Compulsory licensing is when a government authorizes a party other than the patent owner to produce the patented product or process, without the patent owner's consent.

1. India’s First Compulsory License
CL issued to Natco Pharma
BY……….
Harishankar Sahu
Hemant Chandwani
Dhruv Malha

2. Headlines
• New Delhi – India’s Intellectual Property Appellate Board (IPAB) upheld the
country’s first compulsory licence on a pharmaceutical product.
• The much-awaited verdict by Justice (Ms) Prabha Sridevan upholds the
compulsory licence issued to Hyderabad-based Natco Pharma Ltd, an Indian
generic drug manufacturer, which sells a much cheaper version of German
pharmaceutical company Bayer AG’s kidney and liver cancer drug Nexavar in
the market.
• Bayer on 5 March announced it will appeal the decision (IPW, Developing
Country Policy, 5 March 2013).
Vs.

3. Background
• Bayer holds an Indian patent for the chemotherapy drug sorafenib
tosylate, sold under the trade name Nexavar. On 9 March 2012, the then
Indian Patent Controller issued the first-ever compulsory licence to Natco
Pharma to manufacture an affordable generic version of sorafenib
tosylate.
• Bayer promptly filed an appeal against the compulsory licence order
before the IPAB in Chennai. Meanwhile, the CL had a dramatic effect on
the drug’s price – bringing it down to 8,800 rupees (approximately USD
160) for a month’s dose – a fraction of Bayer’s price of 280,000 rupees
(approximately 5,098 USD). Under the terms of the compulsory licence,
however, Bayer got a six per cent royalty on sales by Natco.

4. • The IPAB decision comes at a time when the final verdict on another
landmark case involving patents and pharma is awaited in India. Novartis
is seeking patent protection for the most recent formulation of its
blockbuster leukemia drug, imatinib, sold as as Gleevec in the United
States and Glivec in India.
Background (Con.)

5. • The mechanism of compulsory license, which has generated a lot of heat
globally, is embedded in India’s patent law. Section 84 of India’s Patents Act
provides that an interested person may apply for a compulsory license to
work the patented invention on any of the grounds.
• Granting the CL to Natco reinvigorated the old battle between multinational
pharmaceutical companies and the country’s generic drug manufacturers.
• Sridevan cited affordability and product access as the reasons for the
decision to dismiss Bayer’s appeal against the compulsory licence (CL).
However, the Chennai-based IPAB hiked the royalty which Natco would have
to pay to Bayer (under the terms of the CL) from 6 per cent to 7 per cent.
• Mr. Madineedi Adinarayana, company secretary and general manager
of Legal and Corporate Affairs at Natco Pharma Ltd, told Intellectual
Property Watch that the IPAB decision is “very significant” and he is
“happy” that the CL had been upheld. But, he said, “This is unlikely to be
the end of the legal battle.”
Case

6. • Bayer spokesperson had said, “We strongly disagree with the conclusions
of the Patent Controller of India and have appealed his order on May 4th
2012 with the Intellectual Property Appellate Board. We will rigorously
continue to defend our intellectual property rights which are a
prerequisite for bringing innovative medicines to patients” (IPW, Public Health,
20 May 2012).
Case

7. Conclusion
• Through the whole case we relieve with the decision by the
IPAB to uphold India’s first compulsory license. The decision
confirms that the Indian Patent Office is able to use all the
means legally at its disposal to check the abuse of patents and
open up access to affordable versions of patented medicines.”