Can Pharma And Biotech Companies Trust Emerging Markets To Protect IP?

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

In December 2012, the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) released an index which noted that the four-member emerging economies — Brazil, Russia, India, and China (BRIC) — scored the worst for protecting copyrights, patents, and other intellectual property (IP). The index scored 11 countries on a 25-point scale. Dead last in this index was India (6.24), followed by China (9.13), Brazil (9.57), and then Russia (11.17). The United States scored the highest for IP protection (23.73), and Britain was second (22.4). The reason this is significant is that these countries are negotiating the Trans-Pacific Partnership (TPP) Agreement — a vehicle for Asia-Pacific-wide economic integration intended to strengthen U.S. ties to the robust economies of this region. But for how long can or should biotech and pharmaceutical companies continue to conduct business in regions where there is government-enabled IP theft?

In April, the Supreme Court of India upheld a lower court decision to deny Novartis patent protection for the beta crystalline form of Imatinib Mesylate. Marketed as Glivec in the EU, and Gleevec in the U.S., it is a drug for myeloid leukemia and other kinds of tumors. In its ruling, the court determined that the patent application did not satisfy the tests of invention and patentability. Nearly 40 other countries around the world, including China, Russia, Mexico, and the U.S., disagree, having granted Novartis patent rights for this cancer treatment. The Cancer Patient Aid Association in India responded to the ruling noting, “The court has recognized the right of patients to access affordable medicines over profits for big pharmaceutical companies through patents.” I am sure Indian generic drug manufacturing giants Cipla and Natco Pharma will find the manufacture of these and other drugs the Indian government decides to nationalize highly profitable. Ranjit Shahani, managing director of Novartis India, said the company would be cautious about investing in India, especially when it comes to introducing new drugs, and seek patent protection before launching any new products. Further, the company will continue to refrain from R&D development activities there. Can you blame them? Why should companies like Bayer, Roche, and Pfizer, which have lost similar patent protection in India, want to invest in creating drugs with little chance of IP protection? Some have argued that companies within and outside of the life sciences industry should reconsider outsourcing other types of work now done in India to other countries where IP is not only respected, but supported. I agree.

China poses another problem as it is the direct source of two-thirds of the world’s counterfeit goods. The United Nations estimates China makes about $5 billion from trafficking fake pharmaceutical products annually. Though Russia and Brazil aren’t much better when it comes to IP protection, both India and China seem most inclined to bend the rules however they see fit. China seems incapable of enforcement of illicit behavior, while India takes the position of enabling it. I wonder how long the nearly 55 million Americans (approximately 1/6 of the population) who work in industries that depend heavily on IP rights protection are going to allow this to continue.