March 12, 2012 / 6:45 PM / 7 years ago

UPDATE 1-Bayer loses landmark Indian drug case over Nexavar

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MUMBAI, March 12 (Reuters) - Germany’s Bayer has lost a landmark drug ruling in India, forcing it to grant a compulsory licence for its cancer treatment Nexavar to Natco Pharma in a move that could bring down the cost of other pricey medicines.

The Indian Patent Office issued its first ever compulsory licence to Natco, a local generic drug manufacturer, effectively ending the German drugmaker’s monopoly in India on the drug for treating kidney and liver cancer.

Natco’s chief financial officer said on Monday it won the right to make the drug under a provision of the Indian Patents Act allowing a compulsory licence after three years of the grant of patent on drugs that are not available at affordable prices.

Medecins Sans Frontieres (MSF), which campaigns for access to drugs in poor countries, welcomed the move, which it said would bring the price of the drug in India down from over $5,500 a month to close to $175.

“This decision serves as a warning that when drug companies are price gouging and limiting availability, there is a consequence,” said Michelle Childs, director of policy at the Geneva-based charity.

MSF believes the move means that new medicines in India that are still under patent, including some of the latest treatments for HIV/AIDS, could potentially have generic versions produced for a fraction of the cost.

The move, however, will unnerve international pharmaceutical companies. They are eyeing emerging markets like India as a major growth opportunity but remain worried about intellectual property protection in such countries.

In the current case, Natco will be able to make and sell a low-cost version of Nexavar in India at a price fixed by the Controller General of Patents, Designs and Trademarks. Natco will pay Bayer a small royalty on its sales.

Bayer said in a statement it was evaluating its legal options.

Natco’s finance chief Baskara Narayana told Reuters that sales of the generic version of Nexavar, whose generic name is sorafenib, were expected to be about 250 million to 300 million rupees every year once it is launched.

Shares in Natco Pharma ended 6 percent higher in Mumbai. (Reporting by Kaustubh Kulkarni, with Ben Hirschler in London; Editing by Subhadip Sircar and Will Waterman)

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