India’s Pharmaceutical Ascent: Navigating Patent Challenges and Global Opportunities

India is marking its rising position in pharmaceutical manufacturing by being the primary producer of generic drugs. The Patents Act of 1970 governs process patents but does not include product patents in the pharmaceutical industry.

During the Fiscal Year 2023-24, India’s pharmaceutical and drug exports were approximately $27.85 billion, which made India one of the top global exporters. India’s Drug and pharmaceutical exports soared from $15.07 billion in 2013-14 to $27.85 billion in FY 2023-24. Ranking third globally in drug and pharmaceutical production by volume, India exports to approximately 200 countries and territories. The top five destinations for these exports are the USA, Belgium, South Africa, the UK, and Brazil. With a 10-12% growth rate, India’s pharmaceutical sector is expected to reach $100 billion by 2025, fuelled by its robust domestic manufacturing base.[1]

The Risk Involved

Despite the amendment to the Patents Act 1970, the Patents Rules 2024[2] bringing instrumental regulation to India’s generic pharmaceutical industry have ensured easy access to life-saving drugs that desperately needed revision.

The new rules have brought forth several substantial modifications, most notably regarding the fees for filing the pre-grant opposition and establishing a crucial mechanism to filter out the underserving patents for getting medication permission.

This also risks the timely availability of high-quality generic drugs at affordable costs, which may increase the chances of infringers hoarding and selling at a higher price.

The point of concern here is the grant of discretionary powers to the patent controller to decide who can file a pre-grant opposition, even when the proposition extends beyond the jurisdiction as defined by the Patents Act and is not in line with the previous judicial rulings, which has unequivocally permitted both organizations and individuals to submit pre-grant opposition.

Global Impact and Implications of Impending Patent Cliff

Pharmaceutical companies with products going off patent closely monitor the Drug pricing methodologies investigating the implication of the patent cliff on the Indian pharmaceutical industry and monitor several drug pricing methodologies that must be opted by Indian generic pharmaceutical companies to maximize the market share created due to the patent cliff.

From the study, an assumption can be made that the global impact of the patent cliff from 2022-30 is expected to be significant. It will depend on various factors, including the specific drugs facing patent expiration, regional market dynamics, healthcare policies, and pharmaceutical companies’ ability to adapt to the changing landscape.

Steep Revenue Loss for Pharmaceutical Companies with small molecules: Innovator Pharmaceutical companies that hold patents on drugs facing expiration will experience a decline in sales as generic competition enters the market. This revenue loss can have a considerable impact on these companies’ financial performance, potentially leading to decreased profits, restructuring, and strategic adjustments.

Gradual Revenue Loss for Pharmaceutical Companies with Large molecules: The companies with large molecules like Biosimilars and Mono Clonal Antibodies (MABs) are also going to face price erosion resulting in loss of revenues however this will be gradual. This is because large molecules are more expensive to develop and manufacture and their manufacturers won’t be able to afford cutting prices by nearly as much as by manufacturers of generic small molecules.

Impact of the Patent Cliff (2023-2030):

• Savings for the Patients and Healthcare Systems: The expiration of patents during this 2023-30 will pave the way for multiple generic drug manufacturers to enter the market and produce lower-cost alternatives to brand-name drugs. This increased availability of affordable medications can improve access to essential treatments for patients worldwide, particularly in regions with limited healthcare budgets. Generic medications are typically priced up to 90% lower than their brand-name counterparts, allowing healthcare providers and insurers to achieve substantial cost savings. This will reduce financial burdens on payers in the healthcare systems and potentially lead to expanded coverage and access to more comprehensive healthcare.
• Market Competition and Innovation: The patent cliff fosters increased market competition, as generic manufacturers compete with brand-name companies. This competition can drive innovation and encourage the development of new drugs, as companies strive to differentiate themselves in the market. Pharmaceutical companies may focus on research and development efforts to introduce novel therapies, potentially leading to advancements in treatment options for various diseases and conditions.
• Market Share Shifts: The Patent cliff and resulting loss of exclusivity can reshape the competitive landscape and influence market dynamics within the pharmaceutical industry. As per historical data, the sales of a small molecule that goes generic, 50- 80% of the market, can be lost in 30 to 90 days, and the price can go down by 90%. The expiration of patents can result in major shifts in market shares between innovators and generic drug manufacturers. Generic manufacturers may gain market share as they offer lower-priced alternatives, while innovator companies may experience a decline in their market position unless they come up adequate strategies.
• Regional and Global Market Variations: It’s important to note that the specific drugs and their patent expiration dates during the 2022-2030 period will vary. Further, the impact of the patent cliff will also vary across different regions and countries due to variations in healthcare systems, political, economic, social, legal and regulatory frameworks. Some regions may experience a more pronounced impact, depending on factors such as the prevalence of brand-name drugs facing patent expirations and the availability of generic manufacturers in the market.

Conclusion:

India’s pharmaceutical sector stands at the forefront of global generic drug production, driven by robust domestic manufacturing and strategic patent regulations. The evolution from the Patents Act of 1970 to the significant amendments in 2005 has empowered India to balance innovation and accessibility, ensuring life-saving medications reach global markets at affordable prices. However, the industry’s future faces challenges, including regulatory adjustments under the 2024 Patents Rules and the looming impact of the global patent cliff.

As patent expirations increase competition, the potential for cost savings in healthcare systems worldwide is significant, benefiting patients through affordable generic alternatives. Yet, this also introduces risks, such as market volatility and revenue losses for innovators, necessitating strategic adaptations by pharmaceutical companies. Ultimately, India’s ability to navigate these complexities will not only shape its domestic growth but also redefine its role as a global pharmaceutical leader.

[1] India: The World’s Pharmacy, Press Information Bureau; https://static.pib.gov.in/WriteReadData/specificdocs/documents/2024/aug/doc2024822379301.pdf

[2]https://ipindia.gov.in/writereaddata/Portal/IPORule/1_83_1_Patent_Amendment_Rule_2024_Gazette_Copy.pdf