One more round has started in the battle between drug patent holders and generics players with Swiss firm Hoffman-La Roche filing a patent infringement suit against Indian generics leader Cipla for launching a copy of its anti-infection drug Valcyte. This battle is likely to go on for a long time with periodic victories and defeats going either way. But there is likely to be no going back to the old days when drugs still under patent in the regulated markets could be freely copied in markets like India. On the other hand, global drug majors are unlikely to get away easily with their attempts to ‘evergreen’ — extend the life of a patented drug through ingenuous means. Within these limits, both the camps will continue to fight and survive, with occasional casualties along the way.
Despite the far stricter global intellectual property regime since 2005, the space for generics players will in fact get bigger in the near future with more blockbuster drugs going off-patent. But this is unlikely to make life any easier for generics players as there is already intense competition for a slice of the ex-blockbuster market. This is the reason why Cipla’s chief executive Yusuf Hamied has darkly foretold that there will be no generics players left in 20 years. His over dramatisation is discounted by others who point out that the space for generics will not go away for several reasons.
One, the need to keep challenging patents so that they are not unduly extended will remain. Two, the need for cheap copies of costly patented drugs to save lives in poor countries, like for AIDS treatment in Africa and India, will also remain. Three, genuine health emergencies will occur which will call for compulsory licensing. Another new ray of hope that can emerge is a Democratic victory in the US presidential elections leading to a new comprehensive healthcare policy that will lay greater stress on affordable medicines. Keeping the US budget deficit low will then get a higher priority for a period than rewarding innovation.
Under this scenario, and in view of the fact that new molecules are unlikely to become a substantial weapon for Indian players, this largely generics industry which is under margin pressure has to develop a new business model. One route will be for those who like the discovery space to remain in that play but not try to go the whole hog (from proof of concept to marketing) alone. A combination of in and out licensing (sharing the development spectrum with major players) can yield revenue, reduce risk and allow learning how to develop new molecules even while a major portion of the revenue continues to come from generics.
The other route is to not join the herd in chasing the market of blockbusters but target the niche and speciality corner in the generics space which can harness Indian expertise in chemistry and bring in useful revenue which does not create a splash. What the industry cannot avoid, however, is a phase of consolidation in which only the strong, large and efficient players will be able to live with lower margins. Another imperative is to raise the standards of good manufacturing practices. The US FDA is getting tougher and no Indian player should want to be in the position where Ranbaxy is right now.