Rebutting false rhetoric around the Natco CL

Image from here.

On 31st March, 2015, the Economic Times carried an article titled “Compulsory Licensing hit India’s Image: Hetero Pharma“. The article quotes the Director of Hetero Pharma stating that the Compulsory License granted to Natco and upheld by the Courts “did more harm to our image than actually helped patients“. Moreover, the Director was cited as saying that “the CL for this drug was hardly in favour of public health or an emergency situation, as very few patients were treated for the disease; it also did not add much to Natco’s revenues.” This, according to the Director, “scared away investors”, therefore resulting in $10 Billion loss to the industry.

The sweeping statements are not only incorrect, but quite appalling. But to quickly respond to them:

  • “The CL did more harm to our image than actually helped patients”

Bayer’s pricing for Nexavar was Rs.2,80,428 per month. The CEO of Bayer was even controversially quoted as saying the drug was made “for Western Patients who can afford it”, and therefore not meant to benefit patients in ‘poor’ countries like India at all.  The Court granted the CL to Natco on the terms that the drug cannot be sold for a price higher than Rs.8,800 for a course of 120 tablets (which would last one month), thereby making the drug affordable for a reasonable segment of the Indian population. It had been estimated that around 23,000 patients in India were suffering from Liver and Kidney cancer needed the drug.

We wonder how the “harm” to “our” image was quantified by the said person to arrive at the conclusion that it was greater than the thousands of cancer patients who benefit from the license.

  • “The CL for this drug was hardly in favour of public health or an emergency situation, as very few patients were treated for the disease; it also did not add much to Natco’s revenues”

Firstly, the claim that “very few patients” are treated for the disease has been refuted above. Secondly, the Director betrays a lack of understanding of CLs in India. Compulsory Licenses may be granted under S. 83 or S.92 of the Patent Act. The CL in question was granted under S.83, for which whether there is an emergency or not is completely irrelevant. Under S.83, the required conditions are whether the reasonable requirements of the public are being met, whether the invention is priced reasonably and whether the invention is worked in India. Given how Bayer was not manufacturing the drug in India and was selling it at an exorbitant price, this was a case that fell within S.83 (admittedly, there is debate around whether importation of the drug satisfies the condition of “working” the invention, however, the High Court upheld the CL based on the other two conditions in this case).  “Public Health” and “Emergency” are terms used in S.92, which prescribes a higher standard for a faster procedure for granting CLs by the government wherein the patentee is not given the opportunity to file an opposition to the CL application. Therefore, it is irrelevant whether there was a public health issue or an emergency in the Bayer-Natco case.

As for Natco’s revenues, I am afraid I cannot comment conclusively on whether the revenues have grown. However, I do think it is irrelevant whether Natco has profited from the license. In fact, Natco seems to have done well for itself and its “reputation” with multinational pharma companies, as it has recently entered into a non-exclusive voluntary licensing agreement with Gilead over its Hep-C drug Sovaldi (with Hetero as a co-licensee).

  • “The CL caused $10 Billion Loss to the Industry” –Leena Menghaney from Médecins Sans Frontières India also pointed out the problem here- how did the person come up with the “$10 Billion loss to the industry” figure? In response, Hetero has emailed the following response:

“Dear Leena,

We refer to the article published by Economic Times today ” Compulsory

Licensing of Drugs has Hit India’s Image “

We wish to inform that the statement has not been issued by Hetero Drugs

and we do not endorse the same since Mr.Srinivas Reddy do not currently

hold any serving position with Hetero Drugs or Hetero Labs which is the

Principal organisation which is currently serving for HIV,TB,& HEP C in the

access market globally . The said statement issued by Mr.Srinivas Reddy is

solemnly his personal views and we as an principal organisation  do not

authenticate the statement and in no way take the responsibility of such


We as an organisation  are committed to create an global access for

HIV/TB/HEP C and other related products and will continue our efforts in

the same direction in terms of negotiating with all the stake holders.

We sincerely apologise for the confusion created due to such statement

which is purely an individual views and have no relevance with our

organisation philosophy. We are also taking up the matter with the

requisite media agency asking them to be more cautious in publishing such

statement on behalf of our organisation in future without checking the

authenticity of the source publishing the statement.

It is heartening that Hetero has distanced itself from the stance of the person making the statement. As such misinformed statements by persons who are ostensibly knowledgeable about the industry and the law have huge potential to mislead the public, it becomes all the more important that we call them out and engage in debate.


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2 thoughts on “Rebutting false rhetoric around the Natco CL”

  1. This has reference to News Item published under the caption “Compulsory Licensing hit India’s Image: Hetero Pharma” in the Economic Times daily dated March 31, 2015. In this connection, I wish to clarify the position as under;

    We wish to state that though at present Mr.M.Srinivasa Reddy continues to be on the Board of Hetero Labs Ltd, he has been exclusively looking after the operations of Indian Branded Generics Business vertical operated through Hetero Healthcare Ltd and Genx Pharma Ltd.

    Accordingly, the views expressed by Mr.M.Srinivasa Reddy on Compulsory Licensing in India are the views of Hetero Healthcare Ltd but not necessarily the views of Hetero Labs Ltd, and other Group Companies.

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