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Growth Perspective of Indian Pharmaceutical Industry

by D G Shah Secretary General Indian Pharmaceutical Alliance

New Delhi October 30, 2003


VISION: 10/03

Patents & Implications for the Indian Pharmaceutical Sector

Outline of Presentation

Introduction Global Generics Markets

Opportunities
Challenges-Post 2005

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Patents & Implications for the Indian Pharmaceutical Sector

Global Generics Markets


Boundaries of Change

Demand will Grow Fastest in Emerging Markets Generic Options Available for Most Large Disease Segments Westernization of Disease Patterns in the Developing World Elderly Population will Fuel Demand In Developed Markets

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Patents & Implications for the Indian Pharmaceutical Sector

Global Generics Markets


Increase in Over 65 Population
Year 2000 Base 35%
Percent of Population 65+ Years Old

Increase to 2030

30% 25% 20% 15% 10% 5% 0% 4% 9% 9% 6% 7% 9% 10% 8% 8% 8% 11% 16% 18% 20% 21% 23% 24% 24% 24% 28%

New Zealand

Germany

India

China

United States

Australia

United Kingdom

France

Source: US Census Bureau: National Institutes on Aging Note: Represents 2002 data
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Canada

Japan

Patents & Implications for the Indian Pharmaceutical Sector

Global Generics Markets


Volume Growth from Generics in Strategic Markets

Price
9% Generics

Volume & Mix

New Elements

2.5%
91% Brands

2.7%
83% Brands

17% Generics

1998 % absolute Change in Volume & Mix

4.1%

4.3%

1.2% 1998

1.4% 2002

2002 % absolute Change in Volume & Mix

Source: IMS Health: MIDAS, MAT Dec 2002


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Patents & Implications for the Indian Pharmaceutical Sector

Global Generics Markets


2002 Generic Growth Dramatically Outpaced Brand Growth
% Growth @ Constant Dollars
Retail Only Brands Generics

Canada US Germany UK Japan Italy Spain France


Source: IMS Health: MIDAS, MAT Dec 2002
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+15 +8 +7 +8 +2 +2 +10 +1

+19 +26 +16 +34 -6 +77 +17 +43


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Patents & Implications for the Indian Pharmaceutical Sector

Global Generics Markets


Generic Utilization by Country

60%
Generics Prescriptions as % of Total Prescriptions

50% 40% 40% 30% 20% 20% 11% 10% 0% 5% 20%

47%

49%

52%

New Zealand

Germany

Australia

United States

Source: PharmaHandbook Note: Represents 2002 data


VISION: 10/03

United Kingdom

France

Japan

Canada

Patents & Implications for the Indian Pharmaceutical Sector

Global Generics Markets


Region-Wise Exports: 2001-02
Market 2001-02 Share Growth % Rs Mn %

East Asia West Europe North America Africa East Europe South Asia LAC West Asia OAC Total
Source: Chemexcil
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20,423 19,049 17,675 12,762 7,761 7,435 7,102 4,349 1,579

20.8 19.4 18.0 13.0 7.9 7.6 7.2 4.4 1.6

2.4 10.1 53.3 15.0 -0.9 9.1 -7.8 16.4 -3.2 12.1

LAC South Asia 7% 8% East Europe 8%

West Asia 4% OA C 2% East Asia 21%

Africa 13%

North America 18%

West Europe 19%

98,135 100.0

Patents & Implications for the Indian Pharmaceutical Sector

Global Generics Markets


Indias Top 20 Markets
Market 2001-02 Rs Mn Share % Growth %

USA Germany Russia Nigeria China Brazil Hong Kong UK Vietnam Singapore Netherland Spain Switzerland Sri Lanka Japan Thailand Nepal Canada Mexico UAE Others Total

16,201 4,987 4,771 3,767 3,747 3,493 3,413 2,798 2,117 1,948 1,911 1,690 1,566 1,521 1,501 1,486 1,509 1,474 1,489 1,413 35,333 98,135

16.5 5.1 4.9 3.8 3.8 3.6 3.5 2.9 2.2 2.0 1.9 1.7 1.6 1.6 1.5 1.5 1.5 1.5 1.5 1.4 36.0 100

64.4 16.1 -4.0 8.9 40.3 -4.9 -22.9 14.8 13.2 -9.3 -0.1 2.7 27.9 -12.3 7.5 -0.8 13.3 -12.1 -8.6 10.1 8.9 12.1

Others 36%

Germ any 5% USA 17%

Rus s ia 5%

Nigeria 4%

Mexico 2% Canada 2% Nepal 2% Thailand 2% Japan 2% Sri Lanka 2% Switzerlad 2% Spain 2% Netherland 2%

China 4% Brazil 4% Hong Kong 4% UK 3%

Vietnam 2%

Singapore 2%

Source: Chemexcil
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Patents & Implications for the Indian Pharmaceutical Sector

Global Generics Market


Size and Growth ($Billions)

$57 $10

2001-07 CAGR% Overall 13.3% 8.9% 15.5%

$19 $27 $6 $8 $13 2001 2007

ROW
$28

Europe

US

13.6%

Source: Datamonitor
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Patents & Implications for the Indian Pharmaceutical Sector

Opportunities

Leveraging Knowledge Base Partnering Global Players

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Patents & Implications for the Indian Pharmaceutical Sector

Opportunities
Leveraging Knowledge Base

Lead Optimization Synthesizing Designed Structure Manufacture of Clinical Trial Samples

Global Clinical Research Projects


Moving Up the Value Chain of R & D

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Patents & Implications for the Indian Pharmaceutical Sector

Opportunities
Moving up the Value Chain of R & D
2000E 2005

5%

NCE

30%

30%

Chiral NDDS Analogue

35%

65%

Process Development

35%

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Patents & Implications for the Indian Pharmaceutical Sector

Opportunities
Partnering Global Players

Product Development

In/Out Licensing of New Products


Addressing Public Health Problems Market Access

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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005

National Patent Law

Data Exclusivity
Patent Law Treaty (PLT) Substantive Patent Law Treaty (SPLT) Non Tariff Barriers

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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


National Patent Law

Manufacture For Exports Under Para 6 Safeguards & Conditions Patentability

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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


Patentability

Patenting In Pharmaceuticals

The number of new chemical entities approved for use by US Food and Drug Administration (FDA) declined to 27 in 2000, compared to about 60 in 1985

but the number of patents granted in the main patent class for new drug compositions was 6,730 in 2000.
Year: 2000 NCEs: 27 Patents: 6,730

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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


Patentability

Patenting Minor or Trivial Developments

Formulations/Dosage Forms Salts Processes Combinations Polymorphs Optional Isomers New Indications (therapeutic methods)
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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


Patentability

Patenting Strategies

Blanketing: a jungle or a minefield of patents Flooding: multiple patents, major as well as minor Fencing: blocking certain lines or directions of R & D

Surrounding: an important central patent is fenced in or surrounded by other less important patents that block the use of the central patent, even after its expiration Networking: building of a patent portfolio to strengthen overall protection and bargaining power
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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


Data Exclusivity

TRIPS Article 39.3 Period of Exclusivity ? Retrospective Effect ? Impact of Data Exclusivity
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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


Impact Of 10-year Data Exclusivity
YEARS 0 10
CLINICAL DEVELOPMENT & REGULATORY APPROVAL

13

15

20

25

27

MARKETING EXCLUSIVITY IN INDIA

PATENT FILING

REGULATORY APPROVAL SOUGHT IN INDIA

REGULATORY APPROVAL GRANTED IN INDIA

PATENT EXPIRY

GENERIC SUBMISSION

GENERIC APPROVAL

0
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10 13

15

20

25

27
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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


Patent Law Treaty (PLT)

Diplomatic Conference Comprising 140 States

Adopted PLT by Consensus in June 2000


104 Countries Signed the Final Act For Adoption and 43 Countries Signed PLT

Main Features of PLT


Harmonizes Formality Requirements Streamlines Procedures for Patenting Excludes Substantive Patent Law Issues

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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


Substantive Patent Law Treaty (SPLT)

1st Draft in November 2001 Revised in May 2002-Lays Down World Patent Law

Makes TRIPS Obsolete


Secures What Could Not Be Achieved in TRIPS Implications End of Patent Policy as a Tool For National Development Strategies Deviation Can be Subject to Sanctions No Exclusions to What is Patentable A Pipe Dream Takes On Real Proportions!

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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


Non-tariff Barriers

Spreading Doubts About Product Quality Working to Deny/Delay Product Registrations Raising Standards of Regulatory Approvals

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Patents & Implications for the Indian Pharmaceutical Sector

Challenges Post 2005


UN Nod for Generic Drugs

Under no circumstances do companies based in some countries that have poor regulatory quality standards match the standards of quality, service, and innovation on a sustainable basis that international companies provide.

IFPMA
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