Thecase of Indian pharma company's request for a compulsory license to make a generic version of Bayer's patented drug to treat liver and kidney cancer was settled on March 13, 2012. In a first-of-its-kind ruling, the Indian Patent Office granted permission to NATCO to make anti-cancer drug sorafenib for the India market.

The Indian Patent Office's ruling is subject to certain conditions, such as maintaining account of sales, and payment of royalty at six percent of the net sales on a quarterly basis. The order also makes it obligatory for NATCO to supply the drug free-of-cost to at least 600 needy and deserving patients per year.

Reacting to this, Mr Rahul Dev, managing partner, Tech Corp Legal, India, said, "This has opened up the field for the generic industry to follow suit and could well pave the way for the availability of cheaper drugs for lifestyle diseases. We are likely to see a significant shake out and consolidation in the near future where more generic companies could invoke the compulsory licensing clause of the Indian Patents Act, following the said decision to allow NATCO Pharma to sell a generic version of Bayer's patented anti-cancer drug (Nexavar) at 97 percent reduction. The landmark judgment by the Indian Patent Office is now being seen as a test case and it is almost certain that Bayer will go to court on this issue."

Bayer had contested the Indian company's application for compulsory licensing. NATCO Pharma, based in Hyderabad, insisted that Bayer was not providing the benefits of its patented medicine by making it available to the needy Indian patients at a reasonable cost. India's Patent Office evaluated Bayer's costing mechanism, which was reasoned to be the cause for prohibitively expensive cost in the Indian market. The drug itself had fast track approval in the US after it was classified as an "orphan drug" required for some diseases, which did not have an attractive market. The Indian Patent Office then invoked the provisions of the Trade Related aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO) and granted compulsory licensing as a requirement for public health.

Three years ago, Thailand first tested this TRIPS provision by allowing production of a generic version of an anti-cholesterol drug. The Indian Patent Office's decision on Nexavar has been watched with interest around the world. This decision of Nexavar is going to create heated debate about the requirements of needy patients and the patenting aspects once again globally. The pharma industry, which has invested millions of dollars to produce such innovative drugs, is certainly not happy with India's decision.