1997, Number 8
and Pharmaceuticals: Implications for India
|On the post-Uruguay Round world trade scenario, after the
accords in agriculture and textiles & clothing, the Agreement on Trade
Related Aspects of Intellectual Property Rights (TRIPs) is the issue affecting
developing countries like India.
One of the seven intellectual properties covered under TRIPs is that
of patents. This has been the contentious issue for several reasons. India
is committed to amend its patent laws by the year 2005 (for technologies
previously unprotected in its market). The objective is to change the patent
system which, in turn, is supposed to facilitate the research and development
activities within the country.
This Briefing Paper examines the issue of patents and its impact
on pharmaceutical industry in India and on consumers.
A Look at the TRIPs Agreement
Contrary to popular belief, intellectual property legislations not only
cover patents but also the acquisition and use of a range of rights covering
different types of creations including that of an aesthetic character (e.g.
artistic works and industrial designs) and information and signs of a purely
commercial value (e.g. trademarks) among others.
Intellectual property rights (IPRs) include the following categories
(see Box 1. Also see Annexure 1 for details about the categories of intellectual
However, the GATT Agreement on Trade Related Aspects on Intellectual Property
Rights (TRIPs) covers the first seven categories only. Perhaps the industrialised
nations (and their business lobbies that actively promoted the TRIPs negotiations)
had little interest in the excluded categories.
copyright and related rights,
layout designs of integrated circuits,
breeders' rights, and
As mentioned in Box 1, patent is that type of intellectual property
right a major application of which occurs in the pharmaceutical sector.
According to the United Nations definition, a patent is a legally enforceable
right granted by a country's government to an inventor.
In simple words, the content of intellectual property is information,
and this is exercised with respect to the products that carry the protected
information. A patent excludes other persons from manufacturing, using
or selling a patented product or from utilising a patented method or process.
And, because of this intellectual property rights may have a direct and
substantial impact on indusry and trade.
Before the conduct of the TRIPs negotiations within the GATT there exist
a number of international organisations and conventions regarding the protection
of intellectual property. The World Intellectual Property Organisation
(WIPO--a United Nations specialised agency) has been particularly active
in the development of new forms of protection (layout designs of integrated
circuits) as well in the application of new technologies of patents (e.g.
biotechnological applications) and copyright (e.g. computer programmes).
However, the following are the reasons for which the industrialised
nations pressed for the TRIPs negotiations, chose the organisation setting
rules for world trade (World Trade Organisation--a forum without any tradition
of work in the field of intellectual property rights) as the forum for
implementation of the TRIPs Agreement:
Box 1: Subject Matter and Main Fields of Application of Intellectual
the developed countries, through patents and other protective instruments,
are provided with the possibility of exporting products incorporating innovations
under exclusive or monopolistic rights, i.e.technology-holders can exclude
competition from domestic producers in importing countries or other foreign
firms (see Smith, Pamela, Intellectual Property Protection and United States
Exports: Evidence in the Data, Paper presented at the Conference on International
Relations on Intellectual Property: Challenges at the Turn of the Century,
The American University, Washington D. C., 1995. The study indicates significant
increase in the US exports to countries where intellectual property protection
has been enforced); and
an Agreement within the GATT/WTO facilitates recourse to cross-retaliation
for non-fulfilment of specific obligations. In simple words, countries
failing to comply with TRIPs could be subject to trade retaliation if the
WTO dispute settlement mechanism determined the existence of a case of
non-compliance with the TRIPs Agreement.
Source: The TRIPs Agreement: A Guide for the South,
South Centre, Geneva, 1997
|Types of Intellectual Property Rights
||New, non-obvious, industrially applicable
||Chemicals, drugs, plastics, engines, turbines, electronics, industrial
control and scientific equipment
||Signs or symbols to identify goods and services
||Original works of authorship
||Printing, entertainment (audio, video, motion pictures), software,
||Original layout designs
||New, stable, homogeneous, distinguishable varieties
||Agriculture and food industry
||Secret business information
||Clothing, automobiles, electronics, etc.
||Geographical origin of goods and services
||Wines, spirits, cheese and other food products
TRIPs, Pharmaceuticals and
Except in three sectors: food processing, pharmaceutical and agro-chemicals
the Indian patent law allows product patents. In these sectors only process
patents are allowed.
As on today, India has a process patent regime regarding pharmaceutical
products. Therefore, the Indian Patent Act, 1970 has to be changed to bring
it in line with the international laws on patenting of pharmaceutical (and
Being a developing nation, India has a grace period of five years to
change its patent laws under the Agreement on TRIPs. In other words, the
Indian Patent Act, 1970 will have to be amended suitably by 31st December,
At the same time, developing countries like India are given a grace
period of ten years for technologies previously unprotected in its market.
During this interim period of ten years, all patent applications will be
put in a ‘black box’. However, pharmaceutical corporations can apply for
an exclusive marketing right (EMR) for their products for five years only
even before the country in question has fully phased into the new patent
The proviso is that the product must have been registered for a patent
and has recieved marketing rights in any of the WTO Member countries.
Thus it is a backdoor method for granting the monopoly rights. Furthermore
there is a grey area here too. If marketing rights are granted only for
five years, what will be its position for the remaining five years until
the country in question actually amends its patent laws.
Box 2: Light at the End of the Tunnel!
|There is light at the end of the tunnel for India's ‘patent' muddle,and
particularly the pharmaceutical patent. The idea is to amend the existing
patent law with a provision which will allow its drug industry to copy
world class ‘prescription' medicines for research purposes even before
a patent expires. In lieu of this provision, India can offer incentives
to world drug manufacturers,e.g. the extension of exclusive marketing rights
for an extra year.
A careful perusal of provisions of the TRIPs Agreement reveals that
such a move will not violate the TRIPs Agreement under the
aegis of the WTO. Such a decision would come under Article 30 of the Agreement
which deals with the exceptions to rights conferred: "Members may provide
limited exceptions to the exclusive rights conferred by a patent, provided
that such exceptions do not unreasonably conflict with a normal exploitation
of the patent and do not unreasonably prejudice the legitimate interests
of the patent owner, taking account of the legitimate interests of third
Transnational corporations (TNCs) control 90 percent of all registered
patents in the world. Effectively, given such monopoly power over patents
and the EMR clause, India or for that matter any developing country does
not have any transition period. This is true for protected technology,
and if one interprets that from the patent/product-originating country
angle. This is the haziest part of the TRIPs Agreement with respect to
the pharmaceutical and also the agro-chemical sectors.
An instance of haziness is that the Agreement is silent on the content
and scope of the EMR clause. Furthermore, it makes no reference to actions
which third parties would be permited to take (for instance, with respect
to products already marketed or to products manufactured by a process different
from the patented process). Third parties may interpret the EMR clause
as not including a ius prohibendi, i.e. not including the right to exclude
others from using the invention, as in the case of patents.
Apart from the haziness mentioned above, for the developing country
like India, the following are clear concerns of the TRIPs Agreement vis-a-vis
the pharmaceutical sector:
However, given the present day political economy set up, it is futile for
a developing country like India to adopt a reactive stance with respect
to pharmaceutical patents. In other words, the rational policy would be
to cope with the situation pro-actively. Furthermore, in reality the fears
expressed above may not come true (see page 4--Consequences of TRIPs: Myths
the introduction of product patents may imply significant social costs
due to the higher prices charged for medicaments;
the access to local firms of protected technology will become more difficult
because of the enforcement of the patent-holder's bargaining position through
investments in R&D; and
there is the possibility that the most dynamic segments of the pharmaceutical
market, where the prospects of growth are highest, will be excluded from
domestic firms. This is likely to be true for drugs based on biotechnology
where inventing around (i.e developing drugs with similar compositions)
is relatively more difficult.
Even if the fears have come true there are possible ways out if one
approache the issue pro-actively. An example of the pro-active approach
is to go for compulsory licences (Article 8 of the TRIPs Agreement) on
grounds of competition, health and public interest (see Box 4). Article
8 of the TRIPs Agreement states the right of parties to "adopt measures
necessary to protect public health and nutrition, and to promote public
interest in sectors of vital importance to their socio-economic and technological
development, provided that such measures are consistent with the provisions
of this Agreement" (emphasis added).
For example, in 1991 a German Court granted a compulsory licence in
favour of a German firm with respect to a patent (relating to interferon)
held by a US firm on grounds of public interest. The purpose of the licence
was to allow the marketing of a therapeutical application of interferon
that had been developed by the German firm.
Another (pro-active) way out is there in Article 30 of the Agreement
(exceptions to rights conferred--see Box 2). The following are the exceptions
which may be deemed legitimate under Article 30:
The third way out is within Article 27 of the Agreement which deals with
patentable subject matter. Article 27.1 states: "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..."
Here, inventive step and capable of industrial application may be deemed
by a Member to be synonymous with the terms non-obvious and useful, respectively
(see Annexure 1). Article 27.2 states: "Members may exclude from patentability
inventions, the prevention within their territory of the commercial exploitation
of which is necessary to protect ordre public or morality, including to
protect human, animal or plant life or health..." (emphasis original).
Furthermore, Article 27.3 (a) states: "Members may also exclude from patentability:
diagnostic, therapeutical and surgical methods for the treatment of humans
importation of a protected product that has been legitimately put on the
acts carried out privately and on a non-commercial scale or for a non-commercial
use of an invention for research and experimentation and for teaching purposes;
preparation of medicines for individual cases according to a prescription;
compulsory licensing; and
use of the invention by a third party who started, or took serious precautionary
action, before the application for the patent (or of its publiation).
The existence of process patents under the Indian Patent Act, 1970 resulted
in a robust growth of domestic pharmaceutical industry in India. At the
same time, history also shows a decline in the business of foreign pharmaceutical
companies in India (see Table 1 for Trends and Table 2 for Cross-Sectional
Table1: Indian Pharmaceutical Market, 1970-1993
Unit: In Percent
Source: Redwood, H., New Horizons in India, The Consequences
of Pharmaceutical Patent Protection, Oldwick Press, 1994
|Indian private sector
|Indian public sector
Why such a paradox when the global business is expanding at a rapid
pace? To answer such a seemingly incongruous fact, one has to take the
following into account.
The Indian Patent Act, 1970 was the instrument that made it possible
for the domestic pharmaceutical industry to expand rapidly. Because, the
Act legalised ‘reverse engineering’ of drugs that are patentable
as products throughout the industrialised world but unprotectable in India.
‘Reverse engineering' is a method of evaluation of a product in order to
understand its functional aspects and underlying ideas. This technique
may be used to develop a similar (or even identical) product.
Well equipped with technological expertise, Indian scientists and businesses
seized the opportunity to do ‘reverse engineering’ on therapeutically innovative
drugs discovered elsewere, and launched them on the domestic market as
well exporting them to other countries with similar gaps in their patent
For example, the Indian Institute for Chemical Technology developed
AZT, the AIDS drug through this process without replicating the patent-holder
Burroughs-Wellcome’s process. The technology was passed on to CIPLA, the
fourth largest pharmacetical manufacturer in India. It was also sold to
a Brazilian manufacturer. The cost of the crucial medicine through this
route has come down to less than a third of the Burrough-Wellcome's price.
Another factor is that of strategic abdication of many transnational
corporations who refused to compete without the patent cover. For example,
the Sterling-Winthrop Company wound up their business in India in 1970s
and sold their shares to the Indian partner Dey’s Medical Company.
Furthermore, under the Indian Patent Act, 1970, the following points
Table 2: Sales and Share of Big Companies in Indian Market,
no product patents are allowed in pharmaceutical, agro-chemical and food
processing sectors, where only process patents are admissible;
the Indian patent term of 14 years from the date of filing for pharmaceutical
processes, is curtailed to 7 years from the date of filing or 5 years from
the date of sealing a patent, whichever is shorter; and
pharmaceutical process patents are automatically deemed to be endorsed
License of Right for 3 years from the date of sealing a pharmaceutical
With the coming of TRIPs Agreement, disputes arise with regard to the protection
of pharmaceutical patents. The main provisions of TRIPs Agreement with
respect to pharmaceutical products are as follows:
the minimum patent term will be 20 years from filing;
patent protection is to be extended to pharmaceutical products;
importation must be accepted as a working patent;
compulsory licensing is relegated to special circumstances;
in infringement suits over process patents the ‘burden of proof’ is reversed.
provide transitional arrangements—deferment of the acceptance of pharmaceutical
product patents by developing countries for ten years; and
limited exclusivity is granted to developing countries for pharmaceutical
products whose patent applications are filed after the enforcement of the
Source: As in Table 1
Consequences of TRIPs:
Myths and Reality
TRIPs does not provide for the retrospective patenting in India of drugs
that are already on the market or covered by existing patent applications
elsewhere. Taking into account the transitional period, there will be less
impact on prices of new patented drugs on the Indian market during the
1990s and only a minimal effect until 2005. Thereafter it will build up
gradually from a pool of new drugs. Global progress in research and
development is replenishing this pool at a steady but moderate pace as
older drug patents expire (see Box 3).
Here, one has to consider the moderate pace of pharmaceutical innovation
and of obstacles for market penetration by new drugs in India. Such consideration
leads to the conclusion that in value terms not more than 15 percent of
the Indian market will be covered by patents some time after 2005. The
remaining 85 percent of the market will continue to be exposed to
the impact of generic competition (see Redwood, Heinz, New Horizons
in India: The Consequences of Pharmaceutical Patent Protection, Oldwick
Box 3: Pharma-quake as Patents Expire
|About 40 US drugs with $16bn sales in 1996 are set to loose patent
protection by the year 2002. This will throw the gate open for competition
from generic drugs.
Cheaper drug price and bonanza for generic drugs will alter the research
and business of pharmaceutical majors. To fill the patent gap, drug majors
are turning more to biotechnology development and other partners. The pressing
needs for new drugs has led to the earlier adoption of new technologies.
To avoid the ‘Tagamat Crisis’ (loss of patents), the companies are increasingly
investing in riskier, cutting-edge technologies. Smithkline-Beecham is
one of the first such companies to leap into new technologies for gene-hunting.
Again, Glaxo, after realising the futility of blockbuster dependency, is
contemplating to develop broader ‘portfolio’ of drugs. The rationale is
to minimise risks associated with the development of new drugs.
|Source: Wall Street Journal, 13.08.1997
The time scale of the introduction of pharmaceutical patents in India
under TRIPs makes it certain that, if Indian drug prices rise during the
remainder of the 1990s, it will not be for reasons of patenting. The earliest
start of premium pricing for patented drugs will be in the early years
of the next decade. No significant effect can be anticipated until after
2005, because the weightage of patented drugs on the Indian market will
be too small for economic impact.
More important than the time scale of patent protection will be fundamental
‘checks and balances’ which will put a brake on the impact of premium pricing
on Indian drug expenditure (see Box 4). Such balances are as follows:
Of these the second is the most immediate, whereas the first and the third
are the most ‘durable’ safeguards against a price explosion.
the low purchasing power of Indian consumers;
Government price controls under permanent or reserve powers; and
therapeutic competition from cheaper unpatented drugs.
Here, it will be interesting to note that Canada established the Patented
Medicine Prices Review Board in 1987 under reforms to extend patent protection
on brand-name pharmaceuticals. Until recently, the Board reached over 100
settlements with the pharma industry, which it claims has saved consumers
about C$110mn. In a recent case, it ordered a US company ICN Pharmaceuticals'
local subsidiary to cut the price of its drug: Virazole by almost 90 percent
and pay a penalty of C$1.2mn. Thus, there are precedents for such price
Box 4: Compulsory Licensing of Commercial Medicines Possible
|According to the Co-ordinator of the Forum of Parliamentarians on Intellectual
Property, India, B K Keyala, compulsory licensing of pharmaceutical products
‘for commercial purposes’ is possible within the ambit of the TRIPs Agreement:
“India should draw strength from Articles 7 and 8 of TRIPs and insist on
compulsory licensing of pharmaceutical products for commercial purposes.”
The current understanding, under Article 31 of the agreement, is that TRIPs
provisions only allow compulsory licensing for non-commercial use. However,
Article 7, which outlines the objectives of the intellectual property agreement,
states that implementation of the agreement should inter alia ‘contribute
to the transfer and dissemination of technology’.
Furthermore, Article 8 gives Member countries the right to adopt measures
to ‘protect public health and nutrition’ and ‘promote public interest’.
India should interpret these articles in the national interest since the
constitutional guarantee of the right to life encompasses the right to
health, which requires availability of medicines at affordable prices,
|Source: Press Trust of India, 26.12.1996
There is nevertheless a widespread belief by Indian companies that even
if the remaining preconditions for R&D in India were met, they cannot
afford the cost of minimum scale operations, and that only TNCs will be
in a position to benefit.
Evidently TNCs have far greater financial resources, but they also have
more diverse calls on those resources and are themselves obliged to make
difficult choices when it comes to new R&D projects and facilities
(see Table 3).
Table 4: R&D Position of World Pharmaceutical Majors,
Note: Figures in parentheses are percentage of own
R&D over the total. Source: Scrip, January, 1996
Number of Drugs Under Licence
For them their acid test in India is whether the Indian authorities
will pursue their declared objective of attracting global investment and
R&D to India by meeting the essential pre-conditions.
Impact of TRIPs on Global
As expected, the proposed changes in the intellectual property regime
are welcomed by the global business and their subsidiaries operating in
India. Big TNCs like Hoechst, Novartis etc. have already set up 100 percent
Indian subsidiaries. However, most of them are interested in playing a
waiting game regarding their involvement in the Indian pharmceuticals market.
They are likely to introduce their new patented drugs once the system
of product patent becomes fully operational. Even in that case, most of
the new drugs will either be imported as formulations or be formulated
in India by using imported bulk drugs. In short, India is unlikely to be
a site for R&D and production of bulk drugs.
According to Glaxo-Wellcome, it is holding back on investments in India
because of concerns on intellectual property rights. However, it has plans
to build up volumes in certain therapeutic segments by allowing their Indian
subsidiary to negotiate a cheaper price for imports from the parent company.
Under the TRIPs Agreement, India has to accept the applications for
the grant of product patents from 1st January 1995. According to one estimate,
up to July 1996, 264 applications were received by the patent office.
Another area of concern is the pricing of drugs under the new patent
regime. Though it is a fact that the prices of Indian drugs are lower than
those prevailing in developed countries, the future price differential
is unlikely to be large. The reason is to avoid any action against dumping
of bulk drugs.
Impact of TRIPs on Indian
Axiomatically, the introduction of product patenting will affect the
Indian pharmaceutical firms to a large extent. Certainly, they will be
prevented from taking a circuitous route to growth through the adoption
of process patents. At the same time, some of them are seriously concerned
with the expansion of their business.
To achieve their aim, they are increasingly exploring the following
Development of New Drugs
For this, a necessary condition is to increase the expenditure on R&D
activities. Drug discovery and development have to be included in the R&D
strategy. In other words, the focus of R&D will have to be changed
from the innovation of new processes to that of invention of new products.
For example, Dr. Reddy’s Laboratory (a leading Indian manufacturer)
has focused its R&D expenditure on the development of new drugs for
cancer, bacterial infections and diabetes. They have set up a research
facility at the cost of Rs 8 crore (approximately $2.3mn).
However, a couple of structural weaknesses have to be taken into account.
First, given the small size of Indian firms, even a sharp increase in R&D
activities will not generate sufficient funds for the development of new
drugs. Secondly, Indian firms lack manpower and other institutional mechanisms
to launch new drugs successfully in the foreign market.
Given such limitations, the focus of R&D should be on:
Production of Off-Patent Drugs
the development of in-house drugs which have the same therapeutic value
of those existing in the market; and
production of indigenous drugs catering to the needs of India and other
tropical countries where TNCs have little or no interest in introducing
drugs according to their needs.
A realistic assumption is that in near future, off-patent drugs will
emerge as one of the important manufacturing activities of Indian pharmaceutical
Furthermore, off-patent (generic) drugs made by Indian firms are
going to meet most of the domestic demand. At the same time, it is incorrect
to say that their therapeutic value will be less than the new, on-patent
With increasing concentration of Indian firms in generic drugs, its
export prospect is very high. Currently, the world market
for generic drugs is $20bn, and expected to grow to $40bn by 2005. In order
to take this opportunity, leading Indian firms (like Ranbaxy, SOL, East
India Pharmaceuticals) are building their capacities to produce generic
For example, SOL (Hyderabad) has set up a seperate division for the
production of generics. Further, it expects to generate more than
33 percent of its annual turnover from generics. Exports of generics will
get further boost from foreign investment in this area. The US pharma giant
Merck has set up a 100 percent subsidiary to produce and export generics.
However, Indian firms are going to face strong competition from other
developing countries, and even some developed countries. Therefore, the
long term success of Indian firms depends on improved efficiency and exploration
of new markets through South-North and South-South co-operation, both at
the producers’ and consumers’ level.
Production of Patented Drugs Under Licence
Global drug development and production are undergoing structural
changes in recent times. The reasons for such changes are: a) exponential
increase in the cost of drug development, b) shortening of product life,
and c) stiff competition from generic drugs.
In order to gain maximum revenue within a short period, Indian firms
are trying to get licences from global pharma business to produce and market
However, two discernible fact are worth mentioning:
Marketing of Imported Drugs
global pharma companies not having much stake in Indian market will not
hesitate to give licence to Indian firms; and
companies with large subsidiaries in India (like Glaxo, Pfizer) are likely
to introduce licensed drugs through their subsidiaries only.
The fourth option for Indian pharma firms is marketing of imported drugs.
Many Indian firms are interested in entering into long-term arrangements
with global business. For example, Ranbaxy has entered into an alliance
with Eli Lilly.
The new and liberalised drug policy has removed import restriction from
all but eight category of drugs. The removal of import restrictions and
proposed changes in the IPR regime will lead to an increase in drugs import.
and Prices of Drugs
The aforementioned discussions on off-patent drugs reveals the fact
that they will meet most of the demands. Therefore, even under the new
patent regime (compatible with the TRIPs Agreement), the availability and
prices of generic drugs will largely be unaffected.
However, the situation is different with respect to new (on-patent)
drugs. There is no doubt that these drugs will be available in the Indian
market (either through production or under licence). But, the effect on
prices is ambiguous.
Under the customary theory of demand-supply, the price level should
come down in future. The reason is increased supply and not-so much change
in demand. Albeit, this ideal situation may not be true in practice because
of the following factors:
Furthermore, in the long run, medical bio-technology is going to be the
area of research and development. Biotechnology base and research of Indian
firms (except the Government-owned Central Drug Research Institute) is
poor, and they are unlikely to be able to produce much of these drugs (see
the oligopolistic nature of global pharma business;
the practice of transfer pricing by the global business, where monitoring
and regulation of prices by the Government will be difficult; and
the price situation also depends on the proportion of patented drugs being
sold in the Indian market. At the same time, the global pharma business
has a large number of patented drugs which comes from their own R&D
(see Table 4).
Box 5: Why India Needs R&D in Medical Biotechnology?
|In March, 1995, the US Patent and Trade Mark Office (USPTO) granted
the patenting of healing property of haldi (turmeric). A dispute arose
pertaining to the issue of patenting of “traditional knowledge”. Under
the Agreement on TRIPs, patenting of “traditional knowledge” is barred.
Under the WTO procedures, any Member country can seek resolution of a dispute
with another Member by formally asking for ‘consultations’. If such ‘consultations’
fail, WTO can be asked to set up a dispute settlement panel to adjudicate
In August, 1996, India’s Council for Scientific and Industrial Research
(CSIR) approached attorneys in the US to challenge the American patent
on turmeric. After protracted techno-legal arguments, on August 13,
1997, the USPTO unequivocally rejected the patent application. India won
the Battle of Haldighati—politicians (and experts!) from all hues (left,
right or centre) rejoiced at the great victory(!).
However, the real issue is not that of India won, US lost. It lies in
India’s lack of research facilities in exploring in and inventing with
ethno-medicines. Medical biotechnology can play a crucial role here—not
in near future, but ‘now’. Given the decentralised origin and nature of
ethno-medicines, both the civil society and public sector research institutions
have a larger role in this regard—what is required is public action.
|Source: SAWTEE Newsletter No.8, Aug-Dec., 1996 , The
Economic Times, 24.08.1997, The Times of India, 31.08.1997
On the other hand, TNCs have a large base for research in medical biotechnology
(see Box 6). Given such a dominant position, prices of on-patent drugs
is likely to go beyond the reach of the consumers at large in the long
run. Therefore, the real issue is not availability of new drugs in the
Indian market, but peoples’ access to them.
Box 6: Hoechst Patents Ayurvedic Herb
|Hoechst, Germany patented the Indian medicinal plant Coleus Forskohlii,
which is being used for ayurvedic (Indian traditional medical system) medicine.
Traditional uses of this herb include treatment for cardiovascular disease,
abdominal colic, respiratory disorders, painful urination, insomnia and
convulsions. In 1974, a large scale screening of medicinal plants by Central
Drug Research Institute of India revealed the blood pressure lowering and
anti-spasmodic effects of extracts from C Forskohlii.
One of Hoechst’s patents covers a specific formula of the plant extract
and its use in treating cardiovascular disease and intraocular pressure.
According to a report of the Rural Advancement Foundation International,
Canada, in 1997, Hoechst will begin worldwide marketing of its C Forskohlii
|Source: Press Trust of India, 20.02.1997
Given such a hazy scenario it is difficult to predict the future of
the Indian pharmaceutical industry under the ‘new’ regime of intellectual
property rights and its relationship with international trade. However,
certain broad trends can be picturised.
First is that the Indian pharma companies are going to face stiff competition
from the global business. This despite the fact that at least in India,
the pharma market is not oligopolistic. At the same time, trends in
research and development can make it so in the long run.
Therefore, Indian companies can go either for collaboration or concentrate
on producing and marketing generic drugs. This futuristic conclusion is
based on the realistic assumption regarding poor research and market penetration
strategies by the Indian companies.
On the other hand, global pharma majors are unlikely to consider India
as one of their bases for exploring ‘new’ drugs through research. At most,
India can be an ‘assembly’ point of some drugs.
The trickiest part is what position should the Indian government
take. The issue is a political- economic one, and has to be (pro-actively)
approached from both angles—economics and politics.
Broadly, the Government of India has two options:
Given its traditional medicinal plant base, India can take a leading position
in developing, producing and exporting tropical drugs. Compatibility between
the above mentioned two options serves as a base for rational and need-based
introduce an effective regulatory mechanism for ‘checks and balances’ on
the availability, access and price of essential drugs; and
develop research facilities for the introduction of ‘new’ drugs catering
to the needs of the country.
Take a pro-active stance with respect to the Agreement on TRIPs
Build capacity for research and development on indigenous drugs of decentralised
Help researchers to obtain patents on their products by adopting a single-window
Adopt a holistic and need-based drug policy
Adopt a rational competition policy with respect to the pharmaceutical
Give more focus to preventive aspects of disease control while developing
Develop South-South cooperation while developing and producing need-based
Make rational use of drugs—‘more is better’ is a falacious concept
in this respect
Arouse public action, and convince (through networking and advocacy) the
polity of the necessity of a need-based drug policy
Reaching up to the international fora and advocate on the various issues/implications
of TRIPs on pharma sector
Reaching down to the civil society at large, and make them aware of their
traditional knowledge of indegenous systems of medicine
Annexure 1: Categories of Intellectual
|Copyright and related rights: unlike a patent, copyright protects the
expression of an idea, not the idea itself. This means that, in principle,
protection is only extended to the form in which an idea is expressed (e.g.
the particular writing of instructions in a computer programme), but not
to the concepts, methods and ideas that are expressed. Copyright
protection is provided to the authors of original works of authorship,
including literary, artistic and scientific works. Copyright has also been
extended to protect computer software and databases. "Neighbouring rights",
that is, rights which are related to copyright, are accorded to phonogram
producers, performers and broadcasting organisations. The owners of copyright
can generally prevent the unauthorised reproduction, distribution (including
rental), sale and adaptation of an original work. Protection generally
lasts for the life of the author plus fifty years or for fifty years or
more in the case of works belonging to corporate bodies.
Trademarks: trademarks are signs or symbols (including logos and names)
registered by a manufacturer or merchant to identify goods and service.
A valid trademark allows the owner to exclude from commerce imitations
likely to mislead the public. Protection is usually granted for ten years,
and is renewable as long as the trademark continues to be used.
Geographical indications: these are signs or expressions used to indicate
that a product or service originates in a particular country, region or
place. There are different types of geographical indications. They are
called ‘appellations of origin’ if the characteristics of the products
or services can be attributed exclusively or essentially to natural and
human factors of the place in which the products or services originate.
Industrial designs: an industrial design normally protects the ornamental
or aesthetic aspect of an industrial article. Industrial designs are characterised
by their appeal to the eye. There is a wide variety of requirements and
modalities of protection pertaining to industrial designs. In some countries,
protection is based on novelty, while in others on originality. Further,
in some countries specific protection for an industrial design co-exists
with or can be ‘accumulated to’ copyright or trademark protection for the
same design. The term of protection generally ranges between five and 15
years (including renewal).
Patents: patents are granted by a government authority conferring the
exclusive right to make, use or sell an invention generally for a period
of 20 years (counted from the date on which the application for the patent
was filed). In order to be patentable, an invention usually needs to meet
the requirements of absolute novelty (previously unknown to the public),
non-obviousness (containing sufficient innovativeness to merit protection)
and industrial applicability (or usefulness). Patents may be granted for
all types of processes and products, including those related to the primary
sector of production, namely agriculture, fishing or mining etc. Patent-like
protection is conferred for functional models and other ‘minor’ innovations
under utility models (see definition below).
Layout designs of integrated circuits: the protection of the layout
(or topography) of integrated circuits is conferred in most industrialised
countries. It is a sui generis form of protection introduced for the first
time in the USA in 1984 -- limited, like copyright, to the design as such
-- that allows the owner of the design to prevent the unauthorised reproduction
and distribution of such designs. Reverse engineering is generally allowed,
in accordance with the industry's practice. The duration of protection
is shorter than under copyright (typically ten years).
Trade secrets: confidential business information, such as lists of clients
or recipes, can be an enterprise's most valued asset. Civil and criminal
actions are provided for in most legislation against the unauthorised disclosure
or use of confidential information (of a technical or commercial nature).
In this case, there is no exclusive right, but an indirect type of protection
based on a factual characteristic of the information (its secret nature)
and its business value. Unlike patents, trade secrets are protected as
long as the information is kept secret.
Breeders' rights: this is a sui generis form of protection conferred
on plant varieties that are new, stable, homogeneous and distinguishable.
Exclusive rights, as a minimum, include the sale and distribution of the
propagating materials for around 20 years. Unlike patents, breeders'
rights permit the use by other breeders of a protected variety as a basis
for the development of a new variety (the ‘breeders' exemption’) and for
the re-use by farmers of seeds obtained from their own harvests (the ‘farmer's
Utility models: protection is given to the functional aspect of models
and designs, generally in the mechanical field. Though novelty and inventiveness
are generally required, the criteria for conferring protection are less
strict than for patents. The term of protection also is shorter (typically
up to 10 years). Utility models - which are concerned with the way in which
a particular configuration of an article works -- are distinct from industrial
designs, which are only concerned with the aesthetic character of an article.
|Source: As in Box 1
Copyright 1999 Consumer Unity & Trust
Society (CUTS), All rights reserved.
D-218, Bhaskar Marg, Bani Park, Jaipur 302 016,
Phone: +91(0)141-202 940/205 802, Fax: +91(0)
|© CUTS, This Briefing Paper has been
researched and written by Mr Rajat Chaudhuri, Mr Bipul Chatterjee and Mr
Pradeep S Mehta of and for CUTS Centre for International Trade, Economics
Hosted by: www.fullestop.com