India Enters Product Patent Regime

Kamal Nath, union minister of commerce and industry, announced in December that there are two significant developments in the world of commerce and industry that would open vast opportunities for India in the New Year. "Both are connected with the world trading order, of which India is a part: one is the final phase-out of the Multi-Fibre Agreement and the other is marked by India's conformity with the international Intellectual Property System in all respects, on terms that are practical and credible," he said.

Kamal Nath, union minister of commerce and industry

The Ordinance on Patents was the same as the Bill introduced last year but with improvements in some significant respect. Elaborating on this, he said, "We have introduced a provision for patenting of software that is embedded in hardware. We have also provided for a definite pre-grant opposition procedure. The earlier Bill had only a post-grant opposition, with a weak pre-grant representation. After extensive discussions we have decided to have both pre-grant as well as post-grant opposition." The government has rationalized the timelines, so as to not leave everything open-ended, but have a definite time-table within which each of the stages should take place. This would reduce by half the maximum time it takes for the processing of an application, from more than nine years to about four. Another significant modification is the introduction of a provision to protect Indian industry from infringement proceedings with retrospective effect. It has specifically provided that patent rights for mail box applications will only be available prospectively. These changes have been made after wide consultation.

Dr Swati Piramal, director, Nicholas Piramal India Ltd

The Third Amendment was only the culmination of a process begun 10 years ago. The Bill was introduced in parliament a year ago by the previous government, but it lapsed (owing to the elections). "It was our desire to bring the Bill to parliament first. But it was also necessary to consult with all stakeholders and political parties. Group of Ministers got the feedback from industry associations and experts on December 21, so it was not possible to bring the Bill to this session of parliament. This has necessitated the ordinance. The ordinance will be discussed in detail in parliament in the budget session. The ordinance is an interim measure to fulfil our legal obligations within the stipulated time," Kamal Nath added.

The Patents (Third) Amendment ensures that the reasonable requirements of the public with respect to availability and affordability are taken care of and public interest particularly public health and nutrition is protected. The law effectively balances and calibrates Intellectual Property protection with public health concerns and national security. By participating in the international system of intellectual property protection, India has unlocked itself for vast opportunities in both exports as well as its potential to become a global hub in the area of R&D based clinical research outsourcing, particularly in the area of biotechnology.

It's a mixed bag

VN Balaji, chief scientific officer, Jubilant Biosys Ltd

There was a mixed response to the government's ordinance from different quarters of the society. The pharmaceutical industry and political parties expressed concern over the government using the ordinance rouse to effect patent changes. The industry is of the opinion that the Bill would have increased the acceptability provided the government had brought it after the deliberations on it in the parliament.

A coalition partner of the UPA government, CPI (M) reacted sharply on the ordinance. It said it had advised the government against the hasty passage of the Bill "as many measures need to be taken to protect the interests of the country. The politburo disapproves of the resort to ordinance to pass such an important legislation. There are whole ranges of issues connected with TRIPS agreement and safeguarding of national interest. The Bill, which has been passed as an ordinance, does not serve the purpose."

Similarly the Center of Indian Trade Unions (CITU) also condemned the ordinance. According to some reports it observed that having opened the door for limitless patenting and patenting of products proves that the government has willingly weakened its position before the powerful economies, which control 99 percent of all patents. India is not on the same platforms. It also noted that this will place India at the receiving end and would pay heavily for everything particularly drugs, biotechnological products and pesticides.

Suresh G Kare, president, Indian Drug Manufacturers' Association

The pharmaceutical industry observed that the patents ordinance has been issued to fulfil India's commitments and obligations under the TRIPS agreement. But it does not cover all necessary safeguards. Although it provides an opportunity for the government to further bring in changes in the law when enacted, the concern among the industry people is if no consensus arises in parliament what will happen, as the ordinance will lapse (ordinance's life being only six months).

However, big pharmaceutical companies like Nicholas Piramal, which believes in its scientists and scientific strength and Jubilant Biosys that were prepared for the product patent regime reacted positively to the ordinance.

Dr Swati Piramal, director, Nicholas Piramal India Ltd, said, "I'm happy that the government has done it on time. It's a good job. And we are hopeful and optimistic that the parliament will also ratify it. It is a positive and futurist approach to compete internationally".

Sharing his excitement VN Balaji, chief scientific officer, Jubilant Biosys Ltd, said, "This proves beyond doubt the government's intent to be part of the global village and provides a great opportunity for the Indian pharmaceutical and biotechnology industry to reap the fruits of innovation in the global market place. It gives an opportunity for the multinationals to make investments in the country. It helps in enriching the credibility of the Indian companies and also developing the value added products. This will generate more employment opportunities and support R&D activities in the country."

Expressing similar views RK Sinha, executive director, All India Crop Biotechnology Association said, "It will give a boost to biotechnological inventions by making such inventions eligible for product patent. This will enable the flow of state-of-the-art technology as well as FDI to the overall benefit and growth of Indian agriculture."

The ordinance on product patent has also brought in some cheer among the stocks of the pharma multinationals on December 27, 2004 over the local stocks. The investors felt that the pharma multinationals may launch newer drugs in the local market in the new patent regime. It is not so easy as the ordinance has to get clearance of the parliament in the budget session. The blockbluster drugs are expected to hit the Indian market only after 2007, as viability of the new drugs has to be studied carefully. The pharma multinationals have to continue with their existing product portfolio.

However, the pharma industry bodies expressed some concern saying that the ordinance does not cover all the necessary safeguards. They urged the government to include the suggestions in the rules when enacted.

Suresh G Kare, president, Indian Drug Manufacturers' Association, (IDMA) said, "The expected Patents' Ordinance has been issued. With this step we have fulfilled our entire set of obligations and commitments under the TRIPS Agreement. The product patent in pharmaceuticals, food and agro-chemicals is now operative. The era of inexpensive medicines due to earlier process patent is becoming history. The new-patented medicines now will be sold at the monopoly price laid down by their patent holder (owner). How expensive they will be compared to price structure so far when many parties were producing them is anybody's guess."

He further noted, "We were expecting that the Patents' Ordinance (in lieu of the Third Amendment Bill), which would introduce Product Patent in pharmaceuticals, will take care of all deficiencies in the Patents' Law i.e., the Patents' Act 1970 as well as the two Amendments made in it so far. However, we are disappointed to find that some crucial points have either been left out or have been treated in a half hearted manner. It is necessary to highlight these points, so that when the Patents Third Amendment Bill comes up before the parliament during the Budget session, these deficiencies can be corrected. It may also be mentioned that some claims made by the government such as a three-month period for an appealable pre-grant opposition, insistence on local working etc. do not appear in the ordinance. Hopefully, these will be covered in Rules expected to come out soon."

Though the ordinance has been passed by the government, the industry bodies want the government to reconsider the ordinance and include the suggestions made by them in the final Amendment. The government, which is committed to TRIPS agreement, should implement the ordinance by making necessary changes in the existing one while discussing during the budget session of parliament without much delay. Faster implementation will enhance the confidence of the investors and research activities in the country.

Narayan Kulkarni with Rolly Dureha in New Delhi and Srinivas Rao in Bangalore