With third rank in terms of volume of production and fourteenth in terms of value, the Indian pharmaceutical sector is recognized as the leading global player in the international market. Despite this India itself has a large unmet domestic demand for critical medicines.

We have affirmed our commitment to the protection of intellectual property rights. But, the global economy, the global community, cannot afford the complete privatization of research, of knowledge generation, especially in fields like medicine. We need to evolve mechanisms that protect intellectual property and, at the same time, address the needs of the poor," stated Dr. Manmohan Singh in his remark at the Tenth Fortune Global Forum.

The provision of compulsory license (CL) provided in the Indian Patent Act, in fact, serves to strike balance between these two disparate objectives—rewarding patentees for their invention and making them available to third parties in case of need. It is an intervention mechanism that enables the government to balance the rights of the patent holder with its obligations to ensure working of patents, availability of the products at a reasonable price, promotion and dissemination of technological invention and protection of public health and nutrition.

Though after the Doha Declaration on the TRIPS agreement and Public Health, about 52 countries have issued CLs (including Brazil, Thailand, Malaysia, South Africa and Ecuador)1, India granted its first CL recently in March 2012 to Hyderabad based Natco Pharma Ltd. for producing generic version of Bayer Corporations's patented medicine Nexavar, used in the treatment of liver and kidney cancer. The article discusses the international debate stirred by the said judgment and the broader ramifications on the Indian and global patent system as well as the apprehensions of the innovating companies.

Natco vs. Bayer for Nexavar

Last year in July, Natco Pharma had filed application for CL in respect of Nexavar stating that the German company's drug was unaffordable for the average Indian. It had also claimed to sell the copycat version of the drug for just INR 8,800 for a month's course. Interestingly the price is about 3 % of what is charged by the multinational giant for the same course. Natco had earlier approached Bayer with a request for a voluntary license to manufacture and sell the drug, which did not materialize. It is worth noting here when the application for CL is considered by the Controller, he also takes into account as to whether the applicant has made efforts to obtain voluntary license from the patentee and if the same has been rejected by the innovator company. The Patent Office held that the conditions specified in the Patent Act, i.e., reasonable requirements of the public, availability to public at a reasonable affordable price and working of the invention in India, have not been met and hence granted the CL. It was settled that 6% of the net sales of the drug would be paid to Bayer by Natco as royalty.

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Footnote

1 Department of Industrial Policy and Promotion: Discussion paper on Compulsory License, August 24, 2010

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