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Sakshi Srivastava
| Updated: 28 Nov, 2020 | Category: Drug License

Purchase of Drug Patents by the Pharmaceutical Companies in India

Purchase of Drug Patents
Reading Time: 5 minutes

The pharmaceutical company in India spends a huge amount of their capital in researching for new drugs and variety of groupings so protection of patent is a must. Protection of patent promotes Research and Development (R&D), as it makes sure that pharmaceutical companies have their own protection of intellectual property. By protecting the best interests of the pharmaceutical companies and their economic safety, it encourages the development of new drug patents in India. The question arises that how does the drug patent work and how a pharmaceutical companies purchase of drug patents in India? In this blog we are going to look at how the Indian drug patent system works.

Why do Pharmaceutical Companies need Patent Protection?

Pharmaceutical companies spend billions of money researching for the consequence and want for new drugs that can help in saving lives. Though, if they do not have a drug patent for their products then other companies have the chance to develop the same drug and sell it in the market. As these pharmaceutical companies did not spend money on researching on how to develop that particular drug, the cost of manufacturing is less for them.

So, such pharmaceutical companies[1] make profit even by selling the medicine at a lower price. When two drugs that does the same thing comes to the market at different cost, the one that has a lower price will be sold more in the market. Therefore, the company that manufactured the drug ends up running at a loss because it has a higher price. 

However, if they have Patent Registration for the drugs they developed then other pharmaceutical companies cannot sell their drugs. For that reason, they will be the only company in the market for a time being. The duration of the patent allows them to recover the cost endured by them for research purpose. Other companies can make a generic medicine that does the same thing and also helps in making the drug more reasonable. This is the reason that pharmaceutical companies need Patent Protection.

Need of Purchase of Drug Patents by the Pharmaceutical Companies

The need of Purchase of Drugs Patents by the Pharmaceutical Companies are stated below-

  • A pharmaceutical drug takes around 10 to 15 years for development and marketing. 
  • Number of years of the drug gets lost in testing, approval, and marketing of the drugs. Studies have shown that a drug patent lasts for 20 years while the useful existence of a license is for about 11.5 years. 
  • Therefore, pharmaceutical companies have to recover their research cost within these 11 years to run a cost-effective business. 
  • The same study shows that it roughly takes around $800 million for development of any new drug. 
  • Patent protection also makes technical information related to the new drugs open to the public domain. Consequently if not for patent protection then the manufacturers can lose their market uniqueness.
  • To make sure that even middle class & lower income people also gets right to use these drugs; governments has allowed generic drugs or medicines to be sold. After expiry of patent, generic drug manufacturers buy the patents accordingly and manufacture versions of the same medication at lower costs.

Where is the Office of Generic Drugs?

The Office of Generic Drugs is the authority that regulates and makes sure that the public is provided with safe generic drugs working from America. They put all generic medicines through a controlled and regulatory procedure to make certain that Americans consume premium generic drugs.

Category of Patents for Purchase of Drug Patents

The Category of Patents for Purchase of Drug Patents is as follows-

Category of Patents for Purchase of Drug Patents

Product Patent

Such patent can be granted for an active component, isomers, formulation, or even to the drug as a whole, as the product is unique. 

Composition Patents

This type patents aims to protect specific doses, formulas of drugs & tablets and combinations of different medicines. Composition Patents claims to cover active ingredients, fillers, carriers and lubricants. 

Synergistic Patents

Medical synergy refers to combination of drugs helps in expanding and enhancing the effect of one drug. These type of patents help protect new combinations of several drugs.

Technology Patents

This type of patents state to safeguard the technology concerned in solubility, stabilization and taste masking of patent.

Polymorph Patents

Polymorphs are a mixture of crystal structures and material form of any existing compound. It helps in mounting the steadiness or reduction of any impurities present within any drugs. Polymorphs patent helps in protecting the discoveries of compounds which enhances the efficacy of a medicine.

Biotechnology patents

These types of patent spin around drugs that use live creature and any biological resources.

Definition of Branded Drugs

Branded drugs or Brand name medicines are those medicines which are manufactured, discovered and sold by any pharmaceutical company. They involve a lot of Research & Development, testing, approval and paperwork to start their marketing. After getting the approval the inventive companies begin to exclusively market their branded drug for a period of 20 years.

Generally, these branded drugs are sold at higher prices so that the company producing that particular drug can cover the cost of research and development put in manufacturing of the drug. Only after the expiry of patent, generic drugs can enter the market for sale.

Purchase of Drug Patents by the Pharmaceutical Companies

Whenever a valuable or extensively popular drug loses its patent protection, generic competition takes over the market. The parent company loses a vast asset as most of the market will assemble towards the lower priced generic drug. In such cases the small companies wait for the opportunities to make money.

Patent laws have given a boost to drug manufacturer who does not do Research & Development of their own. These companies wait for expiry of patents and then hurry to purchase those Drugs licenses. After purchase of drug patents they increase the price of the medicine, as patented medicines have no price tags.

The reason for no fixed price is that they did not spend their capital on Research & Development. Consequently, they invest in purchase of drug patentsand not in research for development of drugs. This has led to increase in patent marketing in which licenses are bought and sold by middlemen who is searching for financial benefit.

While the main purpose of any business is to make money but when dealing in the healthcare industry ethics has to be involved. The best thing is that the government can promote an atmosphere of balance in such cases. Although pharmaceutical companies deserve more support for innovation of new drug, regulations should be made to prevent a monopoly in the market. 

Conclusion

Pharmaceutical companies spend billions of money researching for the consequence and want for new drugs that can help in saving lives. When two drugs that do the same thing come to the market at different cost, the one that has a lower price will be sold more in the market.

Therefore, the company that manufactured the drug ends up running at a loss because it has a higher price. After purchase of drug patents they increase the price of the medicine, as patented medicines have no price tags. The reason for no fixed price is that they did not spend their capital on Research & Development.

Read our article: Four Prominent Benefits of Drug license that you must know

Sakshi Srivastava

Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.

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