(image from here)
“The Ranbaxy-Daiichi merger in June 2008 heralded the onset of what one might call an “Ardhanarishwar” model in the Indian drug industry, where innovator companies (creators of new drugs) and generics manufacturers came together in holy matrimony for the first time. The recent past has witnessed more such alliances, with companies such as Shantha Biotech, Dabur Pharma and Wockhardt tying the knot with multinationals, which wished to ramp up their generic capabilities. Most recently, the industry is abuzz about GlaxoSmithKline circling Dr Reddy’s to pick up stake.
The mergers appear a win-win situation for both generics companies and innovators. For one, given the recent push by most governments to reduce healthcare costs, multinational innovators get to partake in an ever lucrative generics pie. As far as Indian companies are concerned, the hope is that such unions will make them more innovative.
However, an oft-ignored consequence of such mergers is the likely impact on patient or public health groups. Ever since 1970, when India resolved to bolster its generic capabilities by denying product patents to pharmaceutical inventions, public-health groups and the generics industry have coalesced in their fight against multinational patentees. Not too surprising, since the regime shift in 1970 was premised on the assumption that creating a vibrant generics industry would also result in a reduction of drug prices and thereby benefit patients.
The recent past is, however, witnessing an increasing schism between the interests of the generics industry, on the one hand, and that of patient groups. The advent of the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the consequent pressure to conduct more research and development to survive in an increasingly competitive world market may have prompted part of this schism. Indeed, even prior to its merger, Ranbaxy was speaking a language familiar to multinationals—it actively supported the grant of patents to incremental inventions in its submissions before the Mashelkar committee.
This schism is even more evident in the debate over price controls. Illustratively, Cipla is routinely targeted by the National Pharmaceutical Pricing Authority for overpricing its drugs in India, indicating that the interests of the generics industry are not always aligned with that of patient groups.
With Indian generics firms now acquiring dual personalities, and speaking the language of patents and innovation, the number of patent oppositions mounted by generics companies against their innovator partners is likely to decrease. Indeed, a cursory examination of patent challenges filed the world over would indicate that one multinational innovator rarely challenges the patent of another.
It bears noting that the Indian patent regime contains what is probably the world’s most potent and comprehensive “opposition” mechanism, where a patent can be challenged for embodying only a trivial, non-meritorious invention.
A recent study by the author, based on publicly available patent opposition decisions, shows that of the 9,719 pharmaceutical applications filed since 2005, only 34 were challenged in an opposition. Of these 34, patient groups were involved in only three challenges, indicating perhaps that they may have relied on generics companies to take on problematic patents in a vast majority of the cases.
Depending on which side of the ideological fence one is on, the recent alliances between originators and generics could be seen as either “holy” or “unholy”. But what is incontrovertible is the fact that patient groups can no longer rely fully on the generics industry to take up cudgels on their behalf. They have to enhance capabilities and challenge more unsavoury patents to fulfil the mandate bestowed upon them by ailing patients.”
dear shamnad,
the alliance is ‘unholy’, in most of the aspects involved. it is neither in the interest of the public, nor in the interest of the indian generic companies themselves (in the long run), nor in the interest of the the pharma sector in india, nor in the interest of the india as a country. there should always be two pillars – ‘generics’ n ‘innovators’. the existence of one is crucial for the other, if the pharma sector has to remain healthy. this dilectical relationship between these two is what that will keep the pharma sector vibrant/healthy.
my labelling of ‘unholy’ applies only if this becomes a ‘trend’. a few cases of this type is fine; it doesnt necessarily make it a ‘trend’. however, if most of the generics marry the innovators, then the dilectic forces will cease to operate. moreover, i aint opposed to the generics transforming themselves into innovators; instead, what i am opposed to is the inherent nature/kind of marriage that u ve referred to. coz such marriages are most likely to be merely commercial, without any real strengthening of indian r&d capabilities/infrastructure. thus, even in the newly emerged ardhanarishwar, for innovation, the reliance would still be the external (grafted) arms of such alliances; its internal (i.e. indian) arm will still be steeped in the generic mould/culture. in the long run, it is the innovator side of the ardhanarishwar that will always be in the win-win situation. so, instead of indian generics following the ranbaxy-daichi model, i wud ve rather seen them transforming themselves on their own, without getting subsumed by mnc. but well, that may be just a wishful thinking! but if the indian generics really want, they already have many of the ingredients (raw materials/pre-requisites) that r required for such a transformation. however, the biggest thing that they lack is ‘will’ n ‘vision’. but the biggest thing that they possess is ‘manpower resources’ that is extremely skilled. n i guess, they cant successfully argue that they lack monetary resources; this argument seems (to me) to be only partly true – indian generic companies are flush with, at least, reasonable amount of funds. indian generics have, so far, failed to exploit their plus points. its a pity that tho pharma mncs ve realised this (they r increasingly awarding/outsourcing r&d n clinical trials to indians/indian arms/indian companies), the indian generic companies themselves havent taken steps to exploit their own strengths. i ve elaborated these viewpoints in detail in my april, 2009 article on section 3(d), which however could be published only in the september, 2009 issue of jipr (journal of intellectual property rights). if anyone, esp. the generic companies, care to read it, here is the link thereto : http://nopr.niscair.res.in/bitstream/123456789/6057/1/JIPR%2014%285%29%20385-396.pdf.
-aditya kant
one more distinction that i forgot to point out in my last comment: ranbaxy-daichi’s case doesnt represent a true case of a marriage between a true generic n a true innovator, as your own earlier post shows that ranbaxy’s vision had already begun re-focussing towards being an innovator. thus, may b, one can call it a marriage between an ‘innovator wannabe'(ranbaxy) n a pure innovator.
-aditya kant
n here is some food for thought, for u, shamnad.
for a long time, i ve been thinking on doing a study on what it takes to transform or re-focus indian generic companies into/on being ‘innovators’ {in the light of section 3(d)}. since i am a regular practitioner n not an academician, i dont ve the resources (esp. research scholars/assistants) to collect empirical data / conduct research n hence i can only present statements/viewpoints/ideological positions. however, being an academician, u ve the unique advantage of having these resources at your disposal. i was wondering if u cud help me or collaborate in any way in that regard, or if u cud yourself cause such a research to be conducted at your institute!!!!!!! i guess, it wud be a worthwhile n substantial research project.
what say u?
-aditya kant
Dear Aditya,
Thanks for your comments. I’m not sure I would totally agree with your characterisation of this as “unholy”. I’m still hopeful that a lot of positive would come out of this.
You’re right that Ranbaxy was already attempting to innovate prior to the merger. But it was still predominantly a generic company. A friend of mine in an email rightly points out that after acquisition of majority stake in Ranbaxy in November 2008, the deal between them is better characterised as an “acquisition” than a “merger”. In other words, it might have started out as a merger, but slowly transitioned to a full blown acquisition.
dear shamnad,
well, i am all ‘for’ market forces (to a large extent). but still i find that the so-called merger (btw, i know that its an acquisition, actually) has more of the ‘unholy’ elements in it than the ‘holy’ ones. i aint saying that it is out n out ‘holy’. moreover, i had clarified that my characterisation of ‘unholy’ will apply only if such marriages become a trend. mere one instance does not necessarily attract that labelling. also, i agree with u that there r positive sides to such alliances – one of them being increasing “innovatisation” (if i may coin such a term) of indian pharma industry. but the point is at what cost? n who will be the real beneficiary thereof? neither the indian pharma sector, nor india. it is in context that i sided with the ‘unholy’ interpretation. otherwise, i am myself an advocate for free (almost) play of market forces, albeit limited only to the extent that the public interest factor is reasonably factored in. here, one must remember that the public interest factor can never be expected to be taken care of by the industry; some amount of govt. regulation (minimal but reasonable) seems imperative.
also, the realisation that its less of a merger n more of an acquisition, further bolsters my fears that if the generics dont girdle up n re-focus themselves, then they ll be extinct/ marinalised, tho the way in which they ll perish may b different [e.g. some will be acquired, some generic owners may sell themselves out for sheer profiteering(this was one of the major reasons for ranbaxy’s stake sale to daichi), some will lose out to international competition, some will not be able to withstand trips-plus n european border/customs seizures n similar measures/pressures. wat i feel is that their growth n dignified survival lies in themselves being strong. but well, its their choice.
-aditya kant
There is nothing like “unholy” “ishwar”. If you choose to bring this alliance within the concept of “ardhnarishwar”, it has to be “holy” or the anology is blasphemously misconcieved.
Dear Shamnad,
Apropos my earlier suggestion to u for considering initiating a study on the issue of ‘what it takes to transform indian pharma companies into primarily innovators n how easy or difficult is it to achieve such a transformation’, I have received another ‘in principle’ interest in my idea, from an academic who has just retired from NISTADS. I am forwarding his mail to you, at your email. As he rightly points out therein, such a study requires sponsorhip. moreover, such a study is bound to be inter-disciplinary (esp. law and economics), which will require massive resources. Furthermore, being a mainstream lawyer, I can’t /won’t solicit for sponsorship. However, you are in a very unique position (being an academician), having the advantage of skilled human resources n also the freedom/opportunity to explore sponsorship.
Irrespective of whether you agree or disagree with my hypothesis, it is worth testing. It will certainly have major beneficial effect on the indian pharma industry’s future direction. Let me know whether you would be willing to explore the possibility of causing a study to be conducted on my hypothesis. In my view, only the pharma industry associations or FICCI/ASSOCHAM, or the Govt. may be interested in commissioning such a study and hence, pursuading them aint going to be an easy task, that i fully understand. but still, can we give it a try?
Lemme know.
-Aditya Kant
If alliances (whether “holy” or “unholy”) between originators and generics become a significant trend, then India’s robust “opposition” mechanism could lose its teeth. It will be interesting to see whether patient advocate groups will fill the void by pursuing patent litigation more aggressively. If not, the public stands to lose quite a lot from these alliances.