Competition and Intellectual Property Policies in the Indian Pharmaceutical Sector

Abstract

The Indian pharmaceuticals market is estimated to be the third largest in the world in terms of volume, and one of the largest in terms of value created (Economics Division, 2017). This industry is also a key player not just within India but also across the globe; the Indian pharmaceutical companies produce bulk drugs that are exported to several countries, including the Organisation for Economic Co-operation and Development (OECD) nations. When compared to the other pharmaceutical sectors in the world such as the mature markets in the OECD countries, the Indian pharmaceutical market is unique due to several reasons: a changing patent regime (from product patents to only process patents and then back to product patents), unique nature of competition (for example, branded generics as against pure generics), etc. Given this exceptional nature of the pharmaceutical market, it is important to understand this sector from a public policy angle. In this article, we provide a perspective from the point of view of two important aspects of public policy: competition policy and intellectual property. With the enactment of the Indian Competition Act in 2002, India has become one of the newer countries that have a robust competition regime in place. In this context, some pertinent issues emerge: (1) How do various firms (domestic and international) compete in India? (2) What role does the practice of branded generics (more prevalent in India than elsewhere) play, etc. At the same time, the Indian patent regime has also undergone a series of changes. The Patents Act of 1970 allowed for only process patenting; however, with India signing the Trade-Related Intellectual Property (TRIPS) agreement, product patenting had to be implemented from 2005. Given the short time span since its implementation, one could say that the current patent policy followed in India is still nascent. In this context, several questions such as why patents are important, how firms react to various policy changes in this space, etc., become important to understand.