On the right track

Ashwin Sapra, Partner, and Biplab Lenin, Consultant, Cyril Amarchand Mangaldas, give an insight on how adequate research and development, intellectual property protection protocols and enforcement strategies in place, the Indian pharma industry is expected to achieve new heights

Innovation is the root of success in the competitive world of today. Creativity that stems from the intellect manifests itself into new ideas and technologies. New technologies when adopted make life easy. This could not hold greater truth than for the pharmaceutical industry.

With the Indian pharma industry en route to becoming a major player in the global market by 2020, the sector currently shows significant promise and opportunity domestically as well as internationally. The industry is expected to become a $55 billion and exports are likely to touch $20 billion by 2020, as per a joint study by Associated Chambers of Commerce & Industry of India

(ASSOCHAM)-TechSci Research. Indian drug companies have played their part and have established their presence on the global stage. There is increased activity in terms of investments in research and development, access to world class healthcare at affordable rates for the public at large and a renewed focus on development in the rural markets. The market is huge and has unlimited potential. The government has also played its role in terms of actions take with respect to relaxing approval requirements for foreign investment in brownfield entities (by allowing 74 per cent foreign direct investment under the automatic route), the forecast is for an increase in the number of associations between domestic and foreign players in the sector. The sectoral outlook has never been more positive.

Innovation leads to progress. That is a good thing. However, an inventor of a new product or a process would stand to lose if his/ her invention is not afforded the right level of IP protection. An IP right granted under law gives the inventor the right to derive commercial benefit from his/her efforts. Though patent law in India has existed over the years, jurisprudence related to pharma patents, is still developing. From granting product patents, to specifically identifying patentable subject matter and incorporation of provisions for compulsory licensing, the law has come a long way since its inception. With India’s accession to TRIPS, a conscious effort has been made to ensure that our laws are TRIPS compliant while supporting a larger initiative to ensure that life saving medicines are available at affordable prices (compulsory licensing, price control etc.).

While disputes between patent owners and infringers abound, courts in India are getting increasingly sensitive to the complex and technical issues that form the pith and substance of complex pharma patent litigation. Patent litigation turns on opinion of experts and evidences, which are often absent at the preliminary stages of litigation especially the interim injunction stage and as such the practice of passing ex-parte interim injunctions has given way to a more rational and balanced approach, wherein questions of prima facie infringement, balance of convenience and irreparable injury of the parties are weighed, analysed and rationalised along with a larger public interest perspective. Parties are going guns blazing at the interim injunction stage with a view towards hitting each other where it hurts the most i.e putting a roadblock in the opponent’s business and then strategising systematic delays to ensure that the hurt caused never heals. The Supreme Court has time and again insisted that patent matters should be handled on an expedited basis especially where issues of public health, access of life saving drugs and commercial interests are involved and that matters should expeditiously head to trial. Courts are thankfully paying heed to this. Times are changing.

Though India has been accused of judicial pronouncements that are pro generic and anti innovator, the accusation is not largely true given that there have been instances where the courts have supported the patent owners, however, such cases have turned mostly on technicalities. The law is still developing and there is hope that the courts would balance enforcement of statutory rights, socio-economic requirements and existing law with international obligations and the current push for greater investment in the sector. In the last decade, particularly after formation of the Intellectual Property Appellate Board (IPAB), we have seen a number of cases filed and adjudicated in India particularly relating to invalidation of granted patents, although, the number of cases are low when compared to the developed nations.

The Supreme Court’s judgement in the Novartis case gave rise to a general perception that India is no longer a country that respects and protects patent rights of innovators. India has time and again argued that it is fully TRIPS compliant and advocated against TRIPS PLUS provisions. India has done what any developing nation would do – amend its laws to comply with its international obligations under TRIPS to a degree whereby its compliance is exact. Not more, not less, but exact. India is TRIPS compliant in the background of the need to provide cheap and readily available drugs to the public at large. The move has been welcomed by most developing nations as they now look at India as an example of how domestic laws can be tweaked to ensure international compliance obligations whilst ensuring that domestic requirements are kept at a priority. This has caused many innovators to seriously rethink their India strategies and also take their woes to international forums where India’s presumed anti innovator patent regime has been a subject matter of many debates. These debates continue at a national and international level and raise significant questions on the issue of balancing national interests against the backdrop of the current trend of economic reforms which are increasingly looking at attracting foreign investment into India. Will the government’s push for increased foreign investment shadow its responsibility towards the citizens or will it tow a median path? A question that is pertinent.

The Trump administration has hinted that free and open trade will be pursued cautiously. Though India is yet to specifically figure in any particular policy document or comment in terms of IP rights, given the administrations focus to keep America first, one can expect a tightened outlook towards protecting US interests in as far as IP rights are concerned. However, it would most likely be a median line drawn given the administrations objective at giving cheap medicines to the American people which would be a welcome sign for Indian generics given that they are still amongst the cheapest in the world in terms of drug pricing. All that remains to be seen is whether President Trumps IP policies will be India inclusive or India exclusive.

The UK shook the world with its decision to exit from the EU. This has gives rise to concerns for players from the India pharma sector given large interests in the form of acquisitions, research and development agreements, supply and distribution agreements and some manufacturing arrangements with UK-based partner companies. The Indian pharma industry, being one of the major exporters to the UK, will certainly be affected. It is, however, largely dependent on the success of this move as the UK will have two years to negotiate its exit, during which key issues would be visited and re-negotiated. Uncertainty looms, however, given that the UK has a government funded public health system, the focus is likely to be on cheaper drugs, cheaper R&D processes as the UK looks out for economical collaborations.

A report published by the Global Intellectual Property Center, US Chamber of Commerce places India on the 43rd position out of 45 countries. India continues to make up the bottom end of the list given its tough stand on not allowing incremental innovations, focus on providing cheap drugs and its slow legal system. A stumbling block? Or factor driven by need? As a developing nation, India is also carving out exceptions when it comes to need of the public at large and any urgency situations. Also, being a developing nation, affordable healthcare will continue to play a vital role in the near future.

India has updated all its IP laws to comply with its international obligations and has also invested in infrastructure at the four patent offices in India to accommodate such changes and facilitate faster and smoother patents prosecution. There have been many cases and precedents in the last few years wherein courts in India have protected interests of patent owners and granted injunctive reliefs in infringement related cases. However, cases where public interest has been considered paramount are also present. It is a mixed bag. With a view towards reducing the burden on the courts, the government has introduced, The Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, 2015(CC Act). Intellectual property disputes have been categorised as commercial disputes. The law lays down strict timelines so as to reduce the overall litigation timeline and it is expected that that proceedings before such commercial courts would take significantly less time. The rights moves are being made.

With adequate research and development, intellectual property protection protocols and enforcement strategies in place, the Indian pharma industry is expected to achieve new heights. With the initiatives like ‘Make in India’ campaign, the Indian government is pushing reforms in the innovation domain. Also, the Government of India has approved the ‘The National Intellectual Property Rights (IPR) Policy’ which aims at ‘Creative India; Innovative India.’ We have recently seen few measures such as appointment and training of patent examiners and more pro-active amendments and actions by the patent office on issues concerning applicants and attorneys.

With all these positive measures, the pharma industry and healthcare at large is gaining momentum to consolidate its existing position and record unprecedented growth. With more than 3000 pharma companies, India is slowly making its presence and emerging as a significant player in the world market. India has already positioned itself to compete with the counterparts of developed nations.

As a take home, the pharma sector should derive comfort from the fact that the genesis of the Patents Act in India is in consonance with international practices. Even though public interest and access to healthcare has become the mainstay of policy formulation and judicial interpretation, the balancing act of adopting international practices and standards for protection of patents and promoting innovation has gone a long way in maintaining India’s reputation of being the ‘Pharmacy of the World’ and its international obligation and commitment of being a level player in a level playing field.