Having succeeded in making India change its patent law to its disadvantage, the multinational drug companies are set to strike another blow to the survival of Indian pharmaceutical companies. They are not only planning to introduce a large number of new products in various therapeutic categories, but are also entering into generic manufacturing in a big way. Introduction of new products under the changed patent regime of the country is not going to be difficult for MNCs as long as Patent Rules remain vague on the definition of patentability. A large number of these new products to be patented could be just modified versions of existing molecules. As far as MNC's entry into generic business, the ball has been set rolling by Novartis, the leading Swiss multinational. The company announced last week its intention to acquire generic drug makers Eon Labs of the US and Hexal of Germany for $8.3 billion, thereby becoming the world's largest generic drug company. The acquisitions will be integrated into the Novartis generics subsidiary Sandoz which is also operating in India. The acquisitions of Hexal AG and Eon Labs should strengthen the company's geographic presence and product portfolio, development and registration capabilities. Novartis expects annual cost savings of $200 million mostly on account of sharp reduction in promotional costs within three years from now. Novartis is not the only multinational making a move into generic business. Last year, Pfizer launched a generic version of one of its epilepsy drugs in the US market to take some sales from non-branded competition. GSK and Sanofi-Aventis are understood to be having major plans to market a number of generics in Indian market soon. International pharmaceutical companies have been complaining of evaporation of revenues because of competition from generic drugs, which are significantly cheaper than drugs under patent. Increasing recall rate of drugs from the market due to adverse drug reactions is also putting severe pressure on profitability of these companies. Merck suffered heavily after it withdrew Vioxx in September last. The company is facing the prospects of claims of billions of dollars after studies concluded that taking the painkiller increased the risk of heart problems in some patients. Since 1990, 14 drugs have been withdrawn from the American market alone. And only Lotronex, a drug for irritable-bowel syndrome in women, has been re-introduced. With the entry of major international companies into generic manufacturing, generic prices should drop sharply in the international market. In fact, US has been experiencing a drop in the prices of several generics since last one year. This could spell serious trouble to Indian generic exporters like Ranbaxy, Dr Reddy's, Cipla, Lupin, Sun, etc. soon. A good part of Indian exporters' current profitability depends on the exports to the US market. In the domestic market too, large Indian companies are heading for tough times with the entry of MNCs in generic business. The options for the survival of Indian pharmaceutical industry seem to be thus dangerously limited.