Drugmakers wrestle over medicine patents
By Jia Hepeng (China Business Weekly)
Updated: 2004-08-17 14:52

One and a half months after the patent of Pfizer's famous Viagra was declared invalid in China by the State Intellectual Property Office (SIPO), the UK-based pharmaceutical giant Glaxo SmithKline (GSK) is facing a challenge from its Chinese rivals over the patent of Rosiglitazone, a major chemical in its famous diabetes drug Avandia.

Although the two parties of the patent lawsuit deny any link between Viagra and Avandia, analysts say the two cases are similar in their role of encouraging more and more Chinese drugmakers to take up patent lawsuits to expand the domestic market for their generic medicines.

"The number of the cases will definitely increase, as more and more domestic drugmakers try to break the monopoly of international pharmaceutical giants on compounds they are copying," Hou Dakun, president of Beijing KevinKing Management Consulting Co Ltd, told China Business Weekly.

KevinKing is a leading consultant in the pharmaceutical industry in China.

In early July, three domestic drugmakers -- including Shanghai-based Sunway Pharmaceutical Co Ltd, Chongqing-based Taiji Group and Zhejiang Wanma Pharmaceutical Co Ltd -- filed an application to SIPO for invalidating the patent of GSK numbered ZL98805686.0, covering pharmaceutical formulations containing 2 to 8 milligram Rosiglitazone or its pharmaceutically acceptable salts.

According to Lilian Xiao, public relations manager of GSK China Investment Co Ltd, GSK in 1993 applied for a patent covering Rosiglitazone Maleate, commercially called Avandia, with SIPO and the patent was granted to the company in April 2000.

Starting in 1993, more than a dozen of Chinese drugmakers began to copy Rosiglitazone. To avoid patent infringement, they tried to develop Rosiglitazone in other forms of salts.

In 1998, GSK filed another patent application to SIPO for pharmaceutical formulations containing 2 to 8 milligram Rosiglitazone or its pharmaceutically acceptable salts, such as Rosiglitazone Hydrochloride, Rosiglitazone Tartrate or Rosiglitazone Sodium.

The patent was granted in July 2003 and GSK immediately requested its Chinese rivals to stop copying Rosiglitazone, otherwise they would face legal actions.

Domestic drugmakers are applying for an invalidation and re-examination of GSK's second Chinese patent.

SIPO's Patent Re-examination Board will hold the first meeting on the patent invalidation application on August 18.

The patent invalidation application is noteworthy at a time when SIPO has declared the patent for Viagra's active ingredient Sildenafil as invalid in China because it does not conform with Article 26 of China's Patent Law.

Viagra is the world's best selling erectile dysfunction drug.

The legal article stipulates that a company applying for a patent must provide a description of the drug "in a manner that is sufficiently clear and complete so that a person skilled in the relevant field can understand" the drug.

Pfizer still has a chance to appeal to Chinese courts to topple the judgment. In a statement about the ruling, Pfizer said it would appeal.

Analysts say the process may take at least two years.

The US-based Pfizer is the world's largest drugmaker, while GSK is the second largest.

Despite the concurrence of Viagra's invalidation ruling and the application to re-examine the Chinese patent of Rosiglitazone, Chen Qingbin, vice-president of Beijing Anboda Intellectual Property Right (IPR) Co Ltd denied any link between the two cases, saying China does not adopt judge-made law and the Viagra case cannot be taken as a precedent to rule on Rosiglitazone case.

Anboda is representing Chinese firms in the Rosiglitazone case, and it also represented Chinese drugmakers in successfully invalidating Viagra's patent.

"GSK does not think Viagra's case can have any impact on the Rosiglitazone invalidation re-examination," Xiao told China Business Weekly.

An official with SIPO also said that any decision on the patent of Rosiglitazone will be fair and will not be influenced by the Viagra case.

Yet Hou said that the two cases are similar in that they all concern Chinese drugmakers who began to copy famous foreign pharmaceutical compounds before they were granted Chinese patents.

In the 1980s and early 1990s, China's patent protection was loose and copying of foreign patented medicine was popular among Chinese drugmakers.

It is estimated that so far 97 per cent of China's chemical drugs are generic medicines copied from foreign drugs.

In its 1992 Patent Law, China began to tighten IPR regulation and forbade copying foreign patents. In 2000, China revised its Patent Law to meet the requirement of the World Trade Organization (WTO) of which it became a member in December 2001.

But the problem is many Chinese drugmakers had launched their copying work before the tightened legal requirements took effect.

"If they cannot overthrow the patent of foreign pharmaceutical giants, their drugs would not be allowed to sell and they would face serious losses," Hou said.

In the case of GSK, if the efforts of Chinese drugmakers to develop other pharmaceutical salts of Rosiglitazone are halted as requested by the UK pharmaceutical giant, they will face more than 100 million yuan (US$12.1 million) losses.

In addition, China's huge potential market for diabetes drugs is encouraging domestic generic drugmakers to continue their practice.

It is estimated that sales volumes of clinical diabetes drugs were 1.46 billion yuan (US$176.3 million) in 2003, rising 9.3 per cent over the previous year.

Clinical diabetes drugs commonly account for more than 80 per cent of the total drug sales in China.

Between 1999 and 2003, clinical diabetes drug sales grew 11.4 per cent annually in China.

Hou said that the Rosiglitazone case might be drawn out for along time as in the case of Viagra. Domestic drugmakers filed their invalidation re-examination application for Viagra to SIPO in mid-2002.

Analysts say the invalidation decision on Viagra has increased foreign pressure on Chinese patent authorities to maintain patents of leading international pharmaceutical firms in China.

In mid-July, Henry McKinnell, chairman and chief executive of Pfizer said he was "extremely disappointed" by China's decision to revoke Viagra patent.

In a statement, the American Chamber of Commerce said it would support Pfizer to file an appeal against the SIPO's invalidation ruling.

"It cannot be excluded that other factors might influence the final decision, but for IPR lawyers like us, we can only try to do our best in the legal framework," Chen told China Business Weekly.

No matter which side wins the IPR case, Hou predicted that such legal conflicts will increase.

It is impossible for most Chinese drugmakers to develop new pharmaceutical compounds as it would cost hundreds of millions of dollars, Hou said.

GSK invested 200 million pound (US$312 million) in developing the compound Rosiglitazone and its related medicines and 500 million pound (US$780 million) to promote it worldwide.

In the United States, it commonly costs US$800 million and 10 years to launch a new drug successfully.

In 2003, China's drugmaking sector, consisting of 6,000 pharmaceutical firms, realized a total production value of 387.65 billion yuan (US$46.8 billion), rising 19.86 per cent over 2002. By comparison, Pfizer's current projections released on July 21 reflected that its 2004 full year revenues will reach US$53.0 billion.

"In a rather long period of time, copying foreign drugs after their patent protection is over, or, for some drugmakers, seeking legal loopholes in the patents of foreign drugs to legally produce generic medicines will be a major development strategy of Chinese drugmakers. This may lead to frequent legal disputes," Hou said.

Close