Recent global meet on climate change in Copenhagen: what were achieved and what were not.

Long before the commencement of Copenhagen climate change meet, many from all over the world started talking passionately about the “dangerous climate change”, which as we know deals with the issue of increase of global temperature of 2 degrees Celsius (2C) from the preindustrial level.

This issue was discussed at length in Copenhagen and an accord was ultimately announced on December 18, 2009 followed by a plenary session on December 19, 2009.

What does it say?

The Accord is a 12-paragraph document of statement of intents and non-binding pledges to address the “dangerous climate change” issues.

Towards this direction the Intergovernmental Panel on Climate Change (IPCC) at Copenhagen recommended even to the developed countries of the world to reduce carbon emission from their respective 1990 level by not less than 25% by 2020, from when the global carbon emission is expected to start declining.

USA and China were the key partners of IPCC with a strong supporting role played by Brazil, South Africa and India to have an accord that suits the emerging large developing economies of the world. The accord though recommends to the developed countries, barring the US, to ensure their carbon emission cuts, but not under the Kyoto Protocol. Most influential 26 countries of the world agreed with this accord and other 192 countries, though appeared to be unhappy in the plenary session, accepted the same with their ‘silence’, which perhaps means indirect consent.

The key points of the accord:

The main points of the Copenhagen Accord are as follows:

• Cooperation by all in containing emissions within 2 degrees Celsius above preindustrial levels.

• To reduce carbon emission, the developing nations will report in every two years on their non-binding voluntary actions. This report will be subject to international consultations and analysis.

• US $ 10 billion each year will be financed by the developed countries for a three-year program to pay for the projects taken up by the poorer nations to develop clean energy and effectively address drought and other climate-change impacts.

• A goal of mobilizing US $ 100 billion per year by 2020 was also set for achieving the same objectives.

Is this accord a triumph of USA or China or the BASIC countries?

This accord is seen by some as a triumph of the USA to influence the ultimate outcome of the Copenhagen climate change summit. US President Barack Obama, in fact, brought back the negotiation from the brink of collapse, at the last minute, through hectic negotiation with the heads of states of Brazil, South Africa, India and China (BASIC countries).

What will the success of the summit depend upon?

The success of this accord will depend on whether the USA will be able to live up to its promises to reduce carbon emissions in their own country and help other countries to address the same by raising billions of dollars.

BASIC countries, especially China, emerged stronger:

The process of this accord also witnessed China coming stronger leveraging their clout in a multilateral forum of the African continent, which is very rich in various valuable natural resources. However, many other less powerful nations, as said earlier, felt left out in this deal brokered mainly by the US initiative and interest.

Thus even after reaching the accord, at the plenary session on the last Saturday, a large number of speakers from the developing nations sharply criticized the deal alleging it as a pact meant only for the rich and BASIC countries.

Lack of a clear roadmap:

Be that as it may, without a clear road map for research and development of low-carbon technologies and no binding collective carbon emission target, achieving 2C by 2020 still remains a pipe dream.


After the Copenhagen Accord, Brazil, South Africa, India and China (BASIC), the four large emerging economies of the world, were immensely successful to display their joint muscle power to the world as a whole, clearly emerging as a major combined force to reckon with, especially by the developed nations of the world lead by the USA.

However, many will strongly feel that interests of smaller and poorer nations of the world were sacrificed in this first global agreement of the century on climate change at Copenhagen.

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.

Recent efforts to improve the functioning of the WIPO-administered Patent Cooperation Treaty (PCT) is a welcome step for the interest of India.

As the third largest user among developing countries of the PCT system, India has a particular interest in ensuring that the PCT system supports its innovators and exporters in the most efficient manner possible.
What does PCT system do?

The PCT system allows reliance on international searches and examination in assessing patentability but it does not preclude national examination including decisions on patentability at a national level. In that regard, the Director-General Francis Gurry of WIPO made the following remarks at the opening of the WIPO Assembly on September 22, which clearly states that PCT reform is not a norm setting exercise and is voluntary:

“…I would like to make specific mention of one project, which I believe to be of great significance, the so-called Road Map for the improvement of the functioning of the Patent Cooperation Treaty (PCT), which will come up for consideration in the PCT Assembly during this meeting. This is not a norm-making exercise. The PCT makes it very clear (Article 27(5)) that nothing in it is to be construed as in any way limiting the freedom of each Contracting State to determine its own substantive conditions of patentability. Neither the PCT nor the Road Map in any way affects TRIPs flexibilities. The Road Map is about improving the functioning of a procedural treaty that links together the patent offices of the world. It is about finding ways to increase work-sharing, to decrease unnecessary inefficiencies, to improve the quality of the output of the international patent system and, thereby, to contribute to the management of the unsustainable backlog of 4.2 million unprocessed patent applications in the world. There are many initiatives occurring already in this regard: the Patent Prosecution Highway and work-sharing initiatives in ASEAN, in South America and between the Vancouver Group of Canada, United Kingdom and Australia. The PCT Road Map aims to bring all these initiatives ultimately under the multilateral umbrella of the PCT“.

PCT is not a substantive treaty:

The PCT is not a substantive treaty and it will not become one. By mixing up the different work streams of WIPO–some of which are substantive and some of which, like the PCT, are technical and administrative, some vested interests seek to create confusion. It is difficult to understand why such people would want to defeat a project that will permit Indian high-tech companies to leverage India’s strong educational and legal infrastructure to compete effectively in the global economy of the twenty-first century.

PCT has important ramifications:

The proposed changes in the PCT have indeed important ramifications for countries like India, as they represent the greater opportunities that the PCT changes will provide Indian commercial interests through an improved international patent search and examination process.

In many technological sectors, including pharmaceuticals, Indian innovators are finding that, indeed, strong intellectual property protection both in India and abroad is critical to the success of their business models. As a result they are becoming users of the PCT system. Opposition to the current WIPO efforts to improve the PCT system, I reckon, would deny Indian innovators these opportunities.

Indian innovators have a stake in WIPO PCT reform:

Indian innovators also have an important stake in “WIPO PCT Reform”. It is, therefore, very much in the interest of the Government of India that such reform succeeds now that it has reached elite status in the international intellectual property regime.

Just last year, the Indian Patent Office (IPO) became one of only fifteen national patent offices to be recognized as an International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) by WIPO. As an ISA, the Indian Patent Office now approves or establishes the title and conducts international searches. Scepticism of a group of vested interests on this much desirable “WIPO PCT Reform” could set back the international recognition that India has deservedly gained from being the only English speaking country in the Asian region to be recognized as an ISA and IPEA.


I would, therefore, expect our Government to continue its support for efforts such as “WIPO PCT Reform” that seek to facilitate India’s further integration into the international economy while at the same time protecting Indian national interests.

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.

Recent appetite of Global Pharmaceutical Majors for Generic Pharmaceutical Business: can it pose a threat to pure generic players?

Last year Lehman Brothers estimated that by 2012 over 25% of the global pharmaceutical market will face competition from generics. Higher demand of generics is mainly due to the following reasons:1. Increased number of patented drugs is going off-patent.2. Cost containment and pricing pressure, especially from the Government, in the developed markets of the world.

3. Increasing number of patents is being challenged, especially in the U.S courts, on the ground of “obviousness”.

“Obviousness” is becoming a key reason of patent challenges in the U.S:

In first quarter of the last year we read about the U.S trial court making void the key patent of Yasmin, the contraceptive drug of Bayer for ‘obviousness’. This incident had compelled Bayer to revise its profit forecast downwards, for 2008.

‘Obviousness’ is increasingly becoming one of the key reasons for challenging Patents in many countries of the world, including India. Financial Times reported recently that keeping protection to all patents intact, could eventually pose to be a key challenge for the R&D based global pharmaceutical companies. Many analysts feel that the issue of “obviousness” could indeed be a threat to many U.S pharmaceutical patents, especially those, which will be considered by the court just as a ‘tweaked-up’ version of existing drugs.

As reported by ‘Chemical Weekly’, March 2008, total 338 patent challenges were recorded globally in 2008. India ranks only next to USA with a share of 21% pharmaceutical patent challenges.

Global generic pharmaceutical market is growing at a faster pace:

Prescription market in the U.S grew by just 1.3% last year to U.S$291 billion. Key factors believed to be responsible for slower growth in the U.S market are as follows:

1. Higher prescriptions for less expensive generic medicines.

2. Lower sales of higher priced new products.

3. Economic downturn has made more patients to move to generics and large number of consumers to lose their health insurance.

Similarly in the United Kingdom (U.K) generics industry supplies 64% of medicines dispensed by the National Health Scheme (NHS), though they contribute just around 30% of NHS expenditure towards medicines.

Recent reports indicate that the generic global pharmaceutical market is expected to record a turnover of U.S$ 520 billion by 2012. This market size is too lucrative to ignore by any big global pharmaceutical player.

Based on sales turnover of 2007, Teva tops the list of global generic players with a turnover of U.S$ 9.1 billion, followed by Sandoz with U.S$ 5.8 billion and Mylan/Merck with U.S$ 4.6 billion.

From India, Ranbaxy registered a turnover of U.S$ 1.7 billion, Dr.Reddy’s U.S$ 1.4 billion, Cipla U.S$ 1 billion and Sun Pharma/Taro U.S$ 900 million, during that year.

48% of the total 422.6 million prescriptions written in Canada in 2007 were for generic medicines, which registered an annual growth of 14%, reports IMS Canada. Compared to this performance, branded products in Canada recorded a growth of meager 0.2%, during this period. As a consequence, generic Canadian pharmaceutical companies like Novopharm (Teva) and Apotex recorded impressive growth of 46.8% and 18.5%, respectively, in that period.

Despite such outstanding performance of generic pharmaceuticals, overall growth of prescription drugs in Canada was at just 6.3%, the lowest in the last ten year period.

President Obama’s Healthcare Policy will encourage generics and biosimilar drugs:

It is widely believed that the new U.S administration under President Barak Obama will try to encourage speedy introduction of generics into the U.S market.

So far as ‘Biosimilar’ drugs are concerned, in 2009 Obama administration is expected to work out the road map to facilitate the introduction of ‘Biosimilar dugs’ in the U.S market. Due to inherent characteristics that biological are ‘grown and not just manufactured’, biosimilar drugs are not expected to be replica of the original products.

To find out a solution to the heated debate, an answer has to be found out regarding the extent of clinical trials that the ‘biosimilar’ manufacturers will require to undertake to satisfy the U.S FDA that these drugs are as safe as the original ones. It is believed by some that the answer to this question lies in the approach that gives regulatory authority the flexibility in ‘what it demands that asks for more evidence than is now required for generic drugs, but something less than the kind of full-blown trials required for products new to the market.’

Global pharmaceutical majors are developing appetite for generics business:

Keeping a close vigil on these developments, as it were, even Pfizer, the largest pharmaceutical player of the world, has started curving out a niche for itself in the global market of fast growing generics, following the footsteps of other large global players like Novartis, GlaxoSmithKline, Sanofi-Aventis and Daiichi Sankyo.

Is Pfizer planning to follow the business model of Abbott and Johnson & Johnson (J&J)?

As reported by the Wall Street Journal (WSJ), Mr. Kindler the CEO of Pfizer very recently commented, “We are breaking the company down into smaller units so we aren’t dependent on any single product… I am a great admirer of J&J and Abbott’s business model.”

It appears what Mr. Kindler perhaps meant by this statement is that smaller business units, like Over the Trade Counter (OTC), Vaccines, Nutrition and Animal Health can be more ‘manoeuvrable and innovative’ for faster business growth. Acquisition of Wyeth could actually help Pfizer to implement this business model.

Coming back to generic business, the recent collaborative arrangement of Pfizer with Aurobindo Pharma in India vindicates Pfizer’s recent appetite on generic global pharmaceutical business. The company is already in this business with some of its off patent products. But now like others, Pfizer seems to be strategizing to reap a rich harvest from fast-growing generic pharmaceutical business through most probably its “Established Products” business division.

Could such business model of Global Pharmaceutical majors pose a threat to pure generic players in the business?

The entry of the global pharmaceutical majors into generic pharmaceutical business, in my view, could pose a serious threat to current generic players in the business, including those who are operating from India in the ‘regulated markets’ of the world, for the the following reasons:

1. Generic pharmaceutical business is usually a high volume, relatively low margin and highly competitive business. To survive in this business of cut-throat competition will require both financial and innovative marketing expertise, as well as financial and marketing muscle, where large global players are expected to easily score over others.

2. Product price of generics of the same or similar molecules being within a price band, prescribers and payors’ preference are expected to be in favour of large global pharmaceuticals, because of corporate brand image.

3. In future, the pharmaceutical marketing model, in my view, is expected to shift from ‘marketing of only medicines’ to ‘marketing of a bundle of medicines and services’. In the changed scenario global pharmaceutical majors are expected to have a distinct strategic advantage.

4. Global Pharmaceutical majors may also use this business model as a ‘preventive strategy’ to restrict market entry of number of players for an off-patent molecule and thereby effectively contain the extent of price erosion, as the brands will go off-patent.

It will, therefore, be quite interesting to watch, what happens in the global generic pharmaceutical business in the next five to ten years. I expect a significant consolidation taking place in this market, both global and local.

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.