Efavirenz, Kaletra Present Indian Pharma with New Opportunities

The controversial compulsory licensing decision and the subsequent debate has opened up a new range of opportunities for Indian pharma firms eager to expand their international horizons. The spotlight on the exporting opportunities comes in with the Thai government's recent decision, which can be described as controversial but far reaching as far as Indian pharma firms are concerned. Thai health minister Mongkol na Songkhla's decision to issue compulsory licensing for second-line AIDS therapies—Abbott's Kaletra (lopanivir/ritonavir) and Bristol Myers Squibb's Sustiva (efavirenz), apart from Sanofi Aventis's blood-thinning cardio product Plavix (clopidrogel)—late last year proved to be a decisive moment for Indian drug firms. Thai government officials have been vocal about the fact that the government is negotiating with Indian firms for supplying cheaper generic versions of the three drugs mentioned. Ranbaxy Laboratories turned out to be an early gainer when the company received orders for efavirenz in November last year, Business Standard reports.

Brazilian president Luiz Inacio Lula da Silva's announcement last week to circumvent patent rights of Merck & Co's Stocrin (efavrienz) and import a cheaper generic version from India instead, after invoking the compulsory licensing provision of the Trade Related Intellectual Property Rights (TRIPS) agreement. The decision was made after the Brazilian government's demand of a similar price tier for the drug with that of Merck's supply to Thailand was not accepted by the pharma major. Reuters cited the health ministry’s estimation that the generic version from India will result in savings of US$30 million in 2007 and US$236.8 million by 2012.

Indian pharma firms have since started to line up for the expected deluge of orders from these countries. The companies most likely to benefit include top-tier firms such as Ranbaxy Laboratories, Cipla, Aurobindo Pharma and Strides Arcolab (acquired by Matrix Laboratories). The distinct advantage that the Indian pharma industry has in this role of generic supplier is the fact that it has the most number of World Health Organization (WHO)-certified facilities and products in the recommended WHO list. The WHO list is the preferred benchmark adopted by countries when accessing drugs for diseases such as tuberculosis, malaria, AIDS and now avian influenza.

Outlook and Implications

The generics-focused industry in India is only just finding its feet in the global arena, and the opportunities presented by the compulsory licensing provision is an added bonus. Although compulsory licensing regulations have tended to be invoked for diseases such as AIDS that has reached epidemic proportions in some regions, the potential decision to include Plavix, Lipotor and Novartis's cancer drug Gleevec/Glivec (imatinib myselate) could prove to be a significant diversion from the accepted benchmark. This will enhance earnings for Indian pharma firms. India has the distinction of having the highest number of Food and Drug Administration (FDA)-approved facilities outside the United States, and also as earlier mentioned is steadily increasingly the number of products in the WHO-recommended essential list of drugs.

The country's own relationship with multinationals is also in troubled waters, and the Novartis litigation against the government has been likened to a litmus test of the strength of its intellectual property rights (IPR) regulations. It is interesting to note here that India has so far not invoked the compulsory licensing option since patent laws were improved in 2005. However, there have been other provisions in the Indian Patent Act such as pre- and post-patent grant opposition that has still allowed Indian generic players to thrive. Recently, the Indian health minister, mindful of the Thai government's decision, declared that India may be forced to invoke the provision if Novartis's litigation results do not go its way. With key emerging nations taking such a stand, the opportunities for Indian pharma firms could expand.

Related Articles

Thailand: 7 May 2007: Sanofi Close to New Plavix Price Deal with Thai Authorities

Brazil: 4 May 2007: Brazilian Government Rejects Merck’s Concessions, Moves on Efavirenz Compulsory Licence

Thailand: 15 February 2007: Thai Government Expands Scope of Patent-Breaking Strategy Amid Unrest in Asia

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