1 Brussels 21-22 September 2008 by D G Shah Secretary General Indian Pharmaceutical Alliance Indian...

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Brussels21-22 September 2008

byD G Shah

Secretary General Indian Pharmaceutical Alliance

Indian Pharmaceutical Industry Innovation, IPRs & Counterfeits

EICC – IMC Roundtable on Pharmaceutical Industry

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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

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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


IPA: 09/08

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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


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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


Pharmacy of the World

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R & D Spend: How Top Sectors Fare

IPA: 09/08

Source: Capitaline Plus


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


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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


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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

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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

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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

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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

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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

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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

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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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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

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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

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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

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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


Expanded IP Protection & Enforcement of Patents and Data Exclusivity Diffuse Anti-Counterfeiting Focus

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EU Directive 2004/48/EC: Article 3.2


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”

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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

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THANK [email protected]

IPA:09/08

1 Brussels 21-22 September 2008 by D G Shah Secretary General Indian Pharmaceutical Alliance Indian...

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