Novartis drug ruling shows up the failures of capitalism
Kevin Rafferty says drug research and patents are overly driven by profit
One cheer for India: its Supreme Court stayed on the right side this week when it refused to grant a new patent to Swiss pharmaceutical company Novartis for an updated, or tweaked, version of its leukaemia treatment drug Glivec.
The decision caused controversy, much of it for the wrong reasons. It leaves open questions about India and its attitudes to investment and intellectual property and about the operations of the giant pharmaceutical companies, or Big Pharma.
More important, it throws a small light on the failure of governments and markets in tackling critical questions over the health and well-being of the planet's seven billion people.
Novartis and Big Pharma immediately damned the judgment and howled that it would discourage them from investing the necessary millions of dollars to try to find cures for all manner of unconquered life-threatening diseases. Ranjit Shahani, managing director of Novartis India, said: "This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options." He noted that Novartis had in any case already transferred its investment in drug research to China where manufacturers were more welcome.
Big Pharma's American industry group complained that India's Supreme Court decision "marks yet another example of the deteriorating innovation environment in India". True enough, India's overall regime of attracting foreign investment and protecting intellectual property rights still leaves much to be desired.
Ernst & Young pointed out recently that India's foreign direct investment regime had been "progressively liberalised". Even so, the practical business of doing business in India means going through a maze of bureaucracy and corruption that makes the country less attractive than China.
But in pharmaceuticals, India is becoming a world leader, particularly because of the growth of its giant generic drugs manufacturers. India's drugs industry is worth more than US$26 billion a year and is earning a reputation for being "the pharmacy of the developing world" because it produces large quantities of generic drugs, such as the Indian version of Glivec.