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Pharmaceutical Investments and Recoveries: Truths and Myths

Aravind Patil,

Last August I received an anxious call from one of my high school friends.  She told me that her father had been suffering from abdominal pain for quite some time, and that a recent CT-scan showed the presence of a big tumour in an inaccessible part of the liver. The diagnosis was confirmed to be a hepatocellular or liver carcinoma (HCC). Every year lakhs of patients die from HCC (1). Till today, majority of the available anti-cancer drugs haven’t shown any clinical efficacy on HCC. Also, by the time HCC is diagnosed, the tumour would have grown well beyond surgical excision limits and would have metastasized extensively into the abdominal lymph nodes. The mean duration of survival after diagnosis is just 6 months. And exactly the same scenario developed in this case.

The oncologist treating the patient decided to start a new drug therapy using Sorafenib tosylate. Sorafenib tosylate is a Tyrosine protein kinase and Raf kinase inhibitor; and it is the only drug which has shown some efficacy in treating HCC and renal cell carcinoma (another deadly tumour from kidney with no cure at present). When an enquiry was made in the pharmacy shop, we were told that two companies market these drugs, Bayer and Cipla. The drug manufactured by Bayer would cost us Rs 3 Lakhs/ month and the drug made by Cipla would cost us Rs 30,000/ month (current cost is Rs 8000/ month). The drug needs to be taken for nearly 6 months. I was totally perplexed to hear that Rs 18,00,000 is what we need spend to treat a patient with HCC, when the drug is purchased from the original manufacturer, Bayer. As a scientist by training, I do understand that research and developmental activities involve heavy investments, but even then, I doubt if it warrants this exorbitant pricing. This to me seemed as a case of MNC pharmaceutical companies using patents as a tool to establish monopoly over markets to make unending high profits.

The answers to many of these questions came from articles published in FRONTLINE magazine dated May 4th 2012. The magazine carries a range of articles on the recent compulsory licensing of Bayer`s anti-cancer drug to NATCO pharmaceuticals. The magazine also carries in depth analysis of causes which lead to Novartis`s refusal of patent for its anti-cancer drug Imatinib mesylate.

Having failed to obtain a voluntary license for the manufacture of Sorafenib tosylate from Bayer, NATCO had filed an application under section 84 of the Indian Patents act, which specifies the conditions under which a `compulsory license` (CL) may be issued to a producer other than the patentee (2). Before 2005, when India amended the patents law, no such permission was required. The pharmaceutical industries used to circumvent the issue of patent by just demonstrating the fact that they had a technology to manufacture the drug by a process different from that of the parental company. This encouraged the growth of Indian pharmaceutical industries and as well made it possible for them to manufacture and market many of the on patent and off patent drugs at affordable prices.

The other part of the story revolves around Novartis`s Imatinib mesylate marketed as Glivec, a wonderful drug for Chronic Myeloid Leukemia (CML). Administration of Imatinib mesylate to the patient is very decisive in extending life of the patient suffering from CML. The drug is priced at Rs 1,20,000/- per patient per month; and the drug needs to be taken for several cycles. Novartis has been successively refused the patent in India, and it has lost two of its cases in Madras high court. The case is currently pending in Supreme Court with final hearing and judgement due in July 2012. The article also analyses as to how cleverly Novartis maintained its patent beyond its 20 years life, in different nations, thus ensuring the profitability of the drug.

These two cases are being observed very closely by pharmaceuticals across the developing world. The judgement on these two cases would determine the future of multinational pharmaceuticals in the Indian Market. It would determine the availability of life saving drugs at affordable prices, as well as the growth and survival of Indian Pharma-Biotech sector in lieu of competition.

However my thoughts on these issues are slightly different. Heavy investments are definitely incurred in inventing and developing a new drug. However much more investments are incurred in marketing these drugs than in developing them. Marketing of medical products and devices requires a different strategy when compared to other industries. The marketing strategy here is a sort of a direct marketing; that means directly from industry to customer (health care professionals and patients). There are no approvals for indirect marketing (like television advertisements and other electronic media) which would cost less and would ensure increased returns. The present judgement in favour of NATCO is unprecedented and if implemented can possible set a similar precedence for other developing countries too. Thus, patents needs to be encouraged to urge Pharma companies to develop new technologies and to ensure return on investment. At the same time, a balance needs to be struck between the cost of development and affordability and availability of these novel technologies to poor patients. 


  1. Epidemiology of Viral hepatitis and hepatocellular carcinoma; Hashem B El-Serag; Gastroenterology; vol-142, issue-6, May, 2012.
  2. A big step forward; C P Chandrasekhar; Frontline; May, 2012

The opinions reflected in the blog/article above are my personal opinions. Under any circumstances they do not reflect the opinions of the employing organization. Dr Aravind Patil

Thanks Shalin. Pricing of pharma products is a very

Thanks Shalin.

Pricing of pharma products is a very sensitive issue. Corporates cannot work for charity. And it is wrong to expect them to do so. Every organizaton and individual has a purpose in their existence. And all those purposes are equally noble. Making profits, running an organization and providing jobs for thousands of talents (and indirectly nurturing their families) is the purpose of corporates; and it is equally noble as charity is. But at the same time an inexorbitant pricing is also not justified. Involved within the pricing are issues of marketting and surviving market competition which the corporates have to survive through, and grow as well. Many a times I find my fellow friends and colleuges from medical science and research not able to understand these stuffs. Many a times their opinions reflect only what they feel as right. At times I feel that there is a need to give basic management tranings to all the technical people, be they are from medicine or from engineering or from research. Such a training can really broaden the scope of our thinking.

I would be very glad to know your opinions in this regard.


Dr Aravind Patil

Arvind, Thanks for these insights and publishing them here.

Arvind, Thanks for these insights and publishing them here. These are quite helpful given that they come from someone inside the system. More of this discussion is needed to enforce fairness in any capitalism driven society. Please consider publishing these thoughts in a newspaper like Hindu.


Dear Arvind, You have picked up one of the most important

Dear Arvind,

You have picked up one of the most important pillars of health care in India, i.e. availability of affordable medications. A recent SatyamevJayate episode highlighted the enormous cost incurred in buying regularly prescribed medicines. On the other hand, you have highlighted the bane of specalized & orphan medicines. With the incidence of cancer increasing, it is imperative for Govt of India to come up with strong patent laws which allows flexibility in access to economically poor patients. This can be helped by compassion in pharmaceutical sector for them and stoppage of wasteful marketing expenditure hitherto. What is required now is a revolution in marketing strategy which can be cheap as well as profitable. Unlawful expenditure on doctors must stop and patentable years must decrease. The companies are already adopting in-silico approach to minimize project costs but falter at human trials. The scams there too are not helping the industry. This warrants a new policy which regulates clinical trials but benefits both patients and pharmaceutical companies. Let us hope the government wakes up and fills the void. With a huge population like ours, it is possible to do Fair clinical trials provided one is honest about it. Population is our strength not weakness, but at the same time one needs to balance ethics and profitability. Good work, keep writing.

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