1
Brussels21-22 September 2008
byD G Shah
Secretary General Indian Pharmaceutical Alliance
Indian Pharmaceutical Industry Innovation, IPRs & Counterfeits
EICC – IMC Roundtable on Pharmaceutical Industry
2
Indian Pharmaceutical Industry
The Patents Act – Restoring “Balance”
TRIPS Article 39.3
IPRs & Innovation
IPRs & Public Health
Anti-Counterfeit Drive
Outline of Presentation
IPA:09/08
3
461
191
93
195
1853 41 49
13 2710
33
91
334
221
459
1855
0
50
100
150
200
250
300
350
400
450
500
95-96 96-97 97-98 98-99 99-00 00-01 '01-02 '02-03 '03-04
Year (May-Apr)
Inve
stm
ent -
Mn
$
Indian Cos
Foreign Cos
Investment in Capacity Creation
Source: CMIE, Study Report: 1996-2004
Mn $ % Mn $ %
Indian 740 81 1,302 90 Foreign 179 19 139 10 Total 919 100 1,441 100
95-99 99-04Sector
Indian Pharmaceutical Industry
IPA: 09/08
4
Globalization of Business: 2005-06
Source: Pharmexcil
05-06 05-06/ 04-05Contrn Growth
Rs Mn Rs Mn % %
West Europe 39,215 47,957 22.2 22.3North America 32,100 35,595 16.5 10.9East Asia 29,277 35,422 16.4 21.0Africa 21,717 29,688 13.8 36.7East Europe 19,179 23,439 10.9 22.2LAC 12,371 15,629 7.2 26.3South Asia 13,540 14,425 6.7 6.5West Asia* 8,616 10,618 4.9 23.2OAC 2,322 2,976 1.4 28.2Others 240 416 0.2 73.2Total 178,578 215,790 100.0 20.8*Includes Israel.
Countries2004-05 2005-06
West Asia5%
OAC1%
South Asia7%
LAC7%
East Europe11%
Others0% West
Europe22%
North America
16%Africa 14%
East Asia16%
IPA: 09/08
Indian Pharmaceutical Industry
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Global Sales of Pharmaceuticals: 1990-2010P
85%
15%
55%
45%
1990 2005
Mn $ 1990 2005 2010P
Domestic Sales
1000 4,564 8,000
Global Sales 178 3,711 20,000
Total Sales 1,178
8,275 28,000
29%
71%
2010P
IPA: 09/08
Indian Pharmaceutical Industry
Pharmacy of the World
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R & D Spend: How Top Sectors Fare
IPA: 09/08
Source: Capitaline Plus
Indian Pharmaceutical Industry
Pharma Spends More Than All Industries Put Together
3%4%5%
11%
25%
51%
3%4%5%
11%
26%
51%
0
10
20
30
40
50
60
Pharma Automotive Oil/Refining IT Software Elec Equpmnt Engineering
2006
2005
7
R & D Spend
@ Constant $ (1 = INR 45)
Source: IPA
3171
409
522
0
100
200
300
400
500
600
1995 2000 2005 2006
Year
$ M
n
Year $ Mn
1995 31
2000 71
2005 409
2006 522
Balancing Short-Term Profitability with Sustainable Long-Term Growth
IPA: 09/08
Indian Pharmaceutical Industry
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Moving Up the Value Chain of R & D
NCE
Chiral
NDDS Analogue
Process Development
30%
65%
5%
2000
30%
35%
2006
35%
IPA: 09/08
Indian Pharmaceutical Industry
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The Patents Act
Embodies TRIPS Agreement
IPA:09/08
Article 7 (OBJECTIVE): The Enforcement of Intellectual Property Rights should be
“…… in a manner conducive to social and economic
welfare, and to a balance of rights and obligations”.
Article 8 (PRINCIPLES): WTO Members are Allowed to
“…… adopt measures necessary to protect public health and nutrition, and to promote the public interest”.
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The Patents Act
IPA:09/08
Criteria for Patentability - S.3 (d) & (e)
Use of Transitional Period - S.11A(7)
Pre-Grant Opposition - S.25
Compulsory Licence - S.84
Government Use Licence - S.92 & 92A
Exception For Early Working - S.107(a) Parallel Imports – S.107A(b)
Implements Flexibilities
Focus on Quality of Patents & Public Health
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The Patents Act
Encourages Innovation
IPA:09/08
“We need to ensure that the global IP systems evolve so that they may contribute to the development of developing countries, by stimulating innovation and technology transfer relevant to them, while also making available the products of technology at the most competitive prices possible .” Integrating Intellectual Property Rights and Development Policy-CIPR
- Prof John Barton - George E. Osborne Prof of Law, Stanford University- Mr Daniel Alexander – Barrister, London, UK- Prof Carlos Correa – Director, Masters Programme on Science and Technology Policy and Management, University of Buenos Aires, Argentina - Dr Ramesh Mashelkar FRS – Director General, Indian Council of Scientific and Industrial Research, New Delhi, India- Dr Gill Samules CBE – Senior Director of Science Policy and Scientific Affairs (Europe) at Pfizer Ltd, Sandwich, UK- Dr Sandy Thomas – Director of Nuffield Council on Bioethics, London, UK
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The Patents Act
Pressure to Emulate the US System:
United States spends over 14% of GDP on Healthcare and yet 1/3 of its people do not have
access to medicines
India Trying to Evolve Own System:
India needs a system that encourages real innovation while ensuring access to medicines
IPA:09/08
FDA Granted Priority Status to Less than 25% of 1,284 Drug Patents
Restoring “Balance”Should India Emulate or Evolve?
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Restoring “Balance”Healthcare Spend as % of GDP - 2005
The Patents Act
0
2
4
6
8
10
12
14
16
India Germany Brazil China US
Source : WHOIPA:09/08
Should India Emulate or Evolve?
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TRIPS Article 39.3
Member States’ obligation is to protect “undisclosed test or other data” submitted to Regulatory Authority against “unfair commercial use”
It does not mean “Market Exclusivity”; and
Use of originator’s data for regulatory approval is “not unfair commercial use.”
Protection of Undisclosed Test Data
Canadian Federal Court Judgement
IPA:09/08
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10-Year “Data Exclusivity”
From Date of Marketing Authorization in the Country
Irrespective of Patent Status
For Any ‘New Product’
Demand of Big Pharma
TRIPS Article 39.3
IPA:09/08
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“different salts, esters, ethers, isomers, mixture of isomers, complexes or derivatives of an active substance shall be considered to be same substance unless they differ significantly in properties with regard to safety and/or efficacy”
European Parliament Directive 2001/83/EC, as amended by Directive 2002/98/EC, as amended by 2004/24/EC, as amended by 2004/27/EC, Art. 10(1) (2004)
Data Exclusivity in EC
Derivative, if Significantly Different, is also Eligible for 10-Year Exclusivity
TRIPS Article 39.3
IPA:09/08
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Longer than 20-Year Market Monopoly
Delays Entry of Generics
Protection to Weak Patents
Tool for “Evergreening”
Offers Market Exclusivity to Pre-1995 Molecules
Implications of Exceeding TRIPS Obligations
TRIPS Article 39.3
IPA:09/08
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No Obligation to Go Beyond TRIPS Agreement;
Taking Calibrated Approach;
Avoiding Data Exclusivity;
Making Appropriate Provision for Protection of “Undisclosed Test Data”;
Protecting Flexibility Conferred by the TRIPS Agreement for Defining Patentability;
Monitoring Impact of the TRIPS Agreement on Access to Medicines and the Local Industry
What India is Doing
TRIPS Article 39.3
IPA:09/08
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Protection v/s Competition
IP Laws are Designed to Provide Exclusive Rights as Incentives for Investment in R & D
But
In Many Sectors Competition (Absence of Exclusivity) Drives Technological Development
IPRs & Innovation
There is Inherent Tension between IPRs & Competition
IPA:09/08
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Protection v/s Competition
IPRs are Designed to Foster Innovation
and
Sustain Economic Growth
But
Kill Competition and thereby Restrict Innovation
Need for Balancing IPRs & Competition
IPRs & Innovation
IPA:09/08
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IPRs & Innovation
Protection (P) vs. Innovation (I)
Minimal Protection LevelOptimal Protection Level
Source: Swiss Federal Institute of Intellectual Property, October 2006
Beyond a Point, IPRs are Counterproductive
Maximal Innovation Level
IPA:09/08
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IPRs & Public Health
Key Elements of India’s IPR Policy
Exclusive Rights should Not Prevent Pro-competitive Environment. Both are Needed for Innovation
There is No “One-Size-Fits-All” Model for Striking the Balance between IPR and Innovation
Stronger IPR = More Innovations? Not So Simple
Access to Medicine – Public Health
Need for Flexibility in the IPR System
IPA:09/08
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IPRs & Public Health
World Audited Market - 2005
Region
+MAT Mar 2005 *Population-Mn
$ Bn%
Share2005
% ofTotal
Latin America 20.3 3.8 558 9
Asia/Africa/Australia 41.0 7.7 4711 73
Japan 59.0 11.1 128 2
Europe 158.4 29.7 725 11
North America 255.1 47.8 332 5
Worldwide 533.7 100.0 6454 100+Source: IMS Health: MIDAS, MAT March 2005 * Source: EarthTrends Data Tables
18% of the World Population Contributes 89% of Sales
IPA:09/08
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Anti–Counterfeit Drive
Scope & Definition
“Medicines which are deliberately and fraudulently mislabeled with respect to identity or source. Counterfeiting occurs both with branded and generic products and counterfeit medicines may include products with the correct ingredients but fake packaging, with wrong ingredients, without active ingredients or with insufficient active ingredients”
Source : WHO
IPA:09/08
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Anti–Counterfeit Drive
Report of the EC Taxation and Customs Unit - 2007
“China, responsible for almost 60% of all counterfeit goods seized, continues to be the main source. However, in some categories, such as articles for personal care, other countries such as Georgia and Turkey are the main sources whilst Switzerland, India and United Arab Emirates top the list for medicines”
Source : Community customs activities on counterfeit and piracy -Results at the European border - 2007
IPA:09/08
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IMPACT by WHO
SECURE by World Customs Organization
ACTA by G–8 / USTR
EU Council Regulation No. 1383/2003
Other Initiatives – Diffusing the Focus
Anti–Counterfeit Drive
Expanded IP Protection & Enforcement of Patents and Data Exclusivity Diffuse Anti-Counterfeiting Focus
IPA:09/08
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EU Directive 2004/48/EC: Article 3.2
Anti–Counterfeit Drive
Yet, Anti-Counterfeiting Campaigns Go Beyond Counterfeits
“The measures, procedures and remedies shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse”
IPA:09/08
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Anti–Counterfeit Drive
Adopt One Uniform Definition
Counterfeits: Medicines which are deliberately and fraudulently mislabeled with respect to identity or source
What is not Counterfeit Products infringing Patent Rights Parallel importation of original products from a third
country where they have been sold by the appropriate right-holder
Diversion of supplies of authorized items Import of medicines for personal use, not duly
registered in the country
Substandard need not be counterfeit and should be defined as Any medicine with incorrect ingredientsIPA:09/08