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In a landmark decision, the Patent Controller of India granted India’s first
compulsory licence to Natco Pharma (Natco) to sell a generic copy of
Bayer’s anti‐cancer drug (Nexavar) at 3% of the innovator price (INR284K
innovator price). Natco, in return, will pay 6% royalty on sales to Bayers.
The latter has expressed its disappointment at the development and is
likely to challenge the decision in a higher court. We believe that this
decision could act as precedent for future patented drugs and open room
for more launches under compulsory licensing.
What is compulsory licensing
Compulsory licensing is a provision in which the government can allow a generic
company to manufacture and sell a low‐cost version of a patented drug in India without
the consent of the patent holder, by paying royalty. Section 84 of the Indian Patent Law
provides a provision of compulsory licence to prevent the abuse of patent as a
monopoly and to make way for commercial exploitation of an invention by an
interested person. Under this section, any person can make an application for grant of
compulsory licence for a patent after three years from date of grant of that patent, on
any of the following grounds:
a) Drug is not freely available to patients.
b) Drug is not available at affordable prices.
c) The patented invention is not manufactured in India.
We highlight that the key focus in this provision is to provide critical medicine at
affordable cost. Globally, Brazil, South Africa and Thailand governments have
implemented compulsory licensing provisions to ensure availability of medicines to
patients at affordable prices.
Impact: Landmark decision for Indian pharma industry
We view this decision as landmark for the pharmaceutical industry and it may set a
precedent for future patented drugs, particularly in the area of critical illnesses such as
cancer and HIV. We expect more such challenges from Indian companies in similar
therapy areas and global pharma companies will have to revisit their India launch
strategy for these products. Cipla and Natco are already fighting with Merck & Co and
Viiv (JV between GSK and Pfizer for HIV products) for HIV products on similar grounds.
We highlight that it may discourage MNC pharma companies to go aggressive on their
India plans or they may have to have an India specific pricing strategy. Glaxo India in its
recent analyst meet has indicated that it has launched two oncology products and is
planning to launch one more from the parent’s pipeline in the near future.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In a landmark decision, the Patent Controller of India granted India’s first
compulsory licence to Natco Pharma (Natco) to sell a generic copy of
Bayer’s anti‐cancer drug (Nexavar) at 3% of the innovator price (INR284K
innovator price). Natco, in return, will pay 6% royalty on sales to Bayers.
The latter has expressed its disappointment at the development and is
likely to challenge the decision in a higher court. We believe that this
decision could act as precedent for future patented drugs and open room
for more launches under compulsory licensing.
What is compulsory licensing
Compulsory licensing is a provision in which the government can allow a generic
company to manufacture and sell a low‐cost version of a patented drug in India without
the consent of the patent holder, by paying royalty. Section 84 of the Indian Patent Law
provides a provision of compulsory licence to prevent the abuse of patent as a
monopoly and to make way for commercial exploitation of an invention by an
interested person. Under this section, any person can make an application for grant of
compulsory licence for a patent after three years from date of grant of that patent, on
any of the following grounds:
a) Drug is not freely available to patients.
b) Drug is not available at affordable prices.
c) The patented invention is not manufactured in India.
We highlight that the key focus in this provision is to provide critical medicine at
affordable cost. Globally, Brazil, South Africa and Thailand governments have
implemented compulsory licensing provisions to ensure availability of medicines to
patients at affordable prices.
Impact: Landmark decision for Indian pharma industry
We view this decision as landmark for the pharmaceutical industry and it may set a
precedent for future patented drugs, particularly in the area of critical illnesses such as
cancer and HIV. We expect more such challenges from Indian companies in similar
therapy areas and global pharma companies will have to revisit their India launch
strategy for these products. Cipla and Natco are already fighting with Merck & Co and
Viiv (JV between GSK and Pfizer for HIV products) for HIV products on similar grounds.
We highlight that it may discourage MNC pharma companies to go aggressive on their
India plans or they may have to have an India specific pricing strategy. Glaxo India in its
recent analyst meet has indicated that it has launched two oncology products and is
planning to launch one more from the parent’s pipeline in the near future.
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