Indian Court Ruling will give advantage to domestic drug makers who don’t have to worry about bigger foreign rivals expanding in India and poaching their best scientists

The Madras High Court dismissed a petition filed by Swiss pharmaceutical major Novartis AG challenging the constitutional validity of the Sect 3 (d) of the patents (amendment) act 2005, under which its patent application for beta crystalline form of imatinib mesylate, was rejected.

The objective of the Section is to prevent drug companies from unjustifiably prolonging the life of a patent by claiming new properties. The company's stand is that medical progress occurs through incremental innovation and section 3 (d) excluded important developments in the form of incremental innovation and thereby denying patients new and better medicines.

The court rejected the challenge saying it had no jurisdiction on whether Indian patent laws complied with intellectual property rules set by the WTO, as Novartis had questioned.

The Swiss multinational in a press note, issued soon after the verdict, has stated that it would not move Supreme Court challenging the Madras HC decision.

The Indian government's veiled threat of invoking 'compulsory licensing' and  Global opinion, with several NGOs has been against the Novartis has played a key role in the Novartis' rather unexpected decision not to move Supreme Court.

According to Commerce Minister Kamal Nath, the Indian Patents Law is compatible with TRIPS and there have been no complaints against it in the international forum. And this Act is compliant with TRIPS.

Union Health Minister Dr Anbumani Ramadoss was on record saying that the government would be forced to resort to the 'compulsory licensing' as the last resort. "Till now, India has not used compulsory licensing and we do have no immediate intention of using it. But, don't force us to use it," he had said, while commenting on the possibility.

Novartis India vice chairman and managing director Ranjit Shahani said that the case shows why companies are more interested in doing their R&D in China than in India. The Indian patent system stifles innovation. Some of the biggest names in the pharma industry – companies like Pfizer, Roche, AstraZeneca, Eli Lilly and Merck as well as Novartis itself – have been expanding their research operations in China.

The Swiss pharmaceutical firm argues that a tightening of intellectual property laws would increase investment for developing more drugs.

NGOs focusing on providing health care in the developing world dismiss suggestions that India’s industry – and patients – will suffer. Y.K. Sapru of India’s Cancer Patients Aid Association on the inadequacies of Big Pharma companies said “They do not conduct research on diseases specific to developing world. They cannot resist the one-billion plus market of India by delaying the entry of a new drug. If at all they fail to patent them in the country or delay its marketing registration, Indian companies can reverse engineer any new molecule. All this talk about patients suffering due to a legitimate patent law is bogus.”

India’s domestic drugmakers, companies such as Ranbaxy and Dr. Reddy’s will be other big winners from the Chennai case. They don’t have to worry much about bigger foreign rivals expanding in India and poaching their best scientists.

Critics of Novartis say changes to the  law would affect the supply of affordable anti-AIDS drugs from India, one of the biggest makers of generic drugs.

India is a key source of cheap generic medicines, and advocacy groups worry that millions of poor people could lose access to key drugs if Novartis succeeds in its challenge.

Indian Health Minister Anbumani Ramadoss said in April that the government was "very concerned" that the challenge by Novartis could restrict the global supply of cheap anti-AIDS drugs.

India has the world's third largest population living with HIV after South Africa and Nigeria, with an estimated 3.5 million infected people.

Mashelkar Committee was formed by the government was primarily to look into the issue of patentability in drugs. Dr. Mashelkar had made a significant observation that Indian pharmaceutical industry is capable of incremental innovations only and therefore India should not limit patenting to new chemical entity or new medical entity. 
Thus government has to come out with a clear stand on patentability of drugs at the earliest.