Novartis has said that India is not a place to do R&D because its Intellectual Property (IP) laws are not strong enough to protect new discoveries. In 2006, Novartis made a commitment to build a $125 million R&D facility in Hyderabad India. The next year, after the company lost a patent battle over its blockbuster cancer drug, Gleevec (Glivec outside the US), Novartis failed on the center. Last week, Novartis has earmarked $1.25 billion for R&D activity in China.
Vasella was careful not to completely burn any bridges to India. He did not expressly make the connection between the huge China commitment and the company’s ongoing IP problems with Gleevec in India, despite his pointed criticism of Indian IP protection. He said the decision to go to China was due to the “investment friendly environment” there.
In 2006, India refused to grant a patent for Gleevec, ruling that the drug was an improvement on an existing product rather than a patentable innovation. Gleevec has, however, become the standard of care for treatment of chronic myelogenous leukemia, gastrointestinal stromal tumors and certain other malignancies elsewhere in the world. Its annual revenues are close to $4 billion.
After four years of litigation, the Gleevec patent case will be heard by the Supreme Court of India. Vasella said the verdict could become a “turning point for Indian R&D.”
Following up on the idea that India is less business friendly, Vasella also commented “There are significant differences between India and China – in the political system, in the decision making processes, in the complexities of the processes and in the continuity. I think India has potential but things take longer to get done.”
India will make similar progress, he opined, when Indian pharmaceutical companies have more IP they want to protect. Then, the companies will force the government to act and increase IP protection.