MUMBAI/LONDON Feb 6 Global pharmaceutical firms
are pressuring the United States to act against India to stop
more local companies producing up to a dozen new varieties of
cheap generic drugs still on-patent, sources with direct
knowledge of the matter said.
An Indian government committee is reviewing patented drugs
of foreign firms to see if so-called compulsory licences, which
in effect break exclusivity rights, can be issued for some of
them to bring down costs, two senior government officials told
The drugs that are part of the review process are used for
treating cancer, diabetes, hepatitis and HIV, said the sources,
declining to give details. No timeline has been given for
completion of the review process.
Emerging markets, from South Africa to China and India, are
battling to bring down healthcare costs and boost access to
drugs to treat diseases such as cancer, HIV/AIDS and hepatitis.
Western drugmakers, including Pfizer Inc, Novartis
AG, Roche Holding AG and Sanofi SA,
covet a bigger share of the fast-growing drugs market in India.
But they have been frustrated by a series of decisions on
patents and pricing, as part of New Delhi's push to increase
access to life-saving treatments where only 15 percent of 1.2
billion people are covered by health insurance.
India is currently on the U.S. government's Priority Watch
List - countries whose practices on protecting intellectual
property Washington believes should be monitored closely.
The U.S. industry trade group Pharmaceutical Research and
Manufacturers of America (PhRMA) believes Washington should take
a tougher line by downgrading it to a Priority Foreign Country,
a classification for the worst offenders, which may trigger
possible actions, sources said.
"The multinational companies are exploring all options -
from paring their investments in the country to forcing the U.S.
to take some actions," said a source in New Delhi, who is
directly involved in the situation.
"Companies feel something should be done at the earliest to
check the violations of their intellectual property in the
country. They want government-to-government pressure to change
things," he said.
All the sources declined to be named due to sensitivity of
the matter. A PhRMA representative declined to comment.
If India gets relegated by the United States to Priority
Foreign Country level, it will join Ukraine as the second
country in that segment. Countries in the Priority Watch List
include China, Indonesia, Pakistan, Russia, Thailand and
"PhRMA makes submissions to the U.S. government every year
on trade issues but this year they really want to ratchet up the
pressure on India," said one executive with a multinational drug
PhRMA is currently drawing up a submission to the U.S.
government ahead of a Friday deadline for filing concerns about
countries to be included in the so-called Special 301 Report,
which is prepared annually by the Office of the United States
Making medicines cheaper is a politically sensitive issue
in India where many patented drugs are too costly for most
people, 40 percent of whom earn less than $1.25 a day, and where
patented drugs account for under 10 percent of total drug sales.
Picking a fight with an emerging economy like India, where
millions of people cannot afford basic healthcare, will not be
easy and without risks.
The industry has recently run into fierce controversy in
South Africa for taking on Pretoria over its plans to overhaul
patent laws to favour cheaper generic drugs, leading some
executives to urge a softer approach.
"I don't believe there is any need for any kind of more
assertive stance. This is a situation where constructive
engagement is the way forward," GlaxoSmithKline Plc
Chief Executive Andrew Witty told Reuters.
With sales of patented drugs in Western countries slowing,
emerging markets are a vital growth driver for companies. India,
however, has so far failed to be much of a money-spinner for the
world's top pharmaceutical companies.
India's $14 billion-a-year drugs market - driven these days
by chronic diseases, such as diabetes, as well as infections -
is expected to be worth $22-32 billion by 2017, which would rank
it as the 11th largest globally, according to IMS Health.
"Any obstruction or action by the U.S. government can have a
very adverse impact on the trade relations between the two
countries," said D.H. Pai Panandiker, president of New
Delhi-based RPG Foundation, an economic think-tank.
"So, both sides will be cautious, but to protect their own
interests they won't hesitate to take actions under the WTO
(World Trade Organisation) provisions."
In 2012, India issued its first ever compulsory licence to
domestic drugmaker Natco Pharma Ltd on a kidney and
liver cancer drug, Nexavar, patented by Germany's Bayer AG
, in a move that it had said endangered pharmaceutical
AstraZeneca Plc last month decided to shut its R&D
centre in Bangalore citing broader global business strategy.
Some analysts expect a few other global drugmakers to pare R&D
spending given the uncertainty about the patent regime.
"If the authorities are going haywire and looking to grant
compulsory licences lock, stock and barrel, in that event you
will lose the credibility in India as a system," Ameet Hariani,
managing partner at Mumbai-based law firm Hariani & Co, said.
"You are going to see much more litigation on this issue.
People are going to be unwilling to introduce new drugs in the
market," he said. "You can't expect to get a new drug at a price
of an aspirin."