Novartis, the Swiss pharmaceutical group, is to switch hundreds of millions of dollars in planned investments from India in the next few years in response to a court ruling that weakens intellectual property rights on new medicines.
In his first detailed comments on the rejection earlier this month of his attempt to protect the patent on the company's cancer medicine Glivec, Daniel Vasella, chief executive of Novartis, told the Financial Times that his "concrete plans" for investments in research in India stalled during the trial and would now go elsewhere instead.
The decision comes at a sensitive time for pharmaceutical companies in Asia, with many hesitating between India and China as an investment location against a backdrop of patent uncertainties.
Mr Vasella said: "This [ruling] is not an invitation to invest in Indian research and development, which we would have done. We will invest more in countries where we have protection. It's not a punishment, it's just a question of the culture for investment. Do you buy a house if you know people will break in and sleep in your bedroom?"
India has enjoyed an upturn in investment by some pharmaceutical companies – including several fast-growing Indian groups – following the introduction of tougher patent rules in 2005, matched by strong market growth and the presence of skilled and affordable doctors and researchers.
However, other international drug makers have so far held back or made larger investments elsewhere in Asia, notably in China and Singapore, spurred by stronger legal protection.
Novartis had appealed against an earlier Indian ruling to reject patents on its leukaemia drug Glivec. The court argued that "incremental innovation" did not qualify it as a new chemical entity justifying protection.
The company said such an interpretation violated World Trade Organisation agreements and would be a disincentive for investment, because much pharmaceutical innovation occurs through incremental research.
The case became a rallying point for non-governmental organisations, which mounted a campaign against Novartis to drop the legal action.
Campaigners argued that tougher patent rules were undermining India's pivotal role in providing cheap medicines for the developing world through its low-cost generic drugs industry.
Mr Vasella said he had no plans for a fresh appeal against the latest court ruling, arguing that it was a matter for the WTO.
