In recent years, India has experienced a dramatic economic transformation that few other countries have been able to achieve. Its economy has grown on average 6% annually for almost 25 years, and over the past three years it has accelerated at over 8% growth per annum. This expansion has opened new opportunities for Indian consumers, businesses and policymakers, and vastly expanded the country’s middle class. The improved infrastructure, better education, enhanced communication and entry into the World Trade Organization (WTO) in 1995, all have contributed to growth, an easier interface with the world, and an ability to attract foreign investments.
Many domestic companies such as Infosys, Satyam, Wipro, Tata Group and, in health care, generic pharmaceutical companies such as Dr Reddy’s and Ranbaxy, have achieved impressive successes, adding to India’s rising economic power. The combination of weak patent laws, a well- educated and relatively inexpensive workforce, and demand have created the foundation for generic pharma companies—creating a national industry—while India’s aspirations to create an innovative pharmaceutical industry have not yet come to fruition.
India is confronted with a globalization dilemma common in emerging economies: Two markets within one state. It has an increasingly wealthy middle class of about 300 million people, as well as countless impoverished citizens. A quarter of the population still exists on less than one dollar a day, and in many parts of India, basic health-care infrastructure is lacking. The proportion of children who suffer from diarrhoea and who receive oral rehydration salts is only about 58%, and among children under three, nearly half are clinically underweight, as the National Family Health Survey 2007 indicates. In parallel, chronic diseases due to lifestyle changes associated with the growth of the middle class are expected to become a rising burden. Deaths from chronic diseases are estimated to increase 18% within the next 10 years, and deaths from diabetes, by 35%.
When evaluating opportunities in India, a company such as Novartis, whose purpose is to cure disease while making a profit, must evaluate the business environment, including the foundation laid by the government related to investments and business activities. As a company with important activities in innovative as well as generic pharmaceuticals, we are aware of the needs of patients, including those who have little access to medicines. We contribute significant funds every year for making potentially life-saving medications available to needy patients. In 2006, we contributed 2% of our sales, or $755 million, to treatment initiatives that reached over 33 million patients. As part of this, we also provide free access to our cancer medicine, Glivec, to all Chronic Myeloid Leukaemia (CML) patients who can’t afford to pay. Glivec represents one of the best examples of true innovation in the industry. Nearly 90% of patients with Philadelphia chromosome-positive CML are alive after five years of Glivec treatment, which has changed medical practice for this disease. In India, 99% of patients receive it for free, which adds up to more than 7,100 patients at present. Every month, we add 120 new patients to our programme.
However, in 2006, the patent for Glivec—granted in nearly 40 countries, including China—was denied in India. We have, therefore, taken action in the Indian courts to gain clarity on the status of the laws regarding the protection of intellectual property and the granting of patents. The Indian patent law for pharmaceuticals is incompatible with the intellectual property standards the country agreed to when it joined WTO in 1995. In India, innovative compounds can only be patented if they demonstrate superior efficacy over existing therapies, which can only be done late in the development cycle, or after regulatory approval, often when copies are already on the market. New compounds with fewer side effects are not considered patentable, a major omission. Variations of existing substances are also not patentable, even if they represent a significant therapeutic advance. Finally, the current law does not include data protection. These exceptions and specifications only apply to pharmaceuticals and thus discriminate against an industry which could add significant economic growth in India with high value-adding activities and export opportunities in the mid- to long term.
Our patent case does not impact patient access to our medicine Glivec as it is given away to most patients, nor will it change the current situation of generic medications in India. Newly discovered medicines, however, would be patented, but flexibilities in international trade agreements protect access to essential medicines by allowing the export of medicines produced under compulsory licences issued for public health reasons. Novartis fully supports these provisions.
The cost of one year of treatment in India with generic imatinib is $2,100, or 4.5 times the annual average income. Even our critics recognize that generic Glivec is not the solution. Generic makers in India have yet to come forward with an access programme for generic imatinib.
India has an independent judicial system, equally accessible to individuals and companies. We hope that it will be recognized that its patent laws discriminate against the innovation-focused pharmaceutical industry and, that as a result of our actions, improvements will be implemented.
Daniel Vasella, MD, is chairman and CEO, Novartis. Comment at email@example.com