Indian Article on Patent Reform Stirs Controversy

As the Patent Reform Act moves its way through Congress, many companies (especially pharmaceutical companies) have turned to the foreign press to get a pulse on "outsider" views of the Act. While many of the foreign press reports provide relatively straightforward reporting on the Act's progress, a few reports have started to surface, where representatives of foreign companies have opined on ways they can benefit from the reform measures.

One particular article from The Economic Times of India raised alarm in the pharma industry, and even prompted Congressmen Michael Michaud (D-ME) and Donald Manzullo (R-IL) to send a "Dear Colleague" letter to fellow members, stressing that "[f]oreign competitors welcome the proposed change in U.S. patent law."

While the article shouldn't be surprising, it does confirm the fears of many opponents of the current reform measures - low-cost countries are looking at ways to knock out patents so the skids may be greased for easier entry into U.S. markets. One quote from the Indian Pharmaceutical Alliance's secretary general DG Shah stated the following:

“This provision will subject many existing US patents to an immediate threat of invalidation as it makes easier to show the obviousness of the invention. Seeking invalidation of patent is likely to be a part of the patent strategy that Indian generics companies may follow in the US. Companies could either make use of this provision or opt for the existing process of litigation or a mix of both depending on legal advice on a case to case basis.”

Traditionally, the Indian pharmaceutical industry has been characterized by a core competency in generics manufacturing and relatively immature capabilities in R&D. However, according to a recent report by ABM's Pharmaceutical Processing, this outlook has evolved substantially since the 1990s and Indian companies have been making investments towards expanding drug discovery and development capabilities. Also, the acceptance of patent laws and the rise of contract manufacturing have led to the diversification of revenue streams, enabling Indian pharma companies to experience high market growth.

Other notable facts in the report:

- In 2005, the Indian pharmaceutical industry was valued at $4,660m, representing an increase of 8.3% over previous year of sales.

- $4,304m. A surge in growth is expected to take place between 2006 and 2008, attributable to the opportunities presented by contract research and manufacturing sourcing (CRAMS).

• See Michaud/Manzullo letter here (link).

• Read The Economic Times article "Local cos can eye patents in US" (link)

• Order a copy of "The Indian Pharmaceutical Market to 2011: Competitive Dynamics and Major Players" here (link)

- Special thanks to David Vandagriff for bringing this article to the 271 Blog's attention.