The doors seem to have opened for more domestic drug companies to seek compulsory licences, say industry experts, after the Centre recently reiterated that it would assess each case for a CL independently, under the Indian Patent Act, that is equipped to handle such issues.

A compulsory licence (CL) allows a third party to make similar versions of an innovative medicine, on the payment of a royalty to the innovator, especially against the backdrop of a public health concern.

Late last year, the Department of Industrial Policy and Promotion (DIPP) had initiated a discussion across sectors and countries on conditions that could trigger a CL – concerned among other things, that no Indian company had pursued this path.

At present only two local drug-companies, Hyderabad-based Natco and Mumbai's Cipla have applied for CLs.

But with the road ahead to be decided on a “case-by-case” basis, more cases for CL seem to be in store, pharma industry representatives indicated.

Timeline concerns

Though the CL issue divides the pharmaceutical industry along traditional lines, both domestic and multinational companies seem to be happy that no additional guidelines have been brought in.

But domestic drug makers underline the need for a definite timeline to resolve CL cases. “The timeframe is too liberal and needs to be more specific,” Lupin's President (Finance and Planning), Mr S. Ramesh, told Business Line .

Indian consumers would be left disadvantaged if such cases were not resolved speedily, especially in the event of a health concern. This needs to be done, keeping in mind the effort taken in bringing out an innovative medicine, he added.

Local drug companies are able to apply for a CL only three years after a patent is given on a drug. Subsequently, the innovator company has six months to respond. And even after that there is uncertainty on whether or not the CL will be granted, observed a representative from Cipla.

For a local company to be ready to research and invest in making a similar version of the drug, it needs to have some lead time, else consumers will not have access to new medicines in the market, he added.

Echoing similar concerns, the Indian Pharmaceutical Alliance's Mr D.G. Shah, however said, it was good that the Government retained its flexibility to grant a CL and decide on the royalty, depending on individual medicine prices.

Mixed signals

At the multinational end of the spectrum though, the Organisation of Pharmaceutical Producers of India's President, Mr Ranjit Shahani, points out, that not having additional guidelines is positive. However, the Government was sending out “mixed signals” to the global pharmaceutical industry, through reports that it seeks to restrict automatic approval for FDI (foreign direct investment) in the pharmaceutical sector only to greenfield projects.

“What is needed is a ‘complete ecosystem ' which encourages investments by the innovative pharmaceutical industry. If industry is to strategically plan, then the way forward cannot be built on an uncertain foundation,” he added.

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