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Nirmal Bang's view on pharma sector

The recent proposal to increase filing fees for pharmaceutical patents will be justifed if it is used to overhaul the old and sloppy system prevalent at present, says Nirmal Bang's research report.

September 25, 2013 / 01:24 PM IST

With the aim to bring better transparency in the Indian pharmaceutical patent system, the Department of Industrial Policy and Promotion (DIPP) recently released a gazette draft notification on 12th June.

The government of India announced a proposal to increase the filing fees for pharmaceutical patents. According to the draft order, companies need to pay double the amount in comparison with the previous fee structure.

The proposed fee structure under draft Patent (Amendment) Rules, 2013 ideates increase in the current fee structure by almost 100 percent. It has also proposed a levy of 10 percent surcharge on physical filings with the patent office. However, in developed countries patent fees are much higher, almost five times higher than the existing Indian patent fee format.

In response to the proposed increase in fee structure, a government official reasoned that the proposed increased fee is still less than the fee in developed countries where it is almost five times more.

India is now becoming an international search and patent examination authority. There is a considerable backlog of patent applications in India. The patent office needs to be substantially equipped with higher quality and larger quantity of technically qualified manpower.

According to the released draft of the amended rules, there will be a 10 percent additional surcharge on documents filed in the physical format. This is the first time in the history of filing of Indian pharma patents that such a surcharge will be levied, indicating that authorities are trying to encourage applicants to use the e-filing mode. An eminent pharma lawyer feels that it is justified in the present situation.

Today the e-filing system is mainly restricted to limited banks. It may be due to a slow server. The system is clumsy too. And to overcome this, the number of banks supporting e-filing and the payment options must be broadened and the system overhauled. If the system is upgraded and implemented in the right spirit, it will not only act as a catalyst to increase efficiency through digitization but will also help increase the transparency, according to an industry expert.

The website of Patent Office became operational on 26th Jan '05 and the "teething problems" have continued too late "past-infancy". Most information is unavailable, unreliable, outdated or simply missing from the website. The "down" time of the website is too frequent and often long.

The 18-month publication and even the "fee paid" early publications are often (many examples of even delay in 2 to 3 years is available for the 18-month publication) delayed. These and other delays and deficiencies need to be rectified.

If the proposed fee increase is used to address these perennial problems, which cause extreme inconvenience and loss to the users, the fee increase is well-justified. Today at the Indian patent office the issue of pendency is very high and the impact of the direct levy should be such that it should reduce pendency.

According to a pharma industry expert, the original fee structure was itself on the lower side since 2005 and one only hopes that if there is any proposal to levy higher fee it should correspond with an increase in the current level of service provided.

In the present scenario, India is considered to be the leader and outsourcing provider for IT and e-jobs across the world. However, India has remained "poor" domestically in e-practices. It is high time that Indian applicants and the Indian Patent Office is e-enabled.

The Indian Intellectual Property (IP) system has to be e-practiced and e-transparencied in all respects by e-enabling all stakeholders, practitioners and the PTO. Increasing the official fee for various office actions is absolutely justified.

India provides a two-tire fee structure, with a 1:4 ratio between "natural persons" (individuals or group of individuals) vis-a-vis "other than natural persons" (corporates, institutes, etc) for patent application fees and all other fees.

In the context of the additional surcharge on physical filings, although the move is in the right direction, it should be implemented to its fullest extent so that the system is made applicant friendly and that it encourages e-filing. This increase in fee should not hamper the growth of Indian companies considering the number of players that are involved and the increased amount involved.

The increase in the patent fee is very much needed to improve the infrastructure of the Indian patent offices and increasing the number of examiners, which in turn, will help quick scrutiny of patents saving valuable time, which was not the case earlier as applicants had to wait for years. They were also asked questions that were not relevant to them.

The effects of the proposed draft patent fees will be visible in a short while post the implementation. Indian pharma companies like Venus Remedies, Suven Lifesciences and many more have received a number of pharma patents from various countries and many more are still in the pipeline.

These pharmaceautical companies say that if the increased patent fee is justified then they would not really mind paying extra. The industry would be willing to bear the additional burden provided it results in modernization of the system and proper utilization of funds so as to reduce the turnaround time for each application. Every applicant today yearns to have his/her respective applications processed faster.

India should be fair and reasonable in its IP policy of private-public parity, equity and balance of rights and obligations. The fee increase is a routine exercise. This will not in any way hamper the growth of pharmaceutical companies.

Patent fee increase is the least of worries for the Indian pharma sector. The growth of Indian pharma companies will be positively affected by the proactively negative policies of the government, which is forcing most pharma-industry leaders to sell out and get out of this "pharma mess".

Indian pharma firms would not mind paying extra as long as the Indian patent office gives them better facilities and utilizes the money thus earned in a proper manner, especially in upgrading the infrastructure and making the procedure more compatible as well as approachable.

Source: Nirmal Bang's Beyond Market

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Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.


first published: Sep 25, 2013 01:24 pm

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