INDUSTRY:An
Overview
By J P Ghose Dastidar,
General Manager,Dabur India Limited
INTRODUCTION
No
patent is granted in India for the end product in the case of food, medicinal
items or chemical substances. Legal protection of such items only cover
the method or process of manufacture. This means an imitator can escape
the charge of infringement by producing a product already patented with
minor variations in the process of production.
WHAT IS A PATENT
A
patent may be viewed as contract between a nation and the inventor giving
the inventor exclusive right to manufacture, use or licence his invention
for a specific period and in exchange the inventor describes the details
of his invention to permit those skilled in the art to employ it and it
rewards the patentee a legal monopoly to make use of his invention to his
economic benefit.
WHAT ARE PATENTABLE
Some
examples are methods of detection/diagnosis or treatment of disease, analytical
methods, methods of agricultural cultivation, set of cards or games.
INDIA JOINING GATT
Indians
were very good in Process Technology and Indian Scientists could develop
their own process once any new molecule was introduced overseas and the
molecules were introduced in Indian Market within a span of 3 to 5 years.
This is because India was not a signatory to the Paris Convention and was
not a member of GATT at that time. New molecule introduction with minor
variations in process technology by Indian companies was called as PIRACY
by original Researchers.
However,
with the policy of Industrial Liberalisation and to bring a global discipline,
a number of issues connected with the International agreement on trade
related Aspects of Intellectual Property rights have been discussed and
the negotiations concluded in 1993. The outcome of the final Urugway round
of discussion is the GATT Agreements, 1994, the final text signed by 115
countries who are member of WTO.
TERMS OF GATT
The
GATT agreements cover aspect of international movements of goods and services
alongwith protection and enforcement for technological innovation. The
salient features of GATT are :-
Trade related intellectual
property rights (TRIPS)
Trade related investment
measures (TRIMS)
Trade in services - agreement
(GATS)
The
objective of the TRIPS agreement is protection and enforcement of intellectual
property rights to promote technological innovation and to the transfer
and dissemination of technology for the mutual advantages of producers
and users of technological knowledge. It contains specific provisions and
scope of Patentability of Drugs and agrochemicals. The TRIPS agreement
also provides that patents shall be available and patent-right enjoyable
without discrimination as to the place of invention, field of technology
and whether products are imported or locally produced. On fulfilment of
certain conditions Exclusive Marketing Rights (EMR) will be allowed to
the patentee to protect the innovations or product patent and prevents
others from making, selling or distributing such products even if manufactured
by alternate process.
Since
Patentability extends to products or process the terms of the patent would
be applied for twenty years for Product patent and then twenty years for
process patent, particularly in the chemical field including drugs and
pesticides. In the case of drugs and medicines, patents will be available
for its usage forms, dosage forms and their combinations. New process would
be patented and new dosage forms etc. would also be patented and thiskind
of monopoly protection in some forms or the other, would in a period of
10 to 15 years, cover almost 70/80% of turnover in the pharmaceutical industry.
TRANSITIONAL ARRANGEMENTS
Under
TRIPS agreement, developing countries including India are entitled to delay
the enforcement by ten years for amending their Patent rules and regulations.
Indian Drug industry shall have access to manufacture the drugs which are
currently underPatent as a result of filing application before 01.01.1995
in any country in the world and the off-patent drugs in the generic forms,
provided that the processing technology is developed in India.
Impact
of Patent Regime on Pharmaceutical Industry
The
specific fall out of the changes that would be made in the patent laws
on the basis of the provisions in the TRIPS agreement would be manifold.
The consumer will be hit by high prices and erratic availability of pharmaceuticals,
medicines etc. and the domestic industry would face the question of survival.
Impact on prices
It
is accepted that pricing includes developmental expenses. Beginning with
R&D expenses to the stage of plant and machinery, all expenses go to
the costing of finished product. But the amount recoverable on an annualised
basis is related to both the market forces and the laws of the land. The
main impact of the proposed globalisation of patents would be on the prices
of medicines which would go up several times higher making it extremely
difficult for the poor people of India to afford them.
Impact on availability
The
availability of new drugs from indigenous sources of the domestic companies
would be totally out of question. Dependence upon imports would go up.
Impact on Medium
& Small Scale Sector
The
existing industry, particularly in the medium and small scale sectors will
over a period of a decade or so after the introduction of new patent regime,
face serious de growth as they will have no possibility of taking up new
products. Even for the existing products or processes, new patents will
be taken, creating difficulties for companies to market their existing
products.
Impact on Technology
With
the acceptance of TRIPS, transfer of technology is likely to accelerate.
Most of the leading drug multinational companies are present in India having
substantial equity participation in their Indian counterparts. With the
policy permitting them to increase the share-holding, they have already
expressed interest in bringing their latest technologies to manufacture
additional bulk drugs to improve present facilities.
Indian
indigeneous sector have better opportunities to enter into technical collaboration
with the firms unrepresented in India.
New Drugs
Most
of the new drugs permitted during the last five years are still covered
by the patent and their formulations in India are manufactured from imported
bulk drugs. The sources of such imports are mostly other than the original
manufactures and are likely to dry out as a result of GATT. Their continued
availability will depend upon the development of alternate technologies
or on technical collaboration agreement.
Impact on R & D
To
establish an indentity in the International market, Research and Development
activities have to be strengthened with substantial investment by Indian
firms. As a result of the availability of the patents in drugs and medicines,
Multinational companies will not be interested to establish separate R
& D centres in India. In fact, it will be difficult for domestic companies
to be able to match multinational companies potential in R & D sector,
sales turnover and world-wide infrastructure for patenting and promotion
of their products. Further to achieve significant performance on the basic
R & D front in India, Government will have to come forward in a big
way to support public and private efforts on a long term basis.
Future Strategies
To Face New Challenges
Now
that the GATT is a reality and will come into force within agreed time-frame,
the Indian companies are visualising the best possible means to encounter
the situation.
The
more forward looking and internationally minded among them have evolved
a two-fold strategy :-
To strengthen R & D
capabilities during the 10-years transitional period
To enter into strategic
alliance with research-based companies abroad for setting up joint
ventures
in India or licensing in patented new Drugs.
Both
the Government policy of granting automatic approval for joint ventures
in which foreign investment is up to 51 percent (which is applicable to
the Drug industry) and the new incentives being considered for total R
& D should go a long way to encourage indigenous companies to adopt
the future strategy.