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Critical chalenges and issues in patent documentation: a study of post GATT era in Indian pharmarceutical sector.


In recent years, much has been talked about the patenting in pharmaceutical industry. The patenting not only provides an opportunity to create wealth and make center of excellence and innovation to achieve better productivity for human beings. Indian pharmaceutical industry has shown tremendous progress in terms of infrastructure development, technology base creation and a wide range of production. Pharmaceutical industry produces bulk drugs belonging to all major Indian therapeutic groups (Grace, 2004). The Indian government has not been promotional in the area of patenting by pharmaceutical firms, but exports have driven the industry growth in India. The Industry has shown compounded annual growth rate of 13per cent from 2002-2007 and is expected to grow at 16per cent over in 2007-2011.

Brief History and Growth of Indian Pharmaceutical Industry

The Bengal Chemicals and Pharmaceutical Works was the first Indian pharmaceutical firm established in Calcutta in 1930. For the next 60 years, most of the drugs in India were imported by multinationals either in fully formulated or bulk form. The Indian pharmaceutical is primarily dominated by multinational firms. So domestic firms carved a niche in both the Indian and world markets with their expertise in reverse engineering processes for manufacturing drugs at lower cost. The companies have their strategies in place to leverage opportunities and appropriate values existing in formulations bulk drugs, generics, novel drug delivery systems, new chemical entities and biotechnology etc. The industry has thrived so far on reverse engineering skills exploiting the lack of process patent in the country. This has resulted in the Indian pharmaceutical players offering their products at lower prices in comparison to other countries. Self-reliance displayed by the production of 70per cent of bulk drugs and almost the entire requirement of formulations within the country, low cost of production, reduced RandD costs, skilled manpower, competitive strength of national laboratories and increasing balance of trade in pharmaceutical sector form as the basis of technological strengths of the Indian pharmaceutical industry. Recognizing the potential of patenting, government has taken proactive steps. They have established the export promotion cell to act as a nodal agency in the matters related to export of pharmaceuticals. The cell interacts with various ministries and departments and have active interfaces with 131 missions abroad to collect information related to pharmaceutical industry in those countries such as, status of the pharmaceutical industry, details of documentation, guidelines for licensing of pharmaceutical companies as well as registration procedure for medicines, details of pharmaceutical market with information on local production, demographic data, details of health care system, health indicators, prevalent disease pattern, details of imports of pharmaceuticals of those countries, details of joint venture units for pharmaceuticals operating in those countries etc. The revenue of top ten pharmaceutical firms in year 2004 is shown in Table 1.


With the globalization of business, there has also been striking internationalization in the world of patent protection. In 1985, there were 1.2 million patent applications filed worldwide, by 1995 it has grown to 2.79 million. With the growth in number of applications, growth in other fields notwithstanding, generics still form large part of the picture. London research company Global Insight estimates that India's share of the global generics market will have risen from 4per cent to 33per cent by 2007 (Kriplani, 2004). The most significant change in patenting was done on the January 1, 2005 with enactment of India's patent law that reinstated product patents for the first time since 1972. The legislation took effect on the deadline set by the WTO's TRIP agreement, which mandated patent protection on both products and processes for a period of 20 years. Under this law, India will be forced to recognize not only new patents but also any patents filed after January 1, 1995. Indian companies achieved their status in the domestic market by breaking these product patents, and it is estimated that within the next few years, they will lose $650 million of the local generics market to rightful patent-holders. In the domestic market, this new patent legislation has resulted in fairly clear segmentation. The multinationals narrowed their focus onto high-end patients who make up only 12per cent of the market, taking advantage of their newly bestowed patent protection. Patent regime has taken effect at a time when Indian companies had just started to aggressively pursue global opportunities. So it is not clear whether the flurry of international activity surrounding the enactment date is a result of the change in legislation. In 2006, the Indian pharmaceutical industry has seen the single largest number of global transactions in its fifty years history. These transactions provide Indian companies with access to foreign markets and facilitate the process of seeking regulatory approval for new products, which can be quite daunting for a company that only has operations on Indian soil. Companies are also starting to adapt their product development processes to the new environment. However, those that can afford it have set their sights on an even higher goal like new molecule discovery. Although the initial investment is huge, companies are lured by the promise of hefty profit margins and the recognition as a legitimate competitor in the global industry. Local firms have slowly been investing more money into their RandD programs or have formed alliances to tap into these opportunities. As promising as the future is for a whole, the outlook for small and medium enterprises (SME) is not as bright. The excise structure changed so that companies now have to pay a 16per cent tax on the maximum retail price of their products, as opposed to same on the ex-factory price. Consequently, larger companies are cutting back on outsourcing and what business is left is shifting to companies with facilities in the four tax-free states i.e. Himachal Pradesh, Jammu and Kashmir, Uttaranchal and Jharkhand. Government support is not the only thing that is in favor of Indian pharmaceutical, the pharmaceutical companies also have access to a highlydeveloped IT industry that can partner with them in new molecule discovery. India's greatest strengths lie in its people India also boasts a cheap, well-educated, English speaking work force that is the base of its competitive advantage. Although molecular biologists are in short supply, there are a number of talented chemists who are equally as important in the discovery process. In addition, there has been a reverse brain-drain effect in which scientists are returning from abroad to accept positions at lower salaries in Indian companies.

Objectives of the Research Study

The present study is focused on following objectives

1. To study the growth and trend of Indian Pharmaceutical Industry in post GATT era with special focus on patenting

2. To study the documentation process of patenting filed by Indian pharmaceutical firms.

3. To study bottlenecks in patenting by the Indian pharmaceutical industry and suggest suitable measures in the light of problematic issues in patenting.


Research Methodology

This is an analytical study because in this study secondary data is being analyzed to draw the results. The percentage methods are being used to analyze the data. The research work is based on the secondary data so the reliability of the results, drawn from the data, depends upon the reliability of secondary data.

Literary Contributions

Now a days pharmaceutical company are focusing to get patent for the drugs or processes invented by them. Both the Indian central and state governments have recognized RandD as an important driver in the growth of their pharma businesses and conferred tax deductions for expenses related to research and development. Various studies have been done in the field of Patent and Pharmaceutical Industry. In recent time pharma companies are more inclined towards patenting. N R Subbaram (2007) stated that human beings are distinguished from animals by the intellectual faculty endowed by the Almighty. He described the IP property as property emanating from the activities of the human intellect. He described the Patents as legal rights granted for new inventions employing scientific and technological knowledge. He stressed about the protection strategy and modes of selection of filing route. H. Khorakiwala (2007) focused on the problems faced by the pharmaceutical industry. He focused on rich talent pool in pharmaceuticals and healthcare, spread over the industry and academia. Even in the absence of active government support, exports have driven the pharmaceutical industry growth in India, having grown at a CAGR of 25 per cent in the last 10 years. In his empirical study he calculated that healthcare delivery market accounts for Rs 86,00 0 crore of the total expenditure. He raised the issues of spurious drugs, which make losses of Rs 3,000 crores to the industry. Dinesh Dua (2005) stated that India is in an ideal position to take advantage of numerous pharmaceutical business opportunities. The most exc iting sector is generic pharmaceuticals. He estimated drugs with combined worldwide annual sales of $80 billion will lose patent protection before 201 2. He demonstrated that the importance of India and China in the global pharmaceutical ingredients industry has grown so much that competitors in other countries feel threatened. Eric Smith (20 00) focused on how Ind ian pharmaceutical industry will react in post 2005 environment. Indian pharmaceutical firms have derived considerable revenues by selling copies of Western companies' patented products. For IP protection laws purpose he studied the strategic activities of twelve influential companies. He explained how the Indian pharmaceutical industry might develop in the coming decades. Ravinder Jha (2007) said that the Indian pharmaceutical industry is one of the largest among the developing countries. It contributes 8 per cent in volume terms but only 1 per cent in value terms to global pharmaceutical sales. The pharmaceutical industry is undergoing a process of consolidation whereby there is concentration at the top due to mergers and acquisitions to tap the opportunities emerging in the domestic as well as the global market in the various stages of the value chain such as RandD, manufacturing and marketing. He concluded that in honoring the WTO mandated product patent regime, the Indian pharmaceutical industry is shifting its focus away from the domestic market to the generics market in the developed world. There is a shift away from bulk drugs towards high valued formulations by both domestic companies and MNCs. D.K. Nauriyal (20 06) d escri bed the i mpact of amendment in Patent Acts on the Indian pharmaceutical sector in terms of strategy choices and Rand D directions. He stated that there may be significant impact of the changed patent regime on the business behavior of foreign as well as Indian pharmaceutical firms.


Indian Pharmaceutical Industry in the Post GATT Era

With the objective of controlling prices of important drugs and making them availabl e to the c on-sumer, the government introduced the Drug Price Control Order (DPCO) in 1970 . It gives guidelines for the maximum selling price of bulk drugs and formulations and the turnover ceilings for exemption from the DPCO. The government also enacted the Indian Patents Act (IPA) in 1970, to provide legal recognition to process patents for food, medicine and chemical substances. Prior to it multinationals played an important role to bring technology and international manufacturing practices in the domestic market. But with FERA, where multinationals were directed to bring down the proportion of equity capital held by them, Indian companies could drive a cost advantage vis-'-vis their international counterparts. Gradually Indian companies developed their own production and marketing skills and overtook the MNCs in the Indian market. The ability of the Indian manufacturers in chemical synthesis and reverse engineering has given them an edge in terms of cost competitiveness and established the quality of their bulk drugs among developed country regulatory authorities like the United States Food and Drugs Administration (USFDA) and the United Kingdom Medicines and Healthcare Products Regulatory Agency (UKMHRA)

(Shailendra ,2005). This has resulted in India being a net exporter of pharmaceuticals to both developed and developing countries. From the mid-1980s, the developed nations, led by the US, started pushing the issue of IPRs as a part of the Uruguay round of multilateral trade negotiations. In 1988 Congress passed the Omnibus Trade and Competitiveness Act, which authorized the US government to take retaliatory action against countries, which did not provide protection to intellectual property rights. All the members of GATT ultimately had to amend their laws and recognize product patents. The conflicts over patent policies have been resolved more through bargaining power than equity considerations. In India the IPA 1970 has been amended thrice since India committed to the WTO to honor the agreement signed in 1995 to comply with the relevant clauses under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIP) from January 2005. Exclusive Marketing Rights (EMRs) were made retrospective from January 1, 1995. The second amendment in 2002 extended the term of patent to 20 years, imposed the burden of proof on the infringer as opposed to the patent holder, along with changes in the stipulations governing compulsory licensing. The last amendment in 2005 finally recognized product patents as well. The total bulk drugs production in 1995, which increased to 59 per cent in 2000 and further to 62 per cent in 2004. India is the largest recipient of US FDA approvals for manufacturing bulk drugs outside the US. The number of bulk drugs produced by big domestic companies like Ranbaxy, Dr Reddy's, Cipla, Lupin and Aurobindo has increased. While some of the big firms are shifting towards formulations, companies like Lupin, Sun and Aurobindo are investing substantial amounts in bulk drugs Lupin derives 54 per cent of its turnover through bulk drugs sales and Sun has 31 per cent of its turnover coming from bulk drugs while it was only 1 per cent in 1995. Aurobindo has 90 per cent of its revenue from bulk drugs. But whether the liberalized industrial and FDI policies along with the signing of the TRIP agreement to introduce product patents in 2005 have actually resulted in increase in invest,ent in physical assets by MNC's.trend in investment growth of domestic and MNC's in table II given below.


Across the world it is recognized that the approach to RandD is shifting to a model where innovation emerges from new ways of arranging existing technologies rather than discovering new ones. The application of new methods is possible without inventions, while inventions as such need not necessari ly lead to innovations. In the field of pharmaceuticals, much of the research is done in university laboratories and is sponsored by governments. It is the latter stage, namely, development, which is undertaken by major pharmaceutical companies.

Patenting and Documentation

A major problem in our country is the enormous delay in the processing of patent applications. It is obvious that the implementation of the Intellectual Property regime can be effective only if we have a very good support structure. The backlog of patents is something like 36,000 in 2008. While around 10,000 patents are being filed, hardly 2000 patents are being issued. There is a proposal to recruit more examiners, but unless we modernize our system there will perpetually be a backlog. Record management too is quite poor in the patent offices and digitization has not been completed. The position is no better in respect of trademarks. A delay of 3 to 5 years for registration is normal. The modernization of the offices and the improvement of the systems do not brook delay. An IP Appellate Board is also required to be set up under the trademarks Act to hear appeals against the decisions of the Registrar of Trademarks (Chanda, 2002). Only after the Board is set up, can the notification for the Geographical Indication Act and Rules be issued in our country. There is a negative perception about the IPR Agreement because of the vigorous campaign that would have an adverse impact on the prices of drugs and pharmaceuticals. A strengthened IPR regime may not be disadvantageous to our country, especially if the basic concern regarding accessibility to essential drugs is taken care of. The prospect of securing a good share of world trade is also much better in pharmaceuticals, since it is a knowledgebased industry. Implementation and enforcement of IPR will also encourage investment in the country. What is now required is strong and full support to research institutions and the strengthening of institutional arrangements to help the industry to derive maximum benefits from the new IPR regime. India has long and credible record of protection of Intellectual (IPR) through a system of well-developed substances laws and also well established and administrative infrastructure for the enforcement of IPR. The system of granting Patents in India is governed by the Patents Act 1970 which contains the necessary provisions for the protection of invention as well as prevention of abuse or misuse of patents rights. The principal objective of the Indian Patent Act, 1970 is stated in section 83 of the said act, namely that (a) Patents are granted to encourage inventions and secure the working of inventions of India on a commercial scale and (b) Patents are not merely granted to enable patentees to enjoy a monopoly on the patented article. A patent is an exclusive right granted by a country to the owner of an invention to make, use, manufacture and market the invention, provided the invention satisfies certain conditions stipulated in the law. Exclusivity of right implies that no one else can make, use, manufacture or market the invention without the consent of the patent holder. These laws may relate to health, safety, food, security etc. Further, existing patents in similar area may also come in the way. A patent in the law is a property right and hence, can be gifted, inherited, assigned sold or licensed. As the right is conferred by the state, it can be revoked by the state under very special circumstances even if the patent has been sold or licensed or manufactured in the meantime. The patent right is territorial in nature and inventors/ their assignees will have to file separate patent applications in countries of their interest, along with necessary fees, for obtaining patents in those countries. Patents and IPR System are a very vast and broad based concept providing safety services to the various sectors of the country so that no one exploits their mastermind inventions.


Patent Documentation Requirements for Pharma Sector

Pharmaceutical drug product patent applications should contain the form of reactants, the parameters of reactions involved to obtain the desired product, supplemented with a plurality of detailed working examples of the processes. For engineering inventions it is necessary to describe particular indicative features of the device, apparatus or machine through detailed sectional drawings. The patent procedure includes the filing of the application, examination, acceptance or refusal, notification of acceptance in the Gazette of India, opposition and grant of patents. If there is opposition, the proceedings carry on as in a regular court case. As a participant in the TRIP agreement, India is obliged to modify her statutes to make her IPR regime TRIP compliant. A general transition period of five years was granted to member countries with an additional five years to developing countries like India. Developing countries that are delaying patent protection for pharmaceutical products (and agricultural chemicals) until January 1, 2005 have been allowed to do so under certain provisions. That is to say that a developing country that did not provide product patent protection in a particular area of technology when the TRIP Agreement came into force in Jan, 1995 has up to 10 years to introduce the protection. However, such countries must make a 'mailbox' provision i.e. allow inventors to file patent applications from January 1, 1995, even though the decision on whether or not to grant any patent itself need not be taken until the end of this period. Subjected to the approval of government allows for the relevant pharmaceutical or agricultural product to be marketed during the transition period. For a utility patent, the invention must be following a process or method for producing a useful, concrete and tangible result a machine, an article of manufacture; a composition of matter; or an improvement of an invention that fits into some of the above categories. In addition to falling within one of the above categories, the invention must also have some utility or usefulness, be novel or different from something else in an important way, and be non-obvious to someone who understands the technical field of invention.


Patent Process

The patent process is generally very long taking one to two years before an application is finally approved. During this period, the application generally travels back and forth between the applicant and the patent examiner until both sides agree as to which part of the invention is worthy of a patent. During this time, the claims must be amended or changed. Once an agreement between the applicant and the examiner is reached, the Patent and Trademark Office approves the application and writes a brief description in a publication entitled the official gazette. After publication, if no one objects to the patent, the applicant receives a patent deed. Once the patent is received, the owner is charged with enforcing it. Filing for an approval is a mammoth task involving the submission of large volumes of documents, which were traditionally submitted on paper. The analysis and the management of the data make it a drag due to the time and the effort it consumes. The need for the pharma industry to decrease the time and improve quality of the data submitted for approvals has led to online submission through an Electronic Common Technical Document (e-CTD).

e-CTD submission protocol is designed by the International Conference on Harmonization to facilitate regulatory submissions to US, EU and Japan, in electronic format. The idea of the new methodology for submissions is to enhance the receipt, processing and review of regulatory documents at the receiving end. The submission protocol comprises a structured approach by which documents are collated and stored in multiple directory structure and referenced from an XML backbone. The protocol also addresses issues of life cycle management of submissions. The specification addresses issues of how to send bio-equivalence and clinical data plus labelling information on pharma products. According to Pravin Pangarkar of Educe Solutions, "e-CTD as a methodology of regulatory document transmission has been conceived to address two major issues. One to solve the issue of managing colossal paper documentation at the receiving end (i.e. USFDA, EMEA) and other to solve the major issue of managing the life-cycle of the drug approval documentation." This he suggests will automatically improve the throughout of the approval process at the FDA, which logically should also result in improved approval cycle timelines.



Through 21 CFR part 11, FDA is bringing IT departments in pharmaceutical companies under the minimum set of compliance guidelines for computerized systems to ensure that electronic records and electronic signatures are reliable, trustworthy and acceptable equivalents to traditional paper records and hand written signatures.

Intellectual Property Rights

It is not exactly clear where the concept of intellectual property originated. The first patent in England was granted by Henry VI in 1949 to a Flemish man a 20 year monopoly (coincidentally, the current length of UK/EU patents is still 20 years) on the manufacture of stained glass (destined for Eton College). This was the start of a long tradition by the English Crown of the granting of "letters patent"

For using this Portal click on link 'On-line Registration for New User' Complete On-line Registration process for getting User Id and Password. Login to E-Patent portal after successful registration Download Client Software for preparing Patent Application(s) offline. Fill Patent Application offline and generate an XML file using Client Software. After creating application (XML) file offline, Digitally Sign the XML file (Max. File size permitted 5 MB) for uploading on to the IPO Server. Login into E-Patent portal for uploading Application XML file on IPO Server. Upload and Submit Digitally Signed XML file to IPO Server. Process Application for EFT (Fee Transaction). Review Application Status on E-Patent Portal. On successful EFT acknowledgement details would be displayed/ generated. Print Acknowledgement. Click on "Print" to generate printout of acknowledgement. (meaning 'open letter', as opposed to a letter under seal) which granted "monopolies" to favored persons (or people who were prepared to pay for them). This became increasingly open to abuse as the crown granted patents in respect of all sorts of known goods (salts, for example). India has enacted fully TRIP compliant Trademarks Act, Copyright act, Designs Registrations act and such other acts related to fields to IPR. However though most acts have been TRIP's compliant, in the Patents Acts there are areas where substantive or procedural amendments could be considered for complying with the TRIPs. While doing so changes may be required, specially keeping view the Indian Companies, by giving protection under the Patents Acts to business methods qualifying as technology, which at present is not patentable. It is essential to get skilled advice before entering into any agreement with the employees. Documentations and maintenance of secrecy is considered as prime issues adopt internal policies and regulations or guidelines on employee inventions- Such policies and regulations should certain provisions on the categories of inventions which fall within the field of the employers business, the employee inventors obligation to notify the employer of inventions, the employers procedures for handling such notifications, confidentiality requirements and patent prosecution, remuneration/royalty for the inventor, etc IP Licensing - Another way by which Indian Companies can benefit monetarily to a large extent is by IP licensing. Licensing is the sharing or the renting of IP through a legally binding contract that specifies certain conditions with another company in exchange for the payment of royalties or may involve a sharing of IP by cross licensing in which both parties have IP and exchange it, here there is no financial exchange between the parties. The importance of intellectual property in India is well established at all levels i.e. statutory, administrative and judicial. India ratified the agreement establishing the World Trade Organisation (WTO). This agreement, inter alia, contains an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIP), which came into force from 1st January 1995. It lays down minimum standards for protection and enforcement of intellectual property rights in member countries, which are required to promote effective and adequate protection of intellectual property rights with a view to reducing distortions and impediments to international trade. The obligations under the TRIP agreement related to provision of minimum standard of protection within the member countries legal systems and practices.


WTO and Trade Related Intellectual Property Rights - An Indian Perspective

Under WTO obligation, each member country must provide for a minimum prescribed level of protection to intellectual property Rights (IPRs). The idea behind such a commitment is to facilitate cross border enforcement of such rights. The member countries may provide for higher standards of protection as they deem fit. However, the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIP) lays down the minimum standards to be adopted by the member countries for protection of IPRs. The following table gives a comparative picture of the status of 1997 as compared to the 1996 filings.

Implications of the Research Studies

The impact of change in Patent regime on Indian Pharmaceutical sector is going to be large enough to push it towards fast restructuring and consolidation. Building upon some studies which

have already been conducted to assess the possible impact of the changed scenario (Grace 2004, Kumar and Pradhan 2003, Mashelkar 2001, Mishra 2001, Nayyar 1992). The combination strategy appears to be one good option because India's leading pharmaceutical firms already have achieved a reasonable level of sophistication. (Karmali 2004, Kriplani 2004, Merchant 2004, Slater 2003) The presence of large international firms gaining further leverage with regard to resources and expertise as a result of mergers and acquisitions, are making it almost impossible for the newly emerging Indian players to compete with them on even terms. Approximately 67.5per cent of the revenues in this industry is accounted for by the world's top 15 companies, making them highly resource rich. The second issue is that Indian pharmaceutical companies have a serious lack of resources and infrastructure needed for conducting animal and human trials for the toxicity and efficacy of drugs under development. The considerable gestation lag (ranging from 12 to 16 years) between initiation of research and discovery, development and commercialization of one's own proprietary products as compared to almost insignificant time period involved in reverse engineering of the drugs in another very important issue looking at the Indian pharmaceutical scenario, one find s that Ind ian pharmaceutical firms have traditionally been investing little in RandD as there was no big requirement of funds for process engineering. Though, of late, especially after the signing of the TRIP agreement, they have become conscious of the need to pump more money into RandD, their investment in RandD is still meager as compared to what the established global firms are spending, e.g. at present, RandD expenditure of the Indian Pharmaceutical industry is around $74 million and the spending by the largest Indian company on RandD is around $17 million (0.006per cent of the largest RandD spending by an MNC). Though these firms have the potential for getting output even with a relatively low level of RandD spending because of lower costs of doing so in India, they may have other problems such as lack of necessary expertise in the basic areas and new tools, to smoothly switch over from reverse engineering. Recent studies indicate that one out of 500010000 compounds synthesized during applied research eventually reaches the market. Industry estimates also reveal that most of the RandD budget of the major companies is invested in the different stages of clinical evaluation of new products. In a study of 775 new chemical entities introduced between 1975 and 1989, only 95 were rated to be truly innovated (Lanjouw,1998). In such an environment there is a high probability that drug forms disadvantaged with resources, experience and research, may opt to orient their RandD towards preparing and producing generic copies rather than developing/ discovering NCEs. Therefore, the short term RandD focus of an Indian firm, having expertise in reverse engineering is likely to be on building upon the existing research, and consequently opting for line extensions, combination drugs and improved dosage forms of drugs. These are the areas where the existing research infrastructure can be effectively utilized to achieve productive outcome. Consistently increasing RandD and patenting activity of some of the Indian Pharmaceutical firms, as is evident from the doubled share of pharmaceutical products patents in total patents, without coming up with any new drug, suggests that the major focus is not on developing NCEs. The strategy of Indian companies to form strategic alliances with global players, therefore, makes perfect business sense under the given scenario as it considerably reduces the degree of uncertainty for them. In the medium term, the strategy of these firms may be to seek alliance with global firms for conducting clinical trials, as it would be difficult for them to do it independently due to resource constraints. At present India shares only $470 million of the US$50 billion world outsourcing business (Timmermans, 2005). With the strengthening of IPRs across the globe, and rising costs if conducting clinical trials, RandD and manufacturing, global pharmaceutical and biotechnology firms are actively scouting for cheaper options available elsewhere. Many of these MNCs may look for outsourcing deals spanning all stages in the drug development pipeline, in particular initial RandD, clinical trials, custom synthesis, technical services and manufacturing with the Indian pharmaceutical firms having have important implications for the possible content of the outsourcing business in India. There are two areas contract research and contract manufacturingwhere outsourcing is most plausible. Under the changing environment, smaller players are expected to form manufacturing and co-marketing alliances with the bigger Indian and foreign firms for the production and supply of generic drugs and speciality chemicals on a contract basis. This strategy may help them to coexist with the bigger players and enjoy economies of scale. However, the road ahead will be tough if they do not ensure better quality control and international packaging specifications and resort to international norms. It is clear from the above discussion that while there may be setbacks during the period of restructuring and consolidation, the Indian Pharmaceutical industry as such may gain more, as compared to the past, in terms of better product portfolios, access to the global market, improved productivity and expanding technical base. There are other possibilities as well. For example, relatively smaller and non innovative players without a global perspective may withdraw from the market. Though it is difficult to estimate at this juncture, the extent of the net impact of either of the business strategies discussed above on the employment scenario. In the medium and long term, further expansion of the industry may lead to increase in employment. On the balance of trade front, existing trends in the contribution to the trade surplus from this sector should continue as the export scenario is more firmly rooted in generics than in copies of the on-patent drugs. No Indian Company is equipped to out a drug from the investigational stage to final marketing stage. Therefore there are a number of collaborations between MNCs and domestic companies, apart from licensing agreements. This has resulted in the bias in drug development. The MNCs are obviously in favour of developing drugs which are more suitable for the developed world. Thus barring a few cases, much of the research is undertaken for lifestyle-related diseases. Here the role of the government is of utmost importance. Even most developed countries' pharmaceutical industries rely on the government-funded laboratories and academic research for RandD in this sector. The breakthrough drugs typically come out of government-funded laboratories. Therefore, government-funded research organizations have to expand their role by partnering with the private sector.


Problematic Issues in Patent Documentation

A major problem in our country is the enormous delay in the processing of patent applications. It is obvious that the implementation of the Intellectual Property regime can be effective only if we have a very good support structure. The backlog of patents is something like 36,000 today. While around 10,000 patents are being filed, hardly 2000 patents are being issued. There is a proposal to recruit more examiners, but unless we modernize our system there will perpetually be a backlog. Record management too is quite poor in the patent offices and digitization has not been completed. The position is no better in respect of trademarks. A delay of 3 to 5 years for registration is normal. The modernization of the offices and the improvement of the systems do not brook delay. An IP Appellate Board is also required to be set up under the trademarks act to hear appeals against the decisions of the Registrar of Trademarks. Only after the Board is set up, can the notification operationalising the Geographical Indication Act and Rules be issued. In our country there is a negative perception about the IPR Agreement because of the vigorous campaign that the Agreement would have an adverse impact on the prices of drugs and pharmaceuticals. A strengthened IPR regime may not be disadvantageous to our country, especially if the basic concern regarding accessibility to essential drugs is taken care of. The prospect of securing a good share of world trade is also much better in pharmaceuticals, since it is a knowledg e-based i ndustry. Implementation and enforcement of IPR will also encourage investment in the country.



Pharmaceutical companies must focus on RandD so that they can get their product patent and capture a large market. Indian Govt. and other regulatory bodies can play a significant role in determining the success of drug discovery research in India. The govt. should give more tax deductions for expenses related to research and development. Since July 2007 electronic filing is being made mandatory. This requires a good knowledge of computers. This e-filing system should be made easier. Another thing is that the process of getting product patent is quite long. It should be made shorter. It is the proposed movement of document and approval procedures in digital form (CII, 2002). The date of filing with the patent office should be accepted as the date of filing with the foreign patent office. But as more and more companies are also filing overseas, the paperwork is piling up and threatening to overwhelm everyone. If all of this can be done on-line, it will be unnecessary to send all of this documentation through the mails and considerable savings can be achieved. All patent offices check to see if an application represents a novel invention. This means that all patent offices have to have patent disclosure information, technical journals, specialist reference books and more, from all over the world. Many developing countries find it very difficult to assemble and stock the references they need. If all of this could be put on-line, such countries could simply access the industrialized countries' databases. Companies also have to go through the literature and check all of the patent information to make sure that the same invention has not already been patented elsewhere before they file a patent application. All of the world's patent offices would put their patent information up on their websites. It would vastly simplify such searches because everything could be done on-line. In addition, it would be to the patent offices' benefit, since they could switch from paper to computer processing. Computerization would also have many other advantages.

1. Information Disclosure

Just as the Patenting office grants an inventor exclusive rights to an invention, it also imposes an obligation to make the technology and other information public. The Patenting office Web site has been called one of the Government's best. It is imperative that the patenting office is not just a place that grants exclusive rights, but that it is also a gathering place for technological information and a cyberoffice with a vast database that researchers can use. Indeed, it is essential that this database work to promote technological development as well as research and development around the globe. Today's patent procedures were formalized over 40 years ago. Yet companies and the economy in general are obviously very different now from what they were then. Business practices are different, as are documentation techniques. Computers have come into general use and telecommunications modalities are radically different. Even corporate ethics and accountability are different.

2. Reforming Patent Administrations

It is imperative that the patenting office continues working to enhance customer satisfaction for the people who file patent applications. Procedures need to be made more transparent and be more open and accountable. In the examination area, for example, the process should be speeded up and provisions made for holding hearings outside the big cities, and even by using teleconferencing. Likewise, it might be good to establish a system of circuit arbitrators for appeal examinations.


The last amendment in 2005 finally recognized product patents as well. No doubt that there is significant impact of the changed patent regime on Indian as well as foreign pharmaceutical firms. Foreign firms are having the option to utilize the potential of Indian market as well as technically well equipped pharmaceutical firms through outsourcing alliances and competition. In the light of changed patent regime Indian Pharmaceutical industry is shifting its focus away from the domestic market to the generics market in the developed world, which is going to expand in the few years when many drugs are going to be off patent. There is a shift away from bulk drugs towards high valued formulations by both domestic companies and MNCs. Even though some domestic firms are becoming dependent on bulk drugs imports, they are net foreign exchange earners; some of the big companies earn more than half of their revenues from exports. As far as MNCs are concerned, their share in both bulk drugs and formulations is declining and investment preferences are heavily tilted towards financial securities. The MNCs want to bring in their patented drugs without any domestic competition. The new patent regime will prove to be detrimental for both the patients due to high costs of drugs and for domestic manufacturers as they will be unable to manufacture any post-1995 patented drugs through alternative processes. Given the structural bottlenecks and the risk and time involved, big domestic firms do not and cannot spend the required amounts on RandD. Cost, in effect, is the crux of the issue. Thus barring a few cases, much of the research is undertaken for lifestyle-related diseases. Here the role of the government is of utmost importance. The breakthrough drugs typically come out of government-funded laboratories. Therefore, governmentfunded research organizations have to expand their role by partnering with the private sector. The issue of intellectual property protection in the pharmaceutical sector in India is encouraging, though there are still areas of immediate interest such as data exclusivity and granting of product patents for substances that are capable of being used as drugs. In the recent past, new areas relating to intellectual property such as prior informed consent, bioprospecting, biopiracy and access and benefit sharing have left a deep impact on the pharmacy majors worldwide. To arrive at a viable balance of preservation and sustainable use of natural resources, these issues require critical analysis of the nation's indigenous requirements as well as conformity with the global trends.



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Web links http//www/

Ashutosh Nigam Assistant Professor, Department of Management Studies, Vaish College of Engineering, Rohtak.
Table I
Revenue of Top Pharmaceutical
Companies in India, 2004

Rank Company Revenue Revenue
 2004 2004 (USD
 (Rs. Crore) milions)
 1 Ranbaxy Laboratories 4461 1026
 2 Dr.Reddy's Laboratories 1933 444
 3 Cipla 1842 423
 4 Nicholas Piramal India 1387 319
 5 Aurobindo Pharma 1260 290
 6 Glaxo SmithKline 1228 282
 7 Lupin Laboratories 1180 271
 8 Sun Pharmaceutical 1110 255
 9 Cadila Healthcare 1091 251
10 Wockhardt 980 225
 8 lergan 1110 255
 9 Biochem Pharmaceutical 1091 251
10 Aventis 980 225

Note: USD 1 = Rs. 43.5

Source: "WTO Chair Menon Pushes to Finalize Agreement
on TRIPS- Essential Drugs", Pharmaceutical Sales Buster,
December 31, 2004.

Table II
Trends in Investment Growth of Domestic and MNCs ( Rs. Crore)

Year GrossBlock NetBlock Investments in Securities

1995 710.4 433.9 512.6 204.2 303.5 221.0
1996 897.3 439.1 708.6 203.3 239.5 110.7
1997 1167.5 428.0 905.0 212.4 328.2 106.5
1998 1568.0 454.1 1214.5 212.6 382.4 124.5
1999 1524.3 463.6 1128.3 209.4 492.7 119.2
2000 1738.6 502.3 1224.1 230.0 454.7 147.9
2001 2292.7 653.9 1618.5 367.4 670.5 157.8
2002 2706.2 652.3 1941.9 344.2 646.3 154.8
2003 3412.3 647.2 2586.7 318.4 749.2 340.6
2004 4033.8 631.4 2973.5 251.2 1550.2 593.1
2005 4560.3 598.2 3324.8 224.7 1503.6 668.1
Annual Growth
Rate(per cent) 20.0 5.0 19.4 3.8 19.2 16.1

Source:,last viewed on Nov 2, 2007

Table III
Increase in Applications filed for Patent

 '97 '96 %change
 (52issues) (52issues)

i)Total no. of applications 668 468 43

i)No. of applications from 166 65 155
Indians companies

i)No. of applications from 502 403 25
foreigners/foreign companies

iv)No. of Indiancompaniest of 7 2 250
file five or more applications

v)Percentage share of Indian 25 14 79
companies/individuals in
total filings last viewed on January 2008.
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Article Type:Report
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Date:Oct 1, 2008
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