The Pharmaceutical industry has grown significantly with the advancement of technology and commercialization. New life-saving drugs and therapeutic advancements are developed daily to increase the efficiency and usefulness of medicine in people’s lives. With the introduction of more pharma companies coming forward with new drugs, it became necessary for them to be protected in the drug market. Intellectual Property rights in pharmaceutical industries are essential for identifying, planning, commercializing and protecting newly invented drugs. A Patent provides an exclusive right to the pharma companies for their drugs in the drug market and thereby aids in preventing others from manufacturing, selling and making these exclusive drugs in the market for 20 years. In India, with the introduction of the Patents Act of 1970, pharma companies have been provided patent rights over their drug manufacturing process. Ever since India has become a party to the GATT (General Agreement on Tariffs and Trade) Agreement and the TRIPS (Trade-Related Aspects of Intellectual Property Rights), significant changes took place in the Indian Market, which made it mandatory for the pharmaceutical industry to comply with the new standards introduced in these agreements. In light of this, the patent rights in India underwent changes. The most significant change was the transition of process patent to product patent. In process patent, only the process involved in manufacturing the product will get protection through patent, and the final drug will not be patented under this system. Nevertheless, with the new amendment, product patent was also added to the Act, and S.5 (1) of the Patents Act, which talked about process patent, was removed. As a result of establishing product patent, no company can sell or manufacture any drug once it has been patented. This indeed raised a fear of a rise in the price of drugs and other medicine because a drug once patented cannot be made by any other company, establishing a monopoly for the patent-holding company over the drug. Many foreign companies like Glaxo Smith Kline, Big pharma, Novartis Etc., opened up their subsidiaries in India and sold their drug through this as the Research and Development cost in India was lesser compared to other countries. If we look at the scenario of Indian pharma companies, the price of these drugs is controlled by the patent regime rather than the administration. This will not help in an effective and efficient price controlling over the drugs. Since a significant portion of the pharma companies’ expenses goes for the R & D of their patented products, there are high chances that the drugs’ cost will likely rise. Critics from around the world were concerned with the patent regime overtaking essential medicines, as a result of which there will be significantly less competition in the pharmaceutical countries, thereby increasing the prices of the essential drugs. The TRIPS agreement was criticized for being a monster of modern capitalism as the patenting of drugs will create a huge monopoly in the pharmaceutical industry, and this will degrade access to essential medicines as a fundamental right to all human beings around the world. They pointed out that the effect will be shown in the long run resulting in a public health crisis.

The Indian Patents Act of 1970 in S. 2(1)(j) lays down what can be counted to be given patent protection. It states that the invention should be something ‘new’ that has an industrial application. If any other party or source or document has prior knowledge of the invention, then it will not be given patent protection. S. 3 of the Act also list the processes or products which will not be considered as an invention, for example, any method of agriculture or horticulture, an invention which is against public morality Etc. One of the sections which hold importance is S. 3(d) of the Act. The section establishes the test for examining whether a product is a new invention or not. Under the test, a new form of a known substance can only be accepted when it includes significant properties which differentiate it from the original product or substance. The strategy of “ever-greening” was adopted by the pharma companies wherein they come up with new products or drugs from already existing ones by using, for example, the same molecular formula but a different structure or adding a new ingredient Etc. This phenomenon led to many companies raising applications for patents by slightly bringing in new drugs, which were just a new version of already existing ones, and; this caused the prices to rise too for the pharmaceutical industry. This led to S. 3 (d) of the Patents Act intervening to prevent the discovery of a known substance. S. 3(d) only encouraged the invention of new derivatives that show magnified or amplified efficacy, and only such products will be given patent rights. One significant case law that discussed this aspect of S. 3(d) was Novartis AG v. UOI.[1] Novartis, a Swiss multinational pharmaceutical company, is one of the largest pharma companies both in terms of market capitalization and sales. Novartis requested a patent right over a drug which was objected by the Indian companies saying that a similar drug has already been patented. However, Novartis argued that this particular drug is a new invention as they made several additions to the drug. The Court, to answer the question of whether the new drug in front of them can be patented as a new invention, went onto applying the test given under S. 3(d) of the Act.[2] The Court successfully established that the new drug that was introduced by Novartis did not pass the test under S. 3(d) as the section clearly states that the discovery of a new form of a known substance without any increase in its efficiency will not be considered as an invention. The Court observed that just making minor changes to already existing products will not increase its efficiency to be identified as a new invention. Sec. 3(d) compels the pharma companies in putting more efforts into innovation and research rather than tinkering with already existing substance. Compulsory Licensing is yet another system of Patent law to protect the interest of the lower sections of the people. In compulsory licensing under S.84 of the Act, a company that gets the license can develop a drug and sell it at a lower price for the general interest. It can only be given in a situation where the patented drug is not available at a feasible price to the people, and the licensing will only be given after three years from when the patent was granted for that particular drug. However, compulsory licensing is yet to be accepted in other countries as it is only an option and not a mandatory requirement under TRIPS. A developing nation will only be able to take full advantage of compulsory licensing when the legislations of developed nations around the world adopt this concept.

As we all know, India is one of the largest producers of drugs around the world. However, considering the economic situations of our country, the drugs must be affordable to all divisions of society. Many experts have put forward that both process patent, as well as product patent, must be given patent protection. They say that if process patent is introduced, this will encourage the companies to be more competent and to invest in R&D, thereby improvising a new method to produce the drugs than the existing standards, and this will further help to keep the market price of the drugs at a reasonable level for an ordinary man. Ever since the introduction of the patent regime in India, there have been apprehensions about a possible occurrence of a monopoly in the pharmaceutical industry and increased competition in the market. The role of the Competition Act of 2002 is very relevant in such a scenario by checking over the abuse of dominant position by the pharma companies and ensuring a healthy market condition as well as the consumer’s interest. The invention of a new drug consumes many expenses, and we cannot ignore the fact that multinational companies will always take steps to protect their financial interest. Hence it is necessary to ensure that a safe balance is maintained while protecting the intellectual property rights and the society’s welfare as a whole.


1.Novartis AG v. UOI, (2007) 4 MLJ 1153

2.The Patents Act, 1970



Elizabeth James,2nd Year Law Student at National University of Advanced Legal Studies, Kochi.

18 views0 comments

Subscribe Form

  • Facebook

©2020 by Juris Review.