Patents and Trademarks

Patent Strategy for Indian Pharma Industry

New drug developments continue to necessitate increasingly high investments to protect revenues from the threat of low cost substitutes. This is based upon fully exploiting the efficacious of the patent system.

In a market environment where competition from generics companies is becoming increasingly aggressive, understanding how to effectively develop and exploit patent protection strategies is essential in facilitating enhanced market exclusivity and revenue returns over the life-cycle of new drugs.

Strategies for the product patent regime

The Indian pharma industry has become globally competitive and is a force to reckon with in the global competition. However, the product patent regime would slow down the growth of industry and act as a retarding force for the growth. The speed of introduction of new products in domestic market would be at a rate lesser than that of before the product patent is introduced.

Currently, the Indian Pharma industry is of the size of $5 billion and the 15th largest market by sales. A company which has a strong product pipeline, keeping in view the manufacturing complexities and competitive pressures will emerge as a winner in this race. A company which has strong domestic base and market, would be able to exploit its strengths by focusing attention on regulated markets and is most likely to emerge as a winner in this segment, will also be leveraging its volumes and designing a manufacturing strategy, which is cost competitive. Considering the regulatory approvals and implementing the same for FDA approvals, majority of companies have experienced that their cost of goods sold has increased from 15 percent to 20 percent.

Pharma companies can make use of the new opportunities arising out of the introduction of product patent regime in India. Strategies and opportunities provided for all companies uniformly based on product patent regime are as follows:

1) Products with end to end value chain integration should be given higher preference for service. That means products which are manufactured from API to generic stage/formulations stage should be given preference for cost reduction and benefits of large market size. Backward integration to API for every generic drug would mitigate and counteract on generic drug pricing pressure.

2) Identify companies which do not have presence in

India and target their products for launch through alliances and in-licensing.

3) Identify products which have access to regulated markets and their market share versus the same product with higher market share in less regulated markets. This may increase sales and improve profitability. Whereas Research and Development expenditure is a must and requires careful allocation of priorities with existing body of knowledge and leveraging the same, it is crucial that capital expenditure plans of companies be carefully controlled through better asset utilization policies.