Five multinational pharmaceutical companies have preferred China over India for setting up research and development units due to the inadequacies in India's patent laws. Besides Novartis [Get Quote], the other companies are Roche, J&J, Glaxo and Astrazeneca.

Ranjit Shahani, managing director of the Indian arm of Swiss multinational Novartis, said the R&D focus of all these centres, set up during the last two years, were mostly tropical diseases, or, diseases of the developing world.  Shahani is also the president of the Organisation of Pharmaceutical Producers of India, which represents multinational pharma companies.

It is, however, not clear whether the controversies surrounding the patent law is the only reason for the companies preferring China over India. D G Shah, secretary general of the Indian Pharmaceutical Alliance, has in the past said that drug companies find it easier to operate in China due to the relatively easier regulatory regime and compliance norms.

Shahani said Novartis' Singapore facility was specifically meant to discover medicines for diseases like tuberculosis, malaria and dengue.

"We are incurring more expenses by setting up laboratories outside India as these diseases are specific to India and not Singapore. Whatever we do, we will have to find patients for clinical trials and treatments in India. It shows that even multinational companies interested in developing drugs for countries like India are not finding the country as a preferred destination for investment," he explained.

"It is not about multinationals investing in the country. Unless incremental innovations are allowed to be patented, even research-based domestic pharmaceutical companies will not be able to survive. Almost all the new drugs being developed by Indian companies are not original research products but incremental innovations," Shahani added.

Even as Shahani made this claim, Big Pharma has stepped up its attack on the Indian patent system, with the Pharmaceutical Research and Manufacturers of America, a group of leading global pharma and biotech firms, joining the chorus of those concerned over India's patent laws in the wake of the Madras high court's recent decision to dismiss Novartis's petition challenging Section 3 (d) of the Indian Patent Act.

The section disallows patenting of minor modifications to existing patents.

PhRMA said it was disappointed as the Indian court dismissed the challenge to Section 3(d) of India's 2005 Patent Law, and was concerned as the decision could reduce patient access to better medicines discovered through 'incremental innovation'.

"We recognise this court case is only one milestone in India's long-term development of its patent system. PhRMA encourages dialogue among all involved groups on the path forward, and how to best support the interests of Indian patient," said Billy Tauzin, President and CEO of PhRMA.