Compulsory license forces MNC pharma to rework India plan

Compulsory license granted to Natco has left the Indian pharma industry with a hard choice to make - cut prices, or quit selling the drug. To counter this, drug-makers are changing strategies, reports CNBC-TV18's Archana Shukla.
 
Historic moves have far reaching consequences. Two months after Natco was given a compulsory license for kidney cancer drug Sorafenib, a price war is underway.

Cipla , which already had a cheaper generic in the market despite the ongoing patent litigation slashed prices by 75%, undercutting Natco's pricing, then did the same thing for two other cancer drugs.

"India with a 1.3 billion population cannot afford a monopoly in healthcare and in drugs. We would like to have a very humanitarian approach to cancer as we did earlier with HIV AIDS," says YK Hamied, chairman, Cipla.

Some are drawing the battle lines, but others, like a few multinational drug firms, warn that this environment is not conducive for them.

Ranjit Shahani, president, Organisation of Pharmaceutical Producers of India, says "It strikes the root of innovation. It is difficult to operate where patented drugs are easily copied. MNC firms will need to assess the laws of the country."

It's a situation Thailand faced in 2007.

The Thailand government came under stiff political pressure from developed nations after it granted compulsory license for a blood cancer drug. Global drug makers waged publicity battles, and withdrew drugs from the Thai market, causing it to collapse. But will history repeat itself in India?

Experts say unlikely. The Rs 64,000 crore Indian drug market, which grows at over 13% per annum, is too big to walk away from. Most experts say MNC Pharma will rework their India strategy. In the past, these firms have continued to bring in new drugs through local alliances even as they fought tooth and nail on patent issues.

"There are other ways to deal with accessibility of medicines, tiered pricing can be one," says Shahani.

Then there are those MNCs that have been ready for such a situation.

In a conference call in February 2012, a Roche spokesperson said, "Our prices are probably too high for the Indian market. We have entered into a partnership with a local organization. We are going to do late stage manufacturing in India as we need to adjust prices substantially."

The compulsory license regime is just another example of evolving commercial dynamics. The result of Bayer's appeal against the license given to Natco will define how global players approach the Indian market. In the meantime, the Indian consumer will get cheaper medical aid.