Who wins from Novartis's India loss

Posted by: Bruce Einhorn on August 09, 2007

When it comes to counterfeiting, piracy, fakery and overall disdain for intellectual property rights, few countries can match China. So when a pharmaceutical executive says that the patent-protection situation in India is worse than China, you know he’s mighty peeved. The top exec in India is saying just that, following a major legal setback this week. A court in Chennai on Monday rejected Novartis’s attempt to preserve a patent on a leukemia drug (known as Glivec in India and Gleevec in the U.S.). While India’s many makers of generic drugs are happy with the verdict, the Economic Times reports that Novartis India vice chairman and managing director Ranjit Shahani says the case shows why companies are more interested in doing their R&D in China than in India.

Multinational drug makers would prefer China for investments in pharmaceutical research so long as India keeps the bar for patenting a drug so high, warns drug major Novartis on Monday after the Madras High Court turned down the company’s challenge to the country’s patent law.

Novartis India vice chairman and managing director Ranjit Shahani, who also heads a body that represents MNC companies, told ET that most of the drug majors have invested in China in the past two years in pharma research, while India did not attract any investments. “No company will go on setting up research centres on an yearly basis. Once it is set up in country, it may not look for further investments for some time,” said Mr Shahani.

Shahani does have a point. Some of the biggest names in the pharma industry – companies like Pfizer, Roche, AstraZeneca, Eli Lilly and Merck as well as Novartis itself – have been expanding their research operations in China.

Sure enough, NGOs focusing on providing health care in the developing world dismiss suggestions that India’s industry – and patients – will suffer. The Business Standard, for instance, quotes Y.K. Sapru of India’s Cancer Patients Aid Association on the inadequacies of Big Pharma companies: “They do not conduct research on diseases specific to developing world. They cannot resist the one-billion plus market of India by delaying the entry of a new drug. If at all they fail to patent them in the country or delay its marketing registration, Indian companies can reverse engineer any new molecule. All this talk about patients suffering due to a legitimate patent law is bogus.”

Maybe. But the same article trashing Novartis’s argument includes a few sentences that actually seem to support it. “The R&D investment of multinational drug firms has been negligible as compared to their turnover during 1999-2005,” the Business Standard reports. “Apart from Pfizer, which has been increasing its R&D spend, no other company including Novartis, Merck, Abbott, Wyeth or Fulford have spent in excess of $1 million on R&D in India during this period.” Following the Chennai verdict, the investment numbers aren’t likely to get any better. So, in addition to poor patients in need of low-cost medicine in India and other developing countries, the other big winners from the Chennai case are probably going to be India’s domestic drugmakers, companies such as Ranbaxy and Dr. Reddy’s. Unlike companies in China, they don’t have to worry much about bigger foreign rivals expanding in India and poaching their best scientists.

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Reader Comments

MyOpinion

August 9, 2007 05:50 PM

Ok lets tell the whole story not the one half that Mr Bruce has written down here. He is safe and securely cuddled in his home town safe and secured in a developed country no worries. Have you ever even given a thought about millions of poor people suffering in lesser developed and poor countries who can't afford the above mentioned drug.
I am sure Novartis has already made more than twice the profit on the drug it had invested. The Greedy management wants to make even more how bring out small changes to the drug and re-patent it nice great way to keep the dollars flowing.
Mr Bruce wake up. Good Journalism also entails the responsibility of fellow human beings those who are deprived. It's only becuz this drug is generic millions in poor African, Asian are able to buy them.

That said I accept the Patent laws in the country needs re-hauling and should be made more investor friendly. But please tell the whole story why the court received more than 20000 mails from worldwide to rule against Novartis? If you don't know then do some reading before writting

Andy

August 9, 2007 08:38 PM

No wonder India can claim that it has better intellectual property right than China. Apparently, India tries to combat the counterfeiting by legalizing the piracy. Way to go, India. I'm sure Jack Sparrow will be proud of you.

Duncan

August 10, 2007 08:06 AM

Speaking of telling the whole story, one of the two actions in the Novartis (Glivec) case is still pending in India. (The one appealing the original decision by the patent office.)
The more controversial challenge to to s 3(d) was dismissed by the Chennai High Court because it didn't have jurisdiction to determine the dispute - it's hard to blame the court for that. It really is a matter for the WTO to adjudicate on TRIPS compliance.

For background to the dispute, see - http://duncanbucknell.com/articles/109/

For discussion see - http://duncanbucknell.com/blog/110/

Palani TS

August 10, 2007 08:26 AM

The concept of intellectual property is fast becoming a topic of contention. And not just in the world of pharma - we are facing these issues in IT as well.

One thing that we need to agree is - companies investing time and money on research need tangible pay-off, and Pharmaceutical companies are no exception. One cannot foster Research and Development when one is not assured of returns from it.

That being said - Pharmaceutical companies need to understand the needs of a developing economy. For example - kids in Africa really can't do without medicine which would otherwise be really expensive but for Indian companies.

Medical companies have social obligations as every other company and individual does (don't brand me a communist just yet ...Bill Gates has been giving a lot of his money for AID, I don't think he is a communist), and this social obligation becomes more pronounced for a Medical Company.

A doctor may not be able to dole out expensive medicine that he doesn't have - but a doctor is duty bound to offer what he can do to alleviate a patient's problems. Pharmaceutical companies need to perhaps see the "human" angle in this when they patent their drugs. Sure patent it - but how about making it available to markets that cannot afford them at prices significantly lower - better still, why not have companies that CAN produce it cheaper do it so - at a royalty.

Personally I think modifying the drug just to extend the period for which the drug remains patented cannot be either condoned or sympathized with - and unless i am mistaken that is exactly what Novartis was upto.

If they feel China is a better place to open up centers - please feel free to do so. We'd rather have the existing laws that allow for cheaper medicines for the needy than have the honour of hosting these companies on our soil.

M.Babu

August 10, 2007 09:34 AM

Hi Bruce,

How much money you get from China for being their propagandist.

Mike

August 10, 2007 10:44 AM

http://news.bbc.co.uk/2/hi/asia-pacific/6939767.stm

jcage

August 10, 2007 01:54 PM

India "repect" IP in its own way and that supposed to help India in IP creation but the facts so far state the opposite.

China is moving very fast in the filling of new patents while India is falling behind according to this report:
http://in.reuters.com/article/topNews/idINIndia-28912620070809?pageNumber=1
"
Asian economies lead growth in patent filings, India lags - U.N.
Fri Aug 10, 2007 4:40AM IST
Email | Print | Digg | Single Page
[-] Text [+]

By Laura MacInnis

GENEVA (Reuters) - China and its fast-growing Asian neighbours helped power a 4.7 percent rise in worldwide patent filings in 2005, the World Intellectual Property Organisation (WIPO) said on Friday.

In a report, the U.N. agency said there were 600,000 patents granted in 2005, the last period for which complete figures were available. The vast majority went to Japan, the United States, China, South Korea and Europe.

While applicants from Japan and the United States owned 49 percent of the 5.6 million patents in force in 2005, more and more developing nations are seeking legal protection for their innovations, WIPO Deputy Director General Francis Gurry said.

India, however, has not similarly boosted its participation in the patent system. Applications from Indian residents fell 8 percent in 2005, from 2004, a period when Chinese filings rose 42 percent, Indonesian filings rose 17 percent and South Korean filings rose 16 percent, according to the WIPO figures.

Gurry said India's technological scene had not translated into a jump in patents, but a drive to open new patent offices should trigger an increase in filings in five years.

China's patent applications rose more than eightfold between 1995 and 2005, while South Korea more than doubled its number.

"Northeast Asia has become a major force technologically. We have seen explosive growth out of the Republic of Korea and China," Gurry told journalists in Geneva."

Nagesh Bhushan

August 10, 2007 03:00 PM

Bruce should have read this
Henry A Waxman, chairman of the House committee on oversight and government reform, wrote to the Novartis chairman requesting him to withdraw the petition. The letter stated that “Novartis and its colleagues in the pharmaceutical industry should respect countries’ rights to take measures that balance the protection of innovation and the promotion of public health”.

Senator Waxman expressed his concern that the attempt of Novartis “to influence domestic Indian law could have a severe impact on worldwide access to medicines”. India’s robust generics market supplies “affordable, essential drugs both to its citizens and to poor nations around the world” and its laws “contain safeguards designed to preserve a balance between protecting innovation and promoting public health”.

Waxmann slammed Novartis for challenging the public safeguards of Indian law instead of appealing against the Indian Patent Office’s rejection, calling the grounds for the challenge as “questionable”.

In 2001, at Doha, 142 countries, including the US, declared that international intellectual property obligations “can and should be interpreted and implemented in a manner supportive of WTO members’ rights to protect public health, and in particular, to promote access to medicines for all.”

jcage

August 10, 2007 05:29 PM

Below is a link that shows all the patents filled per country for resident and non-resident inventors for that particular country.
Notice that India is almost invisible in term of patents application for resident and not resident.
It seems that fewer and fewer multinational go to India to do R & D for a reason.

http://www.wipo.int/ipstats/en/statistics/patents/patent_report_2007.html#P173_14118

Get the Full Story

August 10, 2007 09:38 PM

Agree with MyOpinion. Einhorn just presents the side of the story that is convinient to Novartis. If Novartis feels it has been treated unfairly then why isn't its case being taken up by its own Swiss Government at the WTO....this is just the beginning. It was in fact advised not to go to ligitation....

Keep an eye on what Thailand is doing to MNC Pharma companies....they are buying generics from India and forcing MNC pharma to price their drugs just 5% over generics under a new law (Peter Mandelson has of course requested Thailand to review its decision). Thailand is a small country, if India with a 1.1 Billion population start doing the same.....and some Joker from Novartis uses China as the threatning factor for future investments. The fact is no one can afford to ignore India's 1.1 Billion population.

jskhattar

August 11, 2007 11:08 AM

this is for "my opinion"
i do not think that it is fair on the part of court to give such a judgement, because as someone rightly put it, it is more of a patient vs. patient fight more then anything else. why i say this, is because there are people who can afford say gilvec in this case, but they are going to die, from possibly blood cancer, because the indian courts fail to recognise the drug, and the best part is that this practise is not in accordance with globally practised norms!

Shawn Bradshaw

August 11, 2007 08:01 PM

Yes, let's scare these little indians by bringing the China boogieman into the picture. As if the Chinese pharmas aren't well on their way copying the same drugs. The Indian court decision against Novartis's stand on claiming patent rights on a drug without any innovation is a huge victory for expanding Indian pharma industry. Who needs western investment from western pharma companies, Indian pharma companies are doing just fine without it; and now, the indian pharma industry is doing it's own R&D and drug development. Read it an weep!

jcage

August 11, 2007 11:38 PM

http://www.indiadaily.com/editorial/17813.asp
Five global giants opt for China over India for R&D units
Media Release
Aug. 11, 2007

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, 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 (OPPI), which represents multinational pharma companies.

"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.

ravi

August 12, 2007 08:14 PM

come on...2 cases of blatant ipr violation's in china have been reported in business week..even the
USPTO has articles on how to protect IPR in china..
and now every one finds china ipr friendly. very strange...

Arun

August 12, 2007 10:54 PM

Perhaps we should look at the whole picture....did Novartis try to patent the drug in India or is it asking the court in Chennai to uphold its US patent? Every country has the right to its own patents...having said that, India should be dragged to WTO to bring its patent laws in line with its international obligations.

Runcie

August 17, 2007 02:11 PM

Cmon Friends,China better than India In IPR? HE HE a BIG JOKE.For all those admirers of chinese ipr protection,please the see the website of Chery automobiles of china.All of their cars are exact copies of American(like Gm's)& european cars.Chinese companies(not all! but a majority) are the worst in following patent rules.They produce duplicate copies of every product available in the world.India will lose nothing if Pharma MNCs go to china.Indian Pharma cos can reverse engineer the new drugs from them.But Mncs will lose big things,as chinese Cos will make cheap & unreliable copies of even their patented drugs.

MyOpinion

August 20, 2007 08:36 PM

Mr Khattar here is a bright example of u r world order. Jhonsons suing RED CROSS. Global practice norms!!!! No Greed and Greed. Here are the evils of capitalism if not tamed. Decisions should be guided more by prudence and human compassion rather than only by rule books after all we are humans not machines. After destroying the antarcatics Ice by global warming the so called rich nations want the 25% of the whole worlds OIL buried below it right world norms!!!! Open u r eyes and look around People have turned convenience into world norms greedy lazy Humans. The same countries that are drumming the beats of peace want to sleep well after looting the whole world by colonization. Oh yes there is Jungle rule everywhere might is right. So Wake up and do the right thing.

Eric

August 22, 2007 02:55 PM

By focusing most of it resource (human and money) in IT, india seem to fallen behind in a lot of fields. While other asian counties making progress in different area, Indian still think they are the smartest, most innovative. The truth is they are not that good at anything except answering phones in call center.

jcage

August 22, 2007 08:31 PM

The Indian IT outsourcing are mostly into low level type of work. Many companies set R & D in China, Eastern Europe, Russia and other place with better education and far superior infrastructure than that of India.

The India IT outsourcing is actually hurting India by pulling the very few really qualified engineer, scientist into call center or doing low level type of work but very well paid by Indian standard.

jcage

August 27, 2007 08:04 PM

The obvious loser of this verdict is India since more companies are doing more and more pharmaceutical R & D and trial as well according to this report.

http://www.ft.com/cms/s/0/eeb9703e-54b2-11dc-890c-0000779fd2ac.html
China overtakes India in drug testing

By Andrew Jack in London and Amy Yee in New Delhi

Published: August 27 2007 23:31 | Last updated: August 27 2007 23:31

China has overtaken India as one of the fastest-growing locations for drug trials, in a fresh sign of the importance of the world’s most populous country to the pharmaceutical industry.

An analysis by the Financial Times of data on www.clinicaltrials.gov, one of the most comprehensive websites where researchers register their studies, shows that China has 274 clinical trials under way, compared with 260 in India.

That site also indicates that China now has a cumulative total of 510 completed or ongoing trials compared with 471 in India, which had until recently been ahead on both measures.

The trend reflects intensifying interest by the healthcare sector in China, which is growing rapidly as a result of rising income and expanding health coverage and is already forecast to be the world’s fifth-largest pharmaceuticals market by 2010.

Daniel Vasella, chief executive of Novartis, the Swiss pharmaceutical company, warned earlier this month that he was likely to switch substantial future funding that could have gone to India to other countries, including China, because of a recent court ruling on patents.

As they seek to reduce the escalating costs and speed up the conduct of the clinical trials necessary to win regulatory approval for new medicines, drug companies are increasingly shifting tests from the US and western Europe to eastern Europe, Latin America and Asia.

India and China have both received increased attention by pharmaceutical companies in recent years, reflecting a strong medical infrastructure, substantially lower costs and the relative ease of recruiting patients with diseases under investigation – which allows trials to be launched more rapidly.

Drug companies are also increasingly obliged by regulators in both countries to include a proportion of local patients in their trials as a condition of approval, partly to demonstrate that the medicines are effective in Asian populations.

The government in China – like that in India – still raises concerns about the extent of intellectual property protection, quality, slow regulatory approval and difficulties in exporting blood and tissue samples from patients for analysis in laboratories abroad.

However, pharmaceutical groups including AstraZeneca, Novartis and Roche have committed substantial sums in recent years to open research and development centres in China.

Drug companies and other researchers are increasingly required publicly to register details of their clinical trials to ensure transparency and fair use of the results, both by governments and medical journal editors seeking to raise standards.

Clinicaltrials.gov, run by the US National Institutes of Health, is one of the most comprehensive websites in the sector, listing nearly 40,000 trials around the world.

Copyright The Financial Times Limited 2007

MyOpinion

September 1, 2007 01:26 PM

There we go again Mr JCage. The Name suggests some one writing stupid stuff from Some Chinese Junta's Cage. I mean Clinical Trials Dude are Bad if you can understand what it means it's like trying out a New medicine on Lab animals may be rats. The companies are trying them out in developing countries becuz if it fails they can escape but the poor patient suffers. I don't know about you Mr Cage but Chinese leadership should definitely care about it's citizens. And Don't blow your horns about Chinese leadership on drug research we have been there and know the facts first hand. Piracy and counterfeiting is the order of the day and all the companies are thinking twice even making a move in China for R&D. Newspaper reports are bull Mr Bruce it seems is from some kind of espionage agency member may be British origin you know people can't see other countries living better life. Make them fight and you climb the ladder, Think about it a little bit deeply.

jcage

September 5, 2007 07:05 PM

There is not counterfeiting and piracy in India since the India government just legalized it as it was shown by this article. The true hurt people feeling.

Jason Pratt

February 20, 2008 07:57 AM

If there are no patents - there is no innovation - we will not have new medicines for the diseases of the future. The challenge is to make sure funding and distribution mechanisms are in place where the patients who cannot afford even generic medicine or healthcare are given this...

Anybody has a solution - speak up!!

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BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.

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