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Is the new Patents Bill good for us?

Business Standard | March 23, 2005

The crucial Patents (Amendment) Bill was passed in the Lok Sabha on Tuesday after Commerce and Industry Minister Kamal Nath assured the House that adequate safeguards have been provided in the Bill to protect the interest of the Indian pharma industry and the poor people.

Harinder S Sikka, Senior President, Nicholas Piramal India Limited

As India moves towards granting of product patents, even experts can't agree on the likely impact.

A big hue and cry is being made about the new Patent Act; even the western media has joined the bandwagon and is citing diseases like HIV and AIDS and so on to draw public attention and create misinformation and undue panic.

Whether the Bill is a sell out or a deep-rooted game plan to isolate India at the WTO, needs to be analysed threadbare.

Ironically, while select Indian companies seek extra protection against patents, these pharma majors are doing roaring business in the very countries where patent laws are strictly in force!

The global drugs market is estimated to be over $300 billion, of which the US alone accounts for $150 billion. It is the threat of losing this market share that is beginning to hound the MNCs.

Lapsing of the Patent Bill could come as a blessing in disguise. A new drug costs up to $1.7 billion abroad. India, leveraging on low cost, high quality, speed and a large patient profile can produce drugs at the cost of $50 million.

In addition, we have the largest number of USFDA-approved drug plants outside the US that are capable of producing high quality drugs at the lowest of costs.

While this provides us with an ideal concoction to steal a march over competition, it is worrying the policy makers in the West.

With over 90 per cent of drugs becoming off patent in the coming years, induction of cheaper generic versions of patented drugs is here to stay. The Patents Bill can do nothing to change this reality.

As a consequence, many Indian pharma companies are beginning to set shops in Mexico, Canada and Latin America in order to utilise NAFTA and make inroads into the all-important US market.

Cross-border alliances will also increase dramatically if the Bill is passed by the Parliament. China is already ahead, having a strong patent act as well as data protection laws.

India needs to shift its mindset from becoming a leader of developing countries to taking its place at the table of developed nations. It is China and Korea that will be India's real competitors and not the small countries in sub-Saharan Africa.

Contract research alone is a $30-billion pie, a substantial share of which could fall into our lap in the coming decade. In addition, TRIPS compliance could add to the contract-manufacturing kitty that is estimated at over $50 billion.

In fact, Nicholas Piramal was amongst the first to bag large contracts from US pharma giants after India's positive stand on patent bill became public.

Clinical research, worth $20 billion, could further help our scientists in focusing on the rapidly expanding sub-continent disease profile. Without the patent laws in force, no company will risk transferring confidential data.

And that could mean enormous loss of revenue and growth.

There's a wrong impression that in its present form, the Patent Bill will promote evergreening and monopolies, and ruin the least-developed countries' interest.

While India stands firmly against evergreening, LDCs are out of the patent laws purview till 2014. The all-important "Compulsory License" clause further empowers all nations to bring out the generic version of any patented drug. Intellectual property is a journey and will evolve over time.

What India lacks is effective delivery machinery and a strong autonomous regulator. We have invested huge sums in tertiary education and public research institutions.

It would be a pity if these went to waste by those who may have an interest on not letting India's knowledge economy to flower. In the short run, not having patents would indeed help some companies in copying products.

But in the next five years, India is poised to become a world leader in pharma research, bringing out new drugs at an affordable cost and serving globally those five billion who a re at the bottom of the pyramid.

These people might not have an access to medicines today but stand a great chance of using high technology, affordable "Made in India" drugs in the future.

D G Shah, Secretary General, Indian Pharmaceutical Alliance

The option of not granting product patents for medicines is no longer available. But we have the option, under TRIPS, to choose the type of patent regime that suits us.

The issue is whether India should forego the flexibilities it sought under the 1994 Uruguay Round, or should it make full use of what was achieved with the support and co-operation of developing countries and address their concerns about access to medicines?

Foregoing the flexibilities would mean adopting the US-style patent system as advocated by the foreign drug MNCs and denying access to medicines that are being produced by the domestic companies.

India will then end up encouraging monopoly of big pharma firms. This would mean greater reliance on imports of medicines than indigenous manufacturing.

There is an expectation that the US-style patent regime would attract substantial investment by MNCs in India. But this is devoid of realities and has significant downsides -- not only will the prices of many currently marketed medicines go up, their availability will become an issue, too.

The Ordinance introduced earlier had not only erred on several key provisions, but had gone beyond India's obligations under the TRIPS Agreement.

If the government's intention was not to default on its commitment to the WTO, all it had to do was amend Section 5 of Patent Act, 1970, to enable product patents for pharmaceuticals and food from January 1, 2005.

It could have made provisions for the August 30 Decision of the TRIPS Council to allow exports to countries with no or insufficient manufacturing capacity.

Instead, it chose to rewrite the whole Act through an ordinance. The Ordinance reversed some of the recommendations of the joint Parliamentary committee implemented by the Patents (Second Amendment) Act, 2002.

Some provisions in the Ordinance could have a crippling effect on the domestic pharma industry. They are: Sections 11A, 25, 39, and 104, which deal with early publication, provision for payment of damages from the date of publication of the patent application, dilution of the pre-grant opposition-provision, prohibition to apply for patents outside India, and the reversal of the burden of proof.

Even the flexibilities available in TRIPS Articles 30 and 31 relating to compulsory licensing are not fully availed. This will hurt India's allies at the WTO negotiations.

Many of them have questioned India's intentions and wondered why India has opted to let its people die.

The Parliament should, therefore, consider whether India should retain its ties with other like-minded developing countries in the ongoing Doha Round of multilateral trade negotiations, or align itself with the developed countries and promote the interests of their multinational drug firms.

Another issue is the criteria for patentability. There must be consideration on how to structure it to India's advantage while conforming to TRIPS, keeping in view the 6,989 pharmaceutical patent applications filed during 1995-2004 by MNCs.

Out of these, only 250 applications related to the new drugs developed during this period. All others relate to what is known as evergreening, trivial changes intended to delay entry of generics competition.

These applications could block manufacturing and marketing by the domestic companies of drugs that were invented before 1995. Few domestic companies have the means to fight the protracted legal battles with MNCs.

The Parliament can prevent these problems by "allowing patents only for new chemical entities and for modifications to these entities that have clinically demonstrated to show a significant therapeutic improvement over any previously patented form of the medicine."

This piece was written before the government introduced the Patents Bill in Parliament with changes



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Sub: Amendment of Indian Patents Act

Under the WTO agreement, Govt of India has modified its Patent Law, where product patent applications have to be accepted and examined in India and ...


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