India may head to the World Trade Organization to escalate a spat with the European Union over trademark rules that could hit transshipment of drugs through the bloc to Latin America and Africa.
Bloomberg, citing sources, reports that the issue involves generic drugs under a rule that came in place this month allowing owners of related EU trademarked drugs and packages to block goods that come through the region on their way to other destinations.
An indirectly related aspect is an EU ban imposed in July last year on the import of 700 drugs tested by Hyderabad-based GVK Biosciences because of quality-control worries. That event caused India and the EU to break off wider trade discussions that are only now getting back on track with the GVK issue set aside for now.
From the Indian pharmaceutical industry's point of view, the potential further threat to shipments to or via the EU raises a red flag.
"Drug shipments going to Latin America, some African markets and North America will be impacted," D.G. Shah, secretary general of the Indian Pharmaceutical Alliance in Mumbai, told Bloomberg.
"Anything can be construed as trademark violation--packaging, sign, logo, shape or color. The industry is concerned anything even remotely similar may attract the new regulation."
Also at issue is the scope for wider trade talks between India and the bloc that would lead to a trade pact, a deal India's Prime Minister Narendra Modi and key European leaders are keen to reach, but the disputes stand in the way of progress.
However, the EU said that questions raised by India on the application ground rules have been answered.
"The EU has already responded extensively and in full detail to India's questions on EU trademark legislation in the WTO trade policy review," EU authorities said in an emailed statement to Bloomberg, which added that India's commerce ministry declined to comment.
The GVK Biosciences dispute also continues, hitting many manufacturers who used the company's services for bioequivalence testing. At the time, reports suggested the ban could cost India at least $1 billion in exports by the end of the fiscal year in March 2016.
The EMA issue began last May when investigators from France's Agency for Medicines and Health Products Safety examined 9 trials conducted at GVK's Hyderabad facility. The inspection found GVK employees repeatedly switched outpatient ECG scores with those of healthy volunteers.