United States: Destination: India - Drug Discovery & Development

Patent considerations are important for doing business when offshoring drug discovery and development.

The global pharmaceutical industry is under increasing financial pressure from the draining pipeline of blockbuster drugs, expiring patents, and the rising cost of research and development. Thus, many multi-national pharmaceutical companies (MNCs) are looking to external alliances to maximize R&D productivity by reducing research costs, compressing the period of drug discovery and development, and pursuing more research options.

Many of these MNCs are collaborating with Indian companies, which often offer as much as 30% to 50% savings in total drug discovery and development costs. Recent amendments to India's patent laws have also made India more attractive as a drug discovery destination. In 2005, India amended its patent laws to comply with the World Trade Organization's (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), an international treaty mandating minimum standards for trade and intellectual property protection. These amendments allowed, for the first time, patent protection in India for pharmaceutical products. The earlier law provided patent protection only for the process of making the drug, not for the drug itself.

Companies in India offer two types of opportunities for drug discovery and development: outsourcing and true collaborations. The outsourcing model entails an alliance between one or more entities to perform discrete tasks or specific operations and processes previously done inhouse. In this model, the company soliciting the research typically maintains control over the technology and related assets, including intellectual property.

More recently, a growing number of MNCs have entered into more collaborative ventures with Indian pharmaceutical companies and contract research organizations, extending well beyond task-driven outsourcing. These transactions involve more complex intellectual property considerations. (For details, see additional information on www.dddmag.com.)

A recent PriceWaterhouseCoopers report indicates that India could well become one of the top 10 global pharmaceutical markets by the year 2020. Thus, any pharmaceutical company doing research and development in India will likely choose to patent its technology in India and, therefore, will need to be familiar with Indian patentability standards.

Unlike US law, Indian law does not determine priority of invention by the first-to-invent. India is a first-to-file patent system in which the patent right for an invention lies with the first person to file an application, regardless of the date of actual invention.

India's law requires that for any inventions originating in India or involving an inventor resident in India, patent applications directed to that invention must first be filed in India or, alternatively, a foreign filing license must be obtained before any global filings. In cases of joint inventorship, patent filings should comply with the laws of the countries of all inventors. For example, the US also requires that patent applications covering inventions made in the US be first filed there or a petition for a foreign filing license be obtained prior to filing abroad.

Section 3(d) of India's new Patent Act prohibits patents on derivatives of known substances, unless those derivatives display significantly enhanced efficacy. The section elaborates that salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, and combinations are considered derivatives. Additionally, this section precludes patents on the discovery of any new property or new use of a known substance.

India provides relatively broad compulsory licensing provisions for drugs. Application for a compulsory license for a drug may be made for a host of reasons, including:

• reasonable requirements of the public have not been satisfied;
• the invention is not available to the public at a reasonably affordable price;
• the invention is not manufactured in India;
• when the Indian government perceives a national health emergency at any time during the life of the patent for which the Indian public does not have adequate access; or
• where a dominant patent blocks the use of an improvement patent, the owner of the improvement patent may apply for a compulsory license.

Although the Indian pharmaceutical market is one of the world's fastest growing markets, domestic drug sales in India ($5.3 billion) are currently less than one per cent of the global pharmaceutical market ($550 billion). Thus, any initial patent filing in India should presume a more global approach and should be consistent with global patentability standards.

Any pharmaceutical entity doing research and development in India should, at a minimum, assume a subsequent filing in a large market country, such as the US. Accordingly, the initial Indian application should meet the US standards of patentability to ensure priority. For example, the as-filed Indian application should satisfy US standards of written description, enablement, and best mode.

Also, any later-filed US application must satisfy the duty of disclosure owed to the US Patent Office. Given that the Indian company may not recognize this duty, it should be explained and procedures should be provided in the research agreement to ensure compliance. And since this duty of disclosure continues throughout the US prosecution, the partnering companies should proactively review any corresponding applications for relevant prior public information in regard to the patent.

In contrast to India, the US remains a first-to-invent system, providing for detailed proceedings, or interferences, to determine priority of invention if contested. Through these proceedings, even though an applicant may have filed the application after another, the applicant may still obtain patent rights through proof of earlier conception and diligent reduction to practice. These proofs typically come in the form of documents adhering to strict evidentiary standards. Notably, these documents need not be prepared in the US. Since such documents have little relevance to Indian patentability requirements, the Indian provider likely will not appreciate them. Again, the Indian company should be educated and procedures should be in place and addressed in the research agreement for maintaining documentation of inventions that satisfy US standards.

Drug discovery outsourcing and collaborations in India will likely continue to flourish. Any company doing such research in India must be aware of the prerequisites to protecting the intellectual property resulting from those ventures, both in India and worldwide.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.