The Game Changers in 2012 and A Crystal Gazing into 2013

Wish You and Your Dear Ones Best of Health, Happiness, Success and Prosperity in The Brand New Year.

Welcome 2013

 The Global Pharmaceutical Industry (GPI), by and large, used to be considered as ‘recession-proof’ for various valid reasons. However, the waves of ‘global economic meltdown’ since last several years prompted the rating service Moody to downgrade its outlook to ‘Negative’ in 2007.

However, on September 24, 2012 the same rating service upgraded the outlook of the GPI to ‘Stable’ from “Negative,” indicating subsiding impact of the wave of drug patent expiration, come 2013.

Various other sources also vindicate that the GPI has in fact now bottomed-out. Available data from IMS Health estimates that the industry will grow from US$ 956 billion in 2011 to around US$ 1004 billion by end 2012 with a growth of approximately 5 percent driven mainly by:

-      Cost optimization

-      Higher  disease prevalence across the world

-      Increasing per capita income

The United States continue to maintain its top slot in the industry followed by the European Union and Japan.

All may not be hunky-dory in the GPI just yet, nevertheless 2013 does point towards some early signs of revival after a very uncertain period, prompting a paradigm shift, especially in the mind-set of the global players. This emerging trend could well form a separate topic of discussion altogether in some other time.

Buoyancy in India:

Back home in India the situation is quite different. The Indian Pharmaceutical Industry (IPI) still remains recession-proof. The market buoyancy continued as ‘PharmaTrac India’ reported a turnover of the domestic pharmaceutical market at around US$ 12.6 billion growing over 15 percent annually.

In this article I shall focus on the domestic pharmaceutical market of India.

The Game Changers of 2012:

Looking back, during the year 2012 the ‘Top Five Game Changers’ for the Indian Pharmaceutical Market (IPM), in my opinion, are as follows:

1. A DIFFERENT ‘Drug Policy’ after 10 years:

The ‘National Pharmaceutical Pricing Policy 2012 (NPPP 2012)’ heralds a paradigm shift in the pharmaceutical price control regime of India for the years ahead with a switch from the ‘Cost Based Pricing CBP)’ methodology to ‘Market Based Pricing (MBP)’ and also in its ‘National List of Essential Medicines 2011 (NLEM 2011)’ based span of price control.

The industry has already articulated, though the new policy will make an immediate and significant adverse financial impact on them, market based pricing is directionally prudent for all in the longer term. They feel that MBP is expected to help improving both affordability and availability of medicines.

Such a policy, some stakeholders believe, along with the Government initiative to make essential medicines available free of cost through public hospitals and health centers will benefit all sections of the society, giving a boost to overall consumption of pharmaceutical products in India. It is also good to note that the new policy promises price control exemptions for patented drugs and products with NDDS developed in India through indigenous R&D.

NPPP 2012, is expected to be a game changer for the industry by many, as it will help bringing more stability in the pharma pricing regulation system of India.

However, there is a flip side to this story.

All stakeholders are not equally happy with the NPPP 2012.

In this context, it is worth noting that in an ongoing Public Interest Litigation before the Supreme Court by ‘All India Drug Action Network (AIDAN)’, the petitioner has already drawn the attention of the Court to their ‘Interim Application’ challenging the NPPP 2012 by stating that the ‘policy finalized by the Government will in effect do away with the very notion of price controls’. In response the apex court reportedly had observed that it will consider the averments of AIDAN in the next hearing of January 15, 2013, once the printed Gazette Notification is put on record before the Court by the Government.

2. First ever grant of Compulsory License in India:

On March 12, 2012, Indian Patent Office (IPO), in its landmark ruling, granted its first ever Compulsory License (CL) for Bayer’s patented kidney and liver cancer drug Nexavar (Sorafenib), to the generic pharma player Natco, broadly citing the following reasons:

  • Reasonable requirements of public under Section 84 have not been satisfied.
  • The Patented Drug was not available to the public at a reasonably affordable price as per Section 84 (1) (b).
  • Patented invention is not worked in the territory of India as per Section 84 (1) (c)

The 62 page order of the Controller General of Patents, Designs and Trade Mark (CGPDTM) granted the CL to Natco for the rest of patent life of sorafenib in India at the high end of the UNDP 2001 royalty guidelines at 6 percent.

Though the research based pharmaceutical industry across the world expressed its deep disappointment and anguish over the judgment, many experts and NGOs from different parts of the globe, on the contrary, have reportedly hailed this order as a game changer to improve access to high-priced patented medicines in the country with a firm conviction that the ‘Intellectual Property Rights (IPR)’ and ‘Patients’ Access Issues’ can not tread different paths. They have reportedly opined that CGPDTM has set a right precedence by granting a CL for an exceptionally high-priced sorafenib, which will ensure, in the times to come, that “patent monopolies are kept limited, especially when the patented products are not ‘reasonably affordable’, as stated in the statute”.

Many people, therefore, envisage that if responsible pricing strategy for patented medicines is not followed in India even after the grant of first ever CL by the IPO, one could  well expect other generic players applying for CL mainly for the imported high priced patented medicines purely as a business strategy, but citing the reason of improving patients’ access in the country.

3. First ever Guidelines for Biosimilar Drugs in India: 

Across the world, biologic drugs have a successful record in treating many life threatening and other complicated ailments. Expiration of product patents of the first major group of originators’ biologic molecules has led to the development of products that are designed to be ‘similar’ to the originators’ products, as it is virtually impossible to replicate any protein substances, unlike the ‘small molecule’ drugs. These are ‘Biosimilar Drugs’, which rely, in part, on prior information obtained from the innovators’ products and demonstration of similarity with the originator’s molecule based on detailed and comprehensive product characterization, for their marketing approval.

India has the potential to become one of the key players in the development and manufacture of biosimilar drugs, not only to serve the needs of the local population, but also for export to large developed markets. However, for this dream to materialize, a science-driven ‘Biosimilar Guidelines’ are absolutely necessary. These guidelines provide a regulatory framework or pathway to ensure that ‘Biosimilar Drugs’ are of good quality and demonstrably similar in efficacy, safety and immunogenicity to the original reference products.

Considerable developments have occurred across the globe, in the scientific and regulatory understanding of biosimilar drugs. Nearly all developed nations and many developing countries have now defined appropriate regulatory framework for the same. However, due to lack of such guidelines in India, until recently, there have been instances of so called ‘biosimilar drugs’ being approved for marketing, reportedly with sub-optimal testing and dossiers, thereby putting into question product quality, comparability and patient safety.

Under this back-drop, the need for such a regulatory framework and comprehensive guidelines is even greater in India, mainly in the light of sub-optimal pharmacovigilance system in the country, besides other reasons.

Keeping these issues in view, the Ministries of Health & Family Welfare and the Science and Technology released India’s first “Guidelines on Similar Biologics: Regulatory Requirements for Marketing Authorization in India” in 2012. These Guidelines have been made operational effective September 15, 2012.

Long awaited new ‘Biosimilar Guidelines’ of India, demonstrating an overall similarity in the philosophy and approach with the those in the U.S and Europe, though a belated move by the Government, but certainly yet another game changer of 2012.

I reckon, this critical step will help ‘Made in India’ biosimilar drugs availing opportunities in the emerging biosimilar markets of the world including Europe and America.

4. Increase in National Health Expenditure Budget from 1% to 2.5% of GDP:

This decision of the Government in 2012 could help paving the way to provide basic healthcare services to all citizens of India through “Universal Health Coverage (UHC)”, which has the vast potential to be another game changer in the healthcare space of India.

It is envisaged that UHC will ensure guaranteed access to essential health services for every citizen of the country, including cashless in-patient and out-patient treatment for primary, secondary and tertiary care. All these services will be available to the patients absolutely free of any cost.

Under UHC all citizens of India will be free to choose between Public Sector facilities and ‘contracted-in’ Private Providers for healthcare services. It is envisaged that people would be free to supplement the free of cost healthcare services offered under UHC by opting to pay ‘out of pocket’ or going for private health insurance schemes.

Thus, UHC, I reckon, will also be able to address simultaneously the critical issue of high ‘out of pocket’ healthcare expenses of the common citizens and at the same time increase consumption of overall healthcare, giving a boost to the growth of the pharma industry together with other healthcare sectors.

Implemented sooner, ignoring motivated stalling tactics by the vested interests, if any, could usher-in the dawn of a new healthcare reform process in India for all.

5. Announcement of Distribution of Essential Drugs free of cost to all, from Government Hospitals and Dispensaries:

In July 2012 the Government of India took a landmark ‘Public Healthcare’ related initiative to provide unbranded generic formulations of all essential drugs, featuring in the ‘National List of Essential Medicines 2011’, free of cost to all patients, from the public hospitals and dispensaries across the country.

This social sector project was expected to roll out, as reported in the media, from October/November 2012 with a cost of around US$ 5 billion during the 12th Five Year Plan period of the country. Considering medicines account for around 70% of the total ‘Out of Pocket’ expenses, this particular initiative is expected to be yet another game changer to benefit, especially the poorer patients of the society.

This new scheme, I reckon, has also the potential to hasten the overall growth of the pharmaceutical industry, as poor patients who could not afford will now have access to essential medicines. On the other hand, rapidly growing middle class population will continue to favor branded generic drugs prescribed by the doctors at the private hospitals and clinics.

Some people are apprehending that generic drug makers will have brighter days as the project starts rolling on. This apprehension is based on the assumption that large branded generic players will be unable to take part in this big ticket drug procurement process of the Government, which seems to be imaginary.

However, in my view, it could well be a win-win situation for all types of players in the industry, where both the generic-generic and branded-generic businesses will continue to grow simultaneously.

That said procedural delays and drug quality issues, while procuring cheaper generics, may pose to be a great challenge for the Government to ensure speedier implementation of this project. Drug regulatory and law enforcing authorities will require to be extremely vigilant to ensure that while sourcing cheaper generic drugs, “Public health and safety” due to quality issues do not get compromised in any way.

A Crystal Gazing into 2013:

While Crystal Gazing into 2013, following seven possible developments come to the top of my mind:

  1. New Drug Policy may get caught in Public Interest Litigation (PIL).
  2. UHC related pilot projects may start coming up.
  3. More stringent regulatory requirements for Clinical Trials, Product Marketing approvals, Pricing of Patented Medicines and Ethical Marketing practices may come into in-force.
  4. Along with public investments more private initiatives, both global and local, are expected in the healthcare infrastructure space including in e-healthcare.
  5. Domestics Pharma Companies could challenge increasing number of patents and may also apply for Compulsory Licenses following the set precedence of 2012.
  6. The Supreme Court judgment on Glivec case could bring more clarity in ‘incremental innovation’ in general and the Section 3(d) in particular.
  7. More consolidation within the pharmaceutical industry may take place with valuation still remaining high.


The year 2012, especially for the pharmaceutical industry in India, was indeed eventful. The ‘Top Five’ that I have picked-up out of various interesting developments during the year, could in many ways be the ‘Game Changers’ for the industry during the years ahead.

Key measures, both in the public and private space, be it fostering R&D or improving access to healthcare for the general population, fell well short of adequate even in 2012.

My ‘Crystal Gazing into 2013’, if comes true, will make the year even more eventful in India. The new year could signal herald of yet another interesting  paradigm. A paradigm that may churn quite different sets of rapidly evolving issues requiring more innovative honed skill-sets for their speedy redressal, as the time keeps moving on.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion and also do not contribute to any other blog or website with the same article that I post in this website. Any such act of reproducing my articles, which I write in my personal capacity, in other blogs or websites by anyone is unauthorized and prohibited.


Grant of Compulsory License for Bayer’s Nexavar in India raises more questions than answers

On March 12, 2012, the Patent Office of India, in its landmark ruling, granted its first ever Compulsory License (CL) for Bayer’s patented kidney and liver cancer drug Nexavar (Sorafenib), to the generic pharma player Natco, broadly citing the following reasons:

  • Reasonable requirements of public under Section 84 have not been satisfied.
  • The Patented Drug was not available to the public at a reasonably affordable price as per Section 84 (1) (b).
  • Patented invention is not worked in the territory of India as per Section 84 (1) (c)

The 62 page order of the Controller General of Patents, Designs and Trade Mark (CGPDTM) granted the CL to Natco for the rest of patent life of sorafenib in India at the high end of the UNDP 2001 royalty guidelines at 6 percent.


Sorafenib was co-developed and co-marketed by Bayer and Onyx Pharmaceuticals  for the treatment of advanced  renal cell and hepatocellular carcinoma. The drug got its first regulatory approval from the US FDA for advanced renal cell carcinoma in 2005.

National Institute of Health and Clinical Excellence (NICE) of UK had indicated that the drug extends life of the kidney cancer patients by three months on an average.

As stated earlier, in March 2008, Indian patent for Sorafenib was granted to Bayer by the CGPDTM. Thereafter, in December 2010 Natco had requested for a voluntary license from Bayer, which was rejected by the patentee.

It has been reported that sorafenib was registered as an ‘orphan drug’ in the US. The R&D cost of sorafenib was partly subsidized by the US Orphan Drug tax credit.

Mixed reaction:

Though the research based pharmaceutical industry across the world expressed its disappointment over the judgment, many experts and NGOs from different parts of the globe have opined that CGPDTM has set a right precedence by granting a CL for sorafenib, which will ensure, in the times to come, that patent monopolies are kept limited, especially when the patented products are not “reasonably affordable”.

Many people, therefore, envisage that the grant of the first ever CL by the Indian Patent Office could ultimately open the door for other generics players of India to apply for the same on similar grounds and mainly for ‘non-working of patents’, as many patented medicines are now imported into India by the respective global players.

Granting CL should be the last resort:

While none can deny that all citizens of India should have access to innovative and lifesaving medicines, as will be required for their medical treatment, it appears rather impractical to envisage that routine issue of CL by the Indian Patent Office will be able to resolve this critical issue on a long term basis.  Grant of CL, if any, I reckon, should be taken only after exhausting all other access improvement measures.

Working of a patent:

In this particular case, it has been decided by the CGPDTM that working of a patent will require the concerned company to manufacture the drug in India in a reasonable quantity. The argument of the CGPDTM in this respect, many experts believe, is quite a stretch of an interpretation of the statute.

This is mainly because, as one of the signatories of TRIPS, India has a national commitment for adherence to this important international agreement. It is, therefore, widely believed, if importation is not considered as working of patent, the country could expose itself to the risk of  violation of the Article 27.1 of TRIPS, both in letter and spirit.

The Article 27.1 of TRIPS:

The Article 27.1 of TRIPS on ‘local working of patents’ indicates as follows:

“1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”

Thus as per Article 27.1 of TRIPS, if commercialization of products patented in India, is done locally either through imports or local manufacturing, should be considered as ‘local working of patents’.

Form 27 vindicates the fact:

Form 27 of the Indian Patents Act, which is a statement regarding the working of patented inventions on commercial scale in India, in its point number 3, under ‘if worked’ states as follows:

“If worked: quantum and value (in Rupees) of the patented product:

  1. Manufactured in India
  2. Imported from other countries (give country-wise details)”

Thus, when Form 27 itself accepts importation as ‘local working of patent’, it is indeed intriguing why was the decision to the contrary taken by the CGPDTM?

Moreover, it is worth noting that the term ‘manufacture in India’ was deleted from the earlier Section 90 (a) of the Patents Act.

A statutory requirement:

CGPDTM through a circular dated December 24, 2009, directed all Patentees and Licensees to furnish information in ‘Form No.27’ on ‘Local Working of Patents’ as prescribed under Section 146 of the Patents Act.

It will be interesting to know, whether CGPDTM in response to Form 27 submissions of Bayer had informed them earlier that the Nexavar Patent has not been worked in India. If not, what is then the sanctity of Form 27 filing?

Delhi High Court Judgment:

Further, it has been well reported that in the legal case of ‘Telemecanique & Controls (I) Limited Vs. Schneider Electric Industries SA 94(2001)DLT865’ on working of patents, the Delhi High Court had concluded that importation would amount to working of Patents.

India specific pricing for innovative drugs is not uncommon:

At this stage, it is worth mentioning that India specific pricing for innovative drugs are not uncommon in the country at all. Following are some good examples:

  • GlaxoSmithKline  Pharmaceuticals has already announced its differential pricing system for India and will sell its innovative drugs at prices 25% to 40% less than what those are in the US.
  • MSD  has already introduced its India specific price for patented products. Their patented cervical cancer drug Gardasil is being sold in India at 75% -80% less than the global prices.
  • Moreover, MSD’s patented anti-diabetic drug Januvia (sitagliptin phosphate) is locally sourced and marketed at one-tenth of the global price.
  • In 2008 Novartis  reportedly tied up with the domestic pharma major USV to market its patented anti-diabetic drug Galvus (Vildagliptin) by pricing it lower than Januvia. According to reports, Novartis markets Galvus in the metros, while USV markets the same brand in tier two and three cities of India.
  • Roche  has recently collaborated with the domestic pharma player Emcure Pharmaceuticals to manufacture its two well-known biologics Herceptin and MabThera not only to cater to the domestic needs, but also for export to other developing markets.

Manufacturing of a small quantity locally – an issue:

As quoted in the order of the CGPDTM there are around 8842 eligible patients for sorafenib in India. All these patients put together will require Nexavar ranging from 27000 (Bayer’s figure) to 70000 boxes (NATCO’s figure) per year.  Thus, the moot question remains: even for such small annual requirements, should global companies set up manufacturing facilities in all the countries like, India.

Another question: if other smaller markets of the world also make local manufacturing mandatory for any pharmaceutical products that will be sold in their respective countries, will the Indian players find those markets attractive enough to expand their business? In that case who will be the net losers?… Patients?


If the issue of whether importation will be considered as ‘local working of patents’ or not is not answered conclusively under higher judicial scrutiny in conformity of Article 27.1 of TRIPS and CL is granted to local manufacturers for commercial benefits under similar situation, availability of life saving innovative products in the Indian market for the patients of India could be in a real jeopardy.

The objective of improving access to innovative medicines is a very desirable one for any country like ours. However, if India routinely starts granting CL for this purpose before exhausting all other avenues to achieve this goal, it would risk sending a very wrong signal to the outside world that the country is shirking its responsibilities to create an appropriate ecosystem to foster and support pharmaceutical innovation to offer better quality of lives to the citizens of the country in particular.

In the absence of both collaboration and foreign direct investments by the global innovators in the field of pharmaceutical research and development, India may feel handicapped, especially when our neighbor China is surging ahead in this field with longer strides.

Thus, routine grant of CL, as is being envisaged by many in India, on a similar situation could, on the contrary, make the issue of access to innovative medicines by the common man even more challenging, in the longer run.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Will the ‘Bayer–Cipla case’ now put the ‘Bolar Provision’ under judicial scrutiny?

To enable the domestic pharmaceutical industry gaining a critical mass and cater to the pressing healthcare needs of the nation, in 1970 product patent act was abolished by the government of India. This immensely helped the domestic companies to launch the generic version of innovative medicines at a very low price, making those drugs quite affordable to a large section of the population.
Cost and process efficiencies helped the Indian pharma companies to reach out:

Quickly acquired cost and process efficiencies of the domestic generic pharma companies soon made India a power to reckon within the global generic pharmaceutical industry. Besides fueling the domestic demand of the essential medicines in general and these drugs in particular, the domestic pharma players soon commenced exports of these cheaper but high quality medicines to non-regulated and the least developed countries of the world to cater to their affordable healthcare needs.

India played a key role in combating HIV-AIDS in Africa:

In that process, India also played a critical role to ensure that HIV-AIDS drugs are available to the poor and down trodden in Africa in general and sub-Saharan Africa in particular, at an affordable price.

A paradigm shift:

On January 1, 2005, India stepped in to a new paradigm with re-enactment of the product patent act in the country, which is widely believed to be TRIPS compliant. This consequently ushered in a transition within the Indian pharmaceutical industry from the mindset of an ‘imitator’ to the prestigious status of an ‘innovator’, which ultimately drives the wheel of progress of a nation.

The voice of concern:

At the same time and for the same paradigm shift many expressed their grave concerns about the role that the domestic generic pharmaceutical industry will play in the new paradigm to continue to make cheaper but quality modern medicines available not only to a large section of the Indian society, but also to the needy patients of non-regulated and least developed countries of the world.

TRIPS safeguard provisions:

Although minimum standards of patent protection that patent holders should get have been articulated in TRIPS, it also very clearly specifies three very important public health safeguard provisions simultaneously, which will allow any participating country to utilize these during such types of needs.

These three TRIPS public health safeguard provisions are as follows:

A. Compulsory Licensing:

- There is nothing in TRIPS, which can limit the authority of the government, in any way, to grant compulsory licensing of a patented product for public health safeguard.

B. Parallel importing:

- TRIPS clearly indicates that under WTO dispute settlement body parallel imports cannot be challenged, if there is no discrimination on the patent holders’ nationality.


C. Bolar Provisions

The Bolar Provision:

To enable the generic players launching new molecules at a much cheaper price, the Patent Act 2005 provides for exceptions to the patentee’s exclusive rights under Article 30 of TRIPS, as ‘Bolar Provisions’ in its section 107A(a):

“any act of making, constructing, using, selling or importing a patented invention solely for uses reasonably related to development and submission of information required under any law for the time being in force, in India, or in a country other than India, that regulates the manufacture, construction, use, sale or import of any product.”

This section provides an exemption from patent infringement to the generic manufacturers from producing and importing patented drugs for research and development, related to submission of information for regulatory approvals of generic versions of patented products before the original patents expire. The legislative intent of this section is to ensure that the generic versions of patented products are ready with necessary regulatory approval for market launch, immediately after the innovator products go off patent, rather than going through a long rigorous process of getting the regulatory approval only after expiration of the patent term.

Is the Section 107A now under judicial scrutiny?

This section may be unfairly used by some generic manufacturers, soon after the launch of products patented in India, for unfair commercial reasons. The final judgement on Bayer–Cipla case on Nexavar may throw some light on this important provision. It is quite possible that because of this reason Delhi High court has ordered Cipla to seek the High Court’s permission before market launch of the generic version of Bayer’s patented product.


Although there is nothing wrong in using a patented molecule for getting regulatory approval with a genuine intent to launch the generic version after the original product goes off patent, it now appears that in absence of Regulatory Data Protection (RDP) both against disclosure and unfair commercial use, this section may most likely to be abused more by some generic players with mala fide commercial interest.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.