Rise in ex-parte orders upset generic drugmakers' future business plans

NEW DELHI: A growing number of cases in the pharma sector, where courts forbid Indian drugmakers from launching generic versions of patented drugs (ex-parte injunction, without even hearing defendants) or ask them to furnish undertakings proclaiming that they have no plans to launch such a drug, has rattled domestic drugmakers.

From a handful of five-six in 2012, such instances grew to over 10 in 2013 and have already crossed 10 in the first six months this year, in Delhi High Court, a list compiled by ET from law firms and companies shows. The list is not exhaustive, but indicative of a trend that suggests that for pharma multinationals', the strategy of suing Indian companies before they launch generic versions of the patented drugs in the domestic drug market seems to be paying off.

Some generic drugmakers actually feel that a sustained global campaign by the Big Pharma against Indian intellectual property regime in the aftermath of a high-profile case in 2013 where Swiss innovator Novartis was denied a patent on cancer drug Glivec by the Supreme Court could have swung the pendulum, making judiciary 'overprotect' patents in some cases.

"With Novartis' Glivec, the Big Pharma may have lost the battle, but seem to be winning the war in projecting Indian judiciary as biased and bringing a bad name to it," a top executive of a leading domestic drug firm told ET on the condition of anonymity.

However, a closer look at the cases prove that almost all such injunctions have been granted in situations where innovator firms have filed suits before the generic versions were launched in the market by relying on right to information with drug regulators, company and traders' websites, internal communications such as SMS trails and other market intelligence tools. This is in contrast to what they did till a few years back: they sued generic drug firms only after the copies were brought to market.

Pravin Anand, managing partner of Anand and Anand, who represents innovator companies in many such cases back this strategy saying that a launch of a drug changes the entire equation of balance of convenience.

"If an ex-parte order is not granted, then it can lead to disastrous consequences, such as the removal of goods from one jurisdiction to another," he said. The innovator then risks the market getting flooded with infringing products with one generic encouraging another till the patent owner finds himself battling bees with a hammer.

However, patent experts warn that Indian courts should be cautious while granting ex-parte injunctions in patent cases, particularly in the pharma sector, as these are highly complex matters with a lot at stake. "If India is accused of under protecting patents by select groups, there are several cases where it is guilty of over protecting patents as well," said Shamnad Basheer, a patent expert. "No other country, even patent friendly jurisdictions, dole out ex-parte injunctions so frequently, particularly in pharma patent cases because these cases entail highly technical evaluations, which are very difficult to conclude without hearing out both sides in detail."

Anand says it is not fair to compare India with those jurisdictions (patent-friendly ones), where there are are natural safeguards available, for instance laws linking patents and marketing approvals of drugs, or countries where such lawsuits are rapidly decided. Moreover, he feels that if an ex-parte injunction is wrongly granted here, a judge can always modify or even vacate it on an application by the aggrieved party.

" Also, if a patent is bad or a defendant is not infringing, prima facie, the judge can make out during arguments that an injunction ought not to be granted in the case. The worst that would happen is that the launch of a drug would be postponed by a few days or by a short period," he said.

But generic drug firms see this emerging trend as a threat that can disrupt their business model. "If these injunctions become the norm, you will see a dip in the number of patent challenges in the country," a senior executive at an Indian drug firm said.

He also alleged that through these suits, pharma multinationals are now blocking future potential business plans of top generic companies, not simply targeting current business plans . "In many cases, generic firms are now being sued even if they are just making the drug raw material for exports with no immediate plans to introduce the drug in the domestic market but not having a plan today doesn't mean there will be no business plans tomorrow," he said.