1. It’s Impact on Third World Countries.
An analysis of the legal and moral aspect of product and process patenting
Group 3 | Section C
Presented By:
U111125 Shreshtha Rath
U111134 Budhadev Nayak
U111159 Pratibha Chaudhry
U111160 Rohit Basuri
U111162 Sampat Patnaik

2. Pharmaceutical Industry : Evolution
dyestuffs were found to significant new
have antiseptic discoveries with
TRIPS agreement
properties permanent patent
enforced
protection
Late 19th Century 1940-50s 1960s 1970s 1995 2012
Establishment of firm  tighter regulatory Present Day
R&D units in the controls on clinical
pharmaceuticals trials, greatly
industry increasing
development costs
 appearance of
"generic"
medicines

3. Key Trends
• Companies that invested a good amount of money in R&D spending and
productivity gradually became industry leaders.
• The holy grail of pharmaceutical R&D is the "blockbuster". Like "killer
applications" in the software market, blockbuster drugs are genuine advances
that achieve rapid, deep market penetration
• A blockbuster drug is typically a long-term therapy for a common disease that
offers a substantial perceived improvement in efficacy or tolerability and is
marketed globally. Annual sales must normally exceed $1 billion for a drug to
earn this accolade.
• Glaxo went from being a small player at the beginning of the 1980's to the world
number one, with a presence in 50 countries, on the strength of a single drug -
Zantac for stomach ulcers.

4. Manufact
Marketing uring
& Admin 20%
Why Patents ? 32%
R&D
Sales 32%
16%

6. Need for patents
 Generic drugs are exactly same as their branded counterparts in terms of
dosage form, safety, strength, route of administration, quality, performance
characteristics and intended use and the only differentiating factor in between
them is price. As they do not have to go through product discovery and
trials, cost incurred by generic drug manufacturers is notably less and hence
high profitability.
 This caused an uproar among the pharmaceutical
companies as they have lowered profits. In order
to counter this, pharmaceutical companies have
been granted “patent” which essentially means
that they own the exclusive right to
make, sell, use, import and also offer to sell their
product while disbarring others from doing so.

7. PROBLEM OF MONOPOLIES
DUE TO PATENTS

8. Why MNCs ignore IIIrd World Countries
 Multinational pharmaceutical companies neglect the diseases of the tropics, not
because the science is impossible but because there is, in the cold economics of
the drugs companies, no market.
 There is a market in the sense that there is a need: millions of people die from
preventable or curable diseases every week. But there is no market in the sense
that medicines for leishmaniasis are needed by poor people in poor countries.
 Pharmaceutical companies judge that they would not get sufficient return on
research investment, so why, they ask, should we bother? Their obligation to
shareholders, they say, demands that they put the effort into trying to find cures
for the diseases of affluence and longevity—heart disease, cancer, Alzheimer’s.
 Of the thousands of new compounds drug companies have brought to the
market in recent years, fewer than 1% are for tropical diseases.

11. Pharmaceutical
Industry
Improving
Profit ?
Health?

12. Ethics in Pharmaceuticals ???
Pharmaceuticals, they are a commodity. But they are not just a
commodity. There is an ethical side to this because they’re a commodity
that you may be forced to take to save your life. And that gives them
altogether a deeper significance. But they [big pharmaceutical
companies] have to realize that they’re not just pushing pills, they’re
pushing life or death. And I believe that they don’t always remember
that. Indeed, I believe that they often forget it completely.
— Dr. Drummond Rennie, transcribed from Dying for Drugs, Channel 4, UK

13. TRIPS Agreement
• TRIPS was introduced with the purpose
of universalising the standards of
Intellectual Property Rights and frame
the rules of the game of the developing
countries on par with the developed
countries
• The Paris convention of 1883 was one
of the oldest treaties under which,
member countries were free to
determine the standards of protection,
the subject matter of protection and
the period of protection and thus
maximum divergence was observed.

14. TRIPS : Product & Process Patents
• While many of the industrially developed countries adopted product patents to
promote further innovations, some of the developing countries realised the
potential of the process patents in developing the domestic industry and
adopted the same. This helped them to take advantage of the innovations made
by early innovators
• With the implementation of TRIPS agreement, a stronger patent regime or
product patents has been uniformly applicable on the pharmaceutical
innovations among the member countries of the World Trade Organisation
• The Doha Declaration held on November 2001, brought a new dimension to the
TRIPS. It allowed a waiver of the patent law to face a national emergency and it
was easy for the developing countries to set aside the patent laws (if incase
they were facing epidemics)

15. Impact of TRIPS on Innovation
 Companies have increased their R&D
expenditure to a great extent
 Overall IOP patent applications increased by
more than 10 times compared with less
than three times for the FOP increase in the
same period
 Innovative activities of focused on
• pharmaceutical,
• chemical and
• biotechnology sectors

16. Impact of TRIPS on Exports
 An increase in a pharmaceutical firm's
innovative activities enhances its export
competitiveness
 The exports data from the Office of the
Directorate General Commercial
Intelligence and Statistics (DGCIS) shows
that India exported 249 drugs grouped into
309 items under the category of drugs and
pharmaceuticals

17. An Example Of Disparity
 In 1996, HAART - an effective combination therapy became in rich countries.
 Within four years, death rates for people with HIV/AIDS in developed countries
had dropped by 84 %.
 At a cost of US$10,000-15,000 per person per year, these antiretroviral drugs were
far too expensive for the majority of people infected with HIV in the developing
countries.
 Five years after HAART was introduced in the West, only 2 % of people in
developing countries were receiving the life-saving drugs.
 In order for treatment to reach people living with HIV in the developing world, the
price of the drugs clearly needed to come down to an affordable level.

18. War between Branded & Generic Drugs
 At the beginning of the new millennium there was a
breakthrough in treatment provision for resource
poor areas when an Indian pharmaceutical
company started to produce generic anti-retrovirals
that were exactly the same as those made by large
pharmaceutical companies, but significantly
cheaper.
 This sparked a price war between branded and generic drug makers, which
forced the large pharmaceutical companies to lower the price of their AIDS
drugs. This competition, coupled with pressure from activists, organisations -
such as the Clinton Foundation - and governments of poor countries with severe
AIDS epidemics, dramatically reduced the price of ARVs for developing countries.
By the middle of 2001, triple combination therapy was available from Indian
generic manufacturers for as little as $295 per person per year.

19. Differential Pricing
 Drug companies adopt a policy of price
differentiation, setting price levels
"according to what the market can bear".
 In a country where alternative or generic
medicines are available, a company's
branded product is usually priced lower
due to the competition it faces from lower-
priced alternatives. The same brand may
sell at higher prices in other countries
where there is no competition from
generic producers.
**Surveys show that 100 tablets (150mg) of Zantac were sold for US$2 in India, $3 in
Nepal, $9 in Bangladesh, $30 in Vietnam, $37 in Thailand, $41 in Indonesia, $55 in
Malaysia, $61 in Sri Lanka, $63 in Philippines, $183 in Mongolia,$150 in South Africa and $97
in Tanzania.

20. COUNTER FIGHTING
TRIPS

21. Compulsory Licensing
• Licenses granted without the consent of the patent
holder either to remedy anti-competitive practices or
in situations of national emergency. A compulsory
license limits the enforcement of a patent vis-à-vis the
person(s) being granted such a compulsory license.
• It does not revoke or invalidate the patent concerned.
• Compulsory licenses are generally subject to time and
geographical restrictions.
• In addition, the patent holder is also entitled to
compensation taking into account the economic value
of the compulsory license.

22. Parallel Imports
Parallel imports involve the import and resale
in a country, without the consent of the patent
holder, of a patented product that was put on
the market of the exporting country by the
patent holder.

23. THE WAY AHEAD: PATENT POOLS
• In patent law, a patent pool is a consortium of at least two companies agreeing
to cross-license patents relating to a particular technology. The creation of a
patent pool can save patentees and licensees time and money, and, in case of
blocking patents, it may also be the only reasonable method for making the
invention available to the public.
1856 • Sewing machine manufacturers - Grover,
Baker, Singer, and Wheeler & Wilson
1917 • Airplane manufacturers - the Wright
Company and the Curtiss Company
2005 • 20 companies active in the RFID domain

24. THE WAY AHEAD: PATENT POOLS (CONTD.)
 Countries like Thailand, Brazil and India have found innovative ways of securing cheaper
second-line drugs but such options are constrained to countries having political clout and
financial stability.
 A solution is “Patent Pool” which will hold licences on various patented medicines, that
generic companies can then produce at a lower cost for poor countries. The production of
generic versions can then be more easily negotiated and hence faster and more efficient.
 in July 2011, the pharmaceutical giant Gilead agreed to license four separate antiretroviral
drugs and one combination drug to the pool which were pipeline products that is, they
were undergoing clinical trials.
 In October 2011, Aurobindo Pharma and MedChem, became the first producers of generic
antiretroviral drugs to join the Medicines Patent Pool. Under the new agreement, the
pharmaceutical companies are licensed to produce a number of generic antiretroviral
drugs, which should lead to these anti retrovirals becoming cheaper and easier to access
 Prices have thus been driven down substantially over the years.

25. Conclusion
 Developing countries have successfully stopped the US and the pharmaceutical
lobby from excluding many important diseases of the third world from the
deal, which is an important achievement.
 However no matter how desperate the health need, a poor country without the
capacity to produce a needed drug—which is virtually all of them—will have to
ask another government to suspend the relevant patent and license a local
company to produce and export it.
 The bottom line is that many poor countries will still have to pay the high price
for patented medicines or most probably, doing without.
 The World Trade Organization has failed to live up to the Doha pledge to put
people’s health before profits.