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The New Indian Patent Law: Will it harm or heal?

Professor Prabuddha Ganguli (PhD)CEO

“VISION-IPR”&

Adjunct Professor, School of Humanities, Indian Institute of Technology, Bombay, India.

103 B SENATE, Lokhandwala Township, Akurli Road, Kandivli East, Mumbai 400101, India Tel: 91-22-28873766; Fax: 91-22-28844782

e-mail: ramugang@vsnl.com

Presentation at the CIPH Seminar, WHO (Geneva) on April 11th 2005

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Structure of the Presentation• Overview of the Indian Health Care System

and Industry• Typical Concerns regarding strong IPR

Regimes• Evolution of Patent Laws in India• Salient features of the 3rd Patent Amendment• Did India prepare and / or is prepared for the

healing process?• Steps Ahead

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Start with the Proposition

It will Heal……….provided a holistic approach

and process is put in action

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Perception of IPR – similar to Four Blind Men who encountered an

elephant and reported

““The elephant The elephant is like a ropeis like a rope””

““The elephant The elephant is like a is like a wallwall””

““The elephantThe elephantis like a is like a snakesnake””

““The elephant The elephant is like a is like a pillarpillar””

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“Knowlitics™” …...…..A new international

phenomena

Emerging Socio-Political Dimensions of the Knowledge Trade

IPR plays a decisive role

Transacting Owned Knowledge

“Knowletics” TM applied for in India by P. Ganguli

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The Continual Challenge to

Team India Pharma [TIP ]i.e. Government-Industry-NGOs-Academics

Timely healthcare at affordable costs

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Apportioning Healthcare costs in India

7%Others8%Miscellaneous20%Lodging, Traveling etc14%Hospitalisation

24%Diagnostic Investigations & Pathological Tests

18%Medicines9%Doctor’s Fees

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HEALTH INFRASTRUCTURE

3,00,000N.A.N.A.No. of Medical Reps.

5,00,000N.A.N.A.No. of Chemists

171N.A.N.A.No. of Medical Colleges

1,63,18157,363725Primary Health Centres, including Sub-Centres and Community Health Centres

8,70,1615,69,0002,30,000(1961)

Hospital Beds

15,0976,8003,100(1961)

Hospitals

8,32,0001,43,88718,054Nurses

6,05,8402,68,70061,800Doctors (Allopathy)200319811951

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Indian Pharma Industry Performance 2004

•Domestic sales of Rs. 268 Bn.

•Net Foreign Exchange Earner Export Rs.183 Bn.

Imports Rs. 44 Bn.

•No. 1 Company- Market Share 5.1%.

•Top Ten companies total market share 34.9%

•Domestic industry highly competitive and fragmented

•Production estimated Rs.415 Bn.

–Bulk Drugs – Rs. 94 Bn.

–Formulations - Rs.321 Bn.

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Indian Pharma Industry Performance 2004

•Ranks 4th in Volume and 13th in Value terms.

•Over 10,000 manufacturing units.

Highly fragmented.

Only about 300 in the organised sector.

•60,000 Brands. 60 Therapeutic Categories.

•Share of World Pharma Market

………1% in Value, 8% in Volume

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Indian Pharma Industry.... Growth Trends

- 0.2- 0.7- 0.50.92.3Price Led Growth (%)

6.65.88.88.88.2Volume led Growth (%)

6.45.18.39.710.5Total Growth (%)

20042003200220012000

Source: ORG-IMS also includes Vaccines and Serums which are excluded from 2004 Study of ORG-IMS

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Positive Role of the “TIP”.. thus far

•Abundant availability of medicines at reasonable prices

•Improvement in Health Indicators

1951 2003

Life Expectancy (yrs) 36.7 65.4

Birth Rate (per 1000) 40.8 25

Death Rate (per 1000) 25 8.1

Infant Mortality 150 64

(per 1000 live births)

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Value Chain In India

Drug Discovery &

DevelopmentManufacturing Marketing Distribution Wholesaling Retailing

Investment in R&D to the tune of 1-2% of Sales

Investment in Plant & machinery, auxiliary equipment, building etc.

Investment in manpower, training, knowledge, promotional literature

Manufacturer who is responsible throughout the value chain earns the least

Government earns 37% returnRetailer earns 16-20% returnWholesaler earns 8- 10% returnManufacturer earns 7.9%

Investment in logistics, depots, inventory

Just Stock & sells. Credit given by manufacturer.

Risk of sales return borne by manufacturers

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What is the correct time in the stage of development when a

country should introduce strong IPR laws ???

History has shown that all countries such as USA, various countries in

Europe, Japan, China, Korea, India and others have waited for the appropriate

socio-economic-political stage to introduce strong enforceable IPR

Frameworks.

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Development of the Patent LawIn India

Act VI of 1856Act XV in 1859Patterns and Designs Protection Act 1872Protection of Inventions Act 1883Inventions and Designs Act 1888Indian Patents and Designs Act 1911

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Development of the Patent LawIn India

Indian Patents Act 1970 (39 of 1970)The Repealing and Amending Act 1974 (56 of 1974)The Delegated Legislation Provisions (Amendment) Act

1985 ( 4 of 1986)The Patents (Amendment) Act 1999 ( 17 of 1999)The Patents (Amendment) Act 2002 ( 38 of 2002)The Patents (Amendment) Ordinance 2004 ( Ord 7 of 2004)Passing of the Patent Bill (Third Amendment) 2005(Rules being drafted)

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Indian Patents Act 1970• Definition of Invention [section 2 (1)(j)]• Criteria for Patentability • Inventions Excluded form Patents (Section 3)• Abolition of Product Patents for Drugs, Medicines

and Foods including products of Chemical Reactions• Reduction in Patent Term • Must apply in India prior to applications in foreign

countries• Enlarged framework for Compulsory Licence

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Indian Patents Act 1970(after the third Amendment)

• Invention, inventive step, pharamceutical product redefined.

• Clarification on definition of “new entity”• Inventions Excluded form Patents (Section 3)• Re-introduction of Product Patents for Drugs,

Medicines and Foods including products of Chemical Reactions

• Patent Term 20 years• Must apply in India prior to applications in foreign

countries• Enlarged framework for Compulsory Licence

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Salient Features of the New Patent Act

as per the Bill passed by

Lok Sabha on 22/3/05 and

Rajya Sabha on 23/3/05

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New Definitions• Section 2 (ja) “Inventive step” means a feature of an invention

that involves technical advance as compared to the existing knowledge or having economic significance or both and that makes the invention not obvious to a person skilled in the art;

• New invention” means any invention or technology which has not been anticipated by publication in any document or used in the country or elsewhere in the world before the date of filing of patent application with complete specification, i.e., the subject matter has not fallen in public domain or thatit does not form part of the state of the art.

• Pharmaceutical Substances” means any new entity involving one or more inventive steps.

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Exceptions to PatentabilitySection 3 (d): the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation to Section 3 (d): “Salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, combinations, and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.

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Pre Grant Opposition by Representation

• 25 (1) Where an application for a patent has been published but a patent has not been granted, any person may, in writing, represent by way of opposition to the Controller against the grant of patent within the prescribed period on the grounds of

• (a) ……..• (b) ……..

and the Controller shall if requested by such person for being heard, hear him and dispose of the representationin such manner and within such period as may be prescribed.

• Time for filing pre-grant opposition by representationa minimum period of 6 months, from the date of publication, for making representation.

Rules being redrafted

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Opposition Pre / Post Grant •Grounds for opposition

A formal list of all grounds for opposition as was there in Section 25 before the ordinance will continue be the grounds for opposition that include benchmarks for novelty, inventive step and industrial applicability, non-disclosure or wrongful mentioning of sourceand geographical origin of biological material and anticipation of invention by knowledge, oral or otherwise, available in public domain.

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Deletion of Section 25(2) from Ordinance 2004

• Section 25 (2) was introduced by the Ordinance denying the person making an opposition representation the right of becoming a party to any proceedings under the Act.

• This restriction has now been deleted.

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Provision to implement Para 6 of Doha Declaration

• Section 92A relates to compulsory licence for export of patented pharmaceutical products (provided for in Para 6 of Doha Declaration), to such countries as have inadequate production capacities.

• Compulsory Licence shall be available for manufacture and export of pharmaceutical products to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems, provided compulsory licence has been granted by such country or such country has by notification or otherwise allowed importation of the patented pharmaceutical products from India.

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Transitional Arrangement Applications

Section 11A (7) Rights of a patentee in respect of applications made under sub-section 5 before the 1st day of January 2005 shall accrue from the date of grant of the patent provided also that after a patent is granted in respect of applications made under sub-section (2) of section 5, the patent holder shall only be entitled to receive reasonable royalty from such enterprises which have made significant investment and were producing and marketing the concerned product prior to 1.1.2005and which continue to manufacture the product covered by the patent on the date of grant of the patent, and no infringement proceedings shall be instituted against such enterprises.

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Compulsory LicenceSub-Section (vii) and (viii) of Section 90 (1), modified and a new sub-section (ix) has been introduced

• (vii) that the license is granted with a predominant purpose of supply in the Indian market and that the licensee may also export the patented product, if need be in accordance with Section 84 (7) (a) (iii);

• (viii) that in the case of semi-conductor technology, the license granted is to work the invention for public non-commercial use;

• (ix) that in case the license is granted to remedy a practice determined after judicial or administrative process to be anti-competitive, the licensee shall be permitted to export the patented product, if need be.

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Compulsory Licence• The present Act already contains provisions under

Section 84 (7) (a) (iv) whereby a compulsory licencecould be requested on the ground that “the establishment or development of commercial activities in India is prejudiced”.

• Similarly, Section 84 (6) (iv) provides that in considering an application for compulsory licence the Controller of Patents is required to take into account “as to whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period (not to exceed 6 months) as the Controller may deem fit”.

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Looking through the Indian Biotech Crystal Ball

• Bio-IT market of $15 million in 2002 projected to grow to $ 120 million by 2006

• Biotech industry recorded a turnover of $700mn in 2003-2004 expected to reach $ 1 Billion in 2004-2005 and $ 5Bn by 2010. The number of companies grew to 235 from 150 in 2002-2003. Biotech exports is 56% of the total turnover. About 1000 students graduate from Indian Institutions in biotechnology, 60 bio informatics centers, Biotech Parks, incubation centers, centers of Biotech Excellence; growing fidcal incentives by Government

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ENABLING ENVIRONMENT• Product Patent Protection effective 1st January, 2005,

will give a boost to R&D and make Indian Pharma truly International.

• Peak Customs Rate reduced from 20% to 15%.• 100% Deduction in Profits for Companies carrying

out R&D till March 2007.• Weighted Deduction of 150% of Expenditure on in-

house R&D till March 2007• Allocation to Department of Health & Family Welfare

increased from Rs.8,420 crores to Rs.10,280 crores (22% increase)

• New Pharmaceutical Policy to be announced to stimulate Industry’s Growth.

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Maturing Indian Infrastructure• Several Indian Pharmaceutical Companies are

gaining critical mass and are already in or about to be in the league of $ 250 turnover companies.

• Most of these companies are increasingly adopting the desirable GMPs, GLPs, getting their manufacturing units approved by USFDA and other regulatory bodies, setting up world class facilities for R&D, clinical trials etc.

• Decades of experience in synthetic organic chemistry, understanding of reaction mechanisms, backed up by sound foundations in chemical engineering to deliver cost effective manufacturing processes

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Maturing Indian Infrastructure • 60 FDA approved plants in India ……. the largest

concentration outside the USA.• Expertise in designing and manufacturing low cost equipment,

machinery and medical devices• Manpower and infrastructure now in a state to partner global

companies in early stage development of molecules, delivering full synthetic routes, and selective phases of the clinical trials.

• Successful use of traditional knowledge in therapeutics based on systems such as Ayurveda, Sidha & Unani and in recent times blending it with modern science to seed and nurture the market of neutraceuticals, cosmoceuticals, herbals, etc.

• Rich experience in the development of formulations and drug delivery systems

• Undertake research to create new knowledge for drug discovery and development

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Maturing Indian Infrastructure • Fertile ground for clinical trials with 220 Medical Colleges,

350Universities, 390 Research Institutes, 27ICMR Institutes, over 500Private hospitals and over 100 NGOs and voluntary agencies to help in recruitment and management of patients during trials.

• Undisputed expertise in IT infrastructure, skills for developments in bio-informatics, tele-medicine, device interfacing etc.

• Rich Traditional Knowledge Base and Practices now waiting to be integrated with modern scientific processes for major breakthroughs in cost effective development of pharmaceutical products and services. Projects already underway .

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Maturing Indian Infrastructure• Strong governmental support for the pharmaceutical

and biotech sector• Government having initiated steps to curb spurious

drugs by amending law to make activities related to spurious drugs as a cognizable offence

• Government initiating moves to introduce positive industry friendly regulatory laws and framework.

• Department of Biotechnology (DBT) http://dbtindia.nic.in; Council of Scientific and Industrial Research (CSIR) http://www.csir.res.in and University Grants Commission (UGC) http://ugc.ac.in nationally focusing on building manpower and infrastructure to service emerging needs in biotechnology, immunology, genomics, proteonomics, bioinformatics, etc.

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Maturing Indian Infrastructure• Stress on academic-industry-government teamwork for

targeted deliver of business oriented results through innovative funding schemes such as New Millennium Indian Technology Leadership Initiative (NMITLI)http://www.csir.res.in/nmitli/nmitli.html; Drugs & Pharmaceutical Researchhttp://dst.gov.in/scprog/tecdev/drugspharmares.htm; Instrumentation Development Programme http://dst.gov.in/scprog/tecdev/instrdevprog.htm; Grants to Industry- PATSER Programme Aimed at Technological Self Reliance (PATSER) http://dsir.nic.in; Home- Grown Technology Programme (HGT) http://www.tifac.org.in/; Department of Information Technology http://www.mit.gov.in/R&D/projects/index.htm#about

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Evolving Opportunities for Indian Pharma and Biotech Sector

• manufacturing outsourcing,• development outsourcing involving pre clinical and

clinical trials and customised chemistry services,• contract research for molecules in the pre launch stage, • take lead position in herbal based products and services, • providing value added cost effective business processing

in health care services working in strategic-tandem with global partners with good partnering practices (GPP),

• continuing its dominance in generics (adding bio-generics to the portfolio) would be the trajectory for the near future.

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Ball on the Roll……Contract Manufacturing

Several Indian Companies such as Dishman Pharma,Shasun Chemicals, Suven Pharma, InnovasynthTechnologies, Hikal, Matrix Laboratories, Divis Labs, Orchid Pharmaceuticals, Strides Arcolabs, andJubiliant Organosys are actively engaged in making quality bulk drugs and APIs for GSK, Bayer, MerckKgaA, Pfizer, Aventis, Solvay Labs and Novartis.

Companies like Cipla, Nicholas Piramal, Ranbaxy, Dr Reddy’s Labs, Glenmark Labs, Themis Medicare,Unichem Labs and Sun Pharmaceuticals have set up dedicated manufacturing facilities for making of bulk drugs for exports.

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Ball on the Roll……Contract Manufacturing

Indian Companies have also been serving global generic companies like Teva, Alpharma,Sandoz, Merck Generics, Ivax, Apotex, Bexel,Hexal, Stada and ParPharma.

Many more India companies are setting up manufacturing units to service the growing opportunity. It has recently been reported Tevahas set up their own manufacturing facility in India . Similarly Sandoz has set up their facilities for manufacture and development of generic drugs in India.

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Ball on the Roll…..JVs in the making

GSK – Ranbaxy; Novartis – Torrent;Novartis - Dr Reddy’s; Novo Nordisk - Dr Reddy’s; Pfizer - Shanta Biotech; Schwarz - Ranbaxy; AllerganAllergan–– NicholasNicholas PiramalPiramal (NPIL); (NPIL); Cambridge Biostability -Panacea Biotech (Delhi) are working examples are working examples to act as trendsetters for the events to follow in the strategic backward integration into the drug discovery value chain for the Indian players with their already existing basket of product portfolios, technical skills and infrastructure that might need marginal upgradation.For example For example Nicholas Nicholas PiramalPiramal has set up a worldhas set up a world--class new clinical unit called class new clinical unit called WellcrestWellcrest.

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Ball on the Roll…..CROs and Tech Parks

APFirst in the state of Andhra Pradesh is a body promoting investments and developments in a “Pharma City” in Visakhapatnam. It is also establishing an Indian Institute of Life Sciences for Discovery Research, upgrading hospitals in 3 cities to perform Clinical trials to international standards thereby sending positive signals to the pharma world

There are about 30 CROs in India with Lambada Therepeutic Centre, Lotus Labs, Suven Life Sciences,Clininvent Research Pvt Ltd Quest Life Sciences PvtLtd, Sipra Labs, Sygene International a subsidiary ofBiocon to name a few.

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Ball on the Roll….Public Private Partnerships

CSIR-led New Millennium Indian Technology Leadership Initiative (NMITLI)

The initiative so far is worth Rs 1500-million and has disbursed Rs100 million in two years.

TCS’ bioinformatics educational software development, new chemical molecule development with the help of the chemical industry. Gene marker identification initiated by IGIB are funded in addition to other biotech / bioinformatics

Project titled "Latent M. tuberculosis: New targets, drug delivery systems and bio-enhancers and therapeutics" in the year 2001 by CSIR Lupin Laboratories, Mumbai partenering 4 institutions.

Dabur India investigating a gall blastoma lead under its collaborative Genomics Research Project with CSIR.

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India Post TRIPS…. An Audit• 1st (1999) and 2nd Patents Amendment Act (2002)

with Patent Rules 2003; 3rd amendment bill introduced in December 2003 has lapsed; Patent Ordinance 2004 on December 26th 2004. The Bill for the 3rd Amendment was passed in Lok Sabha on 22/3/05 and in Rajya Sabha on 23/3/05

• The Trademarks Act 1999 and TM Rules 2002 (rules notified on September 15, 2003)

• Copyright Act 1957 with Copyright rules 1958 followed by International Copyright Order 1999.

• Designs Registration Act 2000 with Design rules 2001• Geographical Indications Act 1999 with GI rules 2002• Protection of Layouts for Integrated Circuits Act 2000• The Protection of Plant Varieties and Farmers Rights

Act 2001• Bio-diversity Act 2002

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“ Arise , Awake and Stop Not till the desired end is reached.Be not afraid,For all great power, throughout history of humanity, has been with the people. From out of their ranks have come the greatest geniuses of the world, and history can only repeat itself. Be not afraid of anything. You will do marvellous work. The moment you fear, you are nobody. It is fear that is the great cause of misery in the world.It is fear that is the greatest of all superstitions. It is fear that is the cause of all our woes, and it is the fearlessness that brings heaven even in a moment.Therefore “Arise, awake and stop not till the goal is reached.”

[Address at Calcutta … more than 100 years ago….The Complete Works of Swami Vivekananda,Subsidised Edition, Vol. 3, pp 320 – 321]