A Brief History of Pharmaceutical Product Patents in India

This is based on a presentation by the author at the National Law School of India University, Bengaluru at a roundtable on ‘Two Decades of Product Patents in India’ organised by the Centre for Health Law, Policy and Ethics on 10 January 2025. This short essay explores how India, which had previously allowed only process patents for pharmaceuticals, came to introduce product patents from 2005 onwards.

Before the enactment of the Indian Patents Act in 1970, which disallowed product patents for pharmaceuticals, India had a colonial patent law that had permitted them at least since 1911. Surprisingly, the law of our colonial masters (the UK patent law) expressly disallowed patents for substances intended for use as food or medicine in Section 38(A), from 1919  to 1949. But this was never introduced into the Indian patent law. At least partly as a result of the 1911 law, India ended up having some of the highest prices of pharmaceuticals in the world and in inverse proportion to its per capita income, as later attested in the 1961 report of the US Senate Sub-Committee headed by Estes Kefauver (page 112).

Newly independent India set up a Patent Enquiry Committee in 1948 headed by Justice Bakshi Tek Chand to advise on a patent law that would suit the needs of the country. This committee looked at the patent laws of all major countries and recommended, among other things, product-by-process patents for medicines and food. Product patents protect the end product wherein third parties cannot make, use, or sell the product without  permission of the patent owner; process patents apply only to the process of making the product, allowing others to make the same product as long as they use a different method; and product-by-process patents protect not just the process but the end product as well but only if made through the patented process. A draft bill based on the committee’s recommendations was presented to Parliament in 1953 but was never enacted.

Before presenting the bill to the next Parliament, the government referred it to a single-member committee of Justice N Rajagopala Ayyangar, who studied the patent laws of both developed and developing countries and, inter alia, recommended that only process patents should be allowed for substances intended for use as medicines and food. This recommendation was not only in line with the laws of many developed countries, but also more stringent than the laws of some Latin American countries that had excluded both product and process patents for pharmaceuticals.

The Indian Patents Act of 1970, which allowed only process patents for pharmaceuticals, was largely based on the Ayyangar Committee Report, with some important additions. To ‘kill’ pharmaceutical patents so that they never lead to high prices, the law used three ‘bullets’ on all food and medicine patents:

1. only process patents for eligible inventions;
2. a shorter term of protection of 7 years from filing instead of the 14 years given for all other sectors; and
3. an automatic licence of right upon payment of a statutorily limited maximum of 4 per cent of royalty on sales of the licensee.

Many attribute the growth of India’s generic drug industry to this law, but there were several other proactive policies such as the Foreign Exchange Regulation Act 1973 that forced foreign equity to be limited to only 40 per cent (many multinationals chose to leave the country because of this); the expansion of public sector undertakings such as the Indian Drugs and Pharmaceuticals Limited and Hindustan Antibiotics Limited in the 1970s that helped build indigenous capabilities; and the Drug Policy of 1978 that required manufacture of medicines from the basic stage and not from imported drug intermediates, which then allowed Indian companies to learn how to manufacture medicines from the basic raw materials.

Given the burgeoning pharmaceutical exports from developing countries such as India, the US sought to tighten intellectual property (IP) laws. In 1981, the US placed India on its Special 301 Watch List (which includes countries with IP laws that the US views with concern), a place India has held every year to date. The US considered the World Intellectual Property Organization (WIPO) as inadequate to pursue its agenda because, paradoxically, developing countries—including India—had nearly succeeded by 1984 in further weakening the Paris Convention for the Protection of Industrial Property. But the US stalled this attempt.

The next stage of US involvement came in the Punta del Este Declaration, which launched the Uruguay Round of multilateral trade negotiations of the General Agreement on Trade and Tariffs (GATT) in September 1986. The declaration contained a few paragraphs on trade-related aspects of IPRs, including counterfeit goods, which India and others misunderstood to only mean trade in counterfeit goods. The language, even though ambiguous, clearly included possible new rules for the adequate and effective protection of IPRs, words directly lifted from the Special 301 requirements in the US law. From 1987 to 1988, India blocked the IPR negotiations arguing that the only trade-related aspect of IPRs that was part of the negotiating mandate was trade in counterfeit goods.

In April 1989, India eventually accepted the terms of reference of the negotiating group, which largely forms the table of contents of what is now the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  The understanding at the time was that each country, including India, would decide if it wanted to join the TRIPS agreement or not. This was the model up to then in GATT negotiations. However, given the comprehensive and difficult nature of the Uruguay round of negotiations, in 1990, the concept of ‘single undertaking’—where negotiating items are all part of a single package deal and to be accepted by all countries—was introduced.

Negotiating constructively, India came up in October 1990 with the text of what became Article 31 of the agreement, on compulsory licensing—a legal mechanism that allows governments to authorise third parties to produce or sell patented products without the patent holder’s consent. The story of how India managed not to have any restrictions on the grounds for compulsory licensing is told by me here (page 303–308). India also wanted to get a clear ten-year transition period to comply with the TRIPS obligations for pharmaceutical product patents but failed in this and ended up accepting the filing of such applications from the very first day of the World Trade Organization (WTO)’s establishment—1 January 1995. The circumstances that led to this are recounted here (pages 227–229). In 1999, India lost the dispute brought against it by the US and EU at the WTO, which alleged the absence of patent protection for pharmaceutical and agricultural chemical products. Following this, India implemented amendments to its patent law allowing for the filing of such applications in a ‘mailbox’, which would be examined only after 2005, that is, ten years from the establishment of the WTO.  One interim ‘exclusive marketing right’ was issued to Norvatis, to protect the cancer drug Glivec, but eventually the patent was examined and rejected by the Supreme Court of India (SCI) in the famous Glivec case in 2013. The SCI ruled that the drug lacked significant, improved ‘therapeutic efficiency’ over the existing drug and that ‘efficacy’ as per Section 3(d) of the Indian Patent Act meant ‘therapeutic efficacy’ in the case of pharmaceutical inventions.

India continues to face pressure to amend its IPR framework to provide stronger exclusive rights to innovative pharmaceutical products, including through regulatory data exclusivity. This would entail providing originator medicines with market exclusivity in India for five years from the date of their introduction, a right not required under the TRIPS Agreement but widely required in the IPR chapters of Free Trade Area agreements. Eventually, India will need to work out how to ensure affordability of needed patented drugs to all even while moving to higher levels of IPR protection for pharmaceuticals. The answer may lie in encouraging voluntary licensing by patent owners to Indian generic companies, including through the Medicines Patent Pool. Indian industry must aim to climb higher on the innovation ladder of medical technologies. India’s future negotiations and policies should bear these twin objectives in mind.