1) Pre-Amendment Patent Act of 1970

Before the Commencement of the Indian Patents Act, foreign manufacturers captured a major part of the
pharmaceutical market in India. These foreign multinational companies had a control of 75 % of the
market in India.1 The control was acquired through importing drugs in the Indian market.

The legislatures, while drafting the Act, were motivated with a two-fold objective in the drug sector; first,
reduce the dependency of the consumers in India on importation of drugs and second, ensure self-reliance
in indigenous drugs.2 Guided by this, they enacted the Act on the premise of granting ‘process patent’ in
field of pharmaceuticals as opposed to ‘product patent. 3 Hence, a manufacturer of the drug had patent
over the process of manufacturing the drug but not on the drug itself. The domestic players could now
produce the product using another process that was not patented through ‘reverse engineering’-
reproducing the product by examining its composition.4 Using this method, they began manufacturing a
generic type of expensive patented drugs belonging to specific brands of foreign drug companies. Eg. The
manufacture of generic version of Lilly’s anti-depressant drug Prozac within two years of its introduction
in the global market.5

The Indian pharmaceutical firms began encasing upon the investment of the foreign manufacturers and in
turn substituted them in the market by selling cheaper variants of their drugs. 6 Furthermore, owing to the
non-stringent global patent regime, the Indian players began exporting the cheaper variants of branded
drugs to other countries. This led to the domination of Indian players in the domestic pharmaceutical
market.7 The period of 2000-2005 witnessed the shift in the role of Indian pharmaceutical manufacturers
as they were now controlling over 71% of the manufacturing in the country. 8

1 UNITED NATIONS DEVELOPMENT PROGRAMME , Five Years Into the Product Patent Regime: India’s Response,
Sudip Chuadhuri (2010).

2 NISHITH DESAI, Patents and the Indian Pharmaceutical Industry, N. Zacharias & S. Farias, BUSINESS BRIEFING:
PHARMATECH (2002).

3 S. Chandran, Implications of New Patent Regime on Indian Pharmaceutical Industry: Challenges and
Opportunities, 10 JOURNAL OF INTELLECTUAL PROPERTY RIGHTS 270 (2005).

4 ibid.

5 IMS Health, The Global Use of Medicines: Outlook through 2015, (2012) available at: http://www
.imshealth.com/deployedfiles/ims/Global/Content/Insights/IMS%20Institute%20f or%20Healthcare
%20Informatics/Global%20Use%20of%20Meds%202011/Medicines_Outlook _Through_2015_Report.pdf. <last
visited 20th April, 2019>.

6 Killic Burcu, Boosting Pharmaceutical Innovation In The Post-TRIPS Era : Real-Life Lessons For The
Developing World, CENTRE FOR COMMERCIAL LAW STUDIES, QUEEN MARY, UNIVERSITY OF LONDON (2014).
Even though, 'process patent in pharmaceuticals' helped the development of domestic corporations by
preparing them to confront competing pharmaceutical companies around the world, it presented serious
outcomes. The market elements deflected the MNCs from propelling new items in the Indian market. 9
The solid reliance upon the worldwide market additionally restricted the entrance to drugs for sicknesses
pertaining to the tropical environment that were increasingly pervasive in India, for example such as
malaria. 10 These maladies were to a great extent disregarded by the foreign pharmaceutical corporations
because of the low level of returns owing to the legality reproduction of drugs through reverse
engineering.

Another genuine repercussion was the "appallingly low" level of expenditure on Research &
Development (R&D) by the Indian companies.11 Legality of reverse engineering patented drugs (process
patent) provided the domestic manufacturers with a high level of certainty and safety. This prevented
them from putting resources into advancement of new medications. As per a report, in 2001 by the
Economic Times, the expenditure of domestic companies on R&D was a merely one-fiftieth of their sales
as opposed to the average of over one-tenth worldwide. 12

Thusly, process patent law proved to be insufficient in managing the approaching concerns in the field of
pharmaceuticals.

7 Neeraj Dixit, A Study Of Change In Marketing Strategies Of Indian Pharmaceutical Companies Under The WTO
Regime, 8(3) IJBR (2008).

8 Working Paper, Sudip Chaudhuri, TRIPS and Changes in Pharmaceutical Patent Regime in India, INDIA
INSTITUTE OF MANAGEMENT CALCUTTA (2005).

9 ibid.

10 ibid.

11 S. Chandran, Implications of New Patent Regime on Indian Pharmaceutical Industry: Challenges and
Opportunities, 10 JOURNAL OF INTELLECTUAL PROPERTY RIGHTS 270 (2005).

12 A Banerjee, Indian Pharma Cranks up Research and Development Engine, The Economic Times (6 th December,
2004).