Indian pharmaceuticals industry received 1-1-2005 with mixed feelings. While, domestic and foreign markets were expanding, 1-1-05 had ushered in the new era of product patents. The game board was the same, but the game had changed from 'Checkers' to 'Chess.' Indian pharma had thrived on process patents till 1-1-05, but now will have to contend with product patents.
Medical History
The Indian Patent Act, 1970, permitted the Indian pharmaceuticals companies to reverse-engineer (manufacture through a different process) the patented molecules and sell them in the domestic and certain foreign markets. Most of the pharma companies in the Indian pharmaceutical industry were able to register significant growth until 2005 because of a system of 'process patents' as against the Western countries, which were following the 'product patent' system. The process patent regime has enabled India to become a global and respected player in the pharmaceuticals industry. However, when the Indian Parliament passed the Patents (Amendment) Bill, 2005, on March 22, with retroactive effect to 1-1-2005, all of that changed.
Diagnosis
The highly organized Indian pharma industry is in the forefront of scientific industries, with a wide range of capabilities in the technological and drug manufacturing fields. The Indian pharma industry is estimated to be worth about $10 billion, with an 8-9 per cent annual growth rate. It is one of the leading industries among the Third World countries, and is highly respected for its quality, technology, and range of drugs manufactured and supplied at competitive prices. The growth of the Indian pharma industry is primarily propelled by export markets. India exports its drugs to more than 65 countries. According to McKinsey, Indian pharma exports contribute US $3.2 billion out of the annual turnover of $5 billion, with the industry further assured to grow at $25 billion by 2010. Indian pharma industry's share in value terms in the global market is estimated to be at 1 per cent (13th rank), while in volume terms, it is 8 per cent (4th rank). India also has the largest number (74) of US Food & Drug Administration (USFDA) approved drug manufacturing facilities outside the US. There were 126 Drug Master Files (DMFs) filed by Indian companies, which was higher than the combined DMFs of China, Italy, Spain and Israel. Indian companies, on an average, account for 35 per cent of all DMF applications in the US. The Indian companies' share in the domestic market has witnessed continuous growth from nearly 20 per cent in 1970 to 70 per cent in 2005. In terms of revenue, Ranbaxy Laboratories leads the Indian pharma companies, while Cipla and Dr. Reddy's Laboratories stand second and third respectively.
With the size and foothold of the big Indian pharmaceuticals industry, some analysts feel that the impact of the new product patent regime will not be earth-shattering. As, Dr Anji Reddy, chairman, DRL, said, "We [in India] have brilliant people who are as good as or even better than anyone anywhere else in the world. We're ready for 2005."
Prescription
A 'product patent' regime does not really un-plug the ventilator of any country's pharmaceutical industry. Actually, the pharmaceuticals industry thrives in countries where 'product patents' are strictly enforced.
Indian pharmaceuticals industry has already embarked on the journey to benefit from the product patents. As opposed to earlier, when Indian companies invested only around 1 per cent on R&D, they are now investing huge amounts on R&D.
Alternative Medicine
The global herbal market is estimated to be worth US$ 62 billion, offers a plethora of opportunities for the Indian pharma companies. India's current share in the global herbal market is just $1 billion and a huge opportunity awaits the ingenious Indian pharmaceuticals, to be availed thru innovation, patents, and trademarks. According to the World Bank, the global market for medicinal plants and products includes the potential sectors of pharmaceuticals, nutraceuticals, cosmetics, and agro-chemicals. India has enormous resources of medicinal and herbal plants.
India has the necessary resources and the ability both to cater to the ever-increasing demand for natural and herbal products in various segments such as perfumery, food, pharma, cosmetics, haircare, healthcare, etc. To give an idea of the kind of resources at the disposal of India, it has 10 bio-geographic regions and 25 biotic territories. India is also a haven for 8000 medicinal plants, of which 2200 possess therapeutic properties. Dr. BR Rajeswara Rao, deputy director of CIMAP, Hyderabad, echoed the thoughts of Khannuja and said that traditional knowledge, with a judicious mix of modern biotechnological and chemical tools, has the potential to leverage new drug discovery, resulting in the fusion of traditional and modern medicine. We have seen examples of successful companies, such as Himalaya Drug Company (HDC), Emami, Aswini, Ayur, Dabur, Cholayil Pharma, etc., who have patented their herbal/ayurvedic products in India and abroad. HDC patented its 'Herbal Laxative' preparation for treatment of constipation in February 2001 in the US. HDC's products have been endorsed by more than 250,000 doctors worldwide, and the company exports its products to more than 60 countries. Today, HDC is the only phytopharmaceutical company whose ayurvedic products are registered as a 'pharmaceutical specialty' in Switzerland. Emami has also filed a patent in India. Between 1995 and 2003, Dabur India Ltd., applied for 96 patents in India. Dabur, which owns 29 patents in the US, is amongst the leaders in healthcare. It became one of the only two companies in the world to introduce an anti-cancer drug, Intaxel (paclitaxel). Dabur Research Foundation developed a unique eco-friendly process for extracting the drug from its plant source.
It is no exaggeration to say that an 'Herbal Revolution' by India is just waiting to happen. India could truly become a global leader in the herbal medicine category by inventing and patenting medicines for several ailments by using a combination or mixture of herbal formulations.
In the present situation, Indian pharmaceuticals may have weathered the storm because of many factors. Now, more than ever, there is a need to define a growth-focused Intellectual Property Rights (IPR) strategy. Because, winning without a strategy is only possible in a lottery.
-- The authors represent iPrex Solutions, Hyderabad