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India's Rejection Of Drug Patent Could Reverberate

By LINDA A. JOHNSON

The India Supreme Court's rejection of a patent for an improved version of a costly cancer drug by Novartis AG could have big implications for the world's largest drugmakers.

The ruling, which was handed down on Monday, signals the latest shift in the world of drug development in emerging markets such as India and Brazil, where drugmakers have been looking for growth.

Western governments routinely grant patents for slightly improved versions of medicines whose patents are about to expire. That enables drugmakers to get many patients to upgrade to their new, generally more expensive versions rather than the cheaper, generic knockoffs even though some doctors and patients argue that the improvements don't justify the high cost.

But India, Indonesia and some other developing countries have been bucking that trend. They've been shooting down Western patents and licensing local pharmaceutical companies to make cheap generic versions of medicines that most of their residents otherwise could not afford.

Major drugmakers such as Pfizer and Bayer AG on Monday declined to say what they might do regarding the ruling and other recent decisions by poor countries to let local drugmakers sell cheap generic versions for medicines that have monopolies under patents in Western countries. But some industry insiders â¿¿ including a Novartis executive â¿¿ predict that multinational drugmakers will decide against doing drug research and development in India.

"Novartis will not invest in drug research in India. Not only Novartis, I don't think any global company is planning to research in India," Ranjit Shahani, the vice chairman and managing director of Novartis India, said after the ruling.

Erik Gordon, a professor and analyst at University of Michigan's Ross School of Business, agrees. He said the ruling means that there's "no reason to do research and development in India" because of its "national policy of hostility toward medicine patents."

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