April 2, 2013 3:27 pm

Novartis in India: generic solutions

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Recent ruling is bad for the pharma industry and for India

India’s Supreme Court judges clearly enjoyed hearing the Novartis patent case. In their ruling denying a patent for the Swiss pharmaceutical group’s Glivec cancer drug this week, they had a paternal word for the army of young advocates toiling on the case. “The presence of those bright young ladies and gentlemen in the courtroom added vibrancy to the proceedings and was a source of constant delight to us,” they wrote. With so much gaiety at the bar, it seems churlish to point out that the ruling is bad for the pharma industry, and for India.

The ruling will have little impact on Novartis (it has had no effect on the share price). The company says that 95 per cent of patients using Glivec in India get the drug free of charge. Glivec’s US patent also lapses by 2016, which Citi estimates will send its global sales tumbling from a projected $5bn this year – making it Novartis’ best-selling drug – to barely $200m by 2018.

For the pharma industry, however, the ruling will sharpen its view of India as a hostile operating environment. Bayer and Roche have faced similar problems to Novartis in India; many drug companies have introduced differential pricing to cater for the particular demands of the Indian market, where volume invariably trumps price. Moreover, international pharma groups tend to shun India as a research location. The Novartis ruling can only entrench that position.

This cannot be in India’s long term interests. The country has a woeful record of ignoring international patents (Glivec is patented in 40 countries, including China). Instead, it has become a key source of generic drug production, which has prevented the development of an indigenous research-based pharma industry. India is not going to address its considerable healthcare challenges simply by copying the patented research of others.

Email the Lex team in confidence at lex@ft.com

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