The country's first compulsory licence has been granted by the Indian Patent Office to Hyderabad-based drug-maker Natco.

A landmark decision, under the amended Indian Patents Act (2005), allows Natco to make and sell in India, a similar version of Bayer's Nexavar, an advanced kidney cancer drug.

Natco will have to pay Bayer royalty pegged at six per cent of net sales, every quarter. Buoyed by the development, Natco shares closed up 6 per cent on the BSE, on Monday.

Landmark judgment

The 62-page judgment is Mr P. H. Kurian's last as the Patent Controller. The judgment reasoned that the patent-holder, Bayer, had not met the reasonable requirement of the public. It had not “worked the patent” or manufactured it to a reasonable extent in India. Besides, the drug was not available at an affordable price.

Compulsory licence

A compulsory licence (CL) is granted by a country on health grounds, where patients are unable to access a life-saving medicine.

Bayer imported the product, and while its global sales of Nexavar was $934 million in 2010, in India it clocked sales of Rs 16 crore in 2009, the judgment said. The figures demonstrate “neglectful conduct” of the patentee (Bayer) in India, the judgment added.

Only 2 per cent of the 8,842 patients needing the drug got the medicine, it observed. The patients needing the drug “far exceed” the supply of the product, he added.

Bayer reaction

A Bayer spokesperson, however, said: “We are disappointed by the decision of the Patent Controller in India to grant a compulsory licence for Nexavar. We will evaluate our options to further defend our intellectual property rights in India.”

Cipla too sells its version of generic Nexavar in India, from April 2010.

But Bayer had subsequently taken them to the Delhi High Court over patent-infringement.

On Monday, Mr Kurian also handed over charge at the Patent office to Mr Chaitanya Prasad.

Our Hyderabad bureau adds : Dr P. Bhaskara Narayana, Chief Financial Officer, Natco, said the market for the product was around Rs 30 crore a year. The company will begin selling the drug after a stay granted by the Delhi High Court is vacated.

“The stay will be vacated once we submit the order of the Controller General of Patents Designs and Trademarks to the High Court,” he said.

“We welcome this order as it opens up a new avenue of availability of life-saving drugs at an affordable price to the suffering masses in India,” he said. Natco also expects the market for the drug to expand now, though it might come down in value terms.