A couple of more news reports have emerged on the threat by Novartis to move its investments to China, in the wake of the Glivec patent litigation. In an earlier post, SpicyIP had noted:
“Evoking the name of China is a clever move and one aimed at jolting our Ministers and bureaucrats into action. I couldn’t help being amused at the paradox though. China’s IP regime being lauded by an MNC?? The sun must have risen in the West today!! Just a few months back, the US initiated WTO consultations with China over its poor IP enforcement record.”
The following truths now emerge:
1. Novartis had no immediate plans to set up an R&D center in India. Rather, their plan was to capitalise on India’s reputation as a back office (IT backend support center!!): See this interview of Ranjit Shahani, MD, Novartis India by PB Jayakumar and Shyamal Majumdar of the Business Standard. I reproduce an extract below:
Q. Will the ongoing controversy affect your plans of setting up an R&D centre in Hyderabad?
Ans. Neither Novartis AG nor Novartis India announced plans to set up an R&D centre in India. The reports that came out regarding this were actually wrong, except for our commitment announced earlier on setting up an IT backend support centre in India. A lack of respect for international intellectual property laws will serve as a limiting factor on India’s desire to expand its research-based pharmaceutical industry.
Novartis prioritises investments in R&D in countries which respect intellectual property, a key factor in our decision-making. The Chinese government has made great progress in strengthening protection for intellectual property, and Novartis has announced a significant R&D centre in Shanghai. Concerning our plans in Hyderabad, Novartis reviewed options to acquire land there, but no final agreement has been signed.
2. And as regards the Novartis statement above that “The Chinese government has made great progress in strengthening protection for intellectual property”, Joe C Mathew provides an appropriate response in his Business Standard opinion titled “India no IPR pariah”:
| “Amidst threats of Big Pharma relocating its R&D from India due to inadequate intellectual property rights (IPR) protection, data available with the Pharmaceutical Research and Manufacturers of America (PhRMA), an association of US drug manufacturers, indicates that India’s record in protecting IPR is far better than rival destinations like China. |
| In its annual memorandum to the United States Trade Representative (USTR), PhRMA said US pharmaceutical firms, which account for $43 billion of the $55.2 billion global drug R&D investments, had suffered a 34 per cent loss on their total sales in China due to inadequate IPR protection during 2006. |
| In contrast, India does not even figure among the list of 23 countries in which PhRMA member firms suffered substantial financial damages from IPR-related problems. “ |
In the meantime, a McKinsey report predicts that the Indian pharmaceutical market will treble to 20 billion dollars by 2015. Quite clearly, by moving away to China, Novartis will lose out on some of this valuable pie.
A friend of mine writes to inform me of a recent challenge by Dr Reddy’s to a Novartis patent in the US. This patent pertains to a combination of amlodipine besylate and benazepril hydrochloride (brand name: Lotrel) used to treat cardiovascular disorders. Will this combination be treated as an “obvious” one in the US? Not clear at this point–but if the rulings in KSR vs Teleflex and Pfizer vs Apotex are anything to go by, it seems that the “non-obviousness” standard has become more rigorous in the US. Click here for an earlier SpicyIP post, commenting on the Pfizer vs Apotex decision, rejecting the amlodipine besylate patent.
In his characteristic tongue in cheek manner, my friend quips: “if Novartis loses this patent case in the US, will it shift all its investments from the US to China??
Compare and contrast Novartis’ aggressive and weakly thought out patent strategy with that of Roche, which has gone on to acquire four patents already. Joe C Mathew reports on this in the Business Standard.
“It is raining product patents for Swiss drug maker Roche. Roche has received four product patents for its global drug brands while fellow Swiss pharma firm Novartis is still struggling with the Indian patent laws…. Last year Swiss drug maker Roche received India’s first product patent for its hepatitis treatment drug Pegasys and now in the last few weeks, it has been granted four more product patents. Roche has obtained product patents for its latest drug Mircera, which is an advanced form of organ transplant drug Erythropoetin. Roche has also been granted product patents for Tarceva, the drug it launched last year for treatment of lung cancer. That’s not all; Roche has received product patents for its anti-viral brand Valgancyclovir and breast cancer drug Herceptin.”
Roche’s patent covering pegylated interferon (Pegasus) has now been challenged in a post grant opposition by Wockhardt and Lawyers Collective, but one hardly hears much of this in the press.
Roche has been strategic enough to play it quiet, increasing the chances of it’s patent applications being decided in a more objective manner. Novartis has only exacerbated the politicization of this dispute by threatening to move investments to China—and given that most adjudicators are not hermetically sealed off from society, it is likely that a steady stream of anti Novartis headlines pouring out of leading newspapers will have their desired impact.
pehaps ,aggresiveness is one of the skills of novartis!! (novartis means new skills in latin)
see mr sahani’s article in businessline at http://www.thehindubusinessline.com/2007/08/21/stories/2007082151040900.htm
Thanks Ravi,
I just hope they learn that aggressiveness will not get them the results they desire. They probably need better advisors at this stage.
A friend who wishes to remain anonymous writes:
Good piece. Sums up the position well. Another factoid:
Novartis’ generic arm Sandoz ‘expanded’ its R&D centre in India, situated near Mumbai, a couple of years back. It poached quite a few Ranbaxy personnel with great promises of cutting edge work. There was only cut and no edge. They treated these guys as mere hands and used them to just validate the work done in Kundl, Austria, the then R&D HQ of Sandoz. Almost all of them have left and what remains is a pathetic little unit inside their manufacturing plant. That’s investment in R&D for you.
And, Sandoz has recently challenged the Method of Use patent on Lilly’s atomoxetine (Strattera®). They have alleged that the patent is invalid. They have every right to do so, if they believe what they are saying. Lilly has sued them. Which too is fair enough. That’s how system should work. As you have very rightly pointed out, by falling into the NGO trap of getting into verbal duels and posturing, Novartis has lost what little support they could otherwise have had. In such matters, some companies are wise and others are otherwise. Novartis, has proved to be otherwise.