Drug Companies Battle Against Indian Pharmaceutical 'Pirates'

A possible precedent-setting decision in India has Western drug makers on edge. Indian authorities have told a local firm it can produce a generic version of Nexavar, a cancer drug developed and sold by Bayer, whether the German pharmaceutical giant likes

A pharmacy in Madurai, India (Esme Vos)
A pharmacy in Madurai, India (Esme Vos)

BERLIN -- Nasty letters, the threat of trade sanctions, withdrawing development aid: when it comes to defending the patents of their country's pharmaceutical companies in developing nations, Western governments are not shy.

In the summer of 2007, the government of Bangladesh, for example, got letters from European Union trade commissioner Peter Mandelson and U.S. Ambassador to Thailand, Ralph Boyce, after it announced plans for a compulsory license for HIV drugs. A so-called "compulsory license" enables inexpensive imitations of medication to be made without the agreement of the original inventor in order to respond to domestic health needs.

What was the message contained in those E.U. and U.S. letters? That if the south Asian country wanted access to new medication, it would have to deal with the patent holders. Bangladesh backed down.

It is doubtful, however, that the same harsh means will be used in the aftermath of the latest compulsory license decision on the Indian subcontinent. Earlier this week, the Indian Patent Office, under the leadership of outgoing boss P.H "Bullet" Kurian, approved a request by Natco, an Indian maker of generic medication, to produce Nexavar, a cancer medication patented by Bayer AG. The decision means that Bayer would get but a meager 6% royalties on the much cheaper generic product. Not only that, but the German firm – if the decision stands – can pretty much write off the Indian market for their own, original version of the drug.

Bayer will no doubt present Indian authorities with some commensurately loud objections. But India, with its population of 1.2 billion, is significantly less easy to influence than its poor neighbor Bangladesh. There are more than 20,000 producers of generic medication in India, and they contribute more to the Indian economy and the country's health needs than do all the foreign investors in the country put together. In fact, over 70% of all generic medication worldwide is made in India. The sector also accounts for more than 80% of turnover of the $20 billion Indian pharmaceuticals market.

Keeping an eye on India

The Bayer cancer medication, Nexavar, has in fact not played much of a role in the Indian market. The patent office itself qualified Bayer's Nexavar turnover in India as "negligible." In any case, Natco competitor Cipla had already brought a Nexavar copy onto the Indian market – without license – some time ago, and is presently hoping to get legal approval after the fact, not an unusual way of proceeding in India.

Why then is Bayer so concerned about India's Nexavar decision? Because for the first time since Indian patent law was reformed in 2005, the pronouncement was paired with a compulsory license requirement. And that is a major source of worry to the brand-name makers of such drugs in general: the fear is that, after the Nexavar decision, other drugs could fall under the compulsory license clause of Indian patent law as well. Generic manufacturer Natco has also asked for a compulsory license for Selzentry, and AIDS medication made by the U.S. drug company Pfizer. Natco competitor Cipla, in the meantime, has asked for a license for Merck's AIDS medication Isentress.

"The pharmaceutical companies concerned see this way of proceeding on the part of Indian patent authorities as de facto expropriation. They're not entirely wrong," says patent expert Jens Hammer of a law firm called Grünecker, which specializes in German and European intellectual property matters.

The standoff in India has global relevance. For starters, the Nexavar decision will impact the estimated 2.5 million Indians who are HIV-positive by giving them access to a cheaper generic version of the medication. Secondly, thanks to the compulsory license, the Indian makers of the drug are looking ahead to export possibilities. In Sub-Saharan Africa, according to Oxfam, 80% of required HIV and AIDS medication is covered by Indian generic makes.

In developing countries in general, compulsory licenses are increasingly being used as a means of providing cheaper antiviral products: in the past five years, Brazil, Ecuador, and Thailand have okayed the production of various HIV drugs without seeking agreement from the inventor companies. In countries with no generics industry, such as Ghana and Eritrea, import licenses are granted for Indian products.

Punishing the patients

The pharmaceutical companies behind the original products do not shy away from drastic measures when dealing with manufacturers of generic products. An example: after Thailand issued a compulsory license for Kaletra, an AIDS medication produced by Abbot, the U.S. drug maker responded by denying Thai patients access to its other life-saving drugs.

International trade law can also be used to move against generic manufacturers: in early 2009, for example, German customs authorities at Frankfurt Airport confiscated more than 3 million pills made by an Indian generic manufacturer. The pills were on their way to the Republic of Vanuatu in the South Pacific. The reason for the action was suspicion of breach of GlaxoSmithKline's trademark rights on the part of the manufacturer.

In the future, the controversial Anti-Counterfeiting Trade Agreement (ACTA) could make export on the part of Indian manufacturers even more difficult. Pharma giant Novartis canned plans to build a new, $100-million research center in India after it lost a court case in the southern city of Chennai that it had brought against the compulsory license clause in India patent legislation.

Novartis also has something else up its sleeve. The company has taken a complaint against the reformed Indian patent laws all the way to the Indian Supreme Court. Activists at various NGOs are already warning that generic medicines for AIDS sufferers worldwide may be getting more expensive, and are calling for a boycott of Novartis. But patent lawyer Hammer believes their worries are unfounded: "So far, all court decisions in India have come down on the side of the generic manufacturers," he says.

Read the original story in German

Photo - Esme Vos

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Iran-Saudi Arabia Rivalry May Be Set To Ease, Or Get Much Worse

The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.

Military parade in Tehran, Iran, on Oct. 3


LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.

Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.

Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.

The role of the nuclear pact

Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.

It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.

He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."

The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.

Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.

Photo of Iranian Supreme Leader Ali Khamenei in 2020

Iranian Supreme Leader Ali Khamenei in 2020

Riyadh's warming relations with Israel

Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."

The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."

Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."

Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.

If nuclear talks break down, Iran's regime may become more aggressive.

Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.

Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.

For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.

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