I spoke on the "Opportunities in Emerging Geographies" panel at the Global Healthcare Investing Conference where I discussed the 2005 Patent Act of India, new Indian drug pricing policies, and evolving pharmaceuticals case law and current litigation in India. The Global Healthcare Investing Conference is sponsored by BioEnterprise and International Business Forum Conferences and this is the second year I've spoken. Many special thanks to Baiju Shah who continues to lead the growth and development of Midwest healthcare companies and commercializing their technologies. 

My talking points focused on what I've learned about evaluating investment opportunities in India.  As a patent attorney, my analysis begins with intellectual property issues and how downstream information and events impact an innovator's IP.  Things I analyze downstream IP include the ability and freedom to operate for an innovator to license its technology, whether the technology is over- or under-funded in the angel, corporate and venture capital market, whether an innovation comprises certain aspects that may require heightened regulatory scrutiny, whether delivery of the technology can be reimbursed by the government, and so on.  Looking specifically at India, I highlighted a few quickly evolving laws, policies and administrative issues that are making a proper evaluation of investment opportunities more difficult.

First, I focused on the evolving interpretations of the text of the India Patent Act of 2005.  Because many of the amendments to the previous Act have not been scrutinized in court, it is understandable that there is uncertainty as to the precise meaning of the amendments.  For example, Section 107A of the Act may provide a loophole for generic drug manufacturers to import drugs currently protected by Indian patents from what the World Trade Organisation defines as least developed countries until 2016.  Before the 2005 amendments to the Act, section 107A provided that it was not an infringement to import a patented product "duly authorised by the patentee to sell or distribute the product." Howerver, amendments to the Act now only require the exporter of such patented product (for example, a drug manufacturer in Bangladesh) to be "duly authorised under the law to produce and sell or distribute the product."  Hence, an authorization from the drug controlling authority in Bangladesh may be able to authorize a drug manufacturer or its partner under Bangladeshi law to export the drug into India without infringing the Indian patent.  In other words, one interpretation of section 107A is that an Indian company can import a drug from a WTO-defined "least developed country" where the drug is not patented without infringing the Indian patent.  Reconciling this interpretation of Section 107A in light of inconsistent provisions in the India Patent Act of 2005 (e.g., Section 48 right to importation), not to mention the TRIPS agreement, will provide guidance on what an Indian patent actually protects in India.  Until then, I believe an investor in Indian technology must take the evolving interpretation of the India Patent Act into account and what patents might exist in "least developed countries" when analyzing the value of an Indian technology.

Next, I focused on new Indian policies and litigation/case law that may effect the analysis of an investment opportunity.  New drug pricing policies were recently proposed to make sure drugs are affordable to Indian consumers.  What is not clear is how these policies will be enforced -- can a drug manufacturer's patent be cancelled if the manufacturer fails to comply with the new policy?  This is an enforcement mechanism currently in place in other countries.  In addition, recent jurisprudence in CIPLA v. Roche make it harder for an investor to evaluate the validity of an Indian patent.  In that case, the Indian court focused on three things that I find surprising -- the U.S. Supreme Court case KSR v. Teleflex for guidance on what is "obvious," the cost of the generic drug currently being manufactured while Roche's patent was in force, and the availability of the drug to Indian consumers as Roche's manufacturing facilities are outside India.  While some interpret CIPLA v. Roche as a fair balance between high prices and market exclusivity versus lower prices and generic availability, I am not sure this case helps make the process of Indian courts "busting" patents transparent enough for potential investors in Indian technology to make a fair assessment of what can be protected in India.

As yet another example of what is currently making it hard to evaluate investment opportunities in India, I put forward a difficulty that many IP attorneys and consultants face everyday in conducting IP due diligence in an Indian investment transaction -- the Indian Patent Office does not provide electronic versions of its patent file wrappers to enable those outside India to readily conduct IP due diligence in anticipation of the investment transaction. 

Related to these laws and policies, I discussed how investment opportunities in Indian pharmaceutical technologies and biotechnologies are changing as generic pharmaceutical manufacturers add innovative pharmaceutical products to their pipelines. It appears that all the evolving laws and policies in addition to increasing outside investment and an influx of highly-educated scientists and entrepreneurs are providing India a greater "home field advantage" for the development of innovative new drugs and related technologies.  Certainly, the spin-outs of R&D facilities by Ranbaxy and Dr. Reddy's, large generic drug manufacturers in India, for the purpose of developing branded drugs highlights this change.  I am also aware of new formulatory, vaccine, stem cell and antibody technologies being spun-out or independently developed that present interesting new investment opportunities.   In short, while we wait and see whether Indian innovative products receive the same scrutiny as technologies developed outside India, the same problems outlined above are providing Indian companies an incentive to develop new technologies and new companies that present greater opportunities for  investors.

Within that framework, I concluded with legal and business strategies that can be employed in conjunction with contract researcher organizations ("CROs") and investors to commercialize those new Indian technologies, but my summary will have to wait for another post.  Some of the highlights of the remainder of the conference included a keynote address by Carol Kovac who provided an insightful perspective on the future of medicine and healthcare investing worldwide.  If Carol can guide her portfolio companies in the same manner she did while building IBM's life sciences platform, we are sure to see an exciting new array of "disruptive biotechnologies" (that's a good thing!) commercialized in the near future.  John McCain was also a surprise visitor speaking about his new national healthcare plan.