Bayer fails last-ditch attempt to block India's cheap Nexavar copies

India's Supreme Court dealt a crushing blow to Bayer, denying its final appeal to block generic sales of the cancer powerhouse Nexavar in that country. The closely watched case affirms the government's right to knock aside patent protections and grant its citizens cheap access to lifesaving drugs. 

India's high court dismissed Bayer's challenge to a compulsory license that allows Indian generics maker Natco Pharma to sell a cheaper version of Nexavar to treat kidney and liver cancer. Compulsory licenses can be granted under a global trade agreement, but Bayer has long fought the license, arguing that it undermines pharmaceutical research and intellectual property protections.

The company said it was disappointed with the ruling and that it is weighing its options. "We are analyzing the order and will determine any future course of action afterwards," a Bayer spokesman told Reuters.

The companies' courtroom drama dates back to 2012, when Indian officials forced Bayer to grant a Nexavar license to Natco, allowing the Indian drugmaker to sell its version for 8,800 rupees ($141) per month, pennies and change compared with Bayer's asking price of 280,000 rupees ($4,477). Bayer challenged the decision, and in 2013 an appeals court shot down that challenge, but ordered Natco to increase royalty payments to Bayer to 7% from 6%.

But the German drugmaker chalked up a victory in March, when the Delhi High Court sided with Bayer and blocked Natco from exporting generic copies of Nexavar. That limits Natco's cheap version to Indian market.

Bayer is not the only drugmaker battling it out in India over patents for top-selling drugs. In 2013, after years of battle, the Indian Supreme Court shot down Novartis' ($NVS) bid for a patent on its blood cancer drug Glivec. Companies such as Roche ($RHHBY) and Merck ($MRK) are also taking aggressive steps to protect profits on best-selling meds. In June, Roche and India's Cipla entered mediation over a patent for Roche's blockbuster cancer fighter Tarceva, a novel move in the often contentious legal proceedings.  

The ruling also comes at a pivotal moment for Bayer, as it continues to restructure and beef up its consumer health offerings. In May, the company picked up Merck's consumer health unit for $14.2 billion, building an OTC powerhouse and challenging rival drugmakers.

In September, Bayer said it would spin off its plastics units within the next 18 months, following the Big Pharma slim-down trend. The deal could generate €10 billion ($12.9 billion)--cash that could come in handy for future dealmaking, Kepler Cheuvreux analyst Fabian Wenner said at the time. Now, the company is said to be exploring a sale of its diabetes device business, which could fetch between €1 billion and €2 billion ($2.5 billion) and draw interest from private equity firms such as Cinven, KKR and EQT Partners.

- read the Reuters story

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