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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.
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.