A Study of the Role of Government of India in Helping Indian Pharma Industry Cope Up with the Challenges of Product Patent Regime

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European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 13 (2008) © EuroJournals, Inc. 2008 http://www.eurojournalsn.com

A Study of the Role of Government of India in Helping Indian Pharma Industry Cope up with the Challenges of Product Patent Regime Neeraj Dixit IES Management College, Bandra(W), Mumbai, India Tel: 91-22-26551616; Fax: 91-22-26551818 E-mail: dixitneeraj20012003@yahoo.co.in Abstract India has implemented the Product Patent regime from 1st January 2005. Previously for the past 35 years India had Process Patent which allowed Indian Pharmaceutical Companies to ‘Copy’ molecules of Multinational Pharmaceutical companies and sell them under their brand names. The arrival of the Product patent meant that Indian Pharmaceutical Companies could no longer ‘Copy’ molecules. This has created lot of problems for the Indian Pharmaceutical companies as their own R&D for new molecules is at a very nascent stage. The purpose of this paper is to find out what are the expectations of the Indian Pharmaceutical companies from the Indian Government to help them cope up with the challenges of the Product Patent regime. The study finds out that although majority of Pharma companies are satisfied with the efforts of Government of India in helping them cope up with the challenges of product patent regime, still there were lot of areas where they expect help from the Government. The study finds out that relaxation in Drug Price control order, giving incentives for R&D and taking decisions regarding Data Exclusivity, Compulsory Licensing & Incremental Innovation were the main issues in which Pharma companies expected help from the Government of India.

Keywords: Research & Development (R&D), Intellectual Property Rights, Drugs. JEL Classification Codes: O30, O34, L65

1. Introduction
The Indian Pharmaceutical industry has transformed itself over the past three decades in India, being almost non existing till 1970’s, to now being a prominent provider of Pharmaceutical Products. The Indian Pharmaceutical industry meets approximately 95% of the country’s pharmaceutical needs. The present turnover of the Indian Pharma Industry is approximately $ 9.0 billion of which the share of exports is 40%. Compared to the global picture, the Indian pharmaceutical Industry ranks 4th in terms of volume, and 13th in terms of value, which is highly significant. The Indian Government has implemented the new product patent regime in India, as India had signed the WTO agreement and since Trade Related Intellectual Property Rights (TRIPS) was a part of WTO agreement, India was bound to implement the provisions of TRIPS agreement. This meant that India had to make significant changes in its patent law and respect the Intellectual Property Right’s(IPR’s) as done by other WTO member countries. India implemented from 1st January 2005 the


European Journal of Economics, Finance And Administrative Sciences - Issue 13 (2008)

new product patent regime and hence recognized “product patent” rather than “process patent” which we were following previously. The new patent law has obvious implications for the entire pharma Industry although the hardest hit will be the small scale pharmaceutical manufacturers in India. Pharma Industry experts have predicted that most of the Pharma SME Sector firms will be forced to close down. Overview of the Indian Pharmaceutical Industry The Indian Drug Manufacturers Association (IDMA) in its 44th annual Publication 2006 has given the following overview of the Indian Pharma Industry Table 1: Indian Pharma Industry: An Overview

The Indian Pharmaceutical Industry has Grown to Rs. 40,000 Crores ($ 9 billion)Currently Exports Rs. 17,000 crores Compounded growth rate 13.7% per annum Global ranking By volume 4th By value 13th Extremely Fragmented Industry Leading 250 companies market share 70% Registered units 11,000 Large & Medium scale units 300 Small scale Units 10,000 Number of Drugs...
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