age | 1

24August2UlU
DISCUSSION PAPER
SUBJECT: COMPULSORY LICENCING
I. Invitation of Views:

1. TIc Inicllcciual Procriy rcgimc of iIc Covcrnmcni of
India undcrwcni significani cIangcs aficr India's acccssion io TFIPS
in 1995. Amcndmcnis wcrc madc io iIc Paicnis Aci and iIc Tradc
Marls Aci. TIc Dcsigns Aci as wcll as iIc CcograIical Indicaiions
Aci wcrc cnacicd. TIc focus on iIc IPF rcgimc is now on
consolidaiion as wcll as romoiing a fair lalancc lciwccn IP
roicciion and ullic inicrcsi. In iIis conncciion ccriain olicy issucs
Iavc lccn idcniificd wIicI will Icl in moving iowards our
dcvclomcni and iccInological goals wIilc giving roicciion io
inicllcciual rocriy rigIis. TIcsc includc iIc issuc of comulsory
liccnccs, iIc romoiion of uiiliiy modcls and iIc sircngiIcning of
gcograIical indicaiions rcgisicrcd in India.
2. TIis acr dcals wiiI iIc suljcci of 'Comulsory
Liccnsing of Paicnis'. Vicws and suggcsiions arc sccifically inviicd on
Scciion XVII of iIc acr cniiilcd 'Issucs for Fcsoluiion' aari from
any oiIcr issucs of conccrn rclaiing io comulsory liccncing of
aicnis. TIc oljcciivc is io dcvclo a rcdiciallc cnvironmcni for usc
of sucI mcasurcs. TIcsc vicws/ suggcsiions laclcd u ly facis,
figurcs and cmirical cvidcncc may lc furnisIcd ly 30 Scicmlcr,
2010. TIc vicws crcsscd in iIis discussion acr sIould noi lc
consirucd as iIc vicws of iIc Covcrnmcni. TIc Dcarimcni Iocs io
gcncraic informcd discussion on iIc suljcci, so as io cnallc iIc
Covcrnmcni io ialc an aroriaic olicy dccision ai iIc aroriaic
iimc.





age | 2
24August2UlU
II. Urigins of Compulsory Licencing.
3. Comulsory liccnsing is a sysicm wIcrcly iIc
Covcrnmcni allows iIird ariics (oiIcr iIan iIc aicni Ioldcr} io
roducc and marlci a aicnicd roduci or roccss wiiIoui iIc
conscni of iIc aicni owncr. TIis mccIanism cnallcs iimcly
inicrvcniion ly iIc Covcrnmcni io acIicvc cquililrium lciwccn iwo
oljcciivcs - rcwarding invcniions and in casc of nccd, maling iIcm
availallc io iIc ullic during iIc icrm of iIc aicni. TIrougI sucI
an inicrvcniion mccIanism, iIc Covcrnmcnis lalanccs iIc rigIis of
iIc aicni Ioldcr wiiI iis olligaiions io cnsurc worling of aicnis,
availaliliiy of iIc roducis ai a rcasonallc ricc, romoiion and
disscminaiion of iccInological invcniion and roicciion of ullic
IcaliI and nuiriiion.
4. Comulsory Liccnsing (CL} Ias lccn an inicgral ari of
iIc aicni rcgimc sincc iis incciion. TIc iniroduciion of aicnis in
Vcnicc in iIc fificcniI ccniury was accomanicd ly a lroad sci of
rulcs wIicI includcd iIc siaic's rigIi io issuc a comulsory liccncc
1
.
Ariiclc 5 A(2} of iIc Paris Convcniion of 1883 rovidcs iIai EacI
couniry of iIc Union sIall Iavc iIc rigIi io ialc lcgislaiivc mcasurcs
roviding for iIc grani of comulsory liccnscs io rcvcni iIc aluscs
wIicI migIi rcsuli from iIc ccrcisc of iIc cclusivc rigIis confcrrcd
ly iIc aicni, for camlc, failurc io worl." During iIc World Wars,
comulsory liccncing was rcsoricd io for iIc sIaring of aviaiion
iccInology and iIc manufaciurc of cnicillin.
5. Fclaiivcly morc rcccni insianccs of comulsory liccncing
arc indicaicd lclow. As will lc sccn, loiI dcvclocd and dcvcloing
counirics Iavc issucd comulsory liccnccs in iIc rcccni asi.
III. Recent Instances of Compulsory Licencing
Internationally

. &3tcd Stutcs o Anc.u Comulsory Liccnscs wIicI
Iavc lccn/arc lcing issucd fall inio si caicgorics. TIcsc includc a}
Mandaiory comulsory liccnccs for aicnis wIosc icrm was cicndcd
ly CATT imlcmcniaiion l} Cascs involving govcrnmcni usc undcr 28
USC 1498 c} Cascs involving iIc Day DoIl Aci and d} cascs involving
mcrgcr rcvicws c} cascs involving non mcrgcr rcmcdics io anii

1
lnLellecLual roperLy 8lghLs A CrlLlcal PlsLory ChrlsLopher May and Susan Sell vlva 8ooks 2008
2
1hls secLlon ls drawn from Lwo sources 1hese are 8ecenL examples of Compulsory Llcences on
aLenLs kLl 8esearch noLe 2007 by !ames ackard Love" and ' 1he Clobal ollLlcs of harmaceuLlcal
Monopoly ower urug paLenLs access lnnovaLlon and appllcaLlon of Lhe W1C uoha ueclaraLlon on
18lS and ubllc PealLh by Lllen l M 'L Poen AM8 2009"
age | 3
24August2UlU
comciiiivc raciiccs and f} cascs sulscqucni io iIc Surcmc Couri
oinion in cDay vcrsus Mcrc EcIangc.
7. u3udu Canada, wIicI Iad a sccial comulsory liccncc
rcgimc for food and Iarmaccuiicals, issucd 2 comulsory liccnccs
lciwccn 1923 and 1993. Of iIcsc, 13 wcrc issucd aficr 199, wIcn
iIc law was amcndcd io rovidc for imori of gcncrics undcr a CL.
TIis allowcd for low riccs of Iarmaccuiicals wIilc cncouraging iIc
growiI of iIc local gcncric drug indusiry. In 1993, CLs for
Iarmaccuiicals wcrc cffcciivcly alolisIcd.
8. &3tcd K3gdon Comulsory liccncing Ias lccn uscd ly
iIc Naiional HcaliI Scrvicc in iIc asi. Ii imoricd drugs, aicnicd in
iIc UK from counirics wIcrc no Iarmaccuiical aicni Iad lccn
granicd, on iIc ground of 'Crown usc'. SucI rovisions coniinuc io
cisi in DriiisI Law.
9. tu In 200, iIc Iialian Comciiiion AuiIoriiy issucd a
CL on aniiirusi grounds for roduciion of an aciivc ingrcdicni for an
anii migrainc drug. In 2007, ii issucd a CL for a drug io ircai rosiaic
cnlargcmcni and laldncss on similar grounds.
10. cuco3g u3d Lcust cucocd ou3tcs Aficr iIc
DoIa Dcclaraiion on iIc TFIPS agrccmcni and Pullic HcaliI, aloui
52 counirics Iavc issucd CLs. TIcsc includc Drazil( 2007 for an anii
AIDS drug}; TIailand( 200 and 2007 for anii AIDS drugs }, Malaysia (
2003 for Anii AIDS drugs}, SouiI Africa ( Anii Aids Drug} Kcnya (
voluniary liccnscs issucd in 2004 aficr iIrcai of CL}, and mosi
rcccnily Ecuador ( Aril 2010 for an anii AIDS drug}
In India
11. No CLs Iavc lccn issucd in India undcr iIc
amcndcd Paicnis Aci. In Scicmlcr 2007, iIrcc alicaiions undcr
scciion 92A of iIc Paicnis Aci, 1970 wcrc rcccivcd for grani of
comulsory liccncc for iIc manufaciurc and cori of aicnicd drugs
io counirics wIicI rcoricdly did noi Iavc manufaciuring caaciiy
nor Iad insufficicni caaciiy. TIc roccss cnvisagcd undcr iIc Aci
was iniiiaicd. Howcvcr, iIc alicani sulscqucnily wiiIdrcw Iis
alicaiions.
IV. Compulsory Licencing Provisions in TRIPS
12. Comulsory liccncing undcr TFIPS is covcrcd undcr
iwo Ariiclcs. Ariiclc 30, allows limiicd ccciions io lc rovidcd io iIc
rigIis confcrrcd undcr aicnis rovidcd iIcy do noi unrcasonally
rcjudicc iIc lcgiiimaic inicrcsis of iIc aicni owncr, ialing inio
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24August2UlU
accouni iIc lcgiiimaic inicrcsis of iIird ariics." TIis lroadly covcrs
iIc ossililiiy of issuing CLs. Howcvcr, Ariiclc 31 is morc oinicd.
WIilc roviding for OiIcr Usc wiiIoui auiIorizaiion of FigIi Holdcr",
ii qualifics iIc circumsianccs of iIis usc iIrougI iwclvc condiiions.
TIc siiulaiions of local rcquircmcni and iIc ullic non commcrcial
usc/naiional cmcrgcncy/circmc urgcncy clauscs arc noi rcquircd io
lc alicd wIcncvcr sucI liccncing is aimcd ai addrcssing anii
comciiiivc raciiccs. WIilc TFIPS rcsiricis iIc issuc of CLs for scmi
conducior iccInologics io ullic non commcrcial usc or io rcmcdy
anii comciiiivc raciiccs, ii docs noi rovidc any oiIcr consiraini on
ciiIcr iIc ficld of iccInology or iIc circumsianccs of issuc. TIcrc is no
rcsiriciion iIai sucI mcasurcs sIould lc ialcn only io addrcss ullic
IcaliI conccrns. TIc grounds on wIicI a CL can lc issucd arc noi
siiulaicd. TIc roccdurc io lc followcd for issuing CLs is also noi
sccificd, iIus allowing for diffcrcni roccdurcs io lc adoicd for
diffcrcni circumsianccs. TIus, significani flcililiiy is rovidcd io iIc
mcmlcr counirics for iIc issuc of a CL.
13. TFIPs also siiulaic iIai 'iIc rigIi Ioldcr sIall lc
aid adcquaic rcmuncraiion in iIc circumsianccs of cacI casc, ialing
inio accouni iIc cconomic valuc of iIc auiIorizaiion'. Fcmuncraiion
is furiIcr discusscd in Scciion XIV.
14. TIis acr clorcs iIc scoc of comulsory
liccncing using iIc Iarmaccuiical indusiry as a lasis. A similar
aroacI can lc adaicd io any oiIcr sccior wIcrc iIc issuc of a
comulsory liccncc is found ncccssary.
V. National Pbarmaceutical Policy
15. TIc Naiional PIarmaccuiical Policy 2002
rccognizcs iIc nccd io 'cnsurc alundani availaliliiy ai rcasonallc
riccs of good qualiiy csscniial Iarmaccuiicals of mass
consumiion'. TIc drafi Naiional PIarmaccuiical Policy 200 wIilc
aclnowlcdging iIc closivc growiI in iIis sccior lciwccn 1990 and
2010, and iIc accomanying low cosi of mcdicincs noics, iIai
conccrns rcgarding iIc acccssililiiy and affordaliliiy of mcdicincs
rcmain. Ii rooscd a numlcr of lcy oljcciivcs including a} cnsuring
availaliliiy of good qualiiy mcdicincs wiiIin iIc couniry ai rcasonallc
riccs (l} imroving acccssililiiy of csscniial mcdicincs for common
man ariicularly iIc oorcr scciions of iIc oulaiion. To addrcss
iIcsc issucs, iIc drafi olicy rooscd a slcw of mcasurcs. TIcsc
includcd cnaciing a ncw law io ccrcisc morc cffcciivc ricc conirol
/moniioring of iIc riccs of drugs, crcaiing a Naiional Lisi of
Esscniial Mcdicincs consisiing of 354 drugs, sircngiIcning iIc drug
age | 3
24August2UlU
rcgulaiory sysicm, limiiing iradc margins and ncgoiiaiing riccs for
aicnicd drugs. TIc drafi olicy Ias noi yci lccn finalizcd. Howcvcr,
ii madc somc criincni olscrvaiions on IigI riccs and conscqucni
low dcmand of canccr and aids drugs. TIcsc oinis, rcroduccd
lclow, arc rclcvani io iIc issuc of iIc rcasonallc rcquircmcnis of iIc
ullic lcing mci ai rcasonally affordallc riccs ari of iIc grounds
for issuc of CLs undcr iIc Indian Paicnis Aci.
1. Ai any givcn oini of iimc iIcrc arc aloui 20 io 25
lalI colc suffcring from canccr in iIc couniry wIo arc affccicd ly
various iycs of canccr. Ii is csiimaicd iIai cvcry ycar aloui 7 lalI
colc arc dciccicd wiiI diffcrcni iycs of canccr. Mosi of iIcm arc
unallc io afford iIc cosi of ccnsivc anii-canccr mcdicincs. Coing ly
a conscrvaiivc csiimaic of avcragc cosi of anii-canccr mcdicincs cr
aiicni as Fs 25,000 cr annum, ii would rcquirc mcdicincs woriI Fs
5,000 crorc. As againsi iIis, iIc rcscni iurnovcr of iIis scgmcni of
mcdicincs in India is csiimaicd io lc only Fs 150 crorc. TIc lig ga
indicaics iIc ncar non-acccssililiiy of iIc mcdicincs io a vasi majoriiy
of iIc affccicd oulaiion mainly lccausc of iIc IigI cosi of iIcsc
mcdicincs.
17. India Ias iIc IigIcsi numlcr of rcoricd HIV/AIDS
cascs in iIc cniirc SouiI Asian rcgion. TIcrc arc aloui 25 lalI colc
affccicd ly HIV/AIDS in India, aloui 85% of iIc SouiI Asian ioial.
Prcscnily, only iIosc aiicnis wiiI a CD 4 lclow 200 cr cu ml of
llood arc lcing ircaicd. TIc numlcr of aiicnis lcing ircaicd would
lc aloui 3 lalI. FuriIcr firsi gcncraiion drugs arc lcing uscd wIicI
arc gradually losing iIcir cffcciivcncss, rcquiring iIc usc of sccond
and iIird gcncraiion drugs. NACO urcIascs mcdicincs and
disiriluics iIcm frcc of cosi iIrougI iis Ccnicrs and Siaic Aids
Conirol Sociciics. Lowcr riccs for iIcsc mcdicincs would allow
grcaicr covcragc of affccicd aiicnis.
VI. Views of tbe Parliamentary Standing Committee
18. TIc Dcarimcni Fclaicd Parliamcniary Sianding
Commiiicc on HcaliI and Family Wclfarc rcscnicd iis foriy fifiI
rcoris on 'Issucs Fclaiing io iIc Availaliliiy of Ccncric, Ccncric
Drandcd and Drandcd mcdicincs, iIcir formulaiions and iIcracuiic
cfficacy and cffcciivcncss' io iIc Parliamcni on 4iI Augusi 2010. Iis
rcori crcsscd iis conccrn on iIc following issucs
a. TIc IigI riccs of iIc ncwly aicnicd mcdicincs wIicI wcrc noi
lcing rcgulaicd ly iIc NPPA and iIc nccd for lringing in morc
drugs undcr iIc amlii of iIc NPPA
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24August2UlU
l. Evcn in iIc casc of iIc 74 drugs wIicI wcrc lcing rcgulaicd ly
iIc NPPA, iIc incrcasing incidcncc of unoriIodo raciiccs
adoicd ly drug comanics wIcrcin rcgulaicd drugs wcrc
sulsiiiuicd wiiI ncw ingrcdicnis in oular lrands io avoid
rcgulaiion.
c. TIc sucr rofiis lcing gcncraicd ly somc drug comanics wIo
ricc iIcir roducis significanily alovc cosi and iIc nccd io
clorc ossililiiics of caing rofii margins for all mcdicincs
including iIosc noi covcrcd ly iIc DPCO.
d. TIc ialcovcr of Indian drug comanics ly somc forcign
comanics and iIc nccd io gcncraic olicy oiions io ' cnsurc iIai
major Indian Iarma comanics rcmain in Indian Iands '
19. TIc Primc Minisicr, Dr ManmoIan SingI in Iis
rcmarls ai iIc Foriunc Clolal Forum in Ncw DclIi in Ociolcr 2007
siaicd Wc Iavc affirmcd our commiimcni io iIc roicciion of
inicllcciual rocriy rigIis. Dui, iIc glolal cconomy, iIc glolal
communiiy cannoi afford iIc comlcic rivaiizaiion of rcscarcI, of
lnowlcdgc gcncraiion, csccially in ficlds lilc mcdicinc. Wc nccd io
cvolvc mccIanisms iIai roicci inicllcciual rocriy and ai iIc samc
iimc, addrcss iIc nccds of iIc oor".
VII. Tbe Pbarmaceutical Sector
20. Ovcr iIc asi fificcn ycars, iIc Iarmaccuiical
sccior Ias wiincsscd significani growiI. India is now rccognizcd as iIc
onc of iIc lcading glolal laycrs in iIc manufaciurc of
Iarmaccuiicals. India now ranls iIird in icrms of volumc of
roduciion (9.3% of iIc glolal sIarc} and 14iI in icrms of valuc (1.5%
of glolal sIarc}. India is now sulying affordallc and IigI qualiiy
mcdicincs io a numlcr of DCs and LDCs and Ias lccomc iIc
Iarmacy of cIoicc io iIc dcvcloing world. Iis cosis arc also amongsi
iIc lowcsi in iIc world. Annccd I dciails iIc salcs, and cori
iurnovcrs of iIc Indian PIarmaccuiical indusiry lciwccn 1994-95 and
2008-09. TIis analysis raiscs somc conccrns. TIc gross salcs
iurnovcr incrcascd from Fs 14,200 crorc in 1994-95 io Fs 75,500
crorc in 2008-09. TIis Ias lccn accomanicd ly a morc iIan
rooriionaic growiI in coris. PIarma coris Iavc riscn from Fs
2512 crorc in 94-95 io Fs 39,538 crorc in 2008-09. During 2008-09,
iIc cori growiI raic was 29% againsi iIc indusiry growiI raic of
only 8 %. Tallc I lclow dciails iIc coris, imoris, salcs and
domcsiic consumiion lciwccn 2003-04 and 2008-09.

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24August2UlU
TabIe 1
#s .oc
Ind|cator 200304 20040S 200S06 200607 200708 200809
LxporLs value 132132 178378 221137 268932 307396 393377
lmporLs value 2938 31693 43309 38316 67129 86176
Sales value 40800 42300 49300 61000 70000 73300
MarkeL Slze (value) 43738 436693 340309 668316 767129 841176
uomesLlc ConsumpLlon (value) 283448 278113 319331 399363 439333 443799
uomesLlc ConsumpLlon CrowLh 3 13 23 13 3
Sou.c. dutu Husc
21. TIougI imoris Iavc lccn growing, iIc cmIasis on
coris Ias rcsulicd in a significanily lowcr growiI of domcsiic
consumiion wIcn comarcd io coris during mosi ycars during iIis
criod. During 2008-09, domcsiic consumiion in valuc icrms fcll
from Fs 45,953 crorc io Fs 44,579 crorc.
22. TIis is dcsiic iIc faci iIai India iisclf Ias a largc unmci
domcsiic dcmand for criiical mcdicincs. 5% of iIc Indian oulaiion
siill lacls acccss io csscniial mcdicincs
3
. SIarc of drugs in OPD
ccnscs wcrc csiimaicd ai 3 cr ccni ly NSSO 0
iI
Found (January
2004}. NSSO in iIcir Fcori on 1
si
Found indicaicd iIis ccndiiurc
Iaving incrcascd io 82 cr ccni.
4
As cr Naiional HcaliI Accounis,
mcdicincs accounicd for 38-2 cr ccni of inaiicni ccndiiurc in
rural and urlan arcas.
5
WiiI ioial IouscIold ccndiiurc on IcaliI
csiimaicd ai Fs 92,838 crorc in 2004-05, ai 0 cr ccni lcvcl,
ccndiiurc on mcdicincs is csiimaicd io cross Fs 50,000 crorc.
23. TIis daia acars io rcinforcc iIc issucs raiscd ly
iIc Parliamcniary Commiiicc on iIc nccd io incrcasc iIc availaliliiy
and acccssililiiy of drugs io iIc oor in iIc couniry
24. Civcn iIis laclground, iIc nccd for affordallc and
IigI qualiiy mcdicincs is criiical for iIc susiainallc growiI of iIc
Indian cconomy. In iIis conici, iIrcc dcvclomcnis in iIc
Iarmaccuiical sccior in India Iavc IcigIicncd iIc conccrns lcing
crcsscd. TIcsc arc iIc cnacimcni of iIc amcndmcnis io iIc Indian
aicnis Aci in 2005, iIc rcccni rcsiruciuring of owncrsIi in iIc
sccior and iIc siraicgic allianccs lcing forgcd ly somc largc Indian
laycrs in iIis sccior.
25. TIc cnacimcni of iIc Paicni Amcndmcni aci in
2005 allowcd for iIc grani of roduci aicnis in iIc Iarmaccuiical

3
World Medlclne SlLuaLlon WPC 2004 quoLlng 1999 flgures
4
lndranl CupLa CuL of ockeL Lxpenses and poverLy LsLlmaLes A paper submlLLed Lo Lhe LxperL
Croup on MeLhodology of overLy LsLlmaLes 2009
3
MlnlsLry of PealLh and lamlly welfare naLlonal PealLh AccounLs 200403 page 31
age | 8
24August2UlU
sccior. TIc firsi Iarmaccuiical roduci aicni undcr iIc amcndcd
aci was granicd in 200. WIilc iIc lull of csscniial drugs arc siill
undcr iIc roccss aicni rcgimc, ncw formulaiions will sicadily lc
issucd roduci aicnis rcsuliing in focusing of monooly owcr
among iIc aicni Ioldcrs.
2. Si rcoricd cascs wIcrc forcign comanics Iavc
ialcn ovcr Indian comanics arc rovidcd in Tallc 2 lclow.
TabIe 2
cu 3du3 o tuIc3
ouc
Focg3
onu3
uI.I tooI
ouc
ou3t
o og3
Take
over
amount
US$ mill
Aug 200 Mairi Lal Mylan Inc USA 736
Aril 2008 Dalur PIarma Frcscnius
Kali
Singaorc 219
Junc 2008 Fanlay
Laloraiorics
DaiicIi
Sanlyo
Jaan 4600
July 2008 SIania DioiccI Sanofi
Avcniis
Francc 783
Dcc 2009 OrcIid
CIcmicals
Hosira US 400
May 2010 Piramal HcaliI
Carc
Alloi
Laloraiorics
US 3720
Sou.c. Pcss #cots.
27. Mosi of iIcsc comanics arc cori oricnicd. TIcrc
is a conccrn iIai iIcir ialcovcr ly muliinaiionals will furiIcr oricni
iIcm away from iIc Indian marlci, iIus rcducing domcsiic
availaliliiy of iIc drugs lcing roduccd ly iIcm. TIis may wcalcn
comciiiion lcading io Icadroom for incrcasc in domcsiic drug riccs.
Daia Dasc from iIc Ccnirc for moniioring Indian Economy indicaics
iIai wIilc iIc raic of growiI of salcs of iIc Iarmaccuiical comanics
dcclincd during 2001-2009 (14.2 cr ccni annual} comarcd io iIcir
growiI during 1988-2000 (19.5 cr ccni annual}, iIcir raiio of rofii
aficr ia io ioial incomc incrcascd io 9.7 cr ccni (avcragc of 2001-
2009} from 4.9 cr ccni (avcragc of 1988-2000}. TIis may oini io iIc
age | 9
24August2UlU
worscning in loiI iIc availaliliiy and affordaliliiy of Iarmaccuiical
roducis.

28. Addiiionally, iIc siraicgic allianccs lcing forgcd ly
oiIcr forcign comanics wiiI Indian drug manufaciurcrs for liccncing
and suly also alicr iIc Iarmaccuiical landscac. TIcsc includc
allianccs lciwccn CSK wiiI Dr Fcddys; Pfizcr wiiI iIrcc comanics -
Aurolindo, Siridcs Arcolal and Claris Lifc Scicnccs; Alloi wiiI
Cadilla HcaliI Carc and Asira Zcncca wiiI Torrcni . FuriIcr forcign
comanics arc ialing ovcr domcsiic drug comanics in oiIcr
counirics also. For c.g. Sanofi Avcniis iool ovcr Mcdlcy in Drazil and
Zaniiva in iIc CzccI Fcullic, CSK iool ovcr DMS in Egyi and
Palisian. Ii can iIus lc said, iIai iIcrc is a movc iowards
consolidaiion in dcvcloing couniry marlcis
VIII. Concerns relating to drug prices and availability
29. TIc io 10 Iarmaccuiical comanics ly 2008-09
salcs arc lisicd lclow in Tallc 3. TIcir aggrcgaic salcs ( including
coris} rcrcscni ncarly 39 % of iIc ioial indusiry salcs
TabIe 3
#s .oc
Cila 4807.7
Fanlay Laloraiorics. 4755.7
Dr. Fcddy's Laloraiorics- 4394.90
Luin 2934.25
Sun PIarmaccuiical Inds. 2830.8
Aurolindo PIarma 2730.75
Cadila HcaliIcarc 175.40
ClaosmiiIllinc PIarmaccuiicals 18.08
Piramal HcaliIcarc 155.42
WoclIardi- 1448.87
Sou.c . utu Husc
30. Aficr iIc rcccni ialcovcr, iIrcc of iIcsc icn
comanics arc muliinaiionals. In 1998-99, (scc Annc 2} only onc of
iIc io icn comanics ranlcd ly salcs was a muliinaiional comany.
TIcrc arc incrcasing conccrns iIai if sucI a ialcovcr ircnd coniinucs,
an oligoolisiic marlci may dcvclo wIicI may rcsuli in a fcw
comanics diciaiing riccs of drugs criiical for addrcssing ullic
IcaliI conccrns including figIiing froni linc discascs lilc HIV/AIDS,
Hcaiiiis C. SucI a coniingcncy wIilc rcinforcing iIc ncwly acquircd
monooly aicni owcr of iIc forcign comanics may also wcalcn iIc
govcrnmcni's aliliiy io addrcss sucI cIallcngcs iIrougI iIc issuc of

6
CMlL rowess uaLa 8ase
age | 10
24August2UlU
comulsory liccnccs. If largc Indian gcncric comanics wiiI iIc
caaliliiy io manufaciurc drugs lascd uon a CL ( wIcrc iIcy issucd
io iIcm} arc iIcmsclvcs ialcn ovcr, iIcn iIc rcgimc of cIca and
cffcciivc drugs may lc iIrcaicncd for four rcasons
a. TIc largc Indian Iarmaccuiical comanics, wIicI
Iavc lccn ialcn ovcr ly forcign comanics, may no
longcr lc willing io aly for a Comulsory Liccncc
cvcn if cligillc. TIcir dcicrrcni iIrcai is iIus
cmasculaicd.
l. WIcn govcrnmcni noiifics a ullic cmcrgcncy and
rccognizcs iIc nccd for issuc of a CL for a ariicular
drug, adcquaicly caallc drug manufaciurcs may noi
lc availallc io comc forward io aly for CL and worl
ii ai a rcasonallc cosi.
c. TIcrc is a conccrn iIai forcign comanics may uiilizc
iIc marlciing cIanncls of iIc Indian comanics iIcy
ialc ovcr io scll IigIcr cosi aicnicd drugs or lrandcd
gcncrics raiIcr iIan iIc cIcacr gcncrics iIai wcrc
lcing sold carlicr. TIis may usI u drug riccs in
gcncral.
d. Somc of iIc Indian comanics ialcn ovcr wcrc
rcciicnis of sulsianiial granis as wcll as ia
conccssions. OiIcrs wcrc iransfcrrcd or allowcd io
worl aicnis owncd ly iIc CSIF ai conccssional
riccs. TIus a significani oriion of iIcir marlci valuc
arosc lccausc of siaic suori and iIcy wcrc caicring
io nicIc marlcis for rclcvani drugs. WiiI iIcir iransfcr
io forcign conirol, iIcy may no longcr lc inicrcsicd in
doing so.
IX. Uptions available
31. In iIc cvcni of any or all iIcsc conccrns
crysiallizing, four ossillc rcsonscs arc availallc wiiI iIc
Covcrnmcni of India. Onc is an immcdiaic rcsonsc and iIrcc arc
sIori icrm olicy rcsonscs. TIcsc arc
a. If iIc circumsianccs so rcquirc; for camlc a ullic
cmcrgcncy lilc a andcmic , or wIcncvcr iIc dcmand for
a criiical drug is noi lcing mci, iIcn a comulsory
liccncc can lc issucd romily io a qualificd comany io
roducc sucI a drug or iIc govcrnmcni usc rovision
involcd.
age | 11
24August2UlU
- TIc firsi sIori icrm oiion is involing iIc Comciiiion
Aci 2002 io scruiinizc wIciIcr iIc ricc or availaliliiy of
a drug is a conscqucncc of an anii comciiiivc agrccmcni
or a comlinaiion wIicI Ias an advcrsc cffcci on
comciiiion; or iIc alusc of dominani osiiion ly a
comany and iniiiaiing suiiallc aciion .
c TIc sccond sIori icrm oiion is io rcvicw iIc olicy on
forcign invcsimcni for Iarmaccuiical comanics.
Prcscnily, invcsimcni u io 100% in iIc Iarmaccuiical
sccior is on iIc auiomaiic rouic. TIis could lc sIificd io
iIc govcrnmcni rouic so iIai roosals for mcrgcrs and
acquisiiions in iIis imoriani sccior could lc scruiinizcd
ly iIc FIPD. TIis could lc a way of moniioring wIciIcr
ncw iccInology is lcing lrougIi in ly a forcign
comany wIilc ialing ovcr an Indian comany.
d TIc iIird sIori icrm oiion is io cand iIc amlii of iIc
Naiional PIarmaccuiical Pricing AuiIoriiy and vcsi ii wiiI
iIc owcr io rcgulaic iIc riccs of a largcr numlcr of
drugs iIan iIc rcscni 74.
32. TIc firsi oiion is a focuscd and sIar rcsonsc
wIicI can lc involcd wIcn a singlc criiical drug is ciiIcr unavailallc
cr sc or unavailallc ai rcasonally affordallc riccs. TIc oiIcr
iIrcc oiions dcal wiiI lroadcr issucs and will noi lc discusscd Icrc.
TIis acr cclusivcly discusscs iIc firsi oiion- iIc issuc of
comulsory liccnccs.
X. Provisions under TRIPS
33. Ariiclc 4 of 'TIc Dcclaraiion on iIc TFIPS
Agrccmcni and Pullic HcaliI' adoicd in DoIa in Novcmlcr 2001
affirms iIai iIc TFIPS agrccmcni docs noi and sIould noi rcvcni
mcmlcr counirics from ialing mcasurcs io roicci ullic IcaliI.
Accordingly, ii allows for inicrrciaiion and imlcmcniaiion of iIc
TFIPS agrccmcni in a manncr suoriivc of iIc WTO's mcmlcrs rigIi
io roicci ullic IcaliI and in ariicular, romoic acccss of
mcdicincs io all. Ariiclc (l} of iIc DoIa Dcclaraiion rccognizcs iIai
iIc flcililiiics of iIc TFIPS agrccmcni includc iIc rigIi of cacI
Mcmlcr io grani comulsory liccnscs and iIc frccdom io dcicrminc
iIc grounds undcr wIicI sucI liccnscs arc granicd. Ariiclc (c}
rccognizcs iIc rigIi of cacI Mcmlcr io dcicrminc wIai consiiiuics a
naiional cmcrgcncy or oiIcr circumsianccs of circmc urgcncy.
age | 12
24August2UlU
34. TIcsc flcililiiics Iavc lccn incororaicd in iIc
Paicnis Aci 1970 as amcndcd in 2005 wIicI is fully consisicni wiiI
TFIPS. CIaicr XVI of iIis Aci cniiilcd 'Worling of Paicnis,
Comulsory Liccnscs and Fcvocaiion' dcals wiiI iIc issuc of
Comulsory Liccnccs (CLs}. Scciions 84, 85, 91, 92, and 92A
cnumcraic iIc various circumsianccs undcr wIicI CLs may lc
issucd. CIaicr XVII coniains rovisions for usc of invcniions for iIc
uroscs of govcrnmcni and iIc acquisiiion of invcniions ly iIc
Ccniral Covcrnmcni. CIaicr VIII of iIc Paicni Fulcs 2003 as
amcndcd in 200 rovidcs for iIc modaliiics of issuc and
mainicnancc of Comulsory Liccnccs. Fulc 97 discusscs iIc aciion io
lc ialcn wIcn a rima facic casc Ias noi lccn madc oui. Fulc 98
cnallcs a noiicc of oosiiion io iIc CL io lc madc oui wIilc Fulc 100
rovidcs for amcndmcni io iIc icrms of iIc CL.
35. Scciion 84(1} of iIc Aci rovidcs iIai ai any iimc
aficr iIc ciraiion of iIrcc ycars from iIc daic of iIc grani of a
aicni, any crson inicrcsicd may malc an alicaiion io iIc
Conirollcr for grani of comulsory liccncc. TIc carlicsi
Iarmaccuiical roduci aicnis wcrc granicd in January 200 undcr
iIc amcndcd Aci. Morc iIan fivc ycars Iavc clascd sincc iIcn. Ii is
ncccssary iIai an oljcciivc framcworl for iIc issuc and mainicnancc
of comulsory liccnccs lc dcvclocd using iIc mandaic rovidcd ly
iIc law as iIc lasis for iIc samc.
3. TIis Discussion Pacr IigIligIis iIc issucs wIicI
nccd io lc addrcsscd wIilc formulaiing sucI a framcworl and
discusscs various oiions availallc
X. Legal Provisions.
37. Scciion 83, ai iIc lcginning of CIaicr XVI
unusually lisis iIc Ccncral rincilcs alicallc io worling of
aicnicd invcniions". TIcsc 'Dircciivc Princilcs of Paicni Policy'
incororaic iIc IilosoIy of iIc aicni framc worl undcr Indian law.
TIis Scciion is also iIc lcdrocl on wIicI iIc cdificc of comulsory
liccncing is luili in iIc sulscqucni scciions. Ii siaics as undcr
tIout cud.c to tIc otIc ouso3s .o3tu3cd 3 tIs A.t, 3
cxc.s3g tIc oucs .o3ccd I tIs Iutc, cgud sIu Ic Iud to
tIc oou3g gc3cu .o3sdcuto3s, 3unc,
(u) TIut utc3ts uc gu3tcd to c3.ouugc 3uc3to3s u3d to sc.uc
tIut tIc 3uc3to3s uc uoIcd 3 3du o3 u .onnc.u s.uc u3d
age | 13
24August2UlU
to tIc ucst cxtc3t tIut s cuso3uI u.t.uIc utIout u3duc
dcu;
(I) TIut tIc uc 3ot gu3tcd ncc to c3uIc utc3tccs to c3o u
no3oo o tIc notuto3 o tIc utc3tcd ut.c;
(.) tIut tIc otc.to3 u3d c3o.cnc3t o utc3t gIts .o3tIutc to
tIc onoto3 o tc.I3oog.u 33ouuto3 u3d to tIc tu3sc u3d
dsscn3uto3 o tc.I3oog, to tIc nutuu uduu3tugc o odu.cs
u3d uscs o tc.I3oog.u I3oucdgc u3d 3 u nu33c .o3du.uc
to so.u u3d c.o3on. ucuc, u3d to u Iuu3.c o gIts u3d
oIguto3s;
(d) tIut utc3ts gu3tcd do 3ot ncdc otc.to3 o uI. IcutI
u3d 3utto3 u3d sIoud u.t us 3stunc3t to onotc uI.
3tccst sc.u 3 sc.tos o utu notu3.c o so.o-c.o3on.
u3d tc.I3oog.u dcuconc3t o 3du;
(c) TIut utc3ts gu3tcd do 3ot 3 u3 uu oIIt c3tu
Couc3nc3t 3 tuI3g ncusucs to otc.t uI. IcutI;
() tIut tIc utc3t gIt s 3ot uIuscd I tIc utc3tcc o cso3
dcu3g ttc o 3tccst o3 utc3t on tIc utc3tcc, u3d tIc
utc3tcc o u cso3 dcu3g ttc o 3tccst o3 utc3t on tIc
utc3tcc docs 3ot csot to u.t.cs uI.I u3cuso3uI cstu3
tudc o uducsc uc.t tIc 3tc3uto3u tu3sc o tc.I3oog;
u3d
(g) TIut utc3ts uc gu3tcd to nuIc tIc Ic3ct o tIc utc3tcd
3uc3to3 uuuuIc ut cuso3uI uoduIc .cs to tIc uI..

38. TIis Scciion draws significanily from TFIPS.
Scciion 83( c} is a rclicaiion of Ariiclc 7 of TFIPS iis Oljcciivcs.
Scciion 83(d} draws from Ariiclc 8(1} of TFIPs iis Princilcs. Scciion
83(f} draws on Ariiclc 8(2} of TFIPS - iIc sccond ari of iIc Princilcs.
39. Scciion 89 furiIcr sccifics iIc oljcciivcs of a comulsory
liccncc. Ii siaics iIai TIc owcrs of iIc Conirollcr uon an
alicaiion madc undcr scciion 84 sIall lc ccrciscd wiiI a vicw io
sccuring iIc following gcncral uroscs, iIai is io say,
age | 14
24August2UlU
(u) tIut utc3tcd 3uc3to3s uc uoIcd o3 u .onnc.u s.uc 3
tIc tcto o 3du utIout u3duc dcu u3d to tIc ucst cxtc3t
tIut s cuso3uI u.t.uIc;
(I) tIut tIc 3tccsts o u3 cso3 o tIc tnc Ic3g uoI3g o
dcuco3g u3 3uc3to3 3 tIc tcto o 3du u3dc tIc
otc.to3 o u utc3t uc 3ot u3u cud.cd.
40. Comulsory liccnsing is cnallcd undcr four
scciions of iIc Paicnis Aci. TIcsc arc Scciion 84 ( gcncral CLs io lc
issucd ly iIc Conirollcr on alicaiion } , Scciion 91( issuc of CL ly
iIc Conirollcr for a rclaicd aicni on alicaiion } , Scciion 92( issuc
of CL ly iIc Conirollcr lascd uon a noiificaiion ly iIc Ccniral
Covcrnmcni of circumsianccs of naiional cmcrgcncy or in
circumsianccs of circmc urgcncy or in casc of ullic non-commcrcial
usc} and Scciion 92 A( issuc of CL ly iIc Conirollcr on alicaiion
for manufaciurc and cori of aicnicd Iarmaccuiical roduci io
any couniry Iaving insufficicni or no manufaciuring caaciiy in iIc
Iarmaccuiical sccior for iIc conccrncd roduci io addrcss ullic
IcaliI rollcms}. In addiiion, CIaicr XVII rovidcs for usc of
invcniions for iIc urosc of govcrnmcni and acquisiiion of invcniions
ly Ccniral Covcrnmcni.
41. Undcr Scciion 92, iIc Conirollcr can issuc a CL on
alicaiion only aficr iIc Ccniral Covcrnmcni issucs a sccial
noiificaiion. Undcr 92A, Ic is rcquircd io aci only aficr ciiIcr issuc of
a CL ly iIc imoriing couniry or on iIc lasis of a suiiallc noiificaiion
issucd ly iIai couniry. For iIc uroscs of iIis Discussion Pacr,
sucI liccnccs arc callcd Caicgory I Comulsory Liccnccs. In iIc
rcmaining iwo of iIc four scciions ouilincd alovc, iIc Conirollcr is
indccndcnily cmowcrcd io issuc a comulsory liccncc on
alicaiion and on iIc saiisfaciion of iIc condiiions mcniioncd in iIc
rcscciivc scciions. For iIc urosc of iIis discussion acr, iIcy arc
callcd Caicgory II Comulsory Liccnccs. Inicrnaiionally, mosi
comulsory liccnccs issucd in iIc asi so far rclaic io manufaciurc
or imori of Iarmaccuiicals roducis and Iavc lccn issucd lascd on
rccogniiion ly iIc Covcrnmcni of ciiIcr an cmcrgcncy or iIc
rcquircmcni of ullic usc. TIcsc arc iIc Caicgory I CLs rcfcrrcd io
alovc and ii is io iIcsc iIai wc iurn firsi.
XI. Category I CLs
42. Undcr Scciion 92, iIc Ccniral govcrnmcni can
noiify iIc nccd for issuc of a CL on iIc following grounds
a. Circumsianccs of naiional cmcrgcncy;
age | 13
24August2UlU
l. Circumsianccs of circmc urgcncy;
c. In casc of ullic non-commcrcial usc.

43. TIcsc grounds arc idcniical io iIosc mcniioncd in
Ariiclc 31(l} of TFIPs wIicI allows mcmlcrs io issuc CLs. Scciion
92(3} clarifics cn assani iIai sucI circumsianccs could includc
ullic IcaliI criscs, rclaiing io Acquircd Immunc Dcficicncy
Syndromc, Human Immunc Dcficicncy Virus, iulcrculosis, malaria or
oiIcr cidcmics. TIis is consisicni wiiI Para 5(c} of iIc DoIa
Dcclaraiion on TFIPS and Pullic HcaliI wIicI siaics iIai ullic
IcaliI criscs including iIosc rclaicd io HIV/AIDS, iulcrculosis,
malaria and oiIcr cidcmics can rcrcscni a naiional cmcrgcncy or
oiIcr circumsianccs of circmc urgcncy. TIc Paicni Aci Iowcvcr,
docs noi in any way siiulaic iIai iIc circumsianccs jusiifying issuc
of a CL arc cclusivcly ullic IcaliI criscs. TIc iIrcc circumsianccs
mcniioncd in Para 42 alovc could occur in oiIcr scciors also.
44. Civcn iIc circmcly divcrsc naiurc of iIcsc iIrcc
grounds, onc vicw is iIai ii may noi lc fcasillc or cvcn dcsirallc io
focus iIc scoc of iIcir alicaiion in a dcfiniiional scnsc. AnoiIcr
vicw is iIai ii is ncccssary io clarify iIai iIcsc grounds can lc uscd
for romoiing acccss io mcdicincs lilc canccr and dialcics. Para 4 of
iIc DoIa Dcclaraiion on iIc TFIPS agrccmcni and Pullic HcaliI"
sccifically clarifics iIai iIc TFIPS agrccmcni docs noi and sIould noi
rcvcni Mcmlcrs from ialing mcasurcs io roicci ullic IcaliI. Ii
furiIcr affirms iIc Mcmlcrs rigIis io roicci ullic IcaliI and in
ariicular io romoic acccss io mcdicincs for all. TIus cIronic
discascs can also lc addrcsscd iIougI sucI rovisions.
45. WIilc graniing a Caicgory I liccncc, iIc Conirollcr
sIould cndcavour io sccurc iIai iIc ariiclcs manufaciurcd undcr iIc
aicni sIall lc availallc io iIc ullic ai iIc lowcsi riccs consisicni
wiiI iIc aicniccs dcriving a rcasonallc advaniagc from iIcir aicni
rigIis. In conirasi, wIilc graniing Caicgory II liccnccs, iIc Conirollcr
is rcquircd io cnsurc iIai iIc aicnicd ariiclcs arc madc availallc io
iIc ullic ai rcasonally affordallc riccs wIilc cnsuring iIai iIc
aicnicd invcniion is worlcd io iIc fullcsi cicni and wiiI rcasonallc
rofii io Iim. TIus, iIc Conirollcr acars io Iavc a IigIcr lurdcn
in iIc casc of issuc of Caicgory I liccnccs in iIc maiicr of iIc ricc ai
wIicI iIc aicnicd ariiclc is madc availallc io iIc ullic.
4. Undcr Scciion 92A, a comulsory liccncc sIall lc
issucd for cori of aicnicd Iarmaccuiical roducis io a couniry
Iaving insufficicni or no manufaciuring caaciiy in iIc
Iarmaccuiical sccior for iIc conccrncd roduci io addrcss ullic
IcaliI rollcms, rovidcd comulsory liccncc Ias lccn granicd ly
age | 16
24August2UlU
sucI couniry or sucI couniry Ias, ly noiificaiion or oiIcrwisc,
allowcd imoriaiion of iIc aicnicd Iarmaccuiical roducis from
India.
47. TIis rovision mandaics iIai iIc Conirollcr sIall
issuc a CL wIcn iis siiulaiions arc mci. SucI a CL is rcsiricicd io
Iarmaccuiical roducis wIicI arc dcfincd scaraicly undcr iIc
clanaiion io iIc scciion as any aicnicd roduci, or roduci
manufaciurcd iIrougI a aicnicd roccss, of iIc Iarmaccuiical
sccior nccdcd io addrcss ullic IcaliI rollcms and sIall lc
inclusivc of ingrcdicnis ncccssary for iIcir manufaciurc and
diagnosiic liis rcquircd for iIcir usc".
48. TIis Scciion mirrors iIc Augusi 30 dccision of iIc
TFIPS Council. Ariiclc 31(f} of TFIPS rovidcs iIai roduciion undcr a
comulsory liccncc musi lc 'rcdominanily for iIc suly of iIc
domcsiic marlci'. TIis rcsiriciion limiicd iIc quaniiiy of coriallc
roducis, and inIiliicd iIc advaniagc of cconomics of scalc lcing
lcvcragcd in iIc manufaciurc of sucI roducis. Aciing on iIc
mandaic rovidcd ly aragraI of iIc DoIa Dcclaraiion, iIc TFIPS
Council rcsolvcd on 30 Augusi 2003 io waivc iIc rcquircmcnis of
Ariiclc 31(f} iill iIc rooscd amcndmcni (Ariiclc 30 lis} comcs inio
forcc. TIc amcndmcni uis in lacc a mccIanism roviding for a CL
lascd cori aroval ly iIc TFIPS Council on a drug ly drug, casc
ly casc and couniry ly couniry lasis. DoiI iIc coriing and iIc
imoriing counirics arc rcquircd io noiify iIc TFIPS Council in
advancc.
49. TIc iIrcc alicaiions rcccivcd ly iIc Indian aicni
officc in Scicmlcr 2007 rcfcrrcd io in Para 11 alovc wcrc for grani
of CLs undcr iIis scciion. Sincc iIc corrcsonding CLs/noiificaiions
from iIc imoriing couniry could noi lc madc availallc
7
, iIc
alicaiions wcrc wiiIdrawn. A similar ircnd is sccn inicrnaiionally in
involing iIc Augusi 30 dccision. Only in onc casc Ias iIis dccision
lccn involcd ovcr iIc lasi cigIi ycars
8
. TIc addiiional lurdcn of
comliancc wiiI rcscci io iIc siiulaiions of iIc TFIPS Council in
sucI cascs acars io lc a dcicrrcni.
XII. Central Covernment Use
50. CIaicr XVII of iIc Paicnis Aci rovidcs for iIc
Ccniral Covcrnmcni using an invcniion for iIc urosc of govcrnmcni

7
lnLervlew wlLh represenLaLlve of naLco harma
8
1he Clobal ollLlcs of harmaceuLlcal Monopoly ower urug paLenLs access lnnovaLlon and
appllcaLlon of Lhe W1C uoha declaraLlon on 18lS and ubllc PealLh by Lllen l M 'L Poen AM8 2009

age | 17
24August2UlU
on aymcni of royaliy. Scciion 100(1} sccifics iIai iIc Ccniral
Covcrnmcni or any crson auiIoriscd ly ii in wriiing may usc iIc
invcniion for iIc urosc of govcrnmcni. Scciion 99 dcfincs iIc icrm
urosc of govcrnmcni io mcan madc, uscd, ccrciscd or vcndcd for
iIc uroscs of iIc Ccniral Covcrnmcni, a Siaic Covcrnmcni or a
govcrnmcni undcrialing." SucI a dcfiniiion caicrs io iIc nccds of
iIc Ccniral Covcrnmcni, iIc Siaic govcrnmcni as wcll as loiI Ccniral
and Siaic govcrnmcni undcrialings. Sincc sucI maling, using,
ccrcising or vcnding is for iIc uroscs of govcrnmcni and noi ly iIc
govcrnmcni, Ccniral Covcrnmcni can auiIorizc iIird ariics io
manufaciurc roducis aicnicd ly oiIcrs io fulfill govcrnmcni
urosc. TIus iIc firsi ari of CIaicr XVII cffcciivcly allows for
comulsory liccnsing of aicnis. TIis rovision can also involcd ai
any iimc aficr iIc alicaiion for a aicni Ias lccn filc, iIus maling
ii sirongcr.
51. Scciion 100(} clarifics iIai iIc rigIi io malc, usc,
ccrcisc and vcnd an invcniion for iIc uroscs of govcrnmcni undcr
sul-scciion (1} sIall includc iIc rigIi io scll on non-commcrcial lasis,
iIc goods wIicI Iavc lccn madc in ccrcisc of iIai rigIi. TIc usc of
iIc words' salc on non commcrcial lasis' conirasicd io iIc words
'usc on non commcrcial lasis' in 92(3} acars io cmowcr iIc
govcrnmcni undcr iIis rovision io manufaciurc or causc io
manufaciurc aicnicd roducis and scll iIcm wiiIoui rofii. For
camlc, in iIc casc of Iarmaccuiicals, aiicnis can lc cIargcd cosi
ricc for drugs rovidcd io iIcm iIrougI sucI an arrangcmcni. Sincc
gcncral Covcrnmcni ccndiiurc on IcaliI is only 25%
9
of ioial IcaliI
ccndiiurc, ii may lc ncccssary io usc all availallc cIanncls for sucI
disiriluiion, including iIc rivaic sccior.
52. Scciion 102 rovidcs for ouirigIi acquisiiion of a
aicni ly iIc Ccniral Covcrnmcni ly noiificaiion, if ii is saiisficd iIai
ii is ncccssary io do so for a ullic urosc, suljcci io aymcni of
comcnsaiion. Comcnsaiion may lc dcicrmincd ly iIc HigI Couri
undcr Scciion 102.
53. TIis avcnuc could ossilly lc uscd for iIc
roduciion of cosi cffcciivc and orIancd drugs ly ullic sccior
Iarmaccuiical comanics. If ncccssary, ncw ullic sccior
comanics could lc romoicd for roducing csscniial mcdicincs iIai
arc noi lcing roduccd ly rivaic comanics ai an affordallc cosi.

9
CenLral 8ureau of PealLh lnLelllgence naLlonal PealLh roflle of lndla 2009 accessed from
MoPlW web slLe
age | 18
24August2UlU
XIII. Category II CLs
54. TIc csscniial clcmcni in Caicgory II liccnccs is iIc
aliliiy of iIc alicani io rovc iIai a} iIc rcasonallc rcquircmcnis of
iIc ullic wiiI rcscci io iIc aicnicd invcniion Iavc noi lccn
saiisficd, or (l} iIai iIc aicnicd invcniion is noi availallc io iIc
ullic ai a rcasonally affordallc ricc, or (c} iIai iIc aicnicd
invcniion is noi worlcd in iIc icrriiory of India. WIilc condiiions
rcquircd io saiisfy iIc firsi sci of circumsianccs arc amlificd in
Scciion 84(7}, iIcrc is no guidancc availallc in iIc Aci for dcicrmining
iIc cisicncc of iIc sccond and iIird sci of circumsianccs. Howcvcr
undcr Scciion 90, iIc Conirollcr is rcquircd io sccurc on an cndcavor
lasis comliancc wiiI a numlcr of condiiions.
55. Undcr Scciion 84(} (ii} and (iii}, iIc Conirollcr is
rcquircd io saiisfy Iimsclf aloui iIc aliliiy of iIc alicani io worl
iIc invcniion io iIc ullic advaniagc as wcll as iIc caaciiy of iIc
alicani io undcrialc iIc risl in roviding caiial and worling iIc
invcniion, if iIc alicaiion wcrc granicd;
XIV. Payment of Royalty
WHU-UNDP Cuidelines for Non Voluntary Use of Patent

5. TIcsc guidclincs ullisIcd in 2005 ouilinc four
diffcrcni mciIods for aymcni of rcmuncraiion consisicni wiiI TFIPS.
TIcsc arc lricfly dcscrilcd lclow.
57. TIc simlcsi is iIc mciIod rccommcndcd in iIc
2001 UNDP HDF rcori wIicI rooscs a royaliy raic of 4 crccni of
iIc ricc of iIc gcncric roduci. TIis can lc incrcascd or rcduccd ly 2
crccni dccnding uon oiIcr faciors.
58. TIc Jaancsc Paicni Officc ullisIcd guidclincs in
1998 for sciiing royaliics on govcrnmcni owncd aicnis. TIcsc
guidclincs allow for a lasc royaliy of 4 crccni wIicI can lc incrcascd
or dccrcascd wiiIin a land of 0 io crccni. In casc iIc roduci
liccnscd sans a numlcr of aicnis, iIcrc is a rovision io lias iIis
crccniagc downwards for cacI aicni dccnding uon iis individual
coniriluiion io iIc comosiic aicni.
59. TIc Canadian govcrnmcni in 2005 adoicd royaliy
guidclincs for comulsory liccncing of aicnis for cori io counirics
wIicI lacl iIc caaciiy io manufaciurc sucI mcdicincs. TIcsc
guidclincs usc a lasc raic of 4 crccni of iIc gcncric salcs ricc. TIis

10
8emuneraLlon guldellnes for no volunLary use of a paLenL !ames Love unu WPC 1echnlcal
CooperaLlon for LssenLlal urugs and 1radlLlonal Medlclne
age | 19
24August2UlU
royaliy raic is iIcn liascd downwards lascd uon iIc ranl of iIc
imoriing couniry in iIc UN Human Dcvclomcni Indc. TIc lowcsi
ranlcd couniry in iIc indc will ay 0.02 crccni, wIilc iIc IigIcsi
ranlcd couniry will ay 4crccni.
0. TIc Ticrcd Foyaliy MciIod (TFM} is comuicd using
as a lasc iIc ricc of iIc aicnicd roduci in iIc IigI incomc
couniry. TIc royaliy raic of 4 crccni alicd on iIis raic is iIcn
liascd downwards ly iIc raiio of cr caiia incomcs of iIc rcscciivc
counirics. For counirics wiiI a IigI lurdcn of discasc, iIc rclaiivc
incomc cr crson wiiI iIc discasc could lc uscd as iIc liasing
facior.
1. In iIc casc of Covcrnmcni usc of a aicni, iIc
roviso io Scciion 100(3} of iIc Paicnis Aci siiulaics iIai in casc of
Ccniral Covcrnmcni usc of an invcniion iIc aicnicc sIall lc aid noi
morc iIan adcquaic rcmuncraiion in iIc circumsianccs of cacI casc,
ialing inio accouni iIc cconomic valuc of iIc usc of iIc aicni.
Howcvcr, any disuic on iIc amouni aid can lc rcfcrrcd io iIc HigI
Couri undcr Scciion 103.
2. AnoiIcr vicw is iIai iIc amouni aid musi lc
including a rcasonallc solaiium io iIc aicnicc, wiiI iIc aim of noi
radically discomfiiing Iim loiI cconomically and oiIcrwisc. Ii is iIus
argucd iIai iIc amouni aid sIould lc significanily alovc iIc
maimum royaliy of 4% indicaicd in iIc TFM mciIod. Undcr iIis
vicw, an aggrcgaic aymcni of aloui 10% of iIc gcncric salc ricc of
iIc drug in iIc couniry wIcrc iIc CL is uscd is aroriaic.
In Practice:
3. In Aril 2010, Ecuador uscd iIc iicrcd royaliy
mciIod (TFM} io allow for royaliy aymcnis of 5% of iIc US ricc
liascd downwards ly iIc raiio of cr caiia incomcs for iIc CL issucd
ly ii for iIc manufaciurc of Fiionavir. TIailand in 200 allowcd a
royaliy fcc of 0.5 crccni of iIc salc valuc of iIc roduci in iIai
couniry. Indoncsia in 2004, allowcd a royaliy of 0.5% of iIc nci
sclling valuc in iIai couniry.
XV. Local working of tbe Patent
4. Ariiclc 84(4} of iIc Paicnis Aci auiIorizcs iIc
Conirollcr io grani a comulsory liccnsc if amongsi oiIcr iIings, Ic is
saiisficd iIai iIc aicnicd invcniion is noi worlcd in iIc icrriiory of
India. Hc can also grani a comulsory liccncc if Ic is saiisficd iIai iIc
rcasonallc rcquircmcnis of iIc ullic wiiI rcscci io iIc aicnicd
invcniion Iavc noi lccn mci. Undcr Scciion 84(7} (c}, onc of iIc
age | 20
24August2UlU
criicria for dcciding iIc laiicr is ' if iIc worling of iIc aicnicd
invcniion in iIc icrriiory of India on a commcrcial scalc is lcing
rcvcnicd or Iindcrcd ly iIc imoriaiion from alroad of iIc aicnicd
ariiclc' . TIcrc arc iIus iwo indccndcni grounds
a. TIc invcniion is noi worlcd in iIc icrriiory of India ai all.
l. TIc rcasonallc rcquircmcnis of iIc ullic arc noi lcing mci
as iIc worling of iIc aicni in iIc icrriiory of India on a
commcrcial scalc is lcing rcvcnicd or Iindcrcd ly iIc
imoriaiion from alroad of iIc aicnicd ariiclc ly inicrcsicd
crsons.
5. TIc issuc wIicI iIcn ariscs is wIai iIc icrm
'worling in iIc icrriiory of India' mcans. WIciIcr iIis imlics iIai iIc
roduci musi lc manufaciurcd in iIc icrriiory of India, or ii can lc
ialcn io mcan maling availallc for local salc. Eccicdly, iIcrc arc
oosing vicws in iIc maiicr.
. Ariiclc 27(1} of TFIPS ariially rcads . aicnis
sIall lc availallc and aicni rigIis cnjoyallc wiiIoui discriminaiion
as io ...wIciIcr roducis arc imoricd or locally roduccd". TIis
Ariiclc acars io mandaic iIai so long as iIc aicnicd roduci is
availallc in iIc marlci ai an affordallc cosi, iIc usc of iIc aicni
cannoi lc diffcrcniiaicd on iIc lasis of iis sourcing wIciIcr ii was
manufaciurcd wiiIin iIc couniry or imoricd from wiiIoui. Howcvcr,
ii Ias lccn argucd
11
iIai iIc ccciions rovidcd in Ariiclcs 30 and
31 of TFIPS ovcrridc iIc gcncral siiulaiions in Ariiclc 27.Ii is furiIcr
argucd iIai Ariiclcs 7 and 8 of TFIPS wIicI rccognizc iIc nccd io
romoic iransfcr of iccInology suori rovisions for local sourcing .
TIcrcforc local worling siiulaiions arc valid and cnforccallc.
7. Local Worling rcquircmcnis wiiI a corrcsonding
rcmcdy of issuc of a comulsory liccncc for non comliancc find lacc
in iIc laws of a numlcr of counirics loiI dcvclocd and dcvcloing.
SucI rovisions can lc iraccd io iIc origin of iIc aicni sysicm
12
. A
numlcr of counirics Iavc local worling condiiions in iIcir aicni
laws. Drazil's Inicllcciual Procriy Law auiIorizcs iIc govcrnmcni io
issuc a comulsory liccncc if iIc aicni owncr docs noi manufaciurc
iIc roduci in iIc icrriiory of Drazil wiiIin iIrcc ycars of iIc grani of
iIc aicni. TIis rovision was cIallcngcd ly iIc US in a WTO disuic
Icaring in 2000.

11
aLenL 8lghLs and Local Worklng under Lhe W1C 18lS AgreemenL An analysls of Lhe uS8razll
aLenL dlspuLe aul Champ and Amlr ALLaran
12
lbld
age | 21
24August2UlU
8. TIougI iIc US sulscqucnily wiiIdrcw iis
comlaini, ii rcscrvcd iis rigIis io rccommcncc iIc WTO comlaini.
Howcvcr, ii is noicworiIy iIai during a Congrcssional Icaring in Nov
2005, iIc US DHSS Sccrciary icsiificd iIai Ic Iad cffcciivcly rcquircd
iIc aicni owncrs of Tamiflu io sci u manufaciuring faciliiics in iIc
US so iIai iIc US would Iavc acccss io Tamiflu if confronicd wiiI an
avian flu andcmic
13
.
9. TIc cniirc CIaicr XVI on ' Worling of Paicnis,
Comulsory Liccnccs and Fcvocaiion' wiiI scciions 82 io 98 was
sulsiiiuicd for iIc old CIaicr XVI coniaining scciions 82 io 94 ly
way of amcndmcnis io iIc Paicni Aci (Aci 38 of 2002} wiiI cffcci from
20/5/2003. Scciion 90(3} rovidcs iIai Ccniral Covcrnmcni may, in
ullic inicrcsi, dircci iIc Conirollcr ai any iimc io auiIorizc any
liccnscc in rcscci of a aicni io imori iIc aicnicd ariiclc or an
ariiclc or sulsiancc madc ly a aicnicd roccss from alroad. Scciion
8 rovidcs iIai iIc Conirollcr may adjourn Icaring of alicaiions
on iIis ground ly u io 12 moniIs if Ic is saiisficd iIai adcquaic
iimc was noi availallc io iIc aicnicc io worl iIc aicni in iIc
icrriiory of India. Fcad iogciIcr, iIcsc iwo scciions acar io asscri
iIai iIc local worling rcquircmcni imlics manufaciurc wiiIin iIc
icrriiory of India.
XVI. Utber Considerations
70. Onc conccrn Ias lccn wIciIcr issuc of comulsory
liccnccs in a couniry will inIilii iIc growiI of iccInology. In a rcccni
siudy on wIciIcr comulsory liccnsing cncouragcs invcniions ly
naiionals in nasccni indusirics, an NDEF Worling Pacr indicaics
iIai comulsory liccnsing Ias a sirong and crsisicni osiiivc cffcci
on domcsiic invcniion.
14
Evcn wiiIoui any cffccis on innovaiion,
comulsory liccnsing may crcaic significani osiiivc wclfarc cffccis on
consumcrs in dcvcloing counirics as a mccIanism io mainiain
roduci variciy.
XVII. Issues for Resolution:
1. Ac gudc3cs 3c.cssu o cqucd o tIc ssuc o
.onuso .c3.cs u3 t Ic ugucd tIut t s 3udusuIc to cttc tIc
ds.cto3u ouc o gouc3nc3t cut3g to tIc ..unstu3.cs 3

13
aLenLs Compulsory Llcences and Access Lo Medlclnes Some recenL experlences MarLln khor
1hlrd World neLwork

14
n8L8 Worklng aper (13398) Compulsory llcenslng Lvldence from 1he 1radlng wlLh 1he Lnemy
AcL by eLra Moser and Alessandra voena uecember 2009

age | 22
24August2UlU
uI.I .onuso .c3.cs sIoud Ic ssucd, u3d tIus su.I gudc3cs
sIoud 3ot Ic ucd to utcgo Ls Iut Ic cst.tcd to utcgo
Ls uc3 tIc uttc uc ssucd tIougI tIc cxc.sc o quus ud.u
oucs I tIc o3toc. tIc ssuc o gudc3cs to tunnc Ic
suIc.tuc sutsu.to3 Ic dcsuIc SIoud tIccoc su.I gudc3cs Ic
cst.tcd to tIc out unc3t to Ic uuudcd uIc ssu3g u L
2. o tIc cqucnc3ts o ssuc o u 3ot.uto3 I tIc c3tu
Couc3nc3t (3uto3u cncgc3.; cxtcnc ugc3.; uI. 3o3
.onnc.u usc) u3dc Sc.to3 92 cquc un.uto3 tIougI ssuc o
gudc3cs FutIc uc tIcsc gou3ds su.c3t to ncct u tIc
..unstu3.cs u3d cxgc3.cs tIut nu 3c.csstutc ssuc o u
.onuso .c3.c ocs tIc tcn uI. 3o3 .onnc.u usc
3c.cssu n cc dstIuto3 SIoud su.I dstIuto3 Ic .o33cd
to gouc3nc3t .Iu33cs SIoud dugs o tcut3g dscuscs Ic .u3.c
o duIctcs sIoud uso u utI3 tIc unIt o Ls SIoud su.I
3ot.uto3s Ic .o33cd to uI. IcutI cncgc3.cs Ac tIcc otIc
uud ..unstu3.cs uIc3 su.I ouso3s .u3 Ic 3uoIcd
3. ou sIoud c.ousc to ssuc o u .onuso .c3.c
u3dc sc.to3 92 u3d c.ousc to usc I tIc c3tu Couc3nc3t o u3
3uc3to3 u3dc Sc.to3 lUU Ic dcc3tutcd 3 tIc nuttc o usc
&3dc uIut ..unstu3.cs sIoud cu.I Ic 3uoIcd
4. u3 odu.ts nu3uu.tucd u3dc u utcgo .c3.c Ic
cc.tuc dstIutcd soc tIougI gouc3nc3t .Iu33cs ocs ssuc
o utcgo L c3usugc suc o tIc .onuso .c3scd goods
outsdc tIc unIt o gouc3nc3t u3d 3 tIc nuIct
5. TIc onctto3 A.t 2UU2 docs 3ot cx.t oudc o
ssuc o onuso L.c3.cs us u cncd o u3t .oncttuc u.t.cs.
oucuc, Sc.to3 2?(g) cnoucs tIc onctto3 onnsso3 to uss
'su.I otIc odc o ssuc su.I otIc dc.to3s us t nu dccn t`.
FutIc Sc.to3 9U(x) o tIc Putc3ts A.t c.og3cs tIut Ls .u3 Ic
gu3tcd to cncd u u.t.c dctcn3cd, utc ud.u o udn3stutuc
o.css to Ic u3t .oncttuc. SIoud Ls Ic ssucd o3 tIc Iuss o u3t
.onctto3 uu t s dctcn3cd tIut .onu3cs Iuuc uIuscd tIc
don3u3t osto3 3 tIc nuIct o c3gugcd 3 u3u .onctto3
. SIoud uoI3g o u utc3t 3 tIc tcto o 3du Ic
3tcctcd to ncu3 tIut t sIoud Ic nu3uu.tucd utI3 tIc tcto o
3du &3dc uIut ..unstu3.cs sIoud tIc ouso3s o Sc.to3 S4(?)
(c) cgud3g uoI3g o tIc utc3t Ic3g cuc3tcd o I3dccd I
notuto3 on uIoud Ic ucd
age | 23
24August2UlU
7. ou sIoud tIc cssc3tu ccnc3ts o u utcgo L
out3cd 3 Puu 54 u3d 55 uIouc Ic oucd I tIc u.u3t to tIc
sutsu.to3 o tIc o3toc
8. Iut sIoud Ic tIc Iuss o out unc3ts to
.onc3sutc o Ls SIoud u u3on stu3.c Ic tuIc3 o utcgo
Ls; utcgo Ls u3d c3tu Couc3nc3t usc o 3uc3to3s O
sIoud u dcc3tu uou.I Ic udotcd
9. SIoud unc3ts to tIc utc3t Iodc 3.udc u .ono3c3t
o soutun us 3d.utcd 3 Puu b2 ou sIoud su.I u soutun Ic
uucd ut SIoud tIc uggcgutc out u3d soutun Ic xcd ut su
lU% o tIc gc3c. .c
10. ou .u3 tIc ocuto3u .o3stu3ts 3 tIc
ncnc3tuto3 o tIc August JU dc.so3 Ic csoucd du3g tIc .ousc
o ssuc o Ls u3dc Sc.to3 92A
11. Ic og3u u3g o u utc3t, tIc u.u3t
s cqucd to ds.osc .onctc sc..uto3s o tIc 3uc3to3, us uc us
tIc Icst nctIod o uoI3g t. oucuc, tIcc nu Ic u3 3.c3tuc o
tIc utc3tcc to nt tIc dcs.to3 3 tIc utc3t csut3g 3 .t.u
oto3s o tIc tc.I3oog cnu33g u3ds.oscd. TIs nu .uusc dcu
3 uoI3g o tIc L. sIoud su.I u oIcn o 3su.c3. o
3onuto3 3 tIc Putc3t u.uto3 usc 3 cuto3 to tIc ssuc o u L,
Iou sIoud t Ic uddcsscd
12. SIoud tIc o3toc Ic oIgutcd to cxun3c u3d
tuIc u 3u ucu o3 u L u.uto3s utI3 u sc.cd tnc cod
Iut sIoud Ic tIs tnc cod SIoud tIs tnc cod Ic tIc sunc o
utcgo u3d utcgo L u.uto3s
13. SIoud uI. u3dcd 3du3 cscu.I ogu3uto3s
stuutc uIc sc3g/ tu3sc3g utc3ts to 3du3 uutc sc.to
.onu3cs tIut tIc ou3csI o utc3ts u cuct to tIcsc
ogu3uto3s 3 .usc tIc ou3csI o tIosc .onu3cs usscs o3 to
ocg3 Iu3ds

eod
age | 24
24August2UlU
Turnover of Pbarmaceutical Companies
ar
Drugs and
PharmaceuticaIs
SaIes: (Rs.
Crore)
SaIes
Growth
(%
age)
Drugs and
PharmaceuticaIs
Exports (Rs.
Crore)
Export
Growth
(%
age)
Percentage
of exports
(% age)
Domestic
saIes
(Rs.
Crore)
oqe
qrowth
of
domestic
so/es
9949S 14181 2512 18% 11669
99S96 16831 3409 36% 20% 13423 15%
99697 22553 4342 27% 19% 18211 36%
99798 22390 5419 25% 24% 16971 -7%
99899 26000 6256 15% 24% 19744 16%
9992000 27700 7230 16% 26% 20470 4%
20000 31300 8758 21% 28% 22543 10%
20002 33200 9835 12% 30% 23365 4%
200203 37300 12826 30% 34% 24474 5%
200304 40800 15213 19% 37% 25587 5%
20040S 42500 17858 17% 42% 24642 -4%
200S06 49500 22116 24% 45% 27384 11%
200607 61000 26895 22% 44% 34105 25%
200708 70000 30760 14% 44% 39240 15%
200809 75500 39538 29% 52% 35962 -8%
5ource cMl conomic
lnte//iqence 5ervice {l5)


age | 23
24August2UlU
nn II
99697
urugs pharmaceuLlcals sales 8anbaxy LaboraLorles 1146
urugs pharmaceuLlcals sales ClaxosmlLhkllne harmaceuLlcals 69963
urugs pharmaceuLlcals sales Clpla 43188
urugs pharmaceuLlcals sales AvenLls harma 38269
urugs pharmaceuLlcals sales lramal PealLhcare 31928
urugs pharmaceuLlcals sales Alemblc 28238
urugs pharmaceuLlcals sales 1orrenL harmaceuLlcals 23883
urugs pharmaceuLlcals sales Cadlla PealLhcare 23348
urugs pharmaceuLlcals sales lpca LaboraLorles 23113
urugs pharmaceuLlcals sales ur 8eddys LaboraLorles 24499


200809
urugs pharmaceuLlcals sales Clpla 480767
urugs pharmaceuLlcals sales 8anbaxy LaboraLorles 473376
urugs pharmaceuLlcals sales ur 8eddys LaboraLorles 43949
urugs pharmaceuLlcals sales Lupln 293423
urugs pharmaceuLlcals sales Sun harmaceuLlcal lnds 283086
urugs pharmaceuLlcals sales Auroblndo harma 273073
urugs pharmaceuLlcals sales Cadlla PealLhcare 17634
urugs pharmaceuLlcals sales ClaxosmlLhkllne harmaceuLlcals 166808
urugs pharmaceuLlcals sales lramal PealLhcare 136342
urugs pharmaceuLlcals sales WockhardL 144887
5ource cMl conomic lnte//iqence 5ervice {l5)