Patent, Indian Pharmaceutical Industry and Health Care

Public healthcare is one of the major issues in developing countries. In these countries, a significant part of the population is below poverty and is affected by several infectious diseases. Still they have little or no access to drugs required by them. The MNCs dominate the pharmaceutical industry worldwide, but India, due to its extraordinary growth of the indigenous sector has limited the dominance of MNCs.

We have taken up the issue of Indian pharmaceutical industry because it has become one of the important source of producing generic drugs and exporting to the developing countries. Indian companies, under process patent started producing patented drugs by different process, most of them at competitive price and quality matching the best in the world. Hence generic drugs produced by Indian companies at prices among lowest in the world, imposed serious threat to the MNCs, which charges very high prices for the similar drugs. Introduction of TRIPS has been a debatable issue. TRIPS were set-up to avoid ‘free rider’ problem. If developing countries do not provide product patent, then they can free ride on the innovations that takes place in the developed countries.

Intellectual Property Regime (IPR) had little impact on most of the Indian industries but had significantly affected the pharmaceutical sector. Process patent brought about significant structural changes and growth in the pharmaceutical industry in India. India became self-reliant in drugs. The pharmaceutical industry grew at a faster rate and established a strong position in the world market. From being a net importer of drugs in the early 1970s, the industry has become a net exporter. Before the introduction of TRIPS, forty-seven countries despite providing process patent, could not develop the pharmaceutical industry, but due to entrepreneurial spirit of the indigenous private sector, supported through public investment in R&D and manufacturing accounted for success of the Indian pharmaceutical industry.

TRIPS promise to promote the R&D, but it also imposes threat to rise in price. The cost hence, outweighs the benefit from it. The new patent law will, more adversely affect developing countries other than India, as Indian pharmaceutical industry has already established a strong position in the world market. Moreover, developing countries in spite of low prices of generic drugs, struggling for the availability of modern drugs. Implementation of product patent from January 1,2005 would worsen the situation. Doha declaration recognized the drawbacks of TRIPS and provided some flexibilities that would ease the pressure, but still the problem of developing countries is far from being solved.