Ranbaxy continues to be in the news. The company announced an out-of-court settlement with Pfizer over patent litigations involving the anti-cholesterol drug atorvastatin (Lipitor), the world?s largest-selling drug with worldwide sales of $12.7 billion last year. The drug enjoys exclusive sales in the US until 2011 and Ranbaxy will now have a licence to sell generic versions of atorvastatin in the US, effective November 30, 2011 with a 180-day exclusive marketing period. The company is expected to earn revenues of over $1.5 billion because of this agreement. This is a pleasant outcome for Indian pharmaceutical companies in general. They have spent close to an estimated Rs 500 crore fighting drug patents in various parts of the world. Adding salt to the wound on expenses is the fact that very few of the litigations have actually been successful so far. The very high cost of hiring the best legal help also hampers the efforts of Indian firms who are often forced to engage less expensive and less competent attorneys to fight their cases. The big pharmaceutical companies in the developed world have no such problem. Also, the time taken on drug patent litigation is fairly long?it can be as long as four years.
The Indian pharmaceutical industry is currently struggling with sagging profitability. Original R&D still remains a big challenge for most Indian firms, with very few successes. Thus the focus remains very much on generics, which explains the efforts by Indian firms to challenge patents near their expiry date. Indian companies have been quite justified in their litigation efforts?some of the major global pharma companies are attempting to use technical loopholes in the law to extend the tenure of patents without sufficient justification. Still, the costs of litigation were beginning to drain the already thin resources of Indian firms. This out-of-court settlement could set a precedent for other Indian firms in litigation?Dr Reddy?s, Sun Pharma among others?to settle their disputes quicker and at lower cost. Let it not be forgotten that there is a lot at stake?in the next five years, drugs worth $70 billion are expected to go off-patent. Indian firms must try to corner a large share of that.
