Novartis backs out of India R&D deal

Too bad, India. Novartis CEO Daniel Vasella says he's scrapping plans to invest millions in R&D there. The reason? Intellectual property protections aren't adequate in India, Vasella says. Of course Novartis has reason to resent Indian IP rules. Last week, it lost its court bid for patent protection on Glivec, its best-selling leukemia treatment. Under Indian law--Section 3(d), to be exact--drug makers can't get patents for new versions of old medicines, and the Indian Patent Office had ruled that Glivec was just that.

Section 3(d) protects India's many generics makers, which are aggressive about challenging patents and quick to turn out their own versions of vulnerable brand-name drugs. Currently, India's generic forms of Glivec sell for about a tenth the price of Novartis' branded form. But will Section 3(d) keep other companies besides Novartis from investing in India? Trade groups are muttering about stifled innovation, arguing that the drug research often advances bit by bit--the incremental progress Indian law doesn't protect. If other drug makers start looking to China for their R&D instead, India may have to choose between its own home-grown industry and global pharma.

- read the report from the Financial Times
and the Business Standard looks at the backlash

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