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India's Rejection Of Drug Patent Could Reverberate

One thing is clear, though: Emerging markets are not the gold mine that optimistic pharmaceutical executives have been making them out to be.

India's move casts significant doubt on the companies' predictions that within a few years, emerging markets will generate one-quarter or even one-third of their global revenue. They've been counting on governments and a rising middle class in emerging markets to spend more on their brand-name medicines rather than the locally made drugs that may be counterfeit.

"Less patent protection in huge, developing markets means less revenue, and growth stories that are going to look like fantasies," Gordon said.

That's a big problem for drugmakers that already squeezed on all sides.

Government and private health plans in industrialized countries, particularly in deficit-laden Europe, have been pushing for lower drug prices and occasionally even refusing to cover very-expensive drugs. Consumer health spending has been constrained by severe recessions across the globe. Research is ever more expensive. And virtually every drugmaker has been hurt in the last few years by expirations of patents for popular drugs that once made billions every year.

Countries such as Indonesia and Brazil for several years have been licensing local pharmaceutical companies to make cheap generic versions of medicines, usually drugs for HIV, the deadly virus that causes AIDS.

But recently, India has overturned patents for several cancer drugs, including Bayer AG's Nexavar, AstraZeneca PLC's Iressa, Pfizer Inc.'s Sutent and Bristol-Myers Squibb Co's Sprycel, according to Mark Grayson, spokesman for the big drugmakers' trade group, Pharmaceutical Research and Manufacturers of America.

"Certainly companies will take this into account in deciding ... whether India's a good market," he said.

Grayson noted India has granted patents for very few medicines. He and the trade group's members say that without patents to protect sales of their drugs, drug companies won't have the billions they need to develop innovative new drugs.

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