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Swati Patankar

The recent Madras High Court decision on Swiss pharmaceutical company Novartis challenging Section 3(d) of Indian patent law has important implications for India. Novartis challenged not only Indian patent law but also contested the overturn of its patent on Glivec, a drug used to treat leukaemia.

The Madras High Court decision upheld the notion that incremental changes in a drug cannot be patented, thus preventing companies from holding rights to drugs that are slightly different from previously existing versions.

This issue has been portrayed as a fight for affordable drugs versus the fight for intellectual property. This is a simplistic view of the stakes in the game of drug discovery

The poor of India certainly need affordable medicines and to accomplish this aim, the court decision goes a long way, ensuring that a monthly dose of Glivec can be made available for Rs 8,000-10,000 compared to the Novartis price of Rs 1- 1.2 lakh. Nevertheless, it is questionable how many Indians can afford even Rs 10,000 per month, especially for an indefinite period of time as required for treatment with Glivec.

Most importantly, the poor have an even greater need for systems that provide a minimum standard of healthcare; successive governments have grossly neglected this aspect. In 2003, government spending on healthcare was a paltry 0.9 per cent of GDP, which is expected to increase to 6 per cent by 2010, according to a CII-McKinsey study.

Many diseases afflicting the poor, including tuberculosis, cholera and malaria, require not only new initiatives for drug development but more urgently, drastic public health reforms that could make a serious impact on their control.

For example, public health measures such as ban on spitting on the streets, provision of clean drinking water and mosquito control/distribution of mosquito nets would certainly cause large improvements in the control of TB, cholera and malaria respectively. These measures would not only bring down disease but also improve the quality of life of citizens in urban India.

Multinational companies aver that the Indian patent system stifles innovation. Surely, a Swiss pharmaceutical company like Novartis would have little interest in the innovative capacity of the Indian patent system; the only groups that will have a genuine interest are the Indian government, Indian companies and the Indian people.

Clearly, rather than an altruistic concern for India, Novartis stands to gain in terms of profits from sales of Glivec. Nevertheless, the statement regarding Indian innovation is worth considering and a relevant issue in the context of other Indian businesses as well, including software and the burgeoning BPO industry.

India’s strength of cheap manpower has given us an edge for lowering the cost of many products and services. The issue is when will this cheap manpower yield novel, innovative and cutting-edge technologies? Innovation not only has the potential to spin off products and services that are more valuable and bring in more revenues, but also tends to make for interested, motivated employees.

A case in point is Google, one of the most sought-after companies by prospective employees. One of the factors for this trend is Google’s flexibility in giving employees time in the workweek for developing their own crazy, creative ideas which might pay off for the company.

In the pharmaceutical industry, innovation is driven by several factors. These include the cost of R&D for a new drug, sourcing the revenues for these activities and choice of disease-areas for drug discovery. Among businesses in the US, the pharmaceutical industry has one of the highest investment of profits into R&D (11-25 per cent depending on the analysis); high profit margins result in more internal funds available for R&D spending.

However, today the average R&D cost per new drug has also increased several times. This is due to the changing nature of drug discovery, with a shift from chemistry to biology-based discovery, leading to increased investments in infrastructure and trained manpower. Additionally, clinical trials have become bigger and there has been a shift in the focus of new R&D towards chronic and degenerative diseases. Hence, even in the US this increased R&D spending has not translated into a greater proportion of innovative drugs that are new chemical entities (NCEs), with completely novel structures.

Most of the drugs that are approved by the US FDA (Food and Drug Administration) show small changes from existing drugs and small benefits to the consumer.

Unfortunately, since the US Patent Office also gives patents on small modifications to existing drugs, the number of patents held by a company is not a good index of innovation.

Given a scenario in which even US pharmaceutical companies are unable to keep the supply of NCEs flowing, the Madras High Court decision on Novartis is interesting.

This decision will put pressure on pharmaceutical companies in India to move away from a model of making small changes in existing drugs towards innovative, new drug discovery. What chances do Indian pharmaceutical companies have in the race for innovative new drugs?

One head-start they have is high profitability, a result of the old patent laws that gave pharmaceutical companies the unique advantage of manufacturing drugs that they had spent almost nothing to develop. This is primarily why medicines in India are so cheap.

Today, the Indian pharma sector is clearly poised to excel in the global market as well. But high profits alone will not help. To stand a chance in the race for innovative new drugs, Indian pharma companies have to invest more of their profits in R&D. This is happening already and 20-30 NCEs are in the pipeline of Indian companies. However none of these is expected to be in a new class of chemical entities or has novel drug targets.

Drug discovery (like any other innovative endeavour) is time-consuming, has a long gestation period and uncertain outcomes.

The industry must be given some incentives to invest in such activities. Globally, tax breaks and other incentives are given to companies for investing in R&D.

In the US, some of the uncertainty of this process has been blunted by the fact that the government spends as much as US pharmaceutical companies on R&D in academic institutions.

Owing to strong collaboration between industry and academia, the basic research for drug discovery can be carried out by the academic partner while the application of such research into products is implemented by the industry partner.

Additionally, with more government investment, there is a greater degree of control over the kinds of diseases for which drugs are developed.

In India, this model is being pushed by government agencies (public-private partnership is the cornerstone of the draft National Biotechnology Development Strategy) and shows promise.

For example, collaborations between International Centre for Genetic Engineering and Biotechnology, New Delhi and Hyderabad-based Bharat Biotech could lead to the first indigenously developed vaccine for malaria while Central Drug Research Institute, Lucknow has a long history of drug discovery and industry collaborations.

The court decision against Norvatis will certainly help lower the cost of Glivec. However, the decision also encourages innovation, and once Indian pharma companies are forced to move along the road of innovation, R&D spending will increase, uncertainty in drug discovery will increase and these costs will be passed on to the consumer.

Paradoxically, this decision may result in an increase in the cost of medicines sold by Indian companies in the long term. In planning for the future, the only way to keep the price of medicines affordable in India is establishing a strong and healthy network between government, industry and research centres.

Readers are invited to send their responses to the issues raised in not more than 500 words, with name and professional details of two or three lines, to bleditor@thehindu.co.in

(The author is an Associate Professor in the School of Biosciences & Bioengineering, IIT Bombay. She has research experience in the Indian pharmaceutical industry and has been a consultant for the World Health Organization on tropical disease research.)

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