Novartis Loses Bid To Patent New Version Of Glivec In India, Giving A Boost To Country’s $26B Generic Drug Industry

India’s high court on Monday rejected an appeal by Novartis AG (NYSE:NVS) to overturn a decision by the country’s patent authority that denies the Swiss drugmaker’s patent application for an updated version of its cancer drug Glivec.

The court invoked a 2005 Indian law that prohibits “evergreening” -- when pharmaceutical companies extend drug patents by making superficial modifications to existing drugs in an effort to extend the life of a patent.

But Novartis has argued in this six-year-old battle that the modified version of the drug is easier for the body to absorb and therefore substantially different.

"This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options," Ranjit Shahani, vice chairman and managing director of Novartis India Limited (BOM:500672), told the BBC.

The company responded to Monday’s ruling by saying it would invest “cautiously” in India in the future, according to IBN Line.

Glivec costs about $2,600 a month; the generic version sells in India for $175. India’s $26 billion generic pharmaceutical industry has become a major global player in cheap live-saving drugs. Major generic drug manufacturers, including Cipla Ltd. (NSE:CIPLA) and Lupin Limited (NSE:LUPIN), export drugs for treating fatal infections like AIDS, malaria and tuberculosis to poor countries. India is the second-largest source of generic drugs channeled through the UNICEF, according to the Associated Press.

Fights over alleged evergreening erupt periodically. In August for example, Indianapolis-based Eli Lilly & Co. (NYSE: LLY) won a battle to keep its patent on chemotherapy drug pemetrexed that it sells under the brand name Alimta. Teva Pharmaceutical Industries Ltd. (ADR: TEVA), headquartered in Petah Tikva, Israel, and two privately held drugmakers had challenged the validity of Lilly's patent, arguing that pemetrexed was too similar to earlier patented compounds.

Pharmaceutical companies have long argued that the incentive for creating new drugs is that they retain exclusive rights to sell their inventions for a period of time that’s long enough to recover the cost of their investment, and then make a profit off the venture. Bringing a new drug to market takes over a decade and costs about $1.3 billion, according to Josh Bloom, director of chemical and pharmaceutical sciences at the American Council on Science and Health. Bloom said in a Wall Street Journal piece from January 2012 that the length of time drugmakers retain exclusive rights has declined from 17 years in the late '60s to 11 years.

In the same piece, Els Toreele, director of the Access to Essential Medicines Initiative of the Open Society Foundation's Public Health Program, said patent duration and scope has grown since the '80s and that increasingly new drugs are earning patents despite being no better than their existing versions.