• The term patent usually refers to the right
granted to anyone who invents any new,
useful, and non-obvious process, machine,
article of manufacture, or composition of
matter. Some other types of intellectual
property rights are also called patents in some
Patients win Patent War
Life-saving medicines to become affordable as
two landmark rulings favour cheaper versions
of patented drugs
• It's double trouble for global pharma companies
in India. On April 1, a Supreme Court bench
comprising Judges Aftab Alam and Ranjana Desai
dismissed Swiss drug major Novartis AG's seven-
year-old plea seeking patent protection for its
blood cancer drug sold as Glivec.
• The court held that Glivec was not the outcome
of an invention but a known substance as laid
down in the Indian Patents Act, 1970.
WHY SC DISMISSED NOVRATIS PLEA.
• Abuse of the patent system must be checked
to ensure affordable pricing.
• Availability of the medicines to the poor
patients must get priority.
• Slightly modification of the old and existing
drugs do not warrant patents.
• Natco v/s Bayer was the first case of
compulsory licensing being obtained in India
in pharmaceutical field of discipline
• International drug manufacturing firm Bayer
Corporation and Indian pharmaceutical
company Natco Pharma Limited
• Bayer obtained a patent on Nexavar.
• The players of this case are:
Bayer Corp – The Patentee
NATCO - The Applicant
• Ms Bayer Corp is an innovative drug
multinational giant based at Germany.
• Invented a drug named ‘SORAFENIB‘.
• Life extending drug to be used in liver and
kidney cancer treatment
• Brand name 'NEXAVAR'
• Indian generic pharmaceutical company
• Natco filed an application with the Bayer
Corporation for the Voluntary license of the
drug Nexavar (Sorafenib) with reasonable
commercial terms and conditions.
• Received a license from the Drug Controller
General of India for manufacturing the drug in
bulk and marketing in form of tablets in April
• The drug Nexavar (Sorafenib) is the patented
product of Bayer Corporation.
• Life extending drug to be used in liver and
kidney cancer treatment
• Natco, a generic drug manufacturing company
requested Bayer for giving it a voluntary license.
• The request was denied and so Natco filed an
application in the Controller of Patents Court for
grant of a compulsory license.
• In accordance with the provision of Indian Law’s
Section 84 of the Patent Act, the Indian Controller
of Patents started with competing claims of both
the patentee (Bayer) and the compulsory license
NATCO VS BAYERS
• The Intellectual Property Appellate Board (IPAB) endorsed the
Government's decision to allow India's Natco Pharma to make
inexpensive copies of German multinational Bayer's anti-cancer
drug Nexavar under a Compulsory Licence (CL)-the first to be issued
• But the issue is far from conclusively settled yet. Bayer is to
challenge the IPAB order in the Bombay High Court to defend its
Intellectual Property (IP) rights. Its contention is that the order
weakens the international patent system and endangers research.
• Consequently, more legal battles on patents were on the cards
apart from the ongoing ones such as that of US drug firm Pfizer
against Cipla over the alleged infringement of its patent on anti-
cancer drug Sutent in India; that of Bayer against Natco over its
patent on anticancer drug Nexavar; and of Bristol-Myers Squibb
against Natco over its patent on another anti-cancer drug.
• The legal battle in which Novartis was pitted against several
Indian generic drug makers such as Cipla, Hetero, Ranbaxy
and Natco began in 2005 when the Mumbai-based Cancer
Patients Aid Association (CPAA) challenged the Swiss firm's
application for patenting Glivec, made in July 1998. CPAA
contended that Novartis was trying to patent a variation of
an existing drug, not allowed under Indian patent laws.
• Section 3(d) of the Indian Patents Act, 1970, prohibits the
grant of patents to new forms of known substances. "The
purpose of the section is to ensure that patent monopolies
are not extended and generic versions delayed, unless the
new form results in enhanced efficacy,"
• Under World Trade Organization's Trade Related
Aspects of Intellectual Property Rights (TRIPS), to which
India is a signatory, patents allow companies 20-year
exclusivity on manufacture and distribution. Without
competition, an exclusive marketer could price a
medicine beyond the reach of patients.
• So, companies are allowed to make affordable copies
without compensating the innovator after the 20-year
period. The point of contention for global majors is the
amendment India made to safeguard against frivolous
patents and 'evergreening'.
VERDICT OF THE CASE
• Bayer had disputed the Government's decision to grant a CL
by ordering Natco to sell the cancer drug at Rs.8,800 for a
month's therapy (Bayer's drug cost Rs.2.80 lakh for the
same dosage) and pay 6 per cent royalty to Bayer on total
sales. "In three years, Bayer has not taken any steps to
revise the marketing strategy and cut the price of the
product," IPAB directed Natco to increase the royalty to 7
• The applicant Natco has very limited rights to manufacture
and commercially sell the drug .
• Natco cannot sublicense to another party. It is a non-
assignable and non-exclusive license with no right to import
• The compulsory licensed drug can be sold only
for the treatment of liver and renal cancer.
Natco cannot use this license for alternate or
subsequent use of the drug.
• Natco, as committed before, has to provide
the drug free of cost to at least 600 “needy
and deserving” patients per year.
• Natco cannot or it has no right to “represent
privately or publicly” that the product
manufactured by it is the same as Bayer’s
• In light of the IPAB ruling, the Government will grant more CLs. The
Department of Industrial Policy and Promotion is already
considering the grant of CLs for three more anti-cancer drugs.
• Price will fall as more generic version become available.
• They say that the rulings are likely to strain the relationship
between Indian firms and their global counterparts operating in the
Rs.72,000 crore Indian drug market.
• India's image as an investment hub could, however, suffer in the
aftermath of the rulings. Innovator companies will not feel secure
investing in a country where their extensively researched products
could be subject to CLs. Bayer says the cost of inventing and
developing a new medical entity like Nexavar is about Rs.11,775
• More legal battle will come up.
SOLUTIONS FOR THE FUTURE
• The way out for the Government is to evolve a price
mechanism wherein the drugs made by MNCs are sold
alongside those made by Indian companies at different
prices. In a move that can possibly put an end to the
• The solution is either a cross-subsidy model where the
rich pay the full price and the poor pay a subsidised
price or the Government buys for the poor and
supplies through government hospitals, But such a
policy will distract from the grant of CLs and, in turn,
delay the entry of low-cost generic versions.