Assessing India's Innovation Climate

In 2005 India mostly strengthened their patent laws to meet international norms, with the distinct requirement that new drug products must “differ significantly in properties with regard to efficacy.” This requirement for a significant improvement in efficacy only applies to drugs — not to other patentable inventions like pens, car engines, etc., and is of concern for drug companies seeking to protect their inventions in India.

In 2007, Novartis received a first-hand demonstration of the limitations of patents under these new rules. They failed to receive patent protection for Glivec (sold as Gleevec in the U.S.). In response, Novartis opted to redirect hundreds of millions of dollars of R&D to other countries — essentially voting with their feet.

A recent partnership between Merck and India’s Nicholas Piramal (NPIL), potentially worth more than $300mm, suggests that Merck is unfazed. In this partnership, NPIL is responsible for essentially the entire drug discovery chain, from candidate identification through pre-clinical and early-stage clinical trials.So, one may ask the question: Have Novartis’ experiences affected other companies, and is Novartis actually redirecting their investments?

Pfizer is also investing strongly in India, announcing their intentions to develop drugs for conditions endemic to India.

Novartis, on the other hand, is keeping their word. Whie they did recently announce plans to dramatically increase the headcount at their India Development Centre, the company reiterated that these were not R&D jobs: “This is not a high-end work and the nature of job is similar to business process outsourcing. We will think of doing high-end R&D work in India only when the patent laws are made totally compatible with WTO norms”

So it appears that Novartis isn’t influencing the activities of others. The question remains: who will bend first? Novartis or the Indian Government?