Drug patents: A fool’s game | The Economist

I was reading the article below regarding Novartis' loss in the battle to patent protect Gleevec in India, which is news in an of itself, but an amazing stat jumped out at me in the article that warrants amplification:

PwC, a consultancy, expects Indian drug sales to grow from $16 billion in 2011 to $49 billion by 2020.

First of all, Holy Crap, that's some big growth. What an opportunity for an industry. (But think about how much growth remains beyond PWC's 2020 figure: consider that the total US pharmaceutical market was $200B in 2006.)

But more importantly, consider the ramifications for India. It will be very interesting to see life expectancies rise as pharma spending triples. (And through improvements in all other areas (delivery, access, etc.)

PWC seems to expect the majority of growth to come from generics, which takes away from the opportunity for big Pharma, but taking a wider industry view, this is very exciting.

(bonus: the article also labels Gleevec a $4B product. That's a long way from Novartis' initial expectations of ~$200M in annual revenue.)

http://www.economist.com/blogs/schumpeter/2013/04/drug-patents

A fool's game

NOVARTIS spent nearly 15 years seeking a patent in India for Glivec, a medicine for chronic myeloid leukemia. That quest reached its dead end, at last, on April 1st. India's Supreme Court rejected the Swiss drugmaker's patent application. Glivec (marketed in America as "Gleevec") is a blockbuster, earning the Swiss drugmaker $4.7 billion last year. Its prospects in India are now zilch.

The case was watched closely by virtually everyone with an interest in selling medicines or benefiting from them, including drug firms, trade officials and patient advocates. Drug companies, facing paltry growth in rich countries, want to sell medicines to developing ones where demand for new drugs is rising along with rates of chronic disease. But governments are keen to boost their own pharmaceutical firms and are wary of patented drugs' high costs. As a result, brawls over patent protections and prices have broken out from Brazil to Thailand.

The fight is particularly fraught in India. It has the world's biggest generics industry, an adolescent patent law, growing demand for medicines and an inability to pay for all of them. PwC, a consultancy, expects Indian drug sales to grow from $16 billion in 2011 to $49 billion by 2020. Nearly three quarters of the sales come from generic drugs, and this is unlikely to change, reckons PwC. The Supreme Court ruling, and another one last month, help to explain why.

Innovative drug companies have faced two key questions in India. First, will India's young patent regime, in place since 2005, provide the same protection as those in America and Europe? Second, will Indian regulators tolerate high drug prices? The answer to both questions seems to be "no".

The Supreme Court defended India's right to deny patents to incremental improvements. It ruled that Glivec was merely a new form of an older drug and did not constitute a patentable invention. "This is a huge relief," said Unni Karunakara, the president of Médecins Sans Frontières, which cares for patients in poor countries. Novartis is less pleased, declaring that the ruling "discourages future innovation in India."

The April ruling follows another by an Indian appeals board in March. In that case, the board upheld a decision to let Natco, a generic drugmaker, sell copies of Bayer's patented kidney-cancer drug Nexavar. Bayer had not made the drug available to Indians at a sufficiently low price.

With these rulings, India has become the most extreme case of a problem plaguing Big Pharma from Berlin to Beijing: how to convince governments and consumers to pay for their drugs. Some companies will continue to seek high prices for worthy medicines. Others may chase sales by lowering prices to boost volumes. Either strategy will carry risks.

(Photo credit: AFP)