25 Jul 11 Product Patent Regime in India – the journey from imitation to innovation

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When the earth completes a revolution around the sun, it reaches the same place from where it started – but is it exactly the same? Not only has time progressed, it is the beginning of yet another year with countless possibilities and new endeavors. I can say that the Indian pharmaceutical industry has also completed such a revolution. It started with the product patent regime which was introduced during the British rule and was existent until the 1970s. Later it was changed to process patents for the benefit of the Indian pharma industry. But the year 2005 saw the reintroduction of the product patent regime. Although the Indian pharma industry has reached the same point from where it started, the situation is not the same as it was in the 1970s and it is predicted to bring about a revolutionary change! The new product patent law was introduced to comply with TRIPS (Trade Related Intellectual Property Rights) and it gave this industry a solid legal framework and the intellectual property protection which it vied for.

Indian firms were known to be imitators or (the famous…rather infamous term) – reverse engineers. The scenario is undergoing a change due to these amendments as they are seen to encourage R&D efforts among Indian companies. I came across an article in the Times of India which discussed the increasing R&D investment by Indian pharma companies. Statistics showed that Indian pharma companies have invested around 6% of their sales revenue in R&D in 2009-10. Although this was low in comparison to the expenditure by multinationals (13%), growth over the last 5 years has been commendable. DRL, Ranbaxy, Lupin, Sun Pharmaceuticals and Zydus Cadila are among the top 5 companies which have invested the maximum in R&D. According to Pharmabiz, R&D spending of 20 Indian pharma companies is up by 5% to Rs. 2,989 crore in FY’10.

Mentioned below are some of the strategies adopted by Indian pharmaceutical companies.

1. Made R&D an integral part of strategy

R&D was made an integral part of the functions and it figured in corporate strategies. Considerable amount of budget was allocated for R&D spending. Some portion of profits was reinvested in R&D activities.

2. Set up new functional units dedicated to R&D

Pharma companies have set up new functional units dedicated to breakthrough R&D of new chemical entities. Nicholas Piramal, Ranbaxy, DRL and Sun Pharmaceuticals are actively converting their existing R&D units into separate subsidiaries.

3. Collaboration with multinationals

Collaborating with multinationals and jointly discovering drugs helped in sharing the cost of discovery. Such tie-ups created a win-win situation for both the Indian and multinational companies. For e.g. DRL has entered into an agreement with ClinTec international for joint development of an anti-cancer compound, DRF 1042.

4. Benefit from government initiatives

Government initiatives like New Millennium Indian Technology Leadership Initiative and Drugs and Pharmaceuticals Research Programme have benefited the companies and stimulated R&D growth.

Interest in drug discovery is growing. The money spent on R&D is bearing fruit as some of the major Indian pharma firms have applied for clinical trials for around 12 new drugs in 2010. The table represents some of the Indian companies and their newly developed molecules which are in various stages of clinical development.

Company Name

Molecule

Clinical trial phase (Current)

Disease

Zydus Cadilla

ZYGK1

Phase I

Diabetes

ZYI1

Phase II

Anti-inflammatory and pain management

ZYOG1-oral GLP-1, ZYH7

Phase I

Diabetes and dyslipidemia

ZYH2

Phase II

Diabetes

ZYH1

Phase III

Dyslipidemia

Glenmark

NBE GBR 401, an anti-CD19 monoclonal antibody

Preclinical

Lymphoma and leukemia of new drug origin

GBR 500- a monoclonal antibody, is an antagonist of the VLA-2 (Alpha2 beta1) integrin

Phase II

Cancer

GRC 17536

Phase I

Pain and respiratory disorders

DRL

DRL 17822, selective inhibitor of CETP

Phase I

Dyslipidemia, atherosclerosis and associated cardiovascular diseases.

Ranbaxy-GSK

Unknown

Phase I

Respiratory inflammation

Please note this is not an exhaustive list

The R&D scenario has undergone a rapid change which is evident from the R&D efforts and drugs in the pipeline making it to clinical trial phase. The Indian pharma sector is set to transition from the phase of imitation, to the world of innovation. Innovation is an imperative for an industry like pharma. There is a threshold to which an industry can survive without innovation. The transition is slow, but sooner the Indian companies adapt themselves to change, the better prepared they would be to compete in the future.

Molecule

Clinical trial phase (Current)

Disease

Zydus Cadilla

ZYGK1

Phase I

Diabetes

ZYI1

Phase II

Anti-inflammatory and pain management

ZYOG1-oral GLP-1, ZYH7

Phase I

Diabetes and dyslipidemia

ZYH2

Phase II

Diabetes

ZYH1

Phase III

Dyslipidemia

Glenmark

NBE GBR 401, an anti-CD19 monoclonal antibody

Preclinical

Lymphoma and leukemia of new drug origin

GBR 500- a monoclonal antibody, is an antagonist of the VLA-2 (Alpha2 beta1) integrin

Phase II

Cancer

GRC 17536

Phase I

Pain and respiratory disorders

DRL

DRL 17822, selective inhibitor of CETP

Phase I

Dyslipidemia, atherosclerosis and associated cardiovascular diseases.

Ranbaxy-GSK

Unknown

Phase I

Respiratory inflammation

Sayli Vaidya

Sayli was a research analyst at ValueNotes, with a focus on healthcare and pharma.

3 Comments
  • The Challenge of Innovation
    Posted at 10:48h, 31 March Reply

    […] discussed in my last blog, the introduction of product patent regime is transitioning the industry into an innovation based […]

  • poornima rathod
    Posted at 18:40h, 14 December Reply

    Here are few things i was wondering could you take time to help me understand?

    1. How is the transition from process patent back to product patent lead the industry leaders into investing more in R&D?

    2. Though point made correctly that if pharma has to survive the sooner they realize potential of biotech the better for them.
    But RDA technology has its owns disadvantage of unpredictability…and a lack of guarantee on the returns on investment..so do you think this trend is gonna last long or is just a peak in the curve

    • Sayli Vaidya
      Posted at 06:40h, 16 December Reply

      @poornima:
      To answer your 1st question, I would say that introduction of product patent would act as an incentive for R&D investment in innovative molecules/drugs. The incentive would be in the form of exclusive marketing rights for a certain period of time. In case of process patents, anyone and everyone was producing the same molecule by different process or reverse engineering, so it lacked the right of exclusivity.

      As for the 2nd question, I think any innovation has its share of risks and returns. But this risk is worth taking, especially in an evergreen industry like pharmaceuticals. I strongly believe that this trend would definitely transform the industry and not just be a peak in the curve.

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