India is gearing up for the introduction of new legislation on intellectual property that will bring it into line with its World Trade Organisation commitments.
The country's long-awaited Third Patent Amendment Bill is likely to be introduced in Parliament at its winter session in December, according to local news reports. The bill increases protection to include product patents as well as process patents, and according to the WTO should be passed into law by 1 January, 2005.
However, there are signs that its implementation may be delayed, as there is still disagreement at ministerial level about certain key aspects of the legislation, including the definitions it employs for patentability.
If the bill is not passed in the winter session, it will be referred to a standing committee which will then re-introduce it in the budget session starting in February 2005, said BK Keayla, convenor of India's non-governmental National Working Group of Patent Law.
India's 280-billion rupee (€4.8bn) pharmaceutical industry is looking forward to the launch of a new patent regime, because they believe it will lead to an increase in the number of foreign companies - once assured of product patent protection - seeking local partners.
One key element of benefit to the Indian industry will be its standing as a source of actve pharmaceutical ingredients (APIs). Industry sources expect the domestic pharmaceutical sector's revenue from the US generic market alone will quadruple in the next five years to $2.17 billion with similar growth expected from Europe. The US generic market was worth $16 billion in 2003, with Indian companies capturing a 3.5 per cent share.
However, many of the small and medium companies making a living now by marketing and exporting copied but patented drugs may have to shut down
Another potential obstacle to the bill's implementation is a limited number of staff. The Indian government has so far appointed around 150 examiners to look into IP complaint cases. In contrast, the US has a standing staff of around 3,000 people fulfilling this function.
Industry analysts expect a sharp jump in R&D expenses and a rise in the manufacture of generic drugs, both domestically and overseas, and also forecast consolidation within the industry following mergers and acquisitions of weak units which cannot manage high R&D expenses.
The early signs are that foreign companies are tracking the legislation timescale with collaborations with Indian firms to manufacture and market products for both domestic consumption and export. For example, Merck & Co is to set up a wholly-owened subsidiary in India, Bristol-Myers Squibb has also announced plans to build one and GlaxoSmithKline's local subsidiary is gearing up to in-license and sell patented products of global companies which do not have a presence in India.
Many of the country's 20,000 domestic and foreign-owned companies will be tempted to spend on R&D from next year, with guaranteed protection for their new products. In this they are following the lead of local companies such as Ranbaxy and Dr Reddy's Laboratories.