From generics to global R&D: How India’s patent law reshaped its pharma industry

On June 3, Mumbai-based Sun Pharmaceutical Industries Ltd announced that the company is discontinuing the clinical trials of its new drug candidate for severe psoriasis and atopic dermatitis, as it did not meet its primary objective. Some six months ago, another Mumbai-based pharma major, Wockhardt Ltd, said its flagship discovery product Zaynich, a novel antibiotic, had successfully completed a global, pivotal, registration-enabling clinical trial study and demonstrated superiority compared with another drug that is considered gold standard.

Announcements of successes and failures of drug discovery efforts of Indian pharmaceutical companies are routine today, but it was a rarity 20 years ago. An amendment to Indian patent law that came into effect in 2005 allowed patent protection for innovative products instead of the earlier practice of limiting patent protection to the inventive process (and not the ultimate product), which triggered that change. It encouraged domestic firms to take up drug research and development seriously. Indian companies may not have tasted any global blockbuster success in drug discovery so far, but the result of 20 years of India’s product patent regime is quite evident.

And it spans not just the drug discovery space but also reflects in India’s performance as a drug manufacturing hub and a market for new drugs. It has influenced the Indian regulatory space and also realigned the relationships between domestic pharmaceutical firms and their much bigger global competitors. The product patent regime has thrown up its own challenges too.

But let’s look at the numbers first.

THE GROWTH

According to the latest World Intellectual Property Indicators (WIPI) report published in November 2024, India recorded 15.7% growth in patent applications in 2023, continuing its streak of double-digit growth for the fifth consecutive year. This surge places India among the top countries contributing to global patent filings, signalling the country's increasing role as a global innovation hub. Overall, there were 64,487 patent applications in India, placing the country in the sixth position globally. Of the total applications, 49,860 were resident applications, while 14,627 were foreign applications. However, only 15% of the total patent applications belonged to the medical technology and pharmaceutical sectors, though these two sectors were second only to computer technology, the field which saw the maximum number of patent filings in India. In comparison, data from the Indian Patent Office indicate that there were only 3 product patents in the pharmaceutical sector in 2005, which reached 1,369 in 2008, and was 1,046 in 2009. 

The growth of the domestic pharmaceutical industry during this period is even more impressive. If the 2005–06 annual report of the Pharmaceutical Export Promotion Council of India records the size of the Indian drug industry that year as $8 billion, the current official estimates put the size as $50 billion in 2023–24 (domestic consumption of $23.5 billion and export valued at $26.5 billion). It is the world's third largest by volume and 14th in terms of value of production.

FRIENDLY REGULATIONS

The changes in Indian drug regulatory systems and the rules governing drug regulation also aided pharmaceutical companies to benefit out of the post-2005 product patent regime, say experts tracking the sector. “There has been a lot of development in the regulatory regime. For regulation of new drugs and clinical trials, we now have a comprehensive and robust regulatory provision under the new drugs and clinical trial rules,” says A. K. Pradhan, advisor, Central Drugs Standards Control Organisation (CDSCO). Addressing a policy round table on product patents in the pharmaceutical sector organised by the Institute for Studies in Industrial Development (ISID), Delhi, recently, Pradhan said the new rules have various provisions to encourage development of new drugs. “The timeline for processing of applications for clinical trials is fixed. There is provision of deemed approval. There is a timeline for new drug approval applications also—90 working days. It is at par with the global regulatory regime. These have helped innovation,” he says.

Meanwhile, Archana Jatkar, Associate Secretary General, Indian Pharmaceutical Alliance (IPA), points out that once the Patent Act got amended, Indian companies quickly embraced the new intellectual property norm, leading to the expansion of not just the generics industry but also R&D capabilities, thereby strengthening their patent portfolios. “They invested in global compliances, and many became exporters. Today we export to more than 150 countries; every 3rd tablet in the US is from India. We are also a net foreign exchange earner of almost $19–20 billion. So, we have travelled a considerable distance,” she says. According to Jatkar, Indian pharmaceutical companies are moving up the value chain—in complex generics, in the speciality front—and are also present and fuelling innovation across several therapy lines. One of the provisions that enabled Indian companies to achieve this was that the amended Patent Law had clauses that utilised the flexibilities related to access to public health provided in the TRIPS Agreement of the World Trade Organisation (WTO).

CHALLENGES

On May 6, India and the UK concluded the talks on a Free Trade Agreement (FTA). The conclusion summary of the FTA put out by the UK’s Department for Business and Trade states that the FTA text will have a chapter on Intellectual Property where both countries will agree on commitments that consider the TRIPS Agreement as the baseline of IP protection. Bharat Shah, national president of the Indian Drug Manufacturers Association (IDMA), finds this a disturbing development. He points out that the attempt to position TRIPS as a baseline potentially opens doors for the UK pressurising India to agree on TRIPS-plus obligations in its patent laws. “Today we are witnessing a renewed wave of pressure through FTAs with developed countries (trying) to incorporate TRIPS-plus provisions, which include patent term extension beyond 20 years, data exclusivity that delays generic entry, patent linkage tying drug approval to patent status, restrictions on compulsory licensing, and attack on section 3(d) of the Indian Patent Act itself,” Shah says.

According to him, this is deeply concerning as TRIPS compliance is already the gold standard recognised by the WTO. “India must remain vigilant in preserving its sovereign right to use TRIPS flexibilities, especially in the pharmaceutical sector,” he says.

In fact, the Covid-19 pandemic had exposed the structural inequities of the global IP regime. When India, along with South Africa, proposed a temporary TRIPS waiver in 2020 to enable broader access to therapeutics, vaccines, and diagnostics, there was severe pressure to derail that process. Shah says that even after the proposal got the support of over 100 countries, the final WTO decision limited the waiver only to vaccines and delayed action on diagnostics and therapeutics. “This episode reaffirms the relevance of flexibility in IP for public health. The Indian Patent Act’s section 3(d) provision has withstood legal and diplomatic challenges and is recognised as the gold standard against evergreening. India’s patent law has helped develop a robust generic industry serving not just India but the world. The principle of affordability, equity, and health justice must be central to our innovation framework,” he says.

While patent protection has aided growth, a balance between intellectual property rights and public health is key to access to medicines. The growth of the Indian pharmaceutical industry is an illustration of this balance. Also, the patent regime can’t be seen in isolation. The whole regulatory, trade, and related ecosystem contributes to the growth of the pharmaceutical sector. Continued improvements across all segments are needed to maintain and strengthen India’s role and contribution as the pharmacy of the world.