'Data protection is critical'

Q&A: Ranjit Shahani

Ranjit Shahani

Though India finally has a product patent law in place for pharmaceuticals, multinationals are still not rushing in to file new patents. Indeed, some Indian firms are going abroad to file for patents, while for all intents and purposes there is a perfectly modern patent law of global standards in the country.

The reason for this is lack of "data protection", or the assurance that the data sets (basically the details of clinical trials and their results) given to the government by a company looking for a patent will not be made public for a certain period of time, usually five years after the product comes to market. If the data is made public as soon as the drug goes to market, companies feel rivals will use their expensive clinical trials data to modify the drug they are working on and be able to come to market quicker.

Ranjit Shahani, vice chairman and managing director, Novartis India, and president, Organisation of Pharmaceutical Producers of India (OPPI), tells Business Standard that product launching strategies of research-based companies would essentially be dependent on the assurance of data exclusivity provided by the law and Novartis will not be an exception. Excerpts:

We thought that once the product patent law was in place, multinationals would feel a lot more confident about India and would rush to launch new drugs. Why is this not happening?

The companies are now in a wait-and-watch mood. Though the patent law is in place, I don't expect any big product launches will take place this year. It will take at least two years more for companies to start product releases here because there are still grey areas.

Similarly, the healthcare policies of the government are also a vital element in the India strategy of any company. With 700 million people with little access to medicine, there is clearly a market opportunity "" if there is no expansion of healthcare facilities, especially health insurance, the market will not become particularly attractive.

If a Pepsi and a Coke can be available in the smallest village then why can't we have Paracetamol and Aspirin available there? We need to think out-of-the-box. We have 1,35,000 post offices all over India, maybe these can be used to distribute over-the-counter (OTC) products. If a petrol pump can double up as a distribution point and a convenience store, why can't post offices be leveraged as distribution channels? Today, we have 4,00,000 chemists as outlets, this can then go up dramatically.

Why have revenues of pharma companies, especially multinationals, including Novartis India, fallen dramatically during the last quarter?

During the last quarter of the year, the industry and the market witnessed two major changes in the tax regime "" the new rules in the central excise duty and the implementation of value-added tax (VAT). The enforcement of both these rules had serious implications on the sales and profitability of pharma companies.

But currently, the companies have started recouping lost sales and profits will show improvements in the current financial year. The industry has also approached the state and Central governments to make the tax structure more pragmatic and prospective and are now awaiting a positive response from the authorities on these issues.

Are the changes proposed in the Patent (Amendments) Bill in keeping with your expectations?

We welcome the amendments as they includes several provisions leading to rationalisation of timelines, allowing flexibility and reducing processing time for patent applications. And certainly, the new Act will boost R&D and will help to bring in foreign investment in the industry.

Are there any proposals to bring in more investment into the country?

I cannot comment on that at this point of time. But I feel, if there is an assured climate of world-class patent protection, the decisions on fresh investment "" focussing on R&D, clinical trials and productive collaboration between Indian and international companies "" would certainly rise. We have a strong commitment to the country.

Our R&D initiative in Singapore for developing drugs for tropical diseases such as malaria and dengue fever are ultimately going to help improve the people's health in the country. The company may think about similar initiatives here as well, if there are plans for further expansion of this project in future.

We have, along with other multinationals, requested the government to provide data protection for the safety and efficacy data that is developed by us through costly and time-consuming clinical trials.

We have recommended to the government that at least five years of data protection be granted from the time of marketing approval. It is necessary for the government to provide an environment of intellectual property rights protection that fosters innovation and stimulates launch of patented molecules, which will result in better healthcare for all.

What are Novartis' plans as far as alliances are concerned?

We already have outsourcing arrangements with companies here. Novartis is currently outsourcing almost all its manufacturing requirement for formulations. The number of new chemical entities approved by the US Food and Drug Administration per year has dropped from 50 to 20 and, in addition to this, the exclusive lead times of successful products on the market have been dramatically shrinking.

For instance, Inderal, which was launched in 1965 had a lead time of over 15 years before Lopresor hit the market, but in 2000 Vioxx was launched just six months after Celebrex. Therefore, this will lead to acquisitions of companies with strong research pipelines and also to alliances between companies as this results in sharing of assets and capabilities.

There are several opportunities for global generic companies to enter into alliances with domestic companies for generic drugs sourcing for use by their overseas formulations plants. Again the local manufacturing units of multinationals can be utilised to manufacture bulk drugs and formulations for global supply to other affiliates.

Since R&D costs are rising globally, the industry is looking for cost containment through outsourcing and India offers tremendous opportunity in the area of contract R&D, manufacturing, clinical trials, bio-informatics, custom synthesis, technical services and so on.