The Hindu Business Line : Pharma MNCs likely to tighten hold on patents

WITH fewer innovations in the pipeline, multinational pharmaceutical companies may become more aggressive in protecting their patent rights, making it tougher for generic companies to manufacture cheaper versions of drugs.

According to investment banking sources, multinational pharma companies will now try to safeguard their turfs much more zealously.

"This is primarily because the overall number of blockbuster drugs has come down. Also, the future product pipeline is not very buoyant. Therefore, if they wish to retain the topline growth, these companies will try to adopt creative strategies and draw tighter patents making it difficult for generics to enter the market."

It is estimated that drugs facing patent expiration in 2005 are worth $9 billion (Rs 39,150 crore) in annual sales, with another $19.5-billion (Rs 84,825 crore) worth drugs going off-patent in 2006.

Industry officials said that Indian companies would increasingly have to chalk out their strategy very clearly.

"They would have to factor in litigation costs in the overall business strategy. It is the case of high-risk high-reward wherein if the company wins a patent challenge, it would stand to make huge gains. On the flip-side, a loss could result in the company having to pay up huge damages," said a pharma company official.

Also, domestic companies may not have the balance sheet size to match the huge war chests that the MNCs have, he added.

Another top official said that currently there are only a handful of large generic companies in the country.

"If these companies are seen to be getting beaten in patent challenges, others may be deterred to foray the international markets, delaying the problems for multinationals."

Meanwhile, legal experts are concerned on the different verdicts spelt out by courts in different countries on patent challenges.

"Companies are fighting patent challenges for the same product in different countries. We will have to see whether a decision by, say, a European court would have a bearing in the US or any other country," said a Delhi-based patent attorney. Increasingly, there could be more number of out-of-court settlements or other mutually beneficially agreements between generic and innovator companies, he added.

The patent tussle came to the forefront recently after a US court passed an injunction preventing Teva Pharmaceuticals and Ranbaxy from manufacturing the generic version of Pfizer's Accupril.

So, even as Pfizer has decided to claim damages, the two generic companies are gearing up for a protracted legal battle.

Research reports indicate that in just two months of generic Accupril launch, Ranbaxy and Teva grossed 43.6 per cent share while Pfizer's authorised generic company, Greenstone, gained 39.7 per cent share.

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