New Delhi/Hyderabad: Three Indian drug makers —Cipla Ltd, Ranbaxy Laboratories Ltd, and Aurobindo Pharma Ltd—are set to reap an unexpected gain this year with the Brazilian government breaking the patent on Merck & Co. Inc.’s anti-HIV drug, Efavirenz, and importing copycat versions from India. The gain could be in the region of $50 million (Rs205 crore), according to Aurobindo’s chairman P.V.Ramaprasad Reddy.
On Saturday, 5 May, Brazil broke the patent of the HIV drug—it is the second country to do so after Thailand—after its price negotiations with New Jersey, US-based drug maker fell through. While Merck was willing to offer a 30% discount on its $1.59 per pill price tag, Brazilian president Luiz Inacio Lula da Silva’s government wanted it at $0.65 per pill, the rate at which the company supplies the drug in Thailand.
The medicine, which is part of a 17-drug cocktail treatment for people living with HIV/AIDS, will now be shipped from India at $0.45 per pill from the three drug makers pre-qualified by the World Health Organization.
Tough stance: Brazilian president Luiz Inacio Lula da Silva has issued a compulsory licence that will bypass Merck’s patent on the HIV drug, Efavirenz.
“The talks are on, but they are at a very nascent stage. We can’t say how much order will be placed as of now,” said Amar Lulla, chief executive officer of Mumbai-based Cipla, which is one of the three WHO pre-qualified drug makers.
A Ranbaxy executive, who didn’t wish to be named, said a substantial order could be booked for Brazil, but the details will be known only in a couple of days.
The Brazilian government’s spend on antiretroviral drugs, as medicines used to treat HIV/AIDS are called, has doubled in four years to roughly $495 million in 2005, according to a report for the United Nations. The move to issue a compulsory licence—privilege of a government to supersede a drug patent in case of a public health emergency—and importing the non-patented versions from India will save $30 million this year, and up to $237 million by 2012 for Brazil, the country’s health ministry said.
While the market potential for the first year has been pegged at $40-50 million, it could total up to $340 million till 2012 when the Merck patent expires on the drug, said an analyst with a Mumbai-based investment bank, who did not wish to be named because his firm does not allow him to talk to the media. “The economic upside for these three companies is small for now, unless compulsory licences are issued for a series of other drugs, too. But it is a very strong political statement,” he said.
Drug-access campaigners applauded the move, saying it would reduce strain on the public health system. Medecins Sans Frontieres’ Leena Menghaney believes India will reach the same point in another five years. “Almost 68% of the HIV/AIDS treatment programme in Brazil was spent in procuring drugs. The health budgets are not infinite and the governments in developing countries will have to make them viable,” she said.
Merck said it is “profoundly disappointed” by the breaking of its patent on Storcrin (its brand name for Efavirenz). “This expropriation of intellectual property sends a chilling signal to research-based companies about the attractiveness of undertaking risky research on diseases that affect the developing world,” the company said in a statement on its website, adding it would like Brazil to reconsider its stance.
The Thai government has already bypassed patents in two HIV drugs—Merck’s Storcrin and Abbott Laboratories’ Kaletra and one heart drug Plavix by Sanofi-Aventis SA.
Ricardo Amaral of Reuters contributed to this story.