Drug firms see red on WTO deal

The Indian pharmaceutical companies reacted with caution and the government claimed victory as the World Trade Organisation accepted a draft accord on the issue of affordable medicine for developing countries.

"The procedures and safeguards agreed upon will make compulsory licensing of drugs by poor countries unviable. The cost of medicine in these countries will go up. It is unlikely that companies producing generic drugs will be willing to sell to poor African countries," Indian Pharmaceutical Alliance secretary-general DG Shah told Business Standard.

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But government sources said the agreement would open the doors for poor countries to import generic versions of patented drugs in case of a public health crisis. Many Indian companies would not be able to sell to poor countries, the sources added.

Some Indian companies feel this will not curb their growth as generic exports to poor countries do not form a substantial part of their business.

DS Brar, chief executive of Ranbaxy Laboratories, said: "For Indian exporters, it cannot be perceived to be a regular business. It will depend on when emergencies arise."

Added Nicholas Piramal India senior president Harinder S Sikka, "This will benefit India and Brazil, which are the largest players in the generics business."

As per an agreement reached in Geneva between India, Brazil, South Africa and Kenya on the one side and the United States on the other, a poor country can issue a compulsory licence but the importing country as well as the exporting country will necessarily have to inform the TRIPs Council, which can review and modify the licence. Also, anybody is free to bring any complaint to the council on any compulsory licence.

The negotiators have also agreed that both bulk drugs and formulations supplied under licence should be distinct from the innovator product.

India had argued that apart from a handful of drugs like Pfizer's Viagra, most drugs were similar in colour and size.

"Altering them could mean more investments, which will raise the cost of production," Shah said.

The deal brings to an end two years of wrangling over the fine print. Officials pointed out that developing countries had managed to fulfil the US demands for reference to the disputes settlement body and a separate monitoring authority for declaring an epidemic and also check diversion.