDS will be under patent and hence, will be priced beyond the reach of all but a microscopic minority for long years."

Others counter his contention and say that prices will rise but the scope and extent of price rise is exaggerated. Dilip Shah, the CEO of Vision Consulting, explains. "The assumption that drugs will retail here at international prices is a mistaken one. The Indian consumer is used to cheap drugs, and will not fork out ten to twelve times more for a basic drug."

Less than 10 per cent of India's list of essential drugs are covered by patents worldwide. Prices would not increase to a great extent also because there are a large number of off-patent substitutes available to the customers for a patent drug in a particular therapeutic segment.

So, if a company were to set a very high price for its patent drug, customers can switch over to cheaper substitutes in the same therapeutic segment. In the WTO's list of essential drugs, only one out of the 250 drugs, is currently under patent.

Besides, there are several provisions within the WTO agreement which give sufficient space to the member-countries to safeguard their citizens' interest. WTO has given India ample time to adjust and incorporate product patents in its patent bill. India, like any other developing country, can use the transition period up to January 1, 2005, to amend national laws to include product patents for pharmaceuticals and agro-chemicals.

Actually, there is no meeting ground between the provisions of the Indian Patents Act 1970, and the norms and standards for protection incorporated in the Trade Related Intellectual Property Rights agreement. The TRIPS agreement requires patent protection for inventions of products and processes in every field of technology. The Indian Patents Act permits only process patent, in food, pharmaceutical and chemical sectors, and does not allow product patents.

Not only this, patents are registered only for half of the internationally stipulated period. As a result, Indian pharmaceutical and chemical manufacturers have never bothered to invest in research and development. The large unorganised sector in India thrives on pirated products rather than genuine inventions.

The chairman of Hyderabad-based Dr Reddy's Laboratories, Kallam Anji Reddy, says, "Indian firms need product patent protection to encourage research for developing inexpensive drugs that suit the Indian disease profile." On an average, the Indian pharmaceutical industry spends 1.8 per cent of its total turnover on R&D, whereas in the US, private drug companies spend 16 per cent.

Aditya Trivedi, secretary, the Institute of Intellectual Property Development, points out, "We are not a technology producing nation. To either make or buy technology successfully, you need strong systems of patent protection."

Non-adherence to the international patent laws is also keeping foreign investors out of India. At least 25 per cent of global chemical and pharmaceutical companies are unwilling to invest in India as intellectual property rights protection offered by New Delhi is too weak to allow them to transfer latest and effective technologies.

This is also the reason behind poor foreign direct investment flows into India in the machinery and the electrical equipment sector. Foreign companies in this sector are reluctant to come to India since they fear that others, without investing in R&D, will copy their technologies, analysts said.

Debroy says, "We should not underestimate the potential of our agriculture scientists." India has the distinction of having developed 25,000 varieties of crops ranging from cereals and pulses to oils and vegetables. It has also developed 300 varieties of wheat and 200 varieties of rice. Other successes include hybrid cotton, millet, castor, pea, and arhar, belonging to the self-pollinated varieties.

These varieties have tremendous commercial value, but since they are not protected by the patents, other countries can exploit this situation -- as in the case of turmeric, neem and Basmati rice. India's success in the case of the first indigenously developed anti-leprosy vaccine and a hepatitis-B vaccine at half the innovator's cost are examples of the rich scientific talent available.

R A Mashelkar, the director general of the Council for Scientific and Industrial Research, says, "A patent flags your competitive territory." The country need not fear the patent regime, since Indian scientists are capable of developing more new drugs and substitutes for the patented drugs.

"Tomorrow's wars are going to be fought in the market for knowledge. And in that market, patents are a way of converting knowledge into wealth." The final draft of the Indian Patent Bill 1970 has been amended to ensure enough safeguards to protect the traditional Indian system of medicines.

Notwithstanding the legislative protection, what the domestic industry needs to do is to adapt to the concept of the patent regime fully. After all, in a liberal economic environment, every market will have to open up and intellectual property protection will be the only safeguard available to industry, they add.

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