Generic Firms Can Export Bayer Drugs for R&D in India Ruling

  • Ruling may speed the development of generic drugs abroad
  • Bayer’s blockbusters Xarelto and Nexavar covered by the ruling

An Indian court granted a pair of drugmakers the right to export the main ingredients of two of Bayer AG’s top-selling drugs to develop generics in other countries, a decision that has the potential to speed up copycat versions of some of the industry’s most profitable products.

The two Indian companies, Natco Pharma Ltd. and Alembic Pharmaceuticals Ltd., can respectively export sorafenib, the active ingredient in Bayer’s cancer drug Nexavar, and rivaroxaban, used to make its blockbuster blood thinner Xarelto, for research purposes, the Delhi High Court said in a ruling Wednesday. Together, Nexavar and Xarelto garnered about $4.2 billion in revenue last year for Bayer.

The German drugmaker’s suit attempted to halt exports of the active ingredients needed to make test batches of its patented products. The Indian firms said that because it takes years to get a generic medicine past regulators and ready for market, delaying exports until the patent expired amounted to an extension of the larger companies’ monopoly on those treatments. India is a key producer of the active pharmaceutical ingredients used to make generics, and ranks as the world’s biggest exporter of the finished products. 

Natco said in court papers it was seeking to sell sorafenib to a Chinese company, while Alembic said its rivaroxaban was destined for Brazil and the Middle East. Both said the exports were for the purpose of conducting clinical trials and research -- not for any immediate commercial purpose. Natco has been barred from exporting sorafenib by a court injunction since Bayer first filed the lawsuit in 2014.

A spokeswoman for Bayer said she couldn’t comment on the decision because she didn’t have a copy of the ruling.

Natco’s shares rose as much as 3.2 percent in Mumbai after the decision while Alembic rose as much as 6.7 percent. Bayer was little changed in Frankfurt, trading at 107 euros.

No Limit

Without the ruling, “the launch of a product by a generic company could have been delayed,” said Rajeshwari Hariharan, a lawyer at Rajeshwari and Associates, which represented Natco in the case. “For the end patient, this is actually good news” because it means makers of generics will be ready to launch a cheaper product when Bayer’s patents expire.

The court decision puts no limit on how much of the ingredients the Indian firms can export for research purposes to allow greater flexibility in meeting regulatory needs, according to Hariharan.

"The court has reiterated that pharma industry growth in India cannot be stunted in this manner by stopping exports for regulatory purposes," said Prathiba Singh, the lawyer representing Alembic.

More Cases

Pfizer Inc. brought a similar case against Sun Pharmaceutical Industries Ltd. last year to prevent exports to the U.S. of the main ingredient used in its arthritis drug Xeljanz, worth $927 million in sales in 2016. That case is still before the court. Another case, brought by Merck & Co. against the Indian unit of Teva Pharmaceutical Industries Ltd., won an injunction last year against the export of the main ingredient of Merck’s top selling diabetes treatment Januvia.

Frederick Castro, a spokesman for Sun, declined to comment on the impact of the case. Spokespeople for Pfizer, Merck and Teva did not immediately respond to requests for comment.

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