Role of IP in Pharmaceutical Industry

Accommodative and strong IP regimes in developed countries allow pharma companies to foster at a rapid rate.

Indian Pharmacopoeia Commission IPC

Last Updated on December 30, 2023 by The Health Master

Role of IP in Pharmaceutical Industry

Innovative technologies make way for an array of protectable Intellectual Property (IP), such as trademarks, copyrights, and patents.

IP is, therefore, a valuable resource for a pharma company, and its protection is the key to the company’s success.

Pharma companies constantly face the challenge of not just creating value through the exploitation of IP rights, but also preserving their IP rights.

In the pharma sector, while patents are the most discernible and perhaps the most rewarding form of IP, other IP instruments also play a significant role, such as in the product and Research and Development (R&D) domain.

The product domain includes copyright in supporting publications and materials, trademark protection of brands, protection of “trade dress” and administrative mechanisms or unique provisions giving proprietary rights in clinical and manufacturing data used for supporting regulatory approval.

The R&D domain is critical to the operation of the “market for technology,” i.e., contract law governing license agreements, collaborative ventures, disclosure of proprietary information, statutes covering the rights of inventors vs. employers, and the transfer of technology by publicly funded institutions.

The IP reforms in India under Trade-related Aspects of Intellectual Property Rights (TRIPS) incentivize innovation in the pharma sector and encourage investments in R&D and product development.

The willingness to comply with the TRIPS reforms has, evidently, increased patenting activity over the years.

Pharma companies mostly rely on drug patents to protect technologies from the thriving generic market and to recover profits on expenditures incurred in drug development.

The consistent evolution of the Indian patent regime has further accommodated a conducive environment for innovation.

Recent changes in patent regulations work favorably upon startups and small entities while providing adequate opportunities for expediting the patent approval process, which offers a good ground for nurturing innovative ventures.

Accommodative and strong IP regimes in developed countries allow pharma companies to foster at a rapid rate.

On the other hand, developing countries like India strive to strike a balance between encouraging innovation in a stringent and evolving patent system and maintaining consumer-friendly pricing of proprietary products.

However, the constant increase in the size of the Indian pharma market due to changing lifestyles and high demand for quality healthcare makes this sector one of the promising contributors to the Indian economy.

Importance of IP rights in a pharma company

IP rights are crucial for the growth and sustenance of pharma companies. Some of the important aspects are enlisted below:

Protection of invention

Patent protection is the most recognized form of protection for pharma inventions.

While some countries like Australia do provide various forms of patents with variations in the patent term, most countries predominantly recognize the utility model type of patents for drug-based inventions.

Further, countries like the US also have trade secrets laws, not codified in India, which offers the pharma companies an additional way to maintain a competitive advantage.

Economic growth and maintaining a competitive advantage

Protection of IP rights is crucial to innovators in gaining profits on R&D expenditure as well as providing further platforms for future investments in research.

Invested interests in the pharma sector not only help build a competitive and thriving market in the sector but also contribute to the growth of the country’s economy.

Protection against potential infringement of proprietary products

Several pharma giants have announced expansions of their Indian operations. Originators claim that strong patent protection is indispensable to redeem their investments and incentivize them to carry out further innovation in line with the rationale behind the establishment of IP rights.

Meanwhile, recent cases [for example Novartis Ag & Anr. vs Natco Pharma Limited & Anr., Decided by Delhi High Court on 13th December 2021, and FMC Corporation & Anr. vs Natco Pharma Limited, decided by the Delhi High Court on 7th July 2021], in a way, only reassures that the Indian patents system, although not as defined as that of the US or EP, provides a protective environment to pharma innovators.

Future of the Indian pharma industry and patent laws

India’s future lies with strong IP laws, wherein the chances of counterfeit drugs reaching the market are considerably lower as these laws provide greater means of tracking the supply chain through trademarks, trade secrets, and licensing agreements. This could help manufacturers retain public confidence in their products.

Role of IP regime in combating C-19 pandemic

Amid the critical situation of the C-19 pandemic, the power of IP rights cannot be denied. There are certain provisions in the Indian Patent Act that allow the government to take over any useful patent in case of a national emergency, like C-19.

Under Section 92 of the Patents Act, the provision of compulsory licenses can also be availed in case of a public health crisis or in a state of an epidemic.

Referring to the provisions for compulsory licensing, the Delhi High Court in Rakesh Malhotra v. Govt. of NCT, India & Ors. firmly advised the Central Government to consider reaching out to several manufacturers ramping up the production of essential drugs and medicines during the pandemic.

The patent pool, introduced by the World Intellectual Property Organization (WIPO), is also a significant contribution of IP regimes in battling the pandemic situation.


The Indian patent law is an exemplary piece of patent legislation that is aimed to balance the interests of both the common man and the inventors, but it is complex.

Pharma companies should focus on developing IP strategies to avoid pecuniary loss due to litigation.

Additionally, they can exploit IP-protected products through commercialization and licensing, thereby increasing the demand for low-value drugs and the rapid growth of pharma companies.

T Srinivasan
Director, Lakshmikumaran & Sridharan Attorney

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