Industry players said on Wednesday the new law was a double-edged sword. It would create a monopolistic Indian market dominated by top foreign and local drug majors but would also encourage Indian companies to tap off-patent generic export markets.

Investors reacted positively and bought blue chip pharmaceutical shares in early deals on the Bombay Stock Exchange.

The controversial Patent (Amendment) Bill, which was passed by the lower house of parliament on Tuesday and was being debated on Wednesday by the upper house, is aimed at compliance with World Trade Organisation (WTO) rules.

Once it becomes law, it will replace existing legislation which allows drug makers to copy patented products if they use a different manufacturing process.

Research base

 

"India will be a research base for new drug discoveries and a hub for clinical trials," Habil Khorakiwala, managing director of Wockhardt, a leading Indian drug company, said.

"In the long term a lot of foreign and Indian drug companies will conduct extensive research work in India and also conduct clinical trials for new drugs given the large population base of our country."

"India will be a research base for new drug discoveries and a hub for clinical trials"

Habil Khorakiwala, managing director of Wockhardt

He said India's large pool of scientists, along with low-cost labour, offers opportunities for drug research which in the west would costs hundreds of millions of dollars.

If foreign drugs companies are assured that intellectual property rights will be protected, experts said, they will bring their latest products to Indian shores.

"Our patients will now have access to new and latest drugs which multinationals were not bringing ... fearing their products would be copied by local manufacturers," Ajit Dangi, director-general of the Organisation of Pharmaceutical Producers of India, said.

 

The group represents foreign drug companies operating in the country.


Brain drain

 

Dangi said in the long term the prospects of conducting research in India would also trigger a "reverse brain drain" from the West back to India.

 

Global drug firms are expected to
shift more operations to India

"In the Western countries, 15% of drug research is conducted by Indians. Many of these professionals will return home in a new environment."

Analyst Rohit Bhat at brokerage Batlivala and Karani said foreign drug companies would bring in their products either through existing subsidiaries or by setting up new 100% owned firms.

"They may also tie up with Indian companies having a strong distribution network, in which case it's a win-win situation for both," Bhat said.

He said in the long term the pharmaceutical industry would undergo a massive change.

 

Overseas pastures


"Where the molecules are original, product patents will have to be granted and to that extent there would be monopoly," Bhat said.

"Indian companies will also see their product pipeline dry as the new law prohibits them from introducing drugs patented post-1995."

 

"In the Western countries, 15% of drug research is conducted by Indians. Many of these professionals will return home in a new environment"

Ajit Dangi,
Director-General,
Organisation of Pharmaceutical Producers of India

But the large pool of human resources and the available talent with these companies will make them tap new pastures overseas.

"The market of off-patented generic drugs prior to 1995 is all there to be tapped and exploited. This is exactly what our companies will do in the future," Bhat said.

The New Delhi-based Federation of Indian Chambers of Commerce and Industry described the passage of the bill as a "historic step".

"This will not only make the patent regime credible and protect the interests of domestic producers and consumers, but will also put India on the road to becoming a world leader in drug research," its president Onkar Kanwar said.