INTELLECTUAL PROPERTY RIGHTS

TERM PAPER

ON

A STUDY ON EVERGREENING STRATEGIES & THE
INDIAN PHARMECEUTICAL SECTOR.


BY
HARISH KUMAR BISOYI.
1226113118
EVERGREENING STRATEGIES
Evergreening Strategy
Patent ever-greening refers to a strategy of obtaining multiple patents that covers various aspects
of the same product. Even though it is not a formal concept of patent law, patent owners utilize
this process to extend their monopoly privileges. Some examples include seeking subsequent
patents on derivatives of existing drugs, altering the mixture of isomers, identifying compounds
with the same molecular formula but different structural formulas, or patenting methods of
administration of an existing drug.
Evergreen Revolution in the country to provide for increasing food caused some controversy
in the pharmaceutical industry. Ever greening is often resorted to by companies to extend the
term of protection to their products shortly before the patent is about to expire. Here is an
interesting case where a drug manufacturer fights to manufacture a drug at low cost after expiry
of its patent held by another drug manufacturer demands but what does Ever Greening mean in
the context of patents and especially with regard to the pharmacy industry?
Well, a company manufactures a product for which it secures a patent. Shortly before the
expiration of that patent, the company files a new patent that revises or extends the term of
protection. This is what evergreening is all about. Ever greening is a method by which
technology producers keep their products updated, with the intent of maintaining patent
protection for longer periods of time than would normally be permissible under the law. It refers
to increasing the life of the patent or the patent term beyond 20 years to reap the benefits for a
much longer period of time.
Drug patent ever greening is the single most important strategy that multinational pharmaceutical
companies have been using. One form of ever greening occurs when the original manufacturer
stockpiles patent protection by obtaining separate 20-year patents on multiple attributes of a
single product. These patents can cover everything from aspects of the manufacturing
process to tablet colour, or even a chemical produced by the body when the drug is ingested
and metabolized by the patient.
The ultimate consequence could be that the generic equivalents of the drug would be prohibited
from entering the market so the price of the drug of the Innovator Company will be higher even
after the patent expiry in absence of competition from generic drug makers may be used by
manufacturers of a particular drug to restrict or prevent competition from manufacturers of
generic equivalents to that drug. The process of ever greening may involve specific aspects of
patent law and international trade law. The main arguments in favor of governments
regulating against ever greening are that rapid entry of multiple generic competitors after
patent expiry is likely to lower prices and facilitate competition, and that eventual loss of
monopoly was part of the trade-off for the initial award of patent (or intellectual monopoly
privilege) protection in the first place.
Introduction
To balance the at times competing goals of increasing access to new drugs on the one hand, and
rewarding drug innovation via patents on the other hand, drug manufacturers are granted
exclusive manufacturing rights for periods of up to 20 years. This can generate large revenues
that often exceed initial investments, thus providing an incentive for pharmaceutical companies
to develop new drugs. However, profits have increasingly come under pressure because of
stricter regulatory procedures for drug approval, implementation of price control policies, and
increased competition by generic drugs. Pharmaceutical companies have responded by
developing a number of tactics to extend market monopoly. These are known as evergreening
strategies, or more euphemistically as life cycle management, with sometimes questionable
benefit to society.
One common strategy is the patenting and marketing of a single enantiomer of an already
approved drug. When large-scale production of enantiopure compounds was first possible in the
1980s, it was expected that the use of these drugs would translate into direct health benefits for
the patient, e.g., in the form of better tolerability. However, there is currently no clear evidence
of increased efficacy or tolerability of enantiopure compounds over racemic combinations. The
marketing of enantiopure compounds with questionable advantages over the original drug is just
one example of an evergreening strategy. Other evergreening techniques include patenting
combination formulations, structural analogues, active metabolic types, and slow-release forms.
The specific impact of these second-generation products, or follow-on drugs, on overall
healthcare costs has not been well studied.
Hospitals usually adopt a payer perspective strategy, trying to minimize acquisition costs for
their medications. Usually, pharmaceutical companies offer high rebates to hospitals on their
brand or follow-on drugs to assure that the hospitals will buy and use their drugs, speculating
that hospital prescription patterns may influence prescription patterns in the community in their
favour. The objective of our study was to assess the overall costs associated with the prescription
of follow-on drugs as a result of an evergreening strategy over a 9-y period in the Swiss canton
of Geneva. In addition, we aimed to calculate the financial impact of the Geneva University
Hospitals (HUG) restrictive drug formulary (RDF) on overall healthcare costs, the so called
spillover effect .
Innovator Product vs. Generic - Extended Patents

In relation to generic manufacturers, originators use patenting practices, aiming at replacing the
original preparation by similar follow-on-products through simple proprietary modifications and
or name changes, and subsequently placing them on the market just before the expiry of the
exclusivity so that they can assume the economic role of the original specimen. The
manufacturer of the original product seems less interested in obtaining the broadest possible
patent basis for his first generation drug, than in the further course of products life cycle, i.e. he
tries to develop innovative patentable variations which will enable him to extend the first product
life cycles. After patent expiry, generic manufacturers can file an application for an equivalent
innovator drug. However, this also means that a prodigious amount of investment is at risk for
innovator companies. To protect their interests, originator companies engage in evergreening
which involves i.e.: forming patent clusters, secondary patent applications, divisional patent
applications or conclusion of agreements with generic manufacturers in order to postpone
generic market entry. While such defensive strategies are frequently used in the pharmaceutical
sector, comparable practices of patent applications are not unprecedented in other industries
Either. Patent thickets or patent clusters are formed when originators file numerous broad
and weak patents around the original molecule patent. Divisional patent applications split
parent patent application into one or several narrower patent applications. Clusters and thickets
have the effect of increasing the uncertainty of the generic manufacturer regarding the
originators IP rights when it attempts to enter the market, because it cannot properly asses the
scope of the innovators IP portfolio. Generics are left with two options: either to wait until all
the patents forming the patent family have expired, or to apply for a marketing authorization and
run the risk of litigation. Hence, such practices can have the effect of limiting competition, which
raises the question as to whether they might contravene the relevant provisions of TFEU? The
answer to such a question will obviously depend on the particular facts and circumstances
present in each case. However, there are some general arguments and considerations to be borne
in mind in this context. It has been suggested that when clusters serve the sole purpose of
eliminating potential competition, this is not in line with the underlying objectives of the patent
system and is anti-competitive. The European Commission in its turn seems to take the view
that legitimate business practices cannot become illegitimate simply by their cumulative
application, but that there clearly is a problem if permissible patenting and enforcement practices
can be used in cases where there is little or no legal justification for them.
Nevertheless, it has also concluded that Strong patent protection promotes ex ante incentives to
innovate. If the invention is new, involves an inventive step and is susceptible to industrial
application it is patentable, and Competition law should not second guess. Another defensive
strategy used by innovator companies is to file applications for secondary or follow-on-patents.
Secondary or follow-on-patents, also called reformulations remain the most popular and,
arguably, the most effective way to prolong a products commercial life, since it can delay
competition between products based on same original invention. However, patenting throughout
life of a product is not novel and not restricted to the pharmaceutical sector. Moreover, if it can
be confirmed that:

A follow-on inventor that has made a valuable further development is not usually seen as an
infringer, because courts tend to narrow the technical scope of the patent or, at least they refrain
from expanding it through the doctrine of equivalence. Extra incentives are made available for
the radical improver, so as to prevent him being held up by an earlier patent.

It is a fair question to ask why an innovator applying for a secondary patent should be treated
less favorably. Yet, one of the main issues emphasized by the Commission in its Preliminary
Report concerns the quality of such late secondary patents. In that regard, the Commission's
success statistics of the patent opposition and appeals between originator and generic
manufacturers raise doubts whether the expected quality and legal safeguards of the patenting
process are always fully observed. In order to prevent or delay market access, innovators
occasionally conclude agreements with generic manufacturers, whereby, in exchange for
delaying market entry, the generic companies accept compensation payments or other benefits
from innovator companies or enter into settlement agreements. However, the settlement of patent
infringement disputes is only to be considered under the ambit of cartel law in so far as the
validity or the substantive scope of a property right is seriously in doubt. Such reverse
payments are defined as a variety of diverse agreements between patent owners and alleged
infringers that involve a transfer of consideration from the patent owner to the alleged infringer.
The mere presence or amount of reverse payments is not sufficient to conclude that patent
settlements were illegal, nor do any estimates of an eventual outcome of a patent infringement
dispute warrant such However, when competing manufacturers agree on restrictions that go
beyond the exclusivity rendered normally by a patent, such a decision not to compete constitutes
a hardcore restriction under Art. 4 (1) of the Technology Transfer Guidelines Combe describes
yet another strategy of pharmaceutical companies, called "pseudo-generics" strategy. The
primary patentee indirectly enters the generics market by launching himself a generic drug, but
entrusts the distribution to another firm through a licensing agreement, without the prescriber or
consumer being informed of the ties between the two companies. At first glance, the pseudo-
generics appear to have a pro-competitive effect, as new products are launched on the market.
However, in comparative terms, the presence of pseudo-generics, sold at too low prices, may
also limit the entry of "real" generics.

TRIPS Perspective

Although multilateral treaties on patents have existed since the late nineteenth century, for much
of the twentieth century, countries that opposed pharmaceutical product patents simply
disallowed such patents. In the mid-1980s, as many as fifty countries prohibited pharmaceutical
product patents; this list included a few developed countries, such as Spain and Portugal, but
consisted primarily of large middle- and low-income nations, such as Brazil, India, Mexico and
Egypt. Around this time, industries across a variety of sectors in the United States claimed that
they were suffering heavy losses because of the absence of adequate intellectual property
protection in foreign markets. The U.S. International Trade Commission confirmed these claims,
estimating that American firms were losing about $50 billion a year from lack of overseas
intellectual property protection. This led American businesses to call upon their government to
seek greater intellectual property protection in international trade agreements. When the Uruguay
Round of multinational trade negotiations began in 1986, the United States mounted a campaign
that succeeded in adding Trade-Related Aspects of Intellectual Property Rights, or TRIPS, to
the agenda. Low-income countries were initially reluctant to join a binding intellectual property
agreementnegotiators from these countries worried about drug accessibility issues, and saw no
benefit in a global intellectual property regime that rewarded innovation that largely came from
developed nations. However, the promise of gains in other trade areas, coupled with practices
such as the United States use of its domestic law to undertake trade retaliation against states
with unfair intellectual property laws, eventually persuaded these countries to join such an
agreement. On January 1, 1995, the Uruguay Round of negotiations ended with the establishment
of the WTO, whose members were all required to sign on to the new, binding TRIPS agreement.
Section 5 of Part II of this agreement covers patents, and Articles 27 and 28, which form the core
of this section, grant pharmaceutical innovators strong patent protections. Article 27 establishes a
ceiling for patentability requirements, by requiring that patents be available

For any inventions . . . in all fields of technology, provided that they are new, involve an
inventive step and are capable of industrial application.The article confirms that TRIPS requires
all its signatories to allow pharmaceutical product patents. Article 28, which defines the rights
conferred by a patent, prohibits third parties from making, using, offering for sale, selling or
importing a product that is patented without the consent of the patent holder. It thus prevents
generic drug manufacturers from infringing upon pharmaceutical product patents. Together,
Articles 27 and 28 of TRIPS establish an international patent protection regime for
pharmaceutical products. Over seventy countries signed on to TRIPS at the start of 1995,
including Spain, Portugal, Brazil, India, Mexico and Egypt. Today, with one hundred and fifty-
nine TRIPS signatories, Articles 27 and 28 enjoy near-universal authority. Signatories that
violate these Articles, or any other part of the TRIPS agreement, can be brought before the
WTOs dispute resolution body, which may allow other signatories to impose retaliatory trade
sanctions. The patent protections granted by Articles 27 and 28, however, have their limits. First,
Article 27 does not define the terms new, inventive step, and industrial application. TRIPS
signatories are thus free to define these terms in a way that makes it difficult to obtain
pharmaceutical product patents. Second, Article 27 permits exclusions from patentability where
necessary to protect order public or The Success of, and Response to, Indias Law against Patent
Layering 213 morality. However, this exclusion cannot be made merely because the
exploitation is prohibited by a states law, and it must be linked to a complete ban on the
commercial exploitation of the excluded invention. This is a very narrow limitation, since it
allows TRIPS signatories to prohibit pharmaceutical product patents only if all pharmaceutical
products in the country are produced and distributed noncommercial. Additionally, a signatorys
decision to use this exclusion is subject to a WTO panels scrutiny. Third, Article 31 of TRIPS
limits the scope of Article 28 by allowing signatory governments to undertake compulsory
licensing schemes for patents if they meet a set of conditions. Compulsory licensing occurs when
a government licenses, or permits a third party to license, a patent holders exclusive right to use,
manufacture, import or sell its patented invention, without the patent holders consent. Article 31
allows TRIPS signatories to license branded drug manufacturers product patents to generic drug
companies without the formers consent, for such reasons as poverty or high incidence of
disease. However, signatories that undertake compulsory licensing are required to pay patent
holders adequate remuneration. Although TRIPS has provided branded drug manufacturers
with an unprecedented level of international patent protection, this protection comes with limits.
The limits discussed above show that TRIPS signatories have several mechanisms at their
disposal to restrict the market exclusivity available to drug manufacturers. Low income TRIPS
signatories are likely to employ these mechanisms: the WTOs 2001 Doha Declaration, proposed
by a number of low-income countries, declares that the TRIPS agreement can and should be
interpreted and implemented in a manner supportive of WTO members right . . . to promote
access to medicines for all.

TRIPS constitute only one aspect of the global patent protection landscape. For the past five
decades, countries have been entering into bilateral and multilateral investment treaties. Today,
there are over three thousand such international investment agreements (IIAs), and over one
hundred and eighty countries have entered into at least one such agreement. IIAs enshrine an
assortment of standards for the treatment of foreign investors and their investments. They protect
investments made by one partys investors from direct and indirect expropriation by another
party, guarantee each partys investors fair and equitable treatment, and protect foreign investors
on the basis of most-favored-nation and national treatment principles. Moreover, IIAs allow
aggrieved foreign investors to directly settle their disputes with a host state through arbitration.
Given the ubiquity of IIAs, and the multinational nature of many pharmaceutical innovators,
states that look to limit the patent protections available to pharmaceutical innovators ought to be
aware of their obligations under these agreements. Most IIAs consider patents to be an
investment, and protect the foreign investors that directly or indirectly own patents in a country
from the expropriation of their intellectual property. A state can therefore revoke a
pharmaceutical innovators patent, only to learn that a foreign investor with standing under an
IIA owned that patent, and has decided to seek damages for the states breach of its obligation
not to expropriate foreign-owned investment. IIAs also protect foreign investors from the
indirect expropriation of their patents. Indirect expropriation refers to instances when an investor
still holds legal title to its investment, but is substantially deprived of the use of, or benefits from,
the investment as a result of state action. A state that issues a compulsory license for a foreign-
owned patent, rather than revoking the patent, might find itself in breach of an obligation not to
indirectly expropriate foreign investment. There is little certainty regarding what amounts to
indirect expropriation, and where the difference lies between non-compensable, legitimate state
regulation and compensable indirect Despite these uncertainties, one commentator notes that a
pharmaceutical innovator whose patent is subject to a compulsory license in a foreign country
may be able to seek relief for indirect expropriation under an available IIA, if
(1) The terms of the license, and the level of compensation provided, are such that the drug
manufacturer can claim substantial deprivation of its patent;
(2) The compulsory license goes against the legitimate or reasonable expectations of the
manufacturer; and
(3) Elements such as bad faith or discrimination influence the compulsory license.

IIAs become less useful to pharmaceutical innovators when a state denies a drug manufacturer a
patent, instead of granting but then revoking a patent. In these cases, there is a question as to
whether an invention that has not received a patent is an investment protected by an IIA. A few
IIAs suggest that patentable inventions may be considered investments: the bilateral investment
treaty between the United States and Jamaica, for example, includes patentable inventions in
its definition of investment, while the Canada-Argentina bilateral investment treaty speaks of
rights with respect to patents. However, manyif not mostIIAs include intellectual property
rights in their list of investments only insofar as these rights are recognized by the government
hosting the investment. This implies that inventions that have been denied patents are often
excluded from protection under IIAs. Licensing That said, a state that denies a pharmaceutical
innovator a patent in an opaque, inconsistent or arbitrary manner might be in breach of its
obligation to subject foreign investors to fair and equitable treatment (FET) under an IIA. The
FET standard is broad, and its meaning is grounded in the specific facts and the specific treaty
language of a particular case. Generally, it may be viewed as a guarantee by a host state to treat
foreign investors in a transparent, consistent, and even-handed manner, so as not to affect the
basic expectations of a foreign investor when it makes an investment. Several arbitral tribunals
have reasoned that not all opaque, or inconsistent state acts violate FETfor an act to violate
FET it must be grossly unfair, in a manner that shocks . . . a sense of judicial propriety. One
can conceive of certain circumstances under which a pharmaceutical innovator, subject to
foreign state actions that limit its market exclusivity over a drug, may be able to claim a violation
of FET.

Existence of Evergreening
It has been in practice since the passage of the Waxman-Hatch legislation (Drug price
competition and Patent term restoration act) in 1984, in which the pioneer drug can receive an
extension term equal to one-half the time of the investigational new drug (IND) period, running
from the start of the human clinical trial to the time till the new drug application (NDA) is
submitted.
Evergreening strategies usually followed by the pharmaceutical industries involve:
1. Redundant extensions and creations of next generation drugs which result in superfluous
variation to a product and then patenting it as a new application.
2. Prescription to over-the-counter (OTC) switch.
3. Exclusive partnerships with cream of generic drug players in the MARKET prior to drug
patent expiry thus significantly enhancing the brand value and interim earning royalties on
the product.
4. Defensive pricing strategies practice wherein the innovator companies decrease the price of
the product in line with the generic players for healthy competition and
5. Establishment of subsidiary units by respective innovator companies in generic domain
before the advent of rival generic players.
Effects of Evergreening Strategies
Extending the patent period seizes the generic drug manufacturing. Once the generic drugs are
being produced, the price of the drug can drop by as much as 90%. Additional costs caused by
delay in generic entry can be very significant for the public health budgets and ultimately the
consumer. The European Commission estimated a loss of around three billion Euros due to
delays in the entry of generic products caused by misuse of the patent system (European
Commission, 2009). In 2002, an extensive and lengthy inquiry by the US
Federal TRADE Commission (FTC), found that the Waxman-Hatch legislation had resulted in as
many as 75% of new drug applications by the generic drug manufacturers experiencing legal
actions under patent laws by the original brand name patent owner. This process helps in
extending the exclusivity of the manufacturer over the drug however this process has left a wider
gap between innovation and access. Competition leads to innovation, prolonging the protection
of ideas may freeze the development and utility of the product.
Control of Evergreening
Even though the courts have made some minimal efforts to limit evergreening practices using
existing doctrines, it fails to completely abolish this practice from the industry. In 2005, India
took a proactive step and amended the Indian Patent Act to introduce, inter alia, to curb
evergreening practices by statutorily prohibiting these practices.
Section 3(d) of Indias Patent Act states that the following are not inventions:
The mere discovery of a new form of a known substance which does not result in the
enhancement of the known efficacy of that substance or the mere discovery of any new property
or new use for a known substance or of the mere use of a known process results in a new product
or employs at least one reactant. Explanation - For the purpose of this clause, salts, esters,
polymorphs, metabolites, pure form, particle size, isomers, and mixture of isomers, complexes,
combinations and other derivatives of known substances shall be considered to be same
substance, unless they differ significantly in properties with regard to efficacy.
Australian law also includes safeguards against evergreening, by introducing penalties for such
activities in Section 26C and 26D of Australia Patent Act 1990 and a mechanism for damages to
be paid to the government for proven evergreening practices.
Article 18.9.4 of the Republic of Korea-United States Free Trade Agreement (KORUSFTA) has
been specifically drafted to permit the establishment of pharmaceutical patent anti-
evergreening oversight agency.
Novartis vs. The Supreme Court of India.
Novartis v. Union of India & Others is a landmark decision by a two-judge bench of the Indian
Supreme Court on the issue of whether Novartis could patent Gleevec in India, and was the
culmination of a seven-year-long litigation fought by Novartis. The Supreme Court upheld the
Indian patent office's rejection of the patent application.
The patent application at the center of the case was filed by Novartis in India in 1998, after India
had agreed to enter the World Trade Organization and to abide by worldwide intellectual
property standards under the TRIPS agreement. As part of this agreement, India made changes to
its patent law; the biggest of which was that prior to these changes, patents on products were not
allowed, while afterwards they were, albeit with restrictions. These changes came into effect in
2005, so Novartis' patent application waited in a "mailbox" with others until then, under
procedures that India instituted to manage the transition. India also passed certain amendments to
its patent law in 2005, just before the laws came into effect, which played a key role in the
rejection of the patent application.
The patent application claimed the final form of Gleevec (the beta crystalline form of
imatinib mesylate). In 1993, during the time India did not allow patents on products, Novartis
had patented imatinib, with salts vaguely specified, in many countries but could not patent it in
India. The key differences between the two patent applications, were that the 1998 patent
application specified the counter ion(Gleevec is a specific salt - imatinib mesylate) while the
1993 patent application did not claim any specific salts nor did it mention mesylate, and the 1998
patent application specified the solid form of Gleevec - the way the individual molecules are
packed together into a solid when the drug itself is manufactured (this is separate from processes
by which the drug itself is formulated into pills or capsules) - while the 1993 patent application
did not. The solid form of imatinib mesylate in Gleevec is beta crystalline.
As provided under the TRIPS agreement, Novartis applied for Exclusive Marketing Rights
(EMR) for Gleevec from the Indian Patent Office and the EMR were granted in November 2003.
Novartis made use of the EMR to obtain orders against some generic manufacturers who had
already launched Gleevec in India. Novartis set the price of Gleevec at USD 2666 per patient per
month; generic companies were selling their versions at USD 177 to 266 per patient per month.
Novartis also initiated a program to assist patients who could not afford its version of the drug,
concurrent with its product launch.
When examination of Novartis' patent application began in 2005, it came under immediate attack
from oppositions initiated by generic companies that were already selling Gleevec in India and
by advocacy groups. The application was rejected by the patent office and by an appeal board.
The key basis for the rejection was the part of Indian patent law that was created by amendment
in 2005, describing the patentability of new uses for known drugs and modifications of known
drugs. That section, Paragraph 3d, specified that such inventions are patentable only if "they
differ significantly in properties with regard to efficacy." At one point, Novartis went to court to
try to invalidate Paragraph 3d; it argued that the provision was unconstitutionally vague and that
it violated TRIPS. Novartis lost that case and did not appeal. Novartis did appeal the rejection by
the patent office to India's Supreme Court, which took the case.
The Supreme Court case hinged on the interpretation of Paragraph 3d. The Supreme Court
decided that the substance that Novartis sought to patent was indeed a modification of a known
drug (the raw form of imatinib, which was publicly disclosed in the 1993 patent application and
in scientific articles), that Novartis did not present evidence of a difference in therapeutic
efficacy between the final form of Gleevec and the raw form of imatinib, and that therefore the
patent application was properly rejected by the patent office and lower courts.
Although the court ruled narrowly, and took care to note that the subject application was filed
during a time of transition in Indian patent law, the decision generated widespread global news
coverage and reignited debates on balancing public good with monopolistic pricing and
innovation with affordability. Had Novartis won and gotten its patent issued, it could not have
prevented generics companies in India from continuing to sell generic Gleevec, but it could have
obligated them to pay a reasonable royalty under a grandfather clause included in India's patent
law.
Conclusion
The patent evergreening promotes development of unfair means of competition. Enhanced
intellectual property scrutiny may remove the roadblock for generic drugs and thereby provide
the masses with cost effective medicines. This will be required to bring balance between
inventions and affordability. If we see the actions taken by a few countries, it leaves others with
a ray of hope. The difficulty suggested by the fact that numerous knowledgeable observers have
reached strongly contrasting views concerning the propriety of improvement patenting, the
extent of any possible negative social impact of this practice, and even the term evergreening
itself. Further consideration of possible evergreening practices may nonetheless assist in the
identification of policy concerns, aiding in the current legislative debate of reforms to the patent
system.

A STUDY ON THE INDIAN PHARMACEUTICAL SECTOR

Introduction

The Indian pharmaceutical industry is a successful, high-technology-based industry that has
witnessed consistent growth over the past three decades. The current industry players comprise
several privately owned Indian companies that have captured a substantial share in the domestic
pharmaceutical market due to factors such as favorable government policies and limited
competition from overseas. However, the liberalization of the Indian economy is revolutionizing
Indian industries as they begin to emerge from domestic markets and gear up for international
competition. The Indian pharmaceutical industry is a prime example of an industry that is being
forced to revisit its long-term strategies and business models as India opens its markets to global
trade. Factors such as protection of intellectual property are increasing in significance due to the
growing recognition of the need to ensure protection of valuable investments in research and
development (R&D). Efforts are being made in India to curb problems of weak enforceability of
existing intellectual property legislations, and the Indian government is moving towards
establishing a patent regime that is conducive to technological advances and is in keeping with
its global commitments. India is among the top five emerging pharma market and has grown at
an estimated compound annual growth rate (CAGR) of 13 per cent during the period FY 2009
2013. The Indian pharmaceutical market is poised to grow to US$ 55 billion by 2020 from the
2009 levels of US$ 12.6 billion, according to the report titled India Pharma 2020 by McKinsey
& Co.
A new cluster of countries is contributing to the growth of the pharma industry, resulting in a
robust jump in exports of drugs. The countrys pharma industry accounts for about 1.4 per cent
of the global pharma industry in value terms and 10 per cent in volume terms. Both domestic and
export-led demand contributed towards the robust performance of the sector. An increase in
insurance coverage, an ageing population, rising income, greater awareness of personal health
and hygiene, easy access to high-quality healthcare facilities and favorable government
initiatives are some of the important factors expected to drive the pharma industry in India. The
Government of India has unveiled Pharma Vision 2020 aimed at making India a global leader
in end-to-end drug manufacturing.

Market Size

On improved utilization of manufacturing facilities, the domestic pharmaceutical market is likely
to see high revenue growth and profit margins. Pharmaceutical sales in India are expected to
grow by 14.4 per cent to US$ 27 billion in 2016 from US$ 22.6 billion in 2012, according to a
report by Deloitte called 2014 Global Life Sciences Outlook.
Indias pharmaceutical exports stood at US$ 14.84 billion in FY 201314. The United States
(US) is the countrys biggest market for pharma exports accounting for about 25 per cent,
followed by the United Kingdom (UK). Pharma exports from India will be more than the size of
the domestic sales by FY 2015, according to a report by India Ratings & Research. The country
provides generic medicines to almost 200 countries. It is responsible for about 40 per cent of the
generic and over-the-counter drugs consumed in the US. Indian generics market is expected to
grow to US$ 26.1 billion by 2016 from US$ 11.3 billion in 2011.

Investments

The allowance of foreign direct investment (FDI) in Indias pharma sector was well received by
foreign investors. The cumulative drugs and pharmaceuticals sector attracted FDI worth US$
11,588.42 million in the period April 2000February 2014, according to data published by
Department of Industrial Policy and Promotion (DIPP). Some of the major investment and
developments in the Indian pharmaceutical sector include the following:
Ashland Specialty Ingredients has opened a centre of excellence (CoE) focused on
pharmaceuticals in Hyderabad, Andhra Pradesh. The expertise offered here would be
predominantly in oral solid dosage form and a range of technical services for drug
companies.
Sun Pharma has agreed to buy out Ranbaxy for US$ 4 billion. The landmark deal makes
the combined SunRanbaxy entity the fifth largest generic drug-maker in the world, with
estimated revenues of US$ 4.2 billion for the year ended December 31, 2013.
Natco Pharma Ltd has received tentative approval for Oseltamivir Phosphate capsules
from the United States Food and Drug Administration (USFDA). Tamiflu
(Roches trade name for Oseltamivir Phosphate) had US sales of approximately US$ 495
million for the 12 months ending September 2013, according to IMS Health.
Strand Life sciences have received a US patent for virtual liver, which would aid the
pharmaceutical industry in understanding liver-related issues better. A virtual liver would
help in predicting and assessing hepatotoxicity of novel drug compounds in pre-clinical
studies.
Jubilant Life Sciences has received a nod from the USFDA to market a generic diuretic
medicine. The drug is used to treat fluid retention in the body caused by conditions such
as congestive heart failure and cirrhosis of the liver.
ChrysCapital has invested around US$ 40 million in Torrent Pharma, expanding its
portfolio of healthcare companies and taking up the total exposure in the sector to nearly
US$ 300 million.




Government Initiatives

As per extant policy, FDI up to 100 per cent, under the automatic route, is permitted in the
pharmaceuticals sector for Greenfield investment. Hundred per cent FDI is also permitted for
investments in existing companies under the government approval route. Further, the
Government of India has also put in place mechanisms such as the Drug Price Control Order and
the National Pharmaceutical Pricing Authority to address the issue of affordability and
availability of medicines. The Andhra Pradesh government has announced a new life sciences
policy for the state at the 11th edition of BioAsia 2014 in Hyderabad. According to the new
policy, the state will provide subsidies in power, water and provide land for setting up of new life
science industries in the state. The state government is planning to attract an investment of Rs
20,000 crore (US$ 3.33 billion) by encouraging more industries in the segment. In a move to
simplify the barcode procedures for pharmaceutical companies and to ensure quality, the
Government of India has decided to treat mono cartons containing medicines as primary level
packaging, as per the Directorate General of Foreign Trade (DGFT). The Ministry of Chemicals
and Fertilizers has unveiled a scheme that will enable pharma units in different clusters across
the country to set up common infrastructure facilities with substantial financial assistance from
the government.


Patent Law in India

Patent rights were introduced in India for the first time in 1856 and, in 1970, the Patent Act 1970
(the Patents Act) was passed, repealing all previous legislations. India is also a signatory to the
Paris Convention for the protection of industrial property, 1883, and the Patent Cooperation
Treaty, 1970. The Patents Act provides that any invention that satisfies the criteria of newness,
non-obviousness and usefulness can be the subject matter of a patent. Some of the non-
patentable inventions under the Patents Act include methods of agriculture or horticulture,
processes for the medicinal, surgical, curative, prophylactic or other treatment of human beings,
animals or plants or substances obtained by a mere admixture, resulting only in the aggregation
of the properties of the components, etc. With regard to pharmaceuticals, in the case of
substances intended for use or capable of being used as food, drugs or medicines or substances
produced by chemical processes, patents are granted only for the processes of manufacture of
such substances and not for the substances themselves. Hence, pharmaceutical products are
currently not granted patent protection under Indian law. India had a product patent regime for
all inventions under the Patents and Designs Act 1911. However, in 1970, the government
introduced the new Patents Act, which excluded pharmaceuticals and agrochemical products
from eligibility for patents. This exclusion was introduced to break away Indias dependence on
imports for bulk drugs and formulations and provide for development of a self-reliant indigenous
pharmaceutical industry. Thus, under our existing patent laws, molecules, which are products of
chemical reactions, are as such non-patentable in India. This restriction, coupled with the
restriction on mere admixtures resulting in aggregation of properties in which the components do
not exhibit any synergistic behavior, severely limit the items, which can be patented in India.
Actives prepared by chemical synthesis are as such non-patentable in India even if they exhibit
functional properties. Likewise, standard drug formulations in which the ingredients behave as
mere admixtures also do not qualify for patents in India. In such cases only the process, i.e. the
method of making the product is patentable. The lack of protection for product patents in
pharmaceuticals and agrochemicals had a significant impact on the Indian pharmaceutical
industry and resulted in the development of considerable expertise in reverse engineering of
drugs that are patentable as products throughout the industrialized world but unprotectable in
India. As a result of this, the Indian pharmaceutical industry grew rapidly by developing cheaper
versions of a number of drugs patented for the domestic market and eventually moved
aggressively into the international market with generic drugs once the international patents
expired. In addition, the Patents Act provides a number of safeguards to prevent abuse of patent
rights and provide better access to drugs. The term of patents in the case of processes or methods
of manufacture of a substance intended to be used or capable of being used as food or as a
medicine or drug is for a period of seven years from the date of filing or five years from the date
of sealing the patent, whichever is less. Patents relating to all other inventions are granted for a
period of 14 years from the date of filing the patent, unless shown to be invalid. The Patents Act
also has provisions relating to compulsory licensing. On the completion of three years from the
date of sealing the patent, any person interested in working the patented invention may apply for
a compulsory license with respect to the invention. The controller of patents may direct the
patent holder to grant such a license upon the terms as may be deemed fit, only if he or she is
satisfied that the reasonable requirements of the public with respect to the patented invention
have not been met or that the patented invention is not available to the public at a reasonable
price. In addition to compulsory licensing, the Patents Act includes a provision for licenses of
right where, in certain cases, the central government can, after the expiration of three years from
the date of the sealing of the patent, apply for an order that the patent may be endorsed with the
words license of right, on the grounds that the reasonable requirements of the public with
respect to the patented invention have not been satisfied or that the patented invention is not
available to the public at a reasonable price. Patents for certain substances that are not food items
or drugs as such but that are capable of being used as food items or drugs are deemed to be
endorsed with the words license of right immediately on completion of three years from the
date of the sealing of the patent. The effect of endorsing a patent with the words licenses of
right is that any person who is interested in working the patented invention in India may request
the patentee to grant a license. The granting of a license would be on terms that have been
mutually agreed upon, even if he/she is already the holder of a license under the patent. In case
the parties are unable to agree on the terms of the license, they can apply to the controller of
patents to arrive at a settlement of terms.



The Impact of the World Trade Organization on Pharmaceutical Patents.

The establishment of the World Trade Organization (WTO) has led to a tremendous paradigm
shift in world trade. The agreement on Trade-Related (Aspects of) Intellectual Property Rights
(TRIPS) was negotiated during the Uruguay round trade negotiations of the General Agreement
on Tariffs and Trade (GATT) and one of the primary reasons for incorporating intellectual
property issues into the GATT framework was the pharmaceutical industry. India signed the
GATT on 15 April 1994, thereby making it mandatory to comply with the requirements of
GATT, including the agreement on TRIPS. India is thereby required to meet the minimum
standards under the TRIPS Agreement in relation to patents and the pharmaceutical industry.
Indias patent legislation must now include provisions for availability of patents for both
pharmaceutical products and processes inventions. Patents are to be the Indian government is
moving towards establishing a patent regime that is conducive to technological advances and is
in keeping with its global commitments. Granted for a minimum term of 20 years to any
invention of a pharmaceutical product or process that fulfils established criteria. Compulsory
license provisions under Indian law will be required to be limited and conditional to comply with
the TRIPS Agreement, and the government will grant such licenses only on the merit of each
case after giving the patent holder an opportunity to be heard. In addition, there will be no
discrimination between imported and domestic products in the case of process patents, and the
burden of proof will rest with the party that infringes. India has decided to avail itself of the full
transition period for developing countries and has until January 2005 to extend patent protection
to pharmaceutical products. In keeping with the TRIPS commitments, India has started on a
process of amending the Patents Act by providing exclusive marketing rights (EMRs) and
creating a mailbox system for patent applications for a period of five years or until the patent is
granted or rejected, whichever is earlier. This provision was introduced in the Patents
(Amendment) Act 1999, which grants the inventors what is known as pipeline protection. If
the applicant has already filed an application for his or her invention in any convention country
and a patent or EMR has been granted in that country on or after 1 January 1995, the applicant
would be eligible to file for patent to pharmaceutical and agrochemical products in India. These
patent applications will be kept pending. When India changes its patent law as per WTO
recommendations, the pending patent application will be eligible for product patent. Until such
patent is granted or rejected or for a period of five years (whichever is less), the applicant will be
granted EMRs in India if the application is found eligible. The amended Patents Act also
provides for compulsory license for the EMR on the same lines as patents and also omits a
provision that prohibited Indian inventors from applying for patents outside India without
approval of the Indian government. The new legislative measures to meet Indias TRIPS
obligations are currently in the process of being finalized. The Patents (Second Amendment) Bill
1999, which introduces product patents for pharmaceuticals and agrochemicals in Indias patent
law, is yet to be enacted, and recent press reports have indicated that the Bill is soon to be tabled
before the Indian parliament.


Patents and the future of Indian pharmaceutical sector

The absence of product patent protection for pharmaceuticals and agrochemicals led many
multinationals to limit their portfolios to patent expired products or a few selected patented
products. This resulted in an erosion of their market share because local manufacturers
introduced the most advanced medicines through reverse engineering. Foreign firms were
required to pay royalties for international drugs, while Indian companies could access the newest
molecules from all over the world and reformulate them for sale in the domestic market. Thus,
this resulted in the systematic weakening of patent rights for pharmaceutical products in India
and led to the exodus of several international research-based pharmaceutical firms. The
obligations imposed on India under the TRIPS Agreement are going to have a significant impact
on Indias successful bulk and formulation-oriented pharmaceutical industry. Indian companies
will have to compete with the multinationals by focusing on drug development and thereby
producing their own patented products. Alternatively, Indian companies could focus on
producing patented drugs under license from foreign companies or concentrate on generating
revenues from producing generic drugs. Currently, conflicting views exist within the Indian drug
companies with regard to Indias transition into Indian companies need product patent protection
to encourage research in developing inexpensive drugs that suit the Indian disease profile. The
product patent regime. Some of the existing pharmaceutical companies believe that product
patents will pave the way for innovation in India, while others hold the view that the high cost of
R&D will stifle the growth of the Indian pharmaceutical industry. The key to survival for Indian
pharmaceutical companies would be the exponential growth of R&D expenditure. Indian
companies need product patent protection to encourage research in developing inexpensive drugs
that suit the Indian disease profile. Already the larger firms are increasing their total R&D
expenditure as a percentage of sales and they are beginning to move in the direction of new
molecule discovery rather than concentrating solely on development research. While some firms
may not make the transition, signs thus far suggest that a number of Indian firms will
successfully weather the transition and come out as more innovative companies. In addition, the
advent of product patents is bound to be a boost for multinational companies that have
previously been reluctant to invest in India in the absence of product patent protection, and it will
increase competition in the domestic market.

Pharmaceutical Sector Analysis Report 2013.

The Indian Pharmaceutical industry is highly fragmented with about 24,000 players (330 in
the organized sector). The top ten companies make up for more than a third of the market.
Globally, the Indian pharma market (IPM) is ranked 3rd largest in volume terms and 10th
largest in value terms.
The domestic market grew by 14% YoY for the 12 months period ended in Dec 2012 to Rs
690 bn. In the last five years, the IPM has witnessed compounded annual growth of 12.5%.
The pharmaceutical sector meets around 70% of the country's demand for various types of
formulations and active pharmaceutical ingredients (APIs).
Besides the domestic market, Indian pharma companies also have a large chunk of their
revenues coming from exports. While some are focusing on the generics market in the US,
Europe and semi-regulated markets, others are focusing on custom manufacturing for
innovator companies. Biopharmaceuticals is also increasingly becoming an area of interest
given the complexity in manufacture and limited competition.
The drug price control order (DPCO) continues to be a menace for the industry. There are
three tiers of regulations - on bulk drugs, on formulations and on overall profitability. This has
made the profitability of the sector susceptible to the whims and fancies of the pricing
authority. The recently announced pricing policy by the DPCO on 348 drugs has already
impacted various pharma companies.
Introduction of GDUFA (Generic drug User Fee Act) in the US during July 2012 too had a
negative impact on pharma companies. As per this Act, the generic companies are required to
pay user fees to USFDA, for application of drugs and manufacturing facilities. This fee will be
utilized by USFDA to engage additional resources in order to speed up the approval process.
On back of this, various companies had withdrawn pending applications which they believed
to be less accretive. Though the approval procedure is expected to escalate, this will happen
only over a period of time.
As the patent cliff is approaching, Indian pharma companies have increased their R&D
expenses. The companies are spending more to establish niche product portfolios for the
future.

FY13/CY12 was challenging on the domestic front. The companies witnessed sluggish
growth on the back of severe competition in the acute segment, increasing competition from
unlisted players and so on. Though the Indian Pharma Industry grew by 14% (Dec 2012) vs.
15% in Dec 2011, large part of the growth was contributed by the chronic segment.
MNC pharma companies continued to witness subdued growth during FY13/CY12. These
companies were impacted by the increasing competition, drug launches by other companies
before patent expiry, through compulsory licensing and patent infringements. Only couple of
companies exhibited better growth. The margins of these companies remained subdued due to
increasing expenses and slower top line growth.
In the US, generic companies witnessed mixed growth. While some of the companies
benefited from the low competition launches, others got impacted due to delay in approvals.
Though there were not many blockbuster launches during FY12 as compared to FY11,
various companies did manage to display better growth. On the other hand, several regions of
Europe continued to face pressure on increasing efforts by governments to reduce their
healthcare burden.
Rupee depreciation was one important aspect which helped the industry especially those
companies who had not hedged their receivables.
The industry continued to face challenges on the regulatory front. During the year, there were
quite a few Indian companies that faced issues from the USFDA, as they lacked good
manufacturing practices (GMP). Because of this, there were instances of import alerts being
issued, drug recalls, warning letters and so on. The regulators have become more stringent
now and have also been conducting surprise checks.
Indian companies, in order to fuel their top line, have also made various acquisitions. Further,
launches of branded drugs in the US market have also increased. Drugs like Absorica,
Topicort, Dymista are few classic examples of branded launches made by these companies in
the US market.


As per IMS, India's pharmaceutical market size is expected to rise from about US$ 14 bn in
2011 to US$ 24-34 bn by 2016. The growth in Indian domestic market will be boosted by
increasing consumer spending, rapid urbanization, and increasing healthcare insurance and so
on. However, the introduction of the pricing policy will have negative impact on pharma
companies. MNC pharma companies, in particular, will bear a bigger brunt of the pricing
policy since they are entirely focused on the domestic market.
The life style segments such as cardiovascular, anti-diabetes, anti-depressants and anti-
cancers will continue to be lucrative and fast growing owing to increased urbanisation and
change in lifestyle patterns. Going forward, better growth in domestic sales will depend on
the ability of companies to align their product portfolio towards these chronic therapies as
these diseases are on the rise
In various global markets, the government has been taking several cost effective measures in
order to bring down healthcare expenses. Thus, governments are focusing on speedy
introduction of generic drugs into the market. This too will benefit Indian pharma companies.
However, despite this huge promise, intense competition and consequent price erosion would
continue to remain a cause for concern. Over and above this, following GMP will be
important criteria for companies in order to grow in the global markets.
For the US market, Indian companies are developing niche portfolios in various segments.
High margin injectables, dermatology, respiratory, biogenetics, complex generics etc. have
become an area of interest. Most of the Indian pharmacy companies have been working on
these niche drugs in order to optimize growth and margins. Thus, post patent cliff, the
companies which have developed their product basket in the niche category will be ahead in
the curve. Moreover, generic penetration in the US is expected to peak out at 86-87% over
the next couple of years from 83% currently.


Overview of Patent in India Pharmaceutical Sector.
Intellectual property (IP) filings worldwide grew significantly in 2010 after experiencing a
considerable drop in 2009. The growth of IP filings was stronger than overall economic growth.
After this drop, patent and trademark filings worldwide grew by 7.2 per cent and 11.8 per cent.
China and the US, the two offices accounted for the majority of worldwide growth. In the case of
China, IP growth rates were more than double its GDP.
The upsurge witnessed is led by China, with a growth rate of over 29 per cent. The same figure
stands at little over 11 per cent for India. Patent applications growth rate of India, though being
higher than that of the whole world, i.e. just over 7.5 per cent, India accounts to only two per
cent of the total number of patent applications made globally. This when compared to other
countries with high growth rate is very nominal. China takes over approximately a full quarter of
the total patent applications in 2011 where as the US stands next to China with ~23 per cent and
Europe at ~16 per cent.
In India, most of the patent filings are made by non-residents. On the contrary, the indigenous
patent filings of rest of the world and China account to a majority chunk in patent filings.
The graphs show the ratio of residents filing patents vs. non-residents filing patents: globally, in
China and in India. On comparing the graphs, it reveals that over 60 per cent of the patent filings
are done by residents. This shows the development and the growth of the indigenous units. When
it comes to China, the same number grows up to 79 per cent in 2011. In China, the patent filings
by residents have grown from ~54 per cent in 2005 to ~79 per cent in 2011.
The scenario seems completely opposite in India. Out of total patent filings that happen in India,
residents filing patents account to just ~20 per cent whereas non-residents who file patents in
India account to ~80 per cent. This figure has been merely changing to Indias favour in recent
times. From 19 per cent in 2005, the Indian residents have filed up to ~21 per cent in 2011.
The current figures accrue to a high number of filings from non-residents, this portrays that the
indigenous units are yet to come up to a level where they can compete globally. The non-
residents look towards harnessing the Indian market for their beneficiaries. This shall also impact
the Indian economy adversely by way of slow GDP growth and the growth being overtly
attributed to overwhelming rise of non-resident filings in India. This may lead to initial inflow of
FDI, but in the long term, it may result in capital outflows as well. To help the Indian economy
be self-competitive, innovation and inventions amongst the domestic units should play a vital
role. The ratio of domestic filings to non-residential filings needs to be reversed in coming time.
Though the number of filings by domestic units has been growing constantly, the pace is not
sufficient to beat the overt filings by non-residents.
























Summary of pharma patenting statistics in India
In Indian pharmaceutical sector, the number of patents filed have increased from little over 3500
in 2004-2005 to over 5000 in 2010-11, thus the compounded annual growth of patents being
filed in this industry in India was found to be around five per cent for the period 2004 -11.
However, there has been a significant change in the number of patents granted. It has raised
manifold from 263 in 2004-05 to 2364 in 2008-9 to approximately 1000 in the recent times. Thus
it not only indicates a significant improvement in quality of patents being filed but also
seriousness among players about their IP. Another important statistic that might be worth looking
at is how pharma patenting has increased vis--vis overall growth in the total number of patent
filed in India. The graph below demonstrates that growth in pharma industry has been slower as
compared to overall growth of patenting in India. Further, it is to be noted that patent filing in
pharma sector in India is being led by MNCs rather that indigenous companies, which is a
serious threat to the interests of Indian companies.

Total patent filings (2005-2011; X-axis: years, Y-
axis: Number of patents filed)


(Source: WIPO-IP Statistics)































History of pharma patent law and trade practices in India
During the last two decades, Indian patent regime has undergone humongous changes,
complying with the trade Related Aspects of Intellectual Property Rights (TRIPS) agreement to
move hand in hand with the global patent scenario.
The 1970s Patent Act was made with an objective to encourage the development of an
indigenous Indian pharma industry and to guarantee that the Indian public had access to low-cost
drugs.
Patent filings: Residents vs. Non-residents



(Source: WIPO-IP Statistics)

Growth of total number of patents filed in pharma industry
(Includes drugs and bio-tech)

(Source: IPO)


As per Indian Patents Act 1970 only process patents were allowed for chemical entities while
pharma product patents were not entertained or admissible. The term of patent protection for
even the pharma process patents was intentionally kept short so as to develop and test new drugs.
This allowed Indian companies to practice reverse engineering. Such a patent act groomed the
domestic industry to build up considerable competencies and offer a large number of cheaper
generic versions of patented pharma products at lower cost as long as they used a production
process that differed from that used by the patent owner.
India signed the GATT on April 15, 1994, thereby making it mandatory to comply with the
requirements of GATT, including the agreement on TRIPS. The Patent (Amendment) Act 2005
implemented the product patent regime in India. The Amendment granted new patent holders a
20-year monopoly starting from the date the patent was filed. Product patent regime encouraged
significant numbers of foreign pharma companies to participate in the Indian market and, in
2005; foreign drug producers filed approximately 8,926 patent applications to cover their
patented drugs sold as generics in the Indian market.
However, patentability still remains lower in India than in other market such as Brazil, Russia,
the US, Europe. This is mainly because Indian patent law does not allow patenting of different
forms such as salts, esters, ethers, polymorphs and isomers. These decisions are taken on a case
by case basis.
Predicting the future
Looking at the statistics in section one of this article, the number of patent filings are not still
very high and CAGR growth is just ~5 per cent. This indicates that generic products shall
continue to dominate the Indian market. While the patent law will encourage the launch of new
and more patent protected products, the effort on innovation will still be led by the foreign
players rather than indigenous companies. According to a prediction by McKinsey, the
innovative products can capture up to a 10 per cent share of total market by 2015. These statistics
can go in favour of Indian players only if they understand the value of R&D and innovation, else
if they just keep going behind generics they will start losing their market shares slowly to
innovators.
A graph of similar prediction for some other developing countries shows that looking at Brazils
case, we can definitely relate to what we predicted above as you can see that 14-15 per cent share
is attributed to innovative products and out of that 65-70 per cent is the share of MNCs.
Accordingly, if we do not groom indigenous innovation, Indian companies are going to lose the
market to MNCs as innovative products capture more and more market. The good thing is that
we can see that leading Indian companies are thinking in the same direction and are spending
more on research and development of new molecules.



















Conclusion
The process of liberalization initiated in 1991 has helped develop policies that are focused on
attracting capital from overseas and making India a global industrial base. The resultant inflows
of foreign direct investment and technology transfers have created an environment for dynamic
growth and increased competitiveness of Indian industry. The current revenues of the Indian
pharmaceutical industry are estimated at US$5.5 billion and it is expected to grow at a
Growing INVESTMENTS in R&D by major companies
(In Rs Crs Y axis)

(Source: Product Patent Regime Posed Indian Pharma
Companies to Change Their MARKETING Strategies
compounded annual growth rate of 19% and touch US$25 billion in revenue by 2010. India is
slowly moving into global markets and competing with international quality standards and
prices. Although R&D is an important factor to ensure a competitive edge in the international
arena, the future of the Indian pharmaceutical industry hinges on patent protection.

Rising R&D can be attributed to rising number of patents in pharma sector
R&D in pharma has been increasing significantly, from approximately $120 billion in 2007 to
approximately a little over $135 billion in the recent times. With the kind of investment going
into R&D by the key players, they would want to maximize their earning by patenting their
process and products. We hope that even the small and mid-sized pharma companies start
thinking in this direction so that Indian pharma industry as a whole can emerge as leader to the
worldwide pharma industry. And with the stronger yet highly economic patent regime in India,
they can be sure of protecting their interests at least in their domestic segment. For markets
outside India and to share the costs of clinical trials, etc - they can get in to a JV with other
companies and can out-license their patented molecules to MNCs on their own terms.