CPhI: 2015 Mega Trade Pacts and Their Impact On the Pharmaceutical Markets, Dilip G. Sha (II): Generics

 The generic industry will suffer on several counts slowing down its growth and earnings.

– A major driver of growth for generics is new product introductions. As data exclusivity period and patent protection get longer, the new product introductions will suffer

– As the new product launches become scarce, generic companies will focus on a slice of the pie of older products. The resultant competition will lead to price erosion of even mature products, affecting their earnings

– Thus, two major drivers of growth, viz. new introductions and value, could have negative impact

– The remaining two drivers of growth, viz. new markets and volume, could provide opportunity to efficient manufacturers as they would drive volume and enter “new markets”, but it would be at the cost of existing players, as they will eat into their share

– As the patent linkage kicks-in in EU and other trading partners, the generics will face delays in obtaining marketing approvals

– Dilution of the early working provision (Bolar Exception) for marketing approval in other countries would require a generic company to manufacture the medicine locally in every country where it wishes to seek early marketing approval

– Not only patents, data exclusivity, and patent linkage, the TRIPs-Plus provisions related to protection of trademarks could question prominent display of international nonproprietary name (INN) or generic name of a product. It could prevent generics from using colours or shapes identical or similar to those of the original products

– The fear of costly and lengthy infringement proceedings will keep generic companies at bay and limit them challenging even poor quality patents

– The US proposal envisages empowering patent-holders to seek information of the entire supply and distribution chain in case of alleged infringement. The information so obtained could be used effectively to block the supply chain – transporters, warehousing agents and distributors

– The proposed border measures in the deal revive the fear of detention of goods in transit for alleged violations of patents and trademarks. The application of “confusingly similar” trademarks by the customs officials would most likely lead to seizure or detention of many generic consignments as it happened in case of a shipment of amoxicillin from India to Vanutan. The use of INN appeared confusingly similar to GlaxoSmithKline’s brand Amoxil

Thus, generic industry and the public health will be severely impacted. The generics decline will be discernible from the end 2017, if the TPPA is signed in 2015. It would begin from 11 Pacific Rim countries and accelerate with the conclusion of TTIP in 2016. The decline will extend to the US and 28 EU countries, besides members of NAFTA (2) and EFTA (4). The full blown impact of these mega trade deals will be felt by 2020.

Encouraged by its success, the brand-name industry will be ready by 2020 to push the USTR to seek amendments to the TRIPs Agreement. Backed by some 50 signatories to TPPA and TTIP, the USTR will push for maximalist standards of protection and enforcement in the TRIPs Agreement. The moot question is if BRICS or any other new alignment of the developing countries would be able to thwart this grand design.

Ver anterior:

CPhI: 2015 Mega Trade Pacts and Their Impact On the Pharmaceutical Markets Dilip G Shah (I): Brands