WTO and Its Effect on Indian Pharmaceutical Companies

WTO and its effect on Indian Pharmaceutical Companies

Economics Project Semester 2

Flow of Presentation• Overview of WTO• Overview of WTO Agreements• TRIPS, Impact and Current Issues• Indian Scenario• TRIPS v/s Indian Pharmaceutical Companies• Post 1970, Pre 2005• Features of the Patents Act 1970• Effects of TRIPS • Implications of TRIPS• Impact after 2005• Options Available• Impact of WTO Agreements• Future of Indian Pharmaceutical Companies

Overview of WTO

• Only organization dealing with rules of trade between nations.

• Fact File• Functions of WTO• Structure of WTO• The Secretariat• The Multilateral trading system

Overview of WTO Agreements

• Tariffs• Tariff Quota• Non-Tariff Barriers• Import Licensing• Rules for valuation of goods at customs• Pre-shipment inspection• Rules of origin• Investment measures

TRIPS

Trade-Related Intellectual Property Rights (TRIPS)• Copyrights and related rights • Trademarks • Geographical Indications • Industrial Designs • Patents • Lay out designs of integrated circuits • Protection of undisclosed information (trade secrets)

Statistics

PATENTS 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Application Filed 4824 8503 10,592 11,466 12,613 17,466 24,415 28,882

Application Examined 2824 4264 5104 9538 10,709 14,813 11,569 14,119

Application Granted 1881 1318 1591 1379 2469 1911 4320 7359

Statistics

TRADE MARKS 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Application Filed 66,378 84,275 90,236 94,120 92,251 78,996 85,699 1,03,419

Application Examined 42,500 70,115 1,59,735 2,49,003 89,958 72,091 79,200 85,185

REGISTERED 8010 14,202 6204 11,190 39,762 45,015 1,84,325 1,09,361

Contd...

Trade-Related Intellectual Property Rights (TRIPS)

• GEOGRAPHICAL INDICATION 39 Geographical Indications products have been

registered since September, 2003. These include Darjeeling Tea, Chanderi Saree, Pochanpally Ikat, Solapur Chaddar, Mysore Silk, Kullu Shawl, Bidriware, etc

Contd...

Trade-Related Intellectual Property Rights (TRIPS)

• DESIGNS– The filing of applications for Design has increased from 2874 in

1999-2000 to 5372 in 2006-07

– The number of applications examined has also gone up to 5179 in 2006-07 against the figure of 2067 in 1999-2000

– The number of Designs registered has also increased from 1382 in 1999-2000 to 4431 in 2006-07

TRIPS

• TRIPS and Public Health

• TRIPS and Patents

IMPACT of TRIPS

• TRIPs Agreement favours the developed countries

• TRIPs extends to agriculture

• TRIPs extends to Micro Organism

INDIAN SCENARIO

• 20000+ companies

• Millions employed

• Highly efficient industry

• Affordable

• Rise in GPI is much less

• Self sufficient (70%)

• 8 mn estimated HIV+

• Officially 3.5 mn

• Highest in the world

• 85% are men

TRIPS v/s INDIAN PHARMACEUTICAL COMPANIES

• Prohibitive Costs

• Recolonisation

• Export hurdles

• US interventions


• Prohibitive Costs

• Cost of treatment is around US $ 300 p.m.

• Individuals below US $ 100 p.m. cannot afford treatment.

• Switzerland: Deaths due to AIDS lowered from 686 (1994)

to 100 (1999)

• Only 500/ 10000 get treated


• Recolonisation

• Worldwide minimal standards for patent protection

• Essential to enter global markets

• This will eradicate Indian companies from Indian Markets


• Export hurdles

• Attractive for other countries to buy high-quality products from India

at reasonable prices.

• National and International patent rules

• A patent constitutes the sole right not only to produce a product but

also to import it

• It was ensured that the cheaper drugs did not enter developed

markets


• US interventions

• The generic drugs will be poorly paid

• The TRIPS pact ensured that cheaper drugs did not enter

markets

POST 1970 AND PRE 2005

• By 1994 pharmaceutical units reached 20000

• Investment- 1973- Rs. 225 Crore to 1999- Rs. 2500 Crore

• Bulk Drug- 1980-81- Rs. 240 Crore to 1999-00- Rs. 3777 Crore

• Formulations- 1980-81- Rs 1200 Crore to 1999-00- Rs 16000 Crore

• Exports- 1980-81- Rs. 46 Crore to 1999-00 Rs. 6631 Crore

• Profiatability- 1969-70 - 15% , 1990-91- 1% , 1998-99 - 8%

• 7/10 MNC top companies. In 2000, 6/10 top companies were

Indian

Indian Patents Act, 1970History

Features of the Patents Act 1970

• Process patent in lieu of product patent for pharmaceutical products.

• Term of the patent - 7 years from DOA.• No constraints on exports. • The patent holder was under obligation to use

the patent. There was also provision for revocation of patent for non-use.

TRIPS

Trade-Related Aspects of Intellectual Property Rights

EFFECT of TRIPS ON INDIAN PHARMACEUTICAL INDUSTRY

• Implementation of product patents by January 5, 2005

• A patent term of 20 years (against the existing term of 7 years in India) implemented from Jan 5, 2001.

• EMRs for a period of 5 years are granted to companies for products that are patented after 1995 and are patented in any other country already.

• The burden of proof has been shifted from the plaintiff to the defendant.

IMPLICATIONS of TRIPS

• Patents granted for both- Product and Process• 20 years term applicable in all countries, against 7

year previously.• Grant of Patents.• Incase of Disputes.

IMPACT AFTER 2005

• A stronger patent regime or product patents will be uniformly applicable on the pharmaceutical innovations among the member countries of the WTO.

• Good Manufacturing Practices set by WHO.• Reverse Engineering• Bolar Provision• Compulsory Licensing

OPTIONS AVAILABLE in WTO REGIME

• Manufacture off patented generic drugs, • Produce patented drugs under compulsory licensing • Produce patented and other drugs on contract basis, • Collaborate with multinationals to engage in R&D,

clinical trials, product development or marketing the patented product on a contract basis.

IMPACT OF WTO AGREEMENT

• Closure of Industries on a large scale

• Indian Firms concentrating on generic products

• Opening of R&D bases by foreign multinational

• Standardization of Products.

• Increasing visibility in the Contract Research and

Manufacturing Services (CRAMS) space

Future of Pharmaceutical Industry in India:

INDIAN PHARMACEUTICALS BY 2011

• Expected to double to USD14.7billion • Domestic market driven by : – Aging population,

– Increase in consumption of life style disorder drugs,– Improving healthcare awareness of the economically

growing population– New product launches

• Exports to grow at 20% CAGR . • Contract research to India to grow to US$2 -3 billion

(2-3% of global R$D spend)

GENERICS SEGMENT

• Mergers of Pharmacies, wholesalers - increasing bargaining power, Corporate mergers, Restructuring of product sourcing / supply chain .

• Value to drift towards cost efficient, low cost countries. • Significant business in less regulated market or old generics with scale and technology superiority • New Generic opportunities are becoming highly complex and

the business shall migrate to strong India R&D players • The diversity of product dosage forms, strengths, packaging

and regulatory challenge across continents offers a competitive advantage for modern Indian companies.

BIO-PHARMACEUTICALS

• India's fledging biotech industry is expected to grow still further to reach a value of approximately USD5.37 billion in 2010

• Revenues of Indian Biopharmaceuticals are expected to reach approximately US$3.90 billion by 2010

• Monoclonal antibodies, human and animal biologics will be the limelight products in the future.

• The areas of clinical trials, contract research and government support will be the future growth drivers for the industry.

• Contract Manufacturing and Contract Research are expected to scale up to USD2.5billion.

• The Indian CMO market stood at USD869m in 2007. It is expected to see a CAGR of 41.7% to reach USD2.4 billion by 2010.

• The loss of patent protection by 2009 of almost USD80 billion worth of top selling drugs will be the main driver of this growth.

• India has the highest number of USFDA approved manufacturing facility outside the US.

Future Outlook

• ExportsIndian pharmaceutical market, valued at USD8.16 billion in 2006-07,

• CAGR of 12.36% since last five years, whereas exports grew at a higher CAGR of 20% to reach USD6.15 billion in 2006-07.

• While the domestic market is expected to scale up to USD14.5 billion by 2011-12 at a CAGR of 16%

• Exports are projected to jump much faster at 35% and reach USD25 billion.

• Exports Contributing over 63% of the total production ,up from 43% in 2006-07.

Thank You

WTO and Its Effect on Indian Pharmaceutical Companies

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