Apr 07, 2011, 03.04 PM IST | Source: CNBC-TV18

Cipla tells Merck your anti-AIDS drug too costly in India

Domestic pharma giant Cipla has taken the route of applying for a "voluntary license" for Merck's HIV Isentress (a generic raltegravir) saying it is not reaching needy patients in India and is prices exorbitantly.

Vikas Dandekar,

Pharma major Cipla has applied for a "voluntary license" for Merck's anti-HIV drug Isentress saying the drug is exorbitantly priced and is inaccessible to needy patients in India.

What this means is that Cipla is asking Merck to share the technical know-how for making the drug, so that Cipla can make and sell a generic version in India, and in turn pay a royalty to Merck.

Should Merck decline Cipla, the Indian drug maker has the option of approaching the (Indian) government for a compulsory licensing of Isentress.

A generic drugmaker can invoke the compulsory licensing provision once the patent completes three years and the patent holder is given a six-month notice to consider a voluntary licence offer.

Commenting on whether Cipla has a case, Vikas Dandekar of PharmaAsia said Isentress has been launched at a fourth of its US prices in India by Merck. “It’s going to very interesting to see exactly how this whole issue pans out because Merck is justifying its pricing. So whether Cipla will be able to make its case from the manufacturing angle or from the availability angle — those are the points which we will need to see.”

In a compulsory license, a government forces the holder of a patent, copyright, or other exclusive right to grant use to the state or others. Usually, the holder does receive some royalties, either set by law or determined through some form of arbitration.

There has been a spate of such cases recently notable being Natco, which filed for voluntary license for Bayer's anti-cancer drug Nexavar. It also did a similar move for Pfizer’s anti-HIV drug Selzentry.

“We are at a situation where this entire policy mechanism is going to be tested and it would be interesting from hereon,” Dandekar said.

Cipla stock price

On January 30, 2015, Cipla closed at Rs 696.05, up Rs 0.75, or 0.11 percent. The 52-week high of the share was Rs 711.45 and the 52-week low was Rs 366.70.

The company's trailing 12-month (TTM) EPS was at Rs 15.02 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 46.34. The latest book value of the company is Rs 125.68 per share. At current value, the price-to-book value of the company is 5.54.

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