Bayer vs. Natco

The Indian Patent Office on 9th March 2012, issued the first-ever compulsory licence (CL) to an Indian generic drug manufacturer, Natco Pharma, to manufacture an affordable generic version of Sorafenib tosylate (Nexavar), the anti-cancer drug for which Bayer had obtained a Patent in India in 2008.

The said issue commenced when Bayer rejected Natco's request for a commercial licence to manufacture Nexavar. Natco on July 2011 applied for a compulsory licence to make a copy of the drug, claiming Bayer had failed to meet the needs of the local market, wherein the clauses comprised of (1) Bayer supplied the drug to only 2% of the patient population (2) Bayers pricing of the drug (2.8 lakhs for a months' supply of the drug) (3) Bayer did not sufficiently "work" the Patent in India. Controller General of Patents after taking all the clauses into consideration and after completing hearing with both companies in February 2012 came up with his 62-page order, wherein said compulsory licence under section 84 of the Patents Act was granted to Natco which enabled Natco to sell the drug at a price not exceeding Rs 8,880 for a pack of 120 tablets (one month's therapy) as against Rs 2,84,428 being the cost of Nexavar sold by Bayer and also made it obligatory for Natco to supply the drug free of cost to at least 600 needy patients every year and Natco was directed to pay 6% royalty on sales to Bayer for the drug on a quarterly basis.

Thereafter on May 2012, Bayer appealed against the Controller's order before the Intellectual Property Appellate Board (IPAB), wherein Bayer among other reasons also pointed to the fact that another pharmaceutical company Cipla had started selling its generic version at a lower price, rendering the compulsory licence unnecessary as the drug was indeed available at a reasonable price. IPAB on September 2012 came up with its decision in which it dismissed Bayer petition against Natco over manufacture of Nexavar and observed that "if stay is granted, it will jeopardise the interest of public who are in the need of the drug. The appellant has not made out any case for granting a stay." Also it was stated by IPAB that "The appellant cannot ride piggy-back on, or take shelter under, the sale by Cipla. It is the duty of patentee that its own supply be made available at reasonable price to the requirement of the public".

Disclaimer: The sole purpose of this article is for information only; and not to be construed for any legal advice. The article was drafted, based on the information considered upto 20th November, 2012.