<div>Ever wondered why Gilead Sciences, the US pharmaceutical company, chose seven India-based drugmakers last month to sign non–exclusive licensing agreements to produce low cost versions of its new hepatitis C drug sofosbuvir?<br /><br />The obvious reason could be that Gilead, as part of its humanitarian programme, desires to make “its chronic hepatitis C medicines accessible to as many patients, in as many places, as quickly as possible” and Indian companies - Cadila Healthcare, Cipla, Hetero Labs, Mylan Laboratories, Ranbaxy Laboratories, Sequent Scientific and Strides Arcolab - with their large-volume generic manufacturing and distribution capabilities -- are the preferred choice. <br /><br />Gilead has allowed its Indian partners to sell the medicine in India and 90 other developing countries, which together account for more than 100 million people living with hepatitis C, or 54 per cent of the total infected population globally.<br /> <br />India, the world’s third largest producer of generic drugs by volume, and the base for the largest number of US drug regulator (FDA) approved drug manufacturing facilities outside the US, certainly has the capacity to take up such a challenge. It has proven this on an earlier occasions, by selling AIDS medicines in large volumes at a fraction of innovator’s price, to the entire developing world. It could thus be argued that India is best fit for taking up the Gilead assignment.<br /><br />That is not the only reason, though.<br /><br />In addition to humanitarian considerations, Gilead has commercial reasons as well for choosing Indian generic companies over others for the specific licensing agreement.<br /><br />By making the generic players its partners (for a royalty, of course!) for some countries, Gilead has made them accept the intellectual property rights (IPRs) it holds over the drug in all jurisdictions. Even in countries such as India, where the patent status of sofosbuvir remains undecided (Gilead’s claim is being examined by the Indian Patent Office), the agreement helps avoid potential patent challengers. Thus, in addition to the goodwill generated by agreeing to share its patented technology to produce low cost medicines for markets that cannot afford its high cost drug, Gilead will now gain exclusive marketing opportunities in the developed world and thereby maintain its potential windfall revenue generation opportunities. <br /><br /><strong>India, Not Indian Companies</strong><br />India is different from most of the countries with similar or better drug manufacturing capabilities because of its unique IPR law. And that’s again the reason for Gilead’s attraction towards companies based in India.<br /><br />India’s patent law limits the patentability criteria to real innovation. Hence, all patent claims that are found to be on incremental innovations get rejected.<br /><br />Even in the case Gilead, there are pre-grant patent oppositions filed against sofosbuvir in India. The agreement with generic drug makers will help Gilead limit the generic threat in the eventuality of an adverse ruling. Though, most foreign global multinationals do not consider partnerships as their first option, and are trying to pressurize India to change its patent laws to better suit their interests.<br /><br /><strong>Modi Visit</strong><br />Given the high decibel opposition against India’s patent regime from the US companies, Narendra Modi government has been indicating the possibility of a review of India’s IPR rules. With Modi planning his first US visit next week, the move has gained strength now.<br /><br />The development of Indian generic industry was itself driven by an earlier IPR policy of the Indian government. The Patents Act 1970 had limited patent protection to process innovations and hence allowed companies to develop generic products through processes different than that of the innovator company. The entire production capability of Indian pharmaceutical industry was developed during the three decades that followed. The 2005 amendment to the Patent Act brought product patent protection back to the country, though with certain public interest safeguards, which is allowed under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO). <br /><br />A day after the announcement of the partnership agreement, on September 16th , the Gilead team had visited Nirmala Sitharaman, the Minister of State (Independent Charge) for Commerce and Industry to share the details of the partnership. They informed the minister that no price limitations have been fixed in the licensing deal in order to ensure adequate competition amongst the licensees resulting in competitive prices for the patients. Welcoming the development, as it expands the access of drugs, Sitharaman pointed out that the “pharmaceutical industry has a very pronounced human aspect and such a sector cannot be governed by the commercial considerations alone”. <br /><br />The minister also said that India appreciates the value of innovation and partnerships to improve access of medicines through transparent, non restrictive voluntary licensing and hopes that it will help in technology transfer in front-end technologies in healthcare. <br /><br />As Prime Minister Narendra Modi visits US next week, the significance of India’s current IPR policy will be tested against its ability to remain a credible source of low cost, high quality medicines to the entire world and to help shape Gilead like partnerships. <br /><br />Joe@businessworld.in<br />joecmathew@gmail.com</div><div>@joecmathew<br /><br /> </div>
