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NATURE AND SCOPE OF PHARMA INDUSTRY IN INDIA

Introduction India is the largest provider of generic drugs globally. Indian pharmaceutical sector industry supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in UK. India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms. Market Size The pharmaceutical sector was valued at US$ 33 billion in 2017. The country’s pharmaceutical industry is expected to expand at a CAGR of 22.4 per cent over 2015–20 to reach US$ 55 billion. India’s pharmaceutical exports stood at US$ 17.27 billion in 2017-18. In 2018-19 these exports are expected to cross US$ 19 billion. Indian companies received 304 Abbreviated New Drug Application (ANDA) approvals from the US Food and Drug Administration (USFDA) in 2017. The country accounts for around 30 per cent (by volume) and about 10 per cent (value) in the US$ 70-80 billion US generics market. India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bioindustry and bioinformatics is expected grow at an average growth rate of around 30 per cent a year and reach US$ 100 billion by 2025. Investments and Recent Developments The Union Cabinet has given its nod for the amendment of the existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100 per cent under the automatic route for manufacturing of medical devices subject to certain conditions. The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 15.83 billion between April 2000 and June 2018, according to data released by the Department of Industrial Policy and Promotion (DIPP). Some of the recent developments/investments in the Indian pharmaceutical sector are as follows:

 In August 2018, the market grew by 8.7 per cent year-on-year with sales of R  s 11,342 crore (US$ 1.69 billion).  During April-June 2018, pharmaceutical sector in India witnessed private equity and

venture capital investments of US$ 396 million.  In 2017, Indian pharmaceutical sector witnessed 46 merger & acquisition (M&A) deals

worth US$ 1.47 billion  The exports of Indian pharmaceutical industry to the US will get a boost, as branded

drugs worth US$ 55 billion will become off-patent during 2017-2019.# Government Initiatives Some of the initiatives taken by the government to promote the pharmaceutical sector in India are as follows:  The National Health Protection Scheme is largest government funded healthcare

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programme in the world, which is expected to benefit 100 million poor families in the country by providing a cover of up to Rs 5 lakh (US$ 7,723.2) per family per year for secondary and tertiary care hospitalisation. The programme was announced in Union Budget 2018-19. In March 2018, the Drug Controller General of India (DCGI) announced its plans to start a single-window facility to provide consents, approvals and other information. The move is aimed at giving a push to the Make in India initiative. The Government of India is planning to set up an electronic platform to regulate online pharmacies under a new policy, in order to stop any misuse due to easy availability. The Government of India unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end drug manufacture. Approval time for new facilities has been reduced to boost investments. The government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.

Road Ahead Medicine spending in India is expected to increase at 9-12 per cent CAGR between 2018-22 to US$ 26-30 billion, driven by increasing consumer spending, rapid urbanisation, and raising healthcare insurance among others. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers that are on the rise. The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies. Exchange Rate Used: INR 1 = US$ 0.0149 as on June 29, 2018 References: Consolidated FDI Policy, Department of Industrial Policy & Promotion (DIPP), Press Information Bureau (PIB), Media Reports, Pharmaceuticals Export Promotion Council, AIOCD-AWACS, IQVIA

BACKGROUND IMPORTNACE AND CURRENT STATUS

An Overview of the Indian Pharmaceutical Sector 2.1 Introduction Over the past 40 years or so the Indian pharmaceutical sector witnessed rapid growth and transformation. From a mere volume of just Rs. 10 core in 1947, the industry registered a sales turnover of about US $ 5.5 billion in 2004 with an annual growth rate of about 17%. The flexible provisions of the Patent Act of 1970 and other supportive policies of the Government of India played an instrumental role in the growth and development of this industry. Given the importance of public policies in influencing the present structure of the industry this chapter, reviews in brief the important policy changes that have taken place in this sector and also examines the current changes in the structure of the industry and the changing behavior of firms in responding to policy changes.

2.2 The Evolution of the Indian Drug and Pharmaceutical Industry The history of the evolution of the Indian pharmaceutical industry can be divided into four principal epochs. The first epoch is from 1850 to 1945. The second epoch spans from 1945 to the late 1970s. The third epoch for development is from the early 1980s to the early 1990s, and the fourth epoch spans from the early 1990s to the present time.

2.2.1 The Early Stage of Pharmaceutical Evolution For convenience, the early stage of Pharmaceutical evolution has been divided into two distinct phases viz., the pre-independence and the post independence scenarios. 2.2.1.1 Pre-independence Scenario Before the advent of British Rule, the indigenous forms of medicine were in use (Ayurrvedic or Unani) in India. The Central Government of British India first introduced the allopathic form of medicine in the country. However, there were no production units in the country. Instead, the foreign companies exported raw materials from India, transformed it into finished products, and imported it back to India (Chaudhuri 1984). In spite of sincere efforts by a handful number of entrepreneurs1 to establish indigenous companies, drug production in the country was low and could hardly meet only 13% of the total medicinal requirement of the country.2 The indigenous industry, however, received impetus during the Second World War due to the fall in the supply of drugs from foreign companies and many more Indian companies like Unichem, Chemo Pharma, Zandu Pharmaceutical Works, Calcutta Chemicals, Standard Chemicals, Chemical Industrial and Pharmaceutical Laboratories (now known as Cipla), East India Pharmaceutical Works and others were established. With the entry of new firms in the market the production ofdrugs increased rapidly and indigenous firms were able to satisfy about 70% of the country’s medicinal requirement.3 During this period, foreign companies across the globe as well as Indian companies were engaged in production related activities and the importance of R&D was unknown to them (Temin 1979). Whichever new inventions of drugs were made were mainly due to the individual efforts of scientists and the drug companies were not involved in it (Chaudhuri 2005). 2.2.1.2 Post Independence Scenario The period spans from 1945 to approximately the mid 1970s. A major breakthrough known as therapeutic revolution marked the beginning of this period and resulted in a phenomenal growth of the global pharmaceutical industry located mainly in Germany, Switzerland, the UK and also to some extent in the US (Gambardella 1992, 1995). A noteworthy achievement during this period was a shift in drug therapy from

treating the symptoms to treating the disease itself (Temin 1979). At the same time there was a significant shift in the structure of the industry mainly because the global pharmaceutical industry instead of being mere production units also embarked on the path of massive investment in R&D (Temin 1979). The commercialization of newly invented pharmaceutical products like penicillin and other synthetic drugs also turned out to be a lucrative business. As noted by Statman (1983), the accounting rate of returns from a newly invented drug between 1954 and 1978 averaged at around 20.9 for global pharmaceutical companies. This encouraged firms to conduct more R&D to tap the potential emerging markets by inventing new drugs in a scientific manner. Further, the public sector also extended its unprecedented support for health related research (see Cockburn and Henderson1996). In comparison Indian companies were however, not influenced by the wave of therapeutic revolution. The lack of technology, capital and support from the government were the principal hindrances for Indian companies to embark on the new trajectory of drug development. Concerned about the lack of manufacturing facilities and guided by the perception that ‘foreign technology’ was an important component for the growth of the pharmaceutical sector, the Government of India in its Industrial Policy Statement of 1948 decided to take a liberal attitude towards MNCs and allowed them to establish plants without facing the hurdle of licensing agreements. Such liberal attitude of the government towards MNCs led to a free flow of foreign capital and the sector witnessed rapid growth. As noted by the Pharmaceutical Enquiry Committee of 1954, the drug production of India witnessed a 3.5 times growth in the production from just Rs. 10 core in 1947 to about Rs. 35 core by the end of 1952 . However, in spite of the progress made by the sector, it was observed that foreign companies did not establish any production unit in India, but were engaged in assembling bulk drugs4 (imported from their country) for anufacturing the final product (Pharmaceutical Enquiry Committee 1954). MNCs were not keen to establish production units in the country because the production of bulk drugs required investment in plant and machinery whereas importing bulk drugs and processing them into the formulation was an easier and more profitable business (Pharmaceutical Enquiry Committee 1954). To overcome the structural weakness that the sector was suffering from, the government in its industrial licensing policy of 1956 made it mandatory for foreign multinational companies to establish their production unit in the country and produce drugs from the basic stage. The pharmaceutical industry was also included in the core group of industries for the purposes of licensing because of the ‘high social value’ content of medicinal products. Accordingly, the license was granted under the supervision of the Director General of Technical Development (DGTD) for setting up a new unit or expansion of the existing units keeping into account the medicinal need for the country. In order to fulfill regulatory requirements many foreign companies started their production in India. During this period, a large number of domestic companies also entered the market mainly due to government support under the Industrial Licensing Act and started producing a wide range of products. Between 1952 and 1962, drug productions in the industry increased from Rs. 35 crore to about Rs. 100 crore. Besides, the capital investment for the sector was about Rs. 56 crore in 1962 as compared to its value of Rs. 23 crore in 1952. 2.2.1.3 Role of Public Sector Units and Research Institutes Another note-worthy achievement of this period was the establishment of two public sector units (PSUs) the Hindustan Antibiotics Ltd (HAL) in 1954 and the Indian Drugs and Pharmaceuticals Ltd (IDPL) in 1961 to start the production of drugs from its basic stage. HAL was established to produce antibiotic with the assistance of WHO and UNICEF. It was the first company in India to manufacture a number of antibiotic drugs like penicillin, streptomycin, Sulfate, ampicillin, anhydrous, gentaminin from the basic stage (Sahu 1998). The technology required to produce these drugs were imported mainly from a large number of foreign companies which were then adapted to the local condition assisted by the inhouse R&D wing of the company (see Sahu 1998 for details). The IDPL was

established with the support and assistance of the Soviet Union to produce antibiotics, synthetic drugs, and surgical instruments. The technology acquired for the production of drugs was transferred to IDPL by the Soviet Government and was upgraded and adapted to local conditions by Indian scientists. 5 Apart from PSUs, the public funded research institute also played a pivotal role in the growth of the sector. The government created a number of research institutes under the guidance of the Indian Council of Medical Research (ICMR) and the Council of Scientific and Industrial Research (CSIR) to promote the technological advancement of the country. Some of the CSIR institutes, which have played a significant role in boosting up the knowledge base in the pharmaceutical sector of India, are the Central Drug Research Institute (CDRI) of Lucknow, the Indian Institute of Chemical Technology (IICT) of Hyderabad, the National Chemical Laboratory (NCL) of Pune and the Regional Research Laboratories (RRL) of Jammu and Jorhat. Among the few innovative drugs developed in India, the CDRI has made a major contribution (Chaudhuri 2005). However, in spite of the achievement, what was really missing among the research institutes was commercial orientation. Therefore, most of the new and ‘Novel Drugs’ developed could not be profitably introduced in the market. However, CDRI6 had invented more than 100 new process technologies, which were successfully commercialized. Besides CDRI, the technologies developed by NCL and other RRL were also transferred effectively from laboratories to industries. The success of the CSIR laboratories in fostering the technological environment of the Indian pharmaceutical sector is also evident when we find that almost all the top pharmaceutical companies like Lupin, Ranbaxy, Cipla, Nicholas Primal, Wockhardt, Unichem, Torrent, J.B chemical, Neuland, Sun Pharmaceutical, Orchid, S O L Pharmaceuticals Ltd and Aurobindo Pharma Ltd have benefited from the services of the research institutes in India in some way or the other (Chaudhuri 1997a). The Public enterprises and research institutes also played a key role in enriching the human capital endowment that was necessary for the pharmaceutical sector of the country to flourish. Almost all the entrepreneurs of the big companies (about one-third of the 200 large companies) have worked in IDPL production or the R&D wing at some point of time or the other (Chaudhuri 1997). The necessary skill that is required for reverse engineering was acquired by entrepreneurs of the pharmaceutical industry through their long-term associations with public sector units, which is fundamental to the product and process development for this industry. By early 1970s due to favorable government policies, the domestic industry had grown considerably from a state of non-existence. In 1952, the total turnover for the sector was around Rs. 32 crore. This increased to approximately Rs. 75 crore for bulk drugs and Rs. 370 crore for formulation production in 1970. However, the industry was still dominated mostly by foreign MNCs with a share of about 68% (see Tables A.1 and A.2 in Appendix A). It is interesting to note that during this period the public sector and indigenous companies contributed to a significant share of the bulk drug production, whereas the contribution ofMNCs was less than 12% of the total bulk drug production in India. It was also noted that out of the 66 foreign companies that operated in India, only 19 were engaged in bulk drug production (Hathi Committee Report 1974). Most of the companies were engaged in highpayoff formulation production in which they had monopolistic position for certain life saving drugs like Metholdopa, Indomethacin, etc. MNCs even misused the provision of Product Patent in the Patent Act of 1911 to maintain their monopolistic position in India,7 which resulted in prices for formulations in India becoming as high as in developed nations (Tariff Commission Report 1968).8 In contrast, the prices for bulk drugs were the lowest because of the significant presence and contribution of public sector units and indigenous players (see Tariff Commission Report 1968).

2.2.2 The Amendment of Patent Law and the Implementation of the New Drug Policy (The Second Epoch of Development) Concerned by the high price of medicines and the lack of domestic infrastructure, the government constituted the Hathi Committee in 1974 ‘to probe into the problems and suggest a rational drug policy that would meet the medicinal needs of the country’. Recommended by the Committee’s report, the government amended the

Patent Act of 1970 and enacted the Foreign Exchange Regulation Act (FERA) 1973 in its New Drug Policy (NDP) of 1978. The Patent Act of 1970 recognized only process patents. The life of the patent was also reduced significantly from 16 to 5 years from the date of sealing or 7 years from the date of filling a complete application, whichever is shorter; in other words, the maximum period of patent was 7 years. Further, in the amended Act an MNC could patent only one process. FERA was implemented to compel MNCs to manufacture high technology bulk drugs. It was laid down in Section 29 that FERA companies, i.e., foreign companies with an equity holding of more than 40% and engaged in the production of only formulation products or bulk drugs not involving ‘high-technology’, should reduce their equity holding to 40% or below. For FERA companies licenses would be granted only when the companies provide 50% of bulk drugs to nonassociated formulators, and the ratio of value of bulk drugs used in own manufacture to the value of total formulation production would not exceed 1:5. The corresponding figures for domestic firms were about 1:10. In addition, the NDP of 1978 had reservation for the domestic manufacturer for the production of various categories of drugs. Economies of scale, technology and pricing of products are the deciding factors for the production of drugs. The Patent Act of 1970 and the changes in domestic regulation virtually curbed the monopoly of MNCs. Adopting the flexible provisions of the amended patent act, indigenous companies started imitating the patented product and could eventually come out with better processes for the same product. The FERA and the NDP of 1978 also restricted the activities of MNCs. It is, therefore, not surprising to find that the share of MNCs dropped from 70% to about 50% by the late 1980s . The industry also embarked on the path of high growth during this period. The other significant outcomes were fall in the prices of the medicines and the introduction of a large number of generic versions of patented products. The drug policy of 1978 was, how ever, revised in 1986 to dilute the mechanismof check and control with respect to the production of certain categories of drugs. NDP 1986 also regularized the production of a large number of drugs that were earlier questionable on regulatory grounds. This was done to encourage greater participation of private players in the production of drugs, because the public sector started to suffer from industrial sickness due to the lack of proper commercial orientation (See Sahu 1998).

2.2.3 The Phase of Liberalization, De-Control and Product Patent (The Third Epoch of Development) The growth impetus that the sector received during the 1980s continued even in the 1990s. The pharmaceutical sector witnessed a consistent growth of around 16% from 1995 onward. The bulk drug and the formulation sector also experienced a growth rate of between 15% and 20% during this period. Because of the competence gained by the Indian pharmaceutical companies in process engineering, the Indian companies also emerged as the major players in the domestic market. This resulted in a further fall in the share of MNCs in the country. The country also gained reputation in the international market as low cost producer.9 The number of production units in the Indian pharmaceutical sector also increased from 1,752 in 1952–1953 to 20,053 in the year 2000–2001. However, there was a shift in the regulatory framework under which the sector was operating. As part of the liberalization policy, the Government of India in the New Drug Policy of 1994 and 2002 abolished the licensing requirement for entry and expansion of firms. Further, 100% inward foreign direct investment has been allowed under the automatic approval of RBI and automatic approval for technological collaboration has been approved. Further, free import of formulations, bulk drugs and intermediaries are allowed. The government also implemented certain rules in its New Drug Policy for producers to follow good manufacturing practices and produce quality products. Concern about quality medicine was high on the agenda of the government, because the WHO study reported (2007)10 that about 35% of fake drugs produced in the world come from India, which also had a spurious drug market worth Rs. 4,000 crore.11 Thus, while, on the one hand, India has shown its competence in manufacturing high quality products that also have demand

in the international market, paradoxically, the Indian market is also flooded with spurious drugs to a large extent. To control spurious drugs, the government incorporated ScheduleMin the Drugs and Cosmetic Act in 1995 that lays down Good Manufacturing Practices (GMP) at par with WHO standards.12 Apart from the changes in domestic policies, perhaps the most controversial and debated regulatory changes relate to the amendment of the Patent Act of 1970. Torecall the Patent Law was amended under the WTO compulsion to recognize product patent from 2005 onward. This was implemented in three successions. The first version of it was implemented in 1995 in which the ‘mail-box’ system was recognized. On January 1, 2000, a Second Amendment was introduced. Its key issues re-defined patentable subject matter, extended the term of patent protection to 20 years and amended the compulsory licensing system. A third amendment of patent law was made on January 1, 2005 to introduce product patent regime in areas, including pharmaceuticals that were hitherto covered by process patents only. To summarize, we notice that there is a gradual shift in public policy from the regime of control and process patents to a regime of decontrol and product patents. It is expected that such changes in policy will have a far-reaching effect on the industry. In the following section, we, therefore, discuss certain indicators pertaining to the industry. IMPORTANT POINTS TO NOTE ABOUT INDIAN PHARMA INDUSTRY

The pharmaceutical industry is the world’s largest industry due to worldwide revenues of approximately US$2.8 trillion. Pharma industry has seen major changes in the recent years that place new demands on payers, providers and manufacturers. Customers now demand the same choice and convenience from pharma industry that they find in other segment. Indian Pharmaceutical Industry is poised for high consistent growth over the next few years, driven by a multitude of factors. Top Indian Companies like Ranbaxy, DRL, CIPLA and Dabur have already established their presence. The pharmaceutical industry is a knowledge driven industry and is heavily dependent on Research and Development for new products and growth. However, basic research (discovering new molecules) is a time consuming and expensive process and is thus, dominated by large global multinationals. Indian companies have only recently entered the area. The Indian pharmaceutical industry came into existence in 1901, when Bengal Chemical & Pharmaceutical Company started its maiden operation in Calcutta. The next few decades saw the pharmaceutical industry moving through several phases, largely in accordance with government policies. Commencing with repackaging and preparation of formulations from imported bulk drugs, the Indian industry has moved on to become a net foreign exchange earner, and has been able to underline its presence in the global pharmaceutical arena as one of the top 35 drug producers worldwide. Currently, there are more than 2,400 registered pharmaceutical producers in India. There are 24,000 licensed pharmaceutical companies. Of the 465 bulk drugs used in India, approximately 425 are manufactured here. India has more drug-manufacturing facilities that have been approved by the U.S. Food and Drug Administration than any country other than the US. Indian generics companies supply 84% of the AIDS drugs that Doctors without Borders uses to treat 60,000 patients in more than 30 countries. The Indian pharmaceutical industry has shown impressive growth over the last few years and has become one of the sunrise sectors of the Indian economy. The introduction of the product patent regime in India necessitated pharmaceutical companies both in India and abroad to reconsider their business models and explore newer markets. India's pharmaceutical sector is currently undergoing unprecedented change. on 1st January, 2005, of a system of product patents. Both multinational companies and domestic players are examining the prospects offered by the local market as the government moves forward with initiatives aimed at providing India's more than one billion inhabitants, for the first time, with access to the life-saving drugs they need. A further huge boost to the local market is emerging from the rise of India's new affluent consumers, who lead more Western-style lives and are demanding innovative drugs to treat the chronic illnesses that these changing lifestyles may produce. India's leading drug manufacturers are becoming global players, utilising both organic growth, through

the gradual development of their business, and mergers and acquisitions as they seek to boost their presence in existing markets and open up new ones. Indian Pharma market The Indian pharmaceutical market is highly competitive and remains dominated by low priced, domestically-produced generics. In value terms, India accounts for less than 2% of the world market and per capita expenditure on pharmaceuticals is relatively low. India has an established domestic pharmaceutical industry, responsible for around 8% of world pharmaceutical production. The industry is export-oriented and the larger domestic companies are competing in the global market for both generics and original products. The highly skilled domestic workforce offers good opportunities for outsourcing both research and production. The Indian pharmaceutical market is highly competitive and remains dominated by low priced, domestically-produced generics. In value terms, India accounts for less than 2% of the world market and per capita expenditure on pharmaceuticals is relatively low. India has an established domestic pharmaceutical industry, responsible for around 8% of world pharmaceutical production. The industry is export-oriented and the larger domestic companies are competing in the global market for both generics and original products. The highly skilled domestic workforce offers good opportunities for outsourcing both research and production. However, on the basis of organizational perspective the most prominent performance related issues are: Increased competition and unethical practices adopted by some of the propaganda base companies. Low level of customer knowledge (Doctors, Retailers, Wholesalers). Poor customer (both external & internal) acquisition, development and retention strategies Varying customer perception. The number and the quality of medical representatives Very high territory development costs. High training and re-training costs of sales personnel. Very high attrition rate of the sales personnel. Busy doctors giving less time for sales calls. Poor territory knowledge in terms of business value at medical representative level . Unclear value of prescription from each doctor in the list of each sales person. Unknown value of revenue from each retailer in the territory Absence of ideal mechanism of sales forecasting from field sales level, leading to huge deviations Absence of analysis on the amount of time invested on profitable and not-soprofitable customers and lack of time-share planning towards developing Customer base for future and un-tapped markets. Concerned about the lack of domestic manufacturing facilities and the unequal pattern of trade, few scientists like Prafulla Chandra Ray, TK Gajjar and AS Kotibhaskar laid the foundation of Bengal Chemical and Pharmaceutical Work in Calcutta (BCPW) in 1892 (see, BCPW 1941 for its activities in the early days) and Alembic Chemical Works by in 1907 in Baroda. The establishment of the Bengal Immunity in 1919 by a group of notable scientists and physicians, namely Nilratan Sircar, Kailash Chandra Bose, Bidhan Chandra Ray etc was yet another landmark in the history of the evolution of the Indian pharmaceutical industry. The company was established with the sole objective of attaining selfsufficiency of the production of synthetic medicine and of sera and vaccines. 1.

2 See

Pharmaceutical Enquiry Committee 1954, pp 17–18. Pharmaceutical Enquiry Committee 1954, p 75. 4 Drug manufacturing in India has two important vertically linked processes: (1) production of bulk drug; and (2) the production of formulation. The Bulk drug production is essentially the production for the raw material or active pharmaceutical ingredients (API) for drugs, whereas production for formulation is achieved by synthesizing the bulk drug into final products like tablets, ointments, capsules etc. 5 IDPL has three major plants – the Rishikesh plant, which was established to produce a majority ofthe basic drugs and their product mix. The Hyderabad unit was established to produce 16 synthetic vitamins, analgesics, antipyretics and other varieties of drugs, and the Madras unit produced the surgical instruments. Subsequently, two more plants were established at Gurgaon and Muzaffarpur to produce nicotinamide and acetic acid manufacturing (Chaudhuri 2005). 3 See

6 Source 7 For

8 The

CDRI website: www.cdriindia.org

further details, see Chaudhuri (1999, 1997). Kefauver Committee of US in 1950 (see Jordan 1999), also noted that India was among the high priced nations in the world.

9 India

has gained fame as a low-cost producer and supplier of anti-retroviral and supplier to international organizations and to needy patients in Africa. In a recent case of supplying antiretro viral drugs to South Africa, the price quoted by Indian firm was the lowest at US $ 350 per year per person compared to $ 1679 quoted by US MNCs.

10 See

The Hindu, September 2007.

11 About

20% of medicines in the country are fake or substandard, of these, 60% does not contain any active ingredient, 19% contain wrong ingredients and 16% have harmful and inappropriate ingredients. 12 It is worth mentioning here that many small scale units in India do not have adequate resources to upgrade their facilities at par with the GMP standard which requires investment worth 25 million for plants and machinery. Consequently, these companies might have to exit the market or may merge and grow in size.

An IP Prospects In Pharmaceutical Industry

INTRODUCTION 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 anticompetitive and neglect of the concerns of developing world. IP PROSPECTS IN PHARMA INDUSTRY

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.

CONCLUSION 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. Footnotes 1. http://www.biopharmatoday.com/2010/04/indianpharmaceutical-alliance-defends-section-3d-of-patentsact-says-statute-not-against-incrementa.html

2. Ibid

3. http: //www.novonous.com/case-studies/indianpharmaceutical-industry-and-its-latest-trends.html

4. http://www.expresspharmaonline.com/20120115/market03.shtml

5. Ibid

IPR IN PHARMA INDUSTRY INTRODUCTION Intellectual property (IP) pertains to any original creation of the human intellect such as artistic, literary, technical, or scientific creation. Intellectual property rights (IPR) refers to the legal rights given to the inventor or creator to protect his invention or creation for a certain period of time.[1] These legal rights confer an exclusive right to the inventor/creator or his assignee to fully utilize his invention/creation for a given period of time. It is very well settled that IP play a vital role in the modern economy. It has also been conclusively established that the intellectual labor associated with the innovation should be given due importance so that public good emanates from it. There has been a quantum jump in research and development (R&D) costs with an associated jump in investments required for putting a new technology in the market place.[2] The stakes of the developers of technology have become very high, and hence, the need to protect the knowledge from unlawful use has become expedient, at least for a period, that would ensure recovery of the R&D and other associated costs and adequate profits for continuous investments in R&D.[3] IPR is a strong tool, to protect investments, time, money, effort invested by the inventor/creator of an IP, since it grants the inventor/creator an exclusive right for a certain period of time for use of his invention/creation. Thus IPR, in this way aids the economic development of a country by promoting healthy competition and encouraging industrial

development and economic growth. Present review furnishes a brief overview of IPR with special emphasis on pharmaceuticals. BRIEF HISTORY The laws and administrative procedures relating to IPR have their roots in Europe. The trend of granting patents started in the fourteenth century. In comparison to other European countries, in some matters England was technologically advanced and used to attract artisans from elsewhere, on special terms. The first known copyrights appeared in Italy. Venice can be considered the cradle of IP system as most legal thinking in this area was done here; laws and systems were made here for the first time in the world, and other countries followed in due course.[4] Patent act in India is more than 150 years old. The inaugural one is the 1856 Act, which is based on the British patent system and it has provided the patent term of 14 years followed by numerous acts and amendments.[1] Background The Indian pharmaceutical industry can be said to have begun with the setting up of ‘Bengal Chemical and Pharmaceutical Works’ in Calcutta. Subsequently institutes like Kings Institute of Preventive Medicine in Chennai, Pasteur Institute in Coonoor, the Central Drug Research Institute in Kasauli and others were set up. Post-independence, many other public sector companies such as Hindustan Antibiotics Ltd. and Indian Drugs and Pharmaceuticals Ltd. were set up to reduce the imports of important antibiotics and also to meet the county’s demand from indigenous production. The industry is conspicuous by the large presence of private sector which has captured a substantial share in the domestic & external market due to factors such as conducive regulatory environment, past patent policies, low cost of innovation, access to funds from banks to corporate manufacturers, low cost of setting up and running high technology manufacturing facilities, etc. The public sector as in many other sectors contributed to strategic areas but has gradually been overtaken by the private players – an indication of the latter’s emerging competitiveness and entrepreneurial capabilities. Indian owned firms currently account for 70 percent of the domestic market, up from less than 20 percent in 1970. In 2005, nine of the top 10 companies in India were domestically owned, compared with just four in 1994 Types of Intellectual Properties and their Description Originally, only patent, trademarks, and industrial designs were protected as ‘Industrial Property’, but now the term ‘Intellectual Property’ has a much wider meaning. IPR enhances technology advancement in the following ways:[1–4]  

(a) it provides a mechanism of handling infringement, piracy, and unauthorized use (b) it provides a pool of information to the general public since all forms of IP are published except in case of trade secrets.

IP protection can be sought for a variety of intellectual efforts including  



(i) Patents (ii) Industrial designs relates to features of any shape, configuration, surface pattern, composition of lines and colors applied to an article whether 2-D, e.g., textile, or 3-D, e.g., toothbrush[5] (iii) Trademarks relate to any mark, name, or logo under which trade is conducted for any product or service and by which the manufacturer or the service provider is identified. Trademarks can be bought, sold, and licensed. Trademark has no existence apart from the goodwill of the product or service it symbolizes[6]

 

(iv) Copyright relates to expression of ideas in material form and includes literary, musical, dramatic, artistic, cinematography work, audio tapes, and computer software[7] (v) Geographical indications are indications, which identify as good as originating in the territory of a country or a region or locality in that territory where a given quality, reputation, or other characteristic of the goods is essentially attributable to its geographical origin[8]

A patent is awarded for an invention, which satisfies the criteria of global novelty, nonobviousness, and industrial or commercial application. Patents can be granted for products and processes. As per the Indian Patent Act 1970, the term of a patent was 14 years from the date of filing except for processes for preparing drugs and food items for which the term was 7 years from the date of the filing or 5 years from the date of the patent, whichever is earlier. No product patents were granted for drugs and food items.[9] A copyright generated in a member country of the Berne Convention is automatically protected in all the member countries, without any need for registration. India is a signatory to the Berne Convention and has a very good copyright legislation comparable to that of any country. However, the copyright will not be automatically available in countries that are not the members of the Berne Convention. Therefore, copyright may not be considered a territorial right in the strict sense. Like any other property IPR can be transferred, sold, or gifted.[7] Role of Undisclosed Information in Intellectual Property Protection of undisclosed information is least known to players of IPR and also least talked about, although it is perhaps the most important form of protection for industries, R&D institutions and other agencies dealing with IPR. Undisclosed information, generally known as trade secret or confidential information, includes formula, pattern, compilation, programme, device, method, technique, or process. Protection of undisclosed information or trade secret is not really new to humanity; at every stage of development people have evolved methods to keep important information secret, commonly by restricting the knowledge to their family members. Laws relating to all forms of IPR are at different stages of implementation in India, but there is no separate and exclusive law for protecting undisclosed information/trade secret or confidential information.[10] Pressures of globalisation or internationalisation were not intense during 1950s to 1980s, and many countries, including India, were able to manage without practising a strong system of IPR. Globalization driven by chemical, pharmaceutical, electronic, and IT industries has resulted into large investment in R&D. This process is characterized by shortening of product cycle, time and high risk of reverse engineering by competitors. Industries came to realize that trade secrets were not adequate to guard a technology. It was difficult to reap the benefits of innovations unless uniform laws and rules of patents, trademarks, copyright, etc. existed. That is how IPR became an important constituent of the World Trade Organization (WTO).[11] Rationale of Patent Patent is recognition to the form of IP manifested in invention. Patents are granted for patentable inventions, which satisfy the requirements of novelty and utility under the stringent examination and opposition procedures prescribed in the Indian Patents Act, 1970, but there is not even a prima-faciepresumption as to the validity of the patent granted.[9] Most countries have established national regimes to provide protection to the IPR within its jurisdiction. Except in the case of copyrights, the protection granted to the inventor/creator in a country (such as India) or a region (such as European Union) is restricted to that territory where

protection is sought and is not valid in other countries or regions.[1] For example, a patent granted in India is valid only for India and not in the USA. The basic reason for patenting an invention is to make money through exclusivity, i.e., the inventor or his assignee would have a monopoly if,  

(a) the inventor has made an important invention after taking into account the modifications that the customer, and (b) if the patent agent has described and claimed the invention correctly in the patent specification drafted, then the resultant patent would give the patent owner an exclusive market.

The patentee can exercise his exclusivity either by marketing the patented invention himself or by licensing it to a third party. The following would not qualify as patents: 

 

   

 

(i) An invention, which is frivolous or which claims anything obvious or contrary to the well established natural law. An invention, the primary or intended use of which would be contrary to law or morality or injurious to public health (ii) A discovery, scientific theory, or mathematical method (iii) A mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine, or apparatus unless such known process results in a new product or employs at least one new reactant (iv) A substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance (v) A mere arrangement or re-arrangement or duplication of a known device each functioning independently of one another in its own way (vi) A method of agriculture or horticulture (vii) Any process for the medicinal, surgical, curative, prophylactic diagnostic, therapeutic or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products (viii) An invention relating to atomic energy (ix) An invention, which is in effect, is traditional knowledge

Rationale of License A license is a contract by which the licensor authorizes the licensee to perform certain activities, which would otherwise have been unlawful. For example, in a patent license, the patentee (licensor) authorizes the licensee to exercise defined rights over the patent. The effect is to give to the licensee a right to do what he/she would otherwise be prohibited from doing, i.e., a license makes lawful what otherwise would be unlawful.[12] The licensor may also license ‘know-how’ pertaining to the execution of the licensed patent right such as information, process, or device occurring or utilized in a business activity can also be included along with the patent right in a license agreement. Some examples of know-how are:  

(i) technical information such as formulae, techniques, and operating procedures and (ii) commercial information such as customer lists and sales data, marketing, professional and management procedures.

Indeed, any technical, trade, commercial, or other information, may be capable of being the subject of protection.[13] Benefits to the licensor:   

(i) Opens new markets (ii) Creates new areas for revenue generation (iii) Helps overcome the challenge of establishing the technology in different markets especially in foreign countries – lower costs and risk and savings on distribution and marketing expenses

Benefits to the licensee are:   

(i) Savings on R&D and elimination of risks associated with R&D (ii) Quick exploitation of market requirements before the market interest wanes (iii) Ensures that products are the latest

The Role of Patent Cooperation Treaty The patent cooperation treaty (PCT) is a multilateral treaty entered into force in 1978. Through PCT, an inventor of a member country contracting state of PCT can simultaneously obtain priority for his/her invention in all or any of the member countries, without having to file a separate application in the countries of interest, by designating them in the PCT application. All activities related to PCT are coordinated by the world intellectual property organization (WIPO) situated in Geneva.[14] In order to protect invention in other countries, it is required to file an independent patent application in each country of interest; in some cases, within a stipulated time to obtain priority in these countries. This would entail a large investment, within a short time, to meet costs towards filing fees, translation, attorney charges, etc. In addition, it is assumed that due to the short time available for making the decision on whether to file a patent application in a country or not, may not be well founded.[15] Inventors of contracting states of PCT on the other hand can simultaneously obtain priority for their inventions without having to file separate application in the countries of interest; thus, saving the initial investments towards filing fees, translation, etc. In addition, the system provides much longer time for filing patent application in the member countries.[15,16] The time available under Paris convention for securing priority in other countries is 12 months from the date of initial filing. Under the PCT, the time available could be as much as minimum 20 and maximum 31 months. Further, an inventor is also benefited by the search report prepared under the PCT system to be sure that the claimed invention is novel. The inventor could also opt for preliminary examination before filing in other countries to be doubly sure about the patentability of the invention.[16] Management of Intellectual Property in Pharmaceutical Industries More than any other technological area, drugs and pharmaceuticals match the description of globalization and need to have a strong IP system most closely. Knowing that the cost of introducing a new drug into the market may cost a company anywhere between $ 300 million to $1000 million along with all the associated risks at the developmental stage, no company will like to risk its IP becoming a public property without adequate returns. Creating, obtaining,

protecting, and managing IP must become a corporate activity in the same manner as the raising of resources and funds. The knowledge revolution, which we are sure to witness, will demand a special pedestal for IP and treatment in the overall decision-making process.[17] Competition in the global pharmaceutical industry is driven by scientific knowledge rather than manufacturing know-how and a company's success will be largely dependent on its R&D efforts. Therefore, investments in R&D in the drug industry are very high as a percentage of total sales; reports suggest that it could be as much as 15% of the sale. One of the key issues in this industry is the management of innovative risks while one strives to gain a competitive advantage over rival organizations. There is high cost attached to the risk of failure in pharmaceutical R&D with the development of potential medicines that are unable to meet the stringent safety standards, being terminated, sometimes after many years of investment. For those medicines that do clear development hurdles, it takes about 8-10 years from the date when the compound was first synthesized. As product patents emerge as the main tools for protecting IP, the drug companies will have to shift their focus of R&D from development of new processes for producing known drugs towards development of a new drug molecule and new chemical entity (NCE). During the 1980s, after a period of successfully treating many diseases of short-term duration, the R&D focus shifted to long duration (chronic) diseases. While looking for the global market, one has to ensure that requirements different regulatory authorities must be satisfied.[18] It is understood that the documents to be submitted to regulatory authorities have almost tripled in the last ten years. In addition, regulatory authorities now take much longer to approve a new drug. Consequently, the period of patent protection is reduced, resulting in the need of putting in extra efforts to earn enough profits. The situation may be more severe in the case of drugs developed through the biotechnology route especially those involving utilization of genes. It is likely that the industrialized world would soon start canvassing for longer protection for drugs. It is also possible that many governments would exercise more and more price control to meet public goals. This would on one hand emphasize the need for reduced cost of drug development, production, and marketing, and on the other hand, necessitate planning for lower profit margins so as to recover costs over a longer period. It is thus obvious that the drug industry has to wade through many conflicting requirements. Many different strategies have been evolved during the last 10 to 15 years for cost containment and trade advantage. Some of these are out sourcing of R&D activity, forming R&D partnerships and establishing strategic alliances.[19] Nature of Pharmaceutical Industry The race to unlock the secrets of human genome has produced an explosion of scientific knowledge and spurred the development of new technologies that are altering the economics of drug development. Biopharmaceuticals are likely to enjoy a special place and the ultimate goal will be to have personalized medicines, as everyone will have their own genome mapped and stored in a chip. Doctors will look at the information in the chip(s) and prescribe accordingly. The important IP issue associated would be the protection of such databases of personal information. Biotechnologically developed drugs will find more and more entry into the market. The protection procedure for such drug will be a little different from those conventional drugs, which are not biotechnologically developed. Microbial strains used for developing a drug or vaccine needs to be specified in the patent document. If the strain is already known and reported in the literature usually consulted by scientists, then the situation is simple. However, many new strains are discovered and developed continuously and these are deposited with International depository authorities under the Budapest Treaty. While doing a novelty search,

the databases of these depositories should also be consulted. Companies do not usually go for publishing their work, but it is good to make it a practice not to disclose the invention through publications or seminars until a patent application has been filed.[20] While dealing with microbiological inventions, it is essential to deposit the strain in one of the recognized depositories who would give a registration number to the strain which should be quoted in the patent specification. This obviates the need of describing a life form on paper. Depositing a strain also costs money, but this is not much if one is not dealing with, for example cell lines. Further, for inventions involving genes, gene expression, DNA, and RNA, the sequences also have to be described in the patent specification as has been seen in the past. The alliances could be for many different objectives such as for sharing R&D expertise and facilities, utilizing marketing networks and sharing production facilities. While entering into an R&D alliance, it is always advisable to enter into a formal agreement covering issues like ownership of IP in different countries, sharing of costs of obtaining and maintaining IP and revenue accruing from it, methods of keeping trade secrets, accounting for IP of each company before the alliance and IP created during the project but not addressed in the plan, dispute settlements. It must be remembered that an alliance would be favorable if the IP portfolio is stronger than that of concerned partner. There could be many other elements of this agreement. Many drug companies will soon use the services of academic institutions, private R&D agencies, R&D institutions under government in India and abroad by way of contract research. All the above aspects mentioned above will be useful. Special attention will have to be paid towards maintaining confidentiality of research.[1–18] The current state of the pharmaceutical industry indicates that IPR are being unjustifiably strengthened and abused at the expense of competition and consumer welfare. The lack of risk and innovation on the part of the drug industry underscores the inequity that is occurring at the expense of public good. It is an unfairness that cannot be cured by legislative reform alone. While congressional efforts to close loopholes in current statutes, along with new legislation to curtail additionally unfavorable business practices of the pharmaceutical industry, may provide some mitigation, antitrust law must appropriately step in.[21] While antitrust laws have appropriately scrutinized certain business practices employed by the pharmaceutical industry, such as mergers and acquisitions and agreements not to compete, there are several other practices that need to be addressed. The grant of patents on minor elements of an old drug, reformulations of old drugs to secure new patents, and the use of advertising and brand name development to increase the barriers for generic market entrants are all areas in which antitrust law can help stabilize the balance between rewarding innovation and preserving competition.[20] Traditional medicine dealing with natural botanical products is an important part of human health care in many developing countries and also in developed countries, increasing their commercial value. The world market for such medicines has reached US $ 60 billion, with annual growth rates of between 5% and 15%. Although purely traditional knowledge based medicines do not qualify for patent, people often claim so. Researchers or companies may also claim IPR over biological resources and/or traditional knowledge, after slightly modifying them. The fast growth of patent applications related to herbal medicine shows this trend clearly. The patent applications in the field of natural products, traditional herbal medicine and herbal medicinal products are dealt with own IPR policies of each country as food, pharmaceutical and cosmetics purview, whichever appropriate. Medicinal plants and related plant products are important targets of patent claims since they have become of great interest to the global organized herbal drug and cosmetic industries.[22]

Some Special Aspects of Drug Patent Specification Writing patent specification is a highly professional skill, which is acquired over a period of time and needs a good combination of scientific, technological, and legal knowledge. Claims in any patent specification constitute the soul of the patent over which legal proprietary is sought. Discovery of a new property in a known material is not patentable. If one can put the property to a practical use one has made an invention which may be patentable. A discovery that a known substance is able to withstand mechanical shock would not be patentable but a railway sleeper made from the material could well be patented. A substance may not be new but has been found to have a new property. It may be possible to patent it in combination with some other known substances if in combination they exhibit some new result. The reason is that no one has earlier used that combination for producing an insecticide or fertilizer or drug. It is quite possible that an inventor has created a new molecule but its precise structure is not known. In such a case, description of the substance along with its properties and the method of producing the same will play an important role.[23] Combination of known substances into useful products may be a subject matter of a patent if the substances have some working relationship when combined together. In this case, no chemical reaction takes place. It confers only a limited protection. Any use by others of individual parts of the combination is beyond the scope of the patent. For example, a patent on aqua regia will not prohibit any one from mixing the two acids in different proportions and obtaining new patents. Methods of treatment for humans and animals are not patentable in most of the countries (one exception is USA) as they are not considered capable of industrial application. In case of new pharmaceutical use of a known substance, one should be careful in writing claims as the claim should not give an impression of a method of treatment. Most of the applications relate to drugs and pharmaceuticals including herbal drugs. A limited number of applications relate to engineering, electronics, and chemicals. About 62% of the applications are related to drugs and pharmaceuticals.[1–24] CONCLUSIONS It is obvious that management of IP and IPR is a multidimensional task and calls for many different actions and strategies which need to be aligned with national laws and international treaties and practices. It is no longer driven purely by a national perspective. IP and its associated rights are seriously influenced by the market needs, market response, cost involved in translating IP into commercial venture and so on. In other words, trade and commerce considerations are important in the management of IPR. Different forms of IPR demand different treatment, handling, planning, and strategies and engagement of persons with different domain knowledge such as science, engineering, medicines, law, finance, marketing, and economics. Each industry should evolve its own IP policies, management style, strategies, etc. depending on its area of specialty. Pharmaceutical industry currently has an evolving IP strategy. Since there exists the increased possibility that some IPR are invalid, antitrust law, therefore, needs to step in to ensure that invalid rights are not being unlawfully asserted to establish and maintain illegitimate, albeit limited, monopolies within the pharmaceutical industry. Still many things remain to be resolved in this context. REFERENCES 1. Singh R. Vol. 1. New Delhi: Universal Law Publishing Co. Pvt. Ltd; 2004. Law relating to intellectual property (A complete comprehensive material on intellectual property covering acts, rules, conventions, treaties, agreements, case-Law and much more)

2. New Delhi: Department of Science and Technology (DST), Government of India; 2002. Anonymous. Research and development statistics. 3. New Delhi: Department of Scientific and Industrial Research, Government of India; 2002. Anonymous. Research and development in industry: An overview. 4. Bainbridge DI. New York: Longman; 2002. Intellectual property. 5. New Delhi: Universal Law Publishing Co. Ltd; 2004. Anonymous. The Design Act. 2000 along with Design Rules 2001. 6. New Delhi: Commercial Law Publisher (India) Pvt. Ltd; 2004. Anonymous. The Trademarks Act 1999 along with trade Marks Rules 2002. 7. New Delhi: Commercial Law Publisher (India) Pvt. Ltd; 2005. Anonymous. The Copyright Act 1957 as amended up to 1999 along with Copyright Rules 1958 and International Copyright Order 1999. 8. New Delhi: Universal Law Publishing Co. Ltd; 2004. Anonymous. The Geographical Indications of Goods (registration and protection) Act, 1999 along with Geographical Indications of Goods (registration and protection) Rules 2002. 9. New Delhi: Commercial Law Publisher (India) Private Ltd; 2005. Anonymous. The Patents Act, 1970 as amended by Patents (amendment) Act 2005. 10. Michaels A. 2nd ed. London: Sweet and Maxwell; 1996. A practical guide to Trade Mark Law. 11. Watal J. London: Kluwer Law International; 2001. Intellectual property rights in the WTO and developing countries. 12. Abbott F, Cottier T, Gurry F. London: Kluwer Law International; 1999. The international intellectual property system: Commentary and materials.Part I. 13. Beier FK, Schricker G. Munich: Copyright and Competition Law; 1996. IIC studies: Studies in industrial property and copyright law, from GATT to TRIPS - the agreement on trade related aspects of intellectual property rights.Max Planck Institute for Foreign and International Patent. 14. New York: WIPO Publication; 2001. Anonymous. WIPO intellectual property handbook. policy, law and use. 15. Gutterman AS, Anderson BJ. London: Kluwer Law International; 1997. Intellectual property in global markets: A guide for foreign lawyers and managers. 16. Bently L, Sherman B. Oxford: Oxford University Press; 2001. Intellectual property law. 17. Angell M. The Pharmaceutical Industry.To Whom Is It Accountable? N Engl J Med. 2000;342:1902–4.[PubMed] 18. Lexchin J. Intellectual property rights and the Canadian pharmaceutical marketplace: Where do we go from here? Int J Health Serv. 2005;35:237–56. [PubMed] 19. Mrudula BS, Durgadevi NK, Madhavi BR, Tejeswi B, Durga PV. Intellectual property rights pinpoint at IPR spotlights coveted R and D. Drug Inv Today. 2009;2:197–201. 20. Glasgow LJ. Stretching the limits of intellectual property rights: Has the pharmaceutical industry gone too far? IDEA J Law Technol. 2001;41:227–58.

21. Gottlieb S. Drug firms use legal loopholes to safeguard brand names. BMJ. 2000;321:320.[PMC free article] [PubMed] 22. Kartal M. Intellectual property protection in the natural product drug discovery, traditional herbal medicine and herbal medicinal products. Phytother Res. 2007;21:113–9. [PubMed] 23. Subbaram NR. Hyderabad: Pharma Books Syndicate; 2003. What everyone should know about patents? 24. Shukla S. Patents: An Introduction. Indian Pharm. 2004;3:14–7.

SOME BURNING ISSUES IN INDIAN PHARMA INDUSTRY “Recent acquisition of Indian generic drug companies by MNCs has increased fears that the price of low-cost generic drugs will rise in India. The buy-outs will reduce domestic availability of many essential medicines; point out an internal assessment of the health ministry, Government of India. It is ironic that despite India supplying quality generic drugs around the world, the country has concerns about sufficient domestic drug supply and vaccines security. With the increasing acquisition of Indian companies by overseas drug corporations, there is a pressing need to rethink India’s drug strategy”. This statement was released by government of India before few months. Now what global honchos think about India? On a recent visit to India, Andrew Witty, global top boss - GlaxoSmithKline told “Indian has been slow in terms of innovation and needs a robust intellectual framework so that firms who invest have a certain level of certainty that they will be rewarded for risk. This presence of protection is necessary to recoup investment innovation may it be patents, data exclusivity or any other mechanism”. He was addressing organization of pharmaceutical producers of India (OPPI) and said “cost of failures has pushed up drug process to billions of dollars”. After having established itself as a global leader in IT and pharma generics, India is not only poised to emerge as the world's auto factory and medical tourism hub, but also as a global peacemaker as it can offer the world the great Indian dream that strikes the ideal balance between materialism and spiritualism; management guru Philip Kotler has said in a Hyderabad based function recently in India. He further told “you certainly have the brain power; you have schools like IITs and IIMs. India has done a tremendous job with IT and generic drugs. But what will India be selling five-six years from now”? Pharmaceutical industries are at cross roads owing to rapidly drying pipeline with fewer potential molecules at various phases of clinical trials, yet to see their names in prescriptions. Research and development and subsequent patent benefits are the main source of the economic value that the pharmaceutical industry creates for its survival in market and to further boost itself to engage in the very aim of research and development. It is therefore not surprising that the evidence of a major decline in R&D productivity has led to a sense of catastrophe. Drug discovery and development is a long voyage requiring whooping fund besides involvement of mélange of people from varied backgrounds, and facilities. If it does not fructify then there is huge loss in terms of efforts, resources and perhaps most importantly capital. Though there is technological advancement which is being employed in

various steps and processes during drug development and discovery like genomics, proteomics, combinatorial chemistry (CC), DNA shuffling, combinatorial biosynthesis, bioinformatics, highthroughput screening (HTS), incorporation of robotic stuff, but pharmaceutical industries are witnessing a tough time due to shrinking R and D pipeline, poor productivity, ever increasing cost of drug discovery programs and cash crunch. High failure rate and less innovative pipeline raise concerns on the robustness of R and D process. There are hosts of new ways industries are trying to get around it. Pharmaceutical companies are on the spree of merging or acquisition or some sort of joint venture in an attempt to make profits while churning out some fruitful products/molecules for society. This approach has worked successfully outside the pharma industry and some companies, given the long lead times to market and the intrinsically scientific nature of the drug discovery process, new models that have worked for technology companies such as IBM and for consumer product manufacturers like P&G may not be entirely appropriate for the pharmaceutical industry. As far as cost pressures are concerned, the pharma industries are very aggressively rationalizing cost structures across board. Layoffs, reorganization, shutting down of facilities, outsourcing/offshoring, and new commercial models are among the many changes being implemented.The decade-old promise of the Human Genome Project in the form of pharmacogenomics is not yet living up to its full potential, while the diseases of old age represent a new pipeline but the complexity of these illnesses – Alzheimer’s, Parkinson’s, cancer, cardiovascular, even obesity and aging itself – seem to require something more than pharmaceutical intervention. Macromolecular medicine using peptides, proteins, and genetically modified antibodies are struggling to get out of clinical trials and into the clinic. Moreover there is escalating pressure from regulators. Chinese and Indian drug makers have taken over much of the global trade in medicines and now manufacture more than 80 percent of the active ingredients sold worldwide but these countries also lagging behind when it comes to churning out new molecules. With a large number of drugs nearing patent expiry and fewer blockbuster molecules; major pharma companies will lose about 15 percent of their revenues. It is expected that around $81.5 billion worth of branded products will loose patent privilege. November 30, 2011 has witnessed Lipitor (world’s largest selling pharmaceutical brand) loosing its patent in US and coming out of comfort zone. Atrovastatin containing this blockbuster brand is owned by pharmaceutical giant Pfizer. In 2007, the US Food & Drug Administration (USFDA) approved just 17 new drug products for market, the lowest number since 1983. Looking at this scenario of pharma industries, mostly engaged in discovering drugs from synthetic sources, looking back into nature in a full fledged way will be a silver line. Human history is replete with several uses of natural resources, plants being the cardinal ones. It is the beauty of plants to provide phytoconstituents that serve as nutrients, essential factors, therapeutics and toxins which have given them an invaluable role in human development. Most of the therapeutic agents which are in clinical practices have been derived from natural sources directly (involving only extraction and purification steps) or indirectly (synthetic offspring-after deciphering the structure of the natural molecule or semi-synthesis of altogether a new skeleton from metamorphosis of natural molecule).

Traditional medicines are gaining recognition around the world for their efficacy in the treatment of adult and degenerative diseases. Natural medicines and medical plants hold promise of being the key to the development of new drugs. Perhaps it would have been difficult for human being, had it not been done by morphine, reserpine, aspirin, ephedrine, taxol, quinine, digitalis etc. They are the molecules which helped mankind time to time and chemists to develop more suitable synthetic siblings or offsprings. Researchers in natural medicine have played a significant role in maintaining and strengthening human health and will continue to do so in the future. Ethnopharmacology and natural product drug discovery remains a significant hope in the current target-rich, lead-poor scenario. A quick look into history reveals that for each of the pioneer molecule, for combating almost every class of diseases, nature played incomparable role. Despite this fact, turning back to nature by pharmaceutical industries is beyond comprehension and something uncalled for.