Pharmaceutical majors like Ranbaxy, Dr Reddy's Lab, Wockhardt, Glenmark and Sun Pharma are now treading a careful patent litigation path in the US market to expand their generic business instead of the aggressive patent challenges they pursued until a few years ago.
This caution has almost halved the number of patent challenges by Indian companies in the US in the last few years.
Para IV applications (abbreviated new drug applications (ANDA) notifying to challenge innovator patents) filed by the domestic pharma firms with the US drug regulator have come down to 10-15 annually during the last two years from 20-30, said patent experts.
Changing dynamics of the generic business with the introduction of authorised generics (either innovators launch their own generics or allow others to launch drugs before patent expiry to ward off generic competition) and more out-of-court settlements are the major reasons for a fall in patent challenges. Further, a declining number of patented drugs going off-patent in future, tight competition, price erosion upon patent expiry and huge costs involved in the patent challenge route have also lead to a decline in the patent challenges. Another important reason could be the failure of domestic companies to win patent challenges to earn business, said patent experts.
Dr Reddy's Laboratories challenged 29 innovator patents out of 49 marketing applications by March, 2006-end. The company filed only 19 applications with 10 patent challenges with Para IV certifications in 2007-08, out of a cumulative 122 marketing applications in the US.
The US is the single largest pharma market with an estimated market size of $ 286.5 billion for 2008, including $85 billion generics market.
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Drugs worth $65-70 billion are expected to go off-patent in the next four to five years, according to a KPMG study. According to IMS Health data, drugs with approximately $20 billion in annual sales will face patent expiry in 2008.
"Patent litigation has become a risky game plan and now companies carefully evaluate the potential business benefits. The effort is not worthwhile unless you are sure of gaining at least a $10 million profit by the challenge," said Glen Saldanha, MD and chief executive of Glenmark.
Experts said many companies were now adopting the strategy of not to challenge the patents, which they indicate as a Para III ANDA filing to the drug regulator.
Lupin, one of the fastest growing companies in the US generics prescription market, filed only 11 ANDAs, out of 62 cumulative ANDA applications till March 2008.
However, the company has not revealed how many of these are Para IV certifications. Sun Pharma and its US subsidiary Caraco together have 53 approvals and about 90 products are waiting for approvals. The company filed about 29 applications last year.
Patent experts said very few of them were known to challenge innovator patents. Similarly, Wockhardt is also following a strategy of less patent challenges in the US market.
Glenmark Generics, the generic arm of Glenmark Pharmaceuticals, has about 40-45 ANDAs pending for approval.