India: An IP Prospects In Pharmaceutical Industry

Last Updated: 9 April 2015
Article by Priyanka Rastogi

Most Read Contributor in India, September 2016


In today's era pharma industry is one of the most promising industry having huge profits, growth, knowledge and possibilities. In the pharma sector starting from initial stage till the final stage there are enormous chances of the product's being success or failure. Apart from these challenges, a large amount is invested before any product launched in the market. In this whole process from drug designing to manufacturing, IPR plays an important role. Intellectual Property Rights today are the most strategic and powerful asset of all large and Multinational Companies throughout the world, providing continued global market, economic dominance and profitability. They decide mergers and acquisitions based on the Intellectual Property Assets of the target S.M.E or Partners. Intellectual Property Rights today are independent commodities and assets for trading by way of their safe licensing, joint R&D/Production ventures, recognized globally.

IP prospects in pharma IPR are generally understood to have specific principal areas to have impact in pharmaceuticals. Firstly, there is an issue of pricing and access where discussion focuses on the link between IPR's, exclusion of competitors, the availability and pricing of new medicines. Second, there is an issue of R&D incentives- this is to say the role of IPRs in providing incentives to discover, develop and market new drugsand the effect of IPRs on R&D expenditure and its allocations across diseases, countries and organisation.

As these issues are closely related to each other and their interference presents a series of difficult economic and IP issues. In principle, IPR could support substantial differential pricing across countries. However these differential prices can cause internal and international controversies for example- efforts by government to reduce the price of patent drugs caused problems in small and developing countries. These price differentials can also lead to incentives in parallel market or gray market trade, particularly of products which are easily transferable. In taking steps towards IP prospects in pharma industry, there are lots of challenges which need to be understood and corrected not only at the initial level but also for the entire life span of the drug. In developed countries where the patent system was very much in favour of the pharma industries, these industries grow with a rapid rate whereas in the developing countries, the patent system has been criticized as a failure based on several grounds including drug designing, molecule formation, litigation, patent laws, blockage of rapid technological development in future prospects due to patents, patent created monopolies which are anti-competitive and neglect of the concerns of developing world.


Section 3(d) of the Indian Patent Act has moved up considerable controversy over the last many years within the Indian pharma industry - splitting multinational and Indian pharmaceutical companies as section 3 (d) says that mere discovery of a new form of a known substance without enhanced efficacy cannot be granted a patent. A detailed report commissioned by the IPA and authored by T. C. James, director, National Intellectual Property Organization, and a former government bureaucrat in India's Department of Industrial Policy and Promotion, found: "There is no clinching evidence to show that without a strong patent protection regime innovations cannot occur, that minor incremental innovations in the pharmaceutical sector do not require patent protection and that Section 3(d) of the Patents Act is not a bar for patenting of significant incremental innovations1". James also criticized large multinational companies for "exploring strategies to extend their hold on the market, including through obtaining patents on minor improvements of existing drugs2."

Supervising the IP assets of a pharma company is more than just acquiring the formal IP rights through the national or regional IP office. It is well known fact that patent or trademark rights are not worth much unless they are effectively exploited. Today, the Indian pharma industry is expected to account for 22 percent of the generics world market. Current companies in the pharmaceutical industry are prepared to remove full value from their innovation, take sufficient steps to develop an IP strategy for their business and seek to apply it within their general business strategy. Companies start understanding the relationship between the IP system and the system for obtaining marketing approval for new drugs in the country.

Indian pharma industry tries to exploit IP rights in a variety of ways. These may include the commercialization of IP-protected pharmaceutical products; mutual entering into exclusive or non-exclusive licensing agreements with one or more other companies; the sale or rent or assignment of IP assets to other firms; the creation of joint ventures or considered alliances in order to exploit corresponding IP assets of other companies; the approval or use of IP rights to obtain access to other companies' technology through crosslicensing agreements or the use of IP rights to support an application for obtaining funds to take a patented product to market3.

It all depends on companies how they decide in each case to best exploit their IP assets with Indian companies or internationally while ensuring that they have freedom to operate searches and do not unnecessarily run into problem by infringing the IP rights of others. Today India is becoming an important part of the global pharmaceutical value chain and many Indian pharma companies are participating in this global growth likely through their organic as well as in organic initiatives.

Large numbers of international pharma companies are entering into the Indian market. Moreover, Indian pharma is among the most significant emerging markets for the global pharma industry, given that it will attribute among the world's top 10 sales markets by 20204. These companies invest huge amount of money in research and development, drug designing, patent prosecution and drug manufacturing. It can be clearly observed that Indian pharma companies further increases its supremacy in the world pharmaceutical market; Pharmaceutical industry with its growth enablers and strong building blocks can become a global pharmaceutical hub. With the inception of the patent system, India would be required to leverage its strengths in supply of low cost medicines across the world and invest in newer areas to drive growth5. However, this would attract call for massive change in frame of mind and conversion to attract global capital talent. The path to globalization is full of huge opportunities but also fought with risks.


The article summarizes various concerns of IPR in pharma industry. Firstly the patent system must cover separately the whole scope of product development. The patent laws should be broader not only in use but also in application. The referred Section 3(d) of Indian Patent Act is considered as a roadblock for patenting invention by many global pharmaceutical industries. The pharma companies should be more serious about the section as it may lead to the huge litigation expenses and financial loss to the company. More companies should go forward for commercialization and licensing of the drugs. Speedy progress of knowledge in an industry would finally create the demand, required to speed up the commercialization process. In order to win the race, an option of compulsory license would be a fruitful result for Indian pharma industry. This not only increases the demand of low value drugs but also allows the Indian pharma industry to grow. Another method of achieving the objective is to reduce the cost of commercialization process. Reducing cost is important to any attempt at efficiency; diversity in research for instance cannot be achieved if unavoidable regulatory cost is prohibitive.



2. Ibid

3. http: //


5. Ibid

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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