India's global pharmacy role threatened by EU pact

NEW DELHI — Efforts by India and the European Union to strengthen trade are threatening India's ability to deliver lifesaving medicines to the world's poorest, analysts say as the two sides push through protracted negotiations on a free-trade pact.

India's prime minister and top EU officials are hoping their summit Friday in New Delhi helps move beyond disagreements over issues like European labor market limits and Indian duties on cars.

But health industry workers and activists worry that India may bow to EU demands for strict intellectual property protections and investor guarantees, which could close down the world's generic drug supply.

India's $26 billion drug industry has become an immense profit engine, growing at 15-25 percent a year — but also a lifeline for millions of patients in poor countries, many in Africa, unable to pay sky-high Western prices to treat illnesses that include HIV, malaria, asthma and cancer. For HIV alone, India makes more than 80 percent of the world's medicines.

The EU says it has suggested a clause in the free-trade pact "to ensure that nothing in the proposed agreement would limit India's freedom to produce and export lifesaving medicines."

Despite the EU assurance, Indian drug makers and health workers say two broad provisions in the agreement — one on intellectual property rights, and the other on investor lawsuits — would make it much easier for international pharmaceutical giants to sue the Indian government, drug manufacturers and distributors.

That, they argue, would dramatically curtail Indian production of many lifesaving drugs, or cause prices to rise to levels many cannot afford.

"The EU has changed strategy and has now focused on enforcement," trying to create an intellectual property rights regime "that will intimidate even legitimate generic manufacturers and thereby impact access and availability," said Dilip G. Shah, a former Pfizer executive who now heads both the Indian Pharmaceutical Alliance and the industry's Vision Consulting Group.

Activists have unleashed a global campaign to call the EU out on the policies. Analysts and drug makers say they have a point. While India's pharmaceutical companies would likely survive under a regime limiting generics, millions of the world's neediest patients, including within India, may not.

"The industry will be OK. They can produce anything" including drugs for Western multinationals, pharmaceutical analyst Bino Pathiparampil of IIFL Capital said. They may also gain from easier access to European markets.