Patents, an exclusive right granted to the inventor by the government of the country for exploitation of his invention by use, sell or licensing the patent. With patents, inventor tries to cover up and gain from the research inventor has already carried out. Patents are used by an inventor to protect his invention; invention can be a product or a process. Patent helps an inventor to exploit invention and gets protection for the same in lieu of making his invention public after a specific time.

Patents in pharmaceutical world

The Indian pharmaceutical industry is a successful, high-technology-based industry that has witnessed consistent growth over the past three decades. The current industry players comprise several privately owned Indian companies that have captured a substantial share in the domestic pharmaceutical market due to factors such as favorable government policies and limited competition from overseas. However, the liberalization of the Indian economy is revolutionizing Indian industries as they begin to emerge from domestic markets and gear up for international competition.

Patent rights were introduced in India for the first time in 1856 and, in 1970, the Patent Act 1970 (“the Patents Act”) was passed. In India, patents were not granted on pharmaceutical products before 2005 due to which before that anyone could replicate any drug in India without legal ramifications before that time. It was only after 2005 that patents were granted on pharmaceutical products. Patented drugs are than sold in the market at very high prices that’s why first compulsory license have been issued in India) or generic companies are allowed to manufacture generic version of the drug . Price of patented drugs includes the total money spent on research and development of that medicine. And then this includes overhead expenses, marketing expenses, little amount of manufacturing cost and profit. The key point of whole discussion is that income produced by the sales of medicine today pays for the research and development cost of the same medicine.

Patent expiry

A normal patent expires after duration of 20 years. In pharmaceutical sector there is a provision of entry of generic version of the medicine into the market after a period of 10 years.

Generic drugs

Generic drugs are the drugs that have the same composition as that of branded drugs and are sold under the chemical name. For example, “paracetamol” is a chemical ingredient that is found in many brand name painkillers and is often sold as a (generic) medicine in its own right, without a brand name whereas as a brand name it is sold by the name ofCrocin or Calpol.

Generic in terms of patent means copies of patented drugs or drugs whose patents have. When copies of patent drugs are made by other manufactures, they are either sold under the name of the chemical ingredient (making them clearly generic), or under another brand name.

Difference between generic and branded drugs

It is a very hard question to answer. The answer to this question has divided whole medical fraternity into two groups. One says that generic version is as good as branded version while other says that they are of poor quality. According to doctors and chemists generic drugs are less effective. In fact some doctors avoid prescribing generic drugs and sometimes hand out free samples of branded drugs to patients who can’t afford branded medicines but according to a pharma representative, there is no difference in generic and branded drug.

Patent expiration and generics

The “patent cliff” has begun. Dreaded by leading pharmaceutical companies of the West for years now, and it will help Indian firm earn millions of dollars.

The world has witnessed a sharp increase in the demand for cost-effective generic drugs due to expiration of patents in last one year. In such a scenario, India’s rise as a hub of generic drug manufacturer is the blessing for owners of these companies. This is the time when a lot of pharmaceutical patents are expiring and in coming time more patents will expire and that will make room for the generic version of drugs. India is the market where a lot of generic players are there and they have shown their presence worldwide and even showed results as effective as branded ones. With the patents expiring in coming future, it will be a blessing to the generic firms who are believed to gain around $40 billion in next three years. Many MNCs are trying to hold their place in market by slashing the prices of their drugs but with the generic players in market it’s hard for them to compete with respect to price.

It is expected on the basis of recent study where Ranbaxy gave hard competition to US pharma giant Pfizer by launching Caduet (the generic version of Lipitor) which is an anticholesterol drug (its patent expired in 2011). Ranbaxy has acquired a larger share of the market for the same drug.

Ranbaxy have also gained exclusive rights to market the generic version of Diovan (Ranbaxy was the first company to successfully challenge Novartis’s patent for Diovan) for 180 days which according to analysts will help them gain onetime revenue of 350-450 crore.

Hyderabad-based Dr Reddy’s Laboratories launched Olanzapine Tablets, the generic version of Eli Lilly’s Zyprexa in September, 2011.

“The patent expiry of several major blockbuster drugs between 2010 and 2017 will fuel the growth of the global generic pharma market. The trend is shifting towards less competitive, yet commercially attractive segments such as difficult-to-produce generics, specialty generics and biosimilars”, said a Frost & Sullivan research analyst.

An analysis from Frost & Sullivan showed that market earned revenues of $123.85 billion in 2010 and they are expected to reach $231 billion in 2017 at a compound annual growth rate of 9.29%from 2011-18. Regions covered in the research include the US, Europe (Germany, the UK, France, Spain and Italy) and Asia (India and China).

They also stated that large generic firms have to carefully choose product segments where they want to compete and should also make right entry into the market.

Markets of countries like USA are also inclining towards the concept of generic medicines. FDA (Food and Drug Authority) are approving a lot of generic medicines now. Indian generic drugs account for about 10% of market share in US.