Pre-Lecture Material: Lecture 1
Background for the Novartis’ Battle for Glivec in India
A Case of Patents, Public Health, and Non-Market Strategy
[FOR REFERENCE ONLY]
1. Background of the Company
Novartis, a Swiss pharmaceutical giant was established in 1996 from merger of Ciba-Geigy
and Sandoz. It positioned itself as a leader in oncology and rare disease treatments. With annual
R&D investments exceeding $9 billion, the company’s business model relies heavily on
intellectual property (IP) rights through patent protection to recover costs. This strategy faced
a critical test in India during the Glivec patent dispute-a clash that exposed tensions between
global IP norms and local public health priorities (1, 2).
2. The Glivec Controversy
The Drug: Glivec (imatinib mesylate), a breakthrough therapy for chronic myeloid leukemia,
generated over $4.6 billion annually at its peak. Priced at $2,666/month in India, it faced
competition from generics priced 90% lower ($177–$266/month) (4).
India’s Patent Law: In 2006, India’s Patent Office rejected Novartis’ application under Section
3(d) of the Patents Act, for lacking incremental innovations with “enhanced therapeutic
efficacy.” The Supreme Court upheld this in 2013, ruling that Glivec’s 30% improved
bioavailability didn’t meet the threshold (3, 5).
3. The Background of Glivec: Exclusive Marketing Rights for Novartis
A key part of Novartis non-market approach in the Glivec case was its forceful application of
sole marketing rights within India's transitional TRIPS compliance framework. Novartis
applied for a patent of Glivec's beta crystalline form (imatinib mesylate) in 1998 in India,
keeping it in a "mailbox" until India's complete TRIPS implementation in 2005. Instead of
waiting to get its application heard for a patent, Novartis purchased November 2003 exclusive
marketing rights under Section 24A of the Indian Patents Act, 1970, which gave it temporary
exclusivity to market Glivec until the patent application was settled 36. This legal process,
enacted to shield innovators in times of regulatory change, was a powerful tool for Novartis to
quell generic competition.
During 2003–2006, the period of exclusive marketing rights, Novartis used this
exclusivity to secure injunctions against Indian generic producers such as Cipla, Natco, and
Ranbaxy, compelling them to suspend production and sales of low-cost imatinib mesylate at
$177–$266/month compared to Novartis' $2,666/month (9,11,13). Novartis used the exclusive
marketing rights to monopolize the market despite patent controversies unresolved, imposing
severe access barriers. For example, the Cancer Patients Aid Association (CPAA), which
depended upon generics to distribute free treatment among poor patients, was forced to
discontinue aid. Novartis' lawyers stated that EMR violations deserved tough penalties, placing
generic manufacturers in the category of violators rather than competitors (11).
Such a strategy had double purposes of market capture and pressure of litigation. By
repressing generics during the marketing exclusivity period, Novartis hoped to make Glivec
the de facto standard, making it expensive to re-enter generics even if the patent subsequently
got rejected. Furthermore, the marketing exclusivity period provided Novartis with a method
of delaying litigation, as generic companies would lose from having to wait and the expense of
litigation. However, the strategy was socially unsuccessful: patient organizations and NGOs,
like Médecins Sans Frontières (MSF), accused Novartis of exploiting loopholes in regulation
to seek profits over public health, raising risks to reputation (9,10).
The effect of sole marketing rights highlights the tension between legal frameworks
and market forces. Novartis’s generics suppression based on sole marketing rights in 2003–
2006 illustrates how multinationals can use transitional IP provisions to stall competition, even
in courts that emphasize affordability (12).
Figure 1 Novartis Case Timeline
3. Novartis’s Actions
Novartis responded with a sophisticated, yet integrated plan designed to navigate the complex
interplay of legal, regulatory, and social challenges. Unlike traditional market strategies
focused on pricing or product differentiation, non-market strategies address the broader socio-
political environment in which businesses operate. For Novartis, this meant deploying a
combination of legal advocacy, public relations, corporate social responsibility (CSR), and
coalition-building to protect its IP rights while mitigating reputational risks in a market critical
to its global operations (1). Precisely Novartis employed a multi-track approach to influence
regulatory and public opinion arenas:
Legal Battles
Strategically Novartis framed the dispute as a way to challenge the interpretation and
enforcement of the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights)
by India. By challenging Section 3(d) in the Madras High Court (2007) and later the Supreme
Court, the company aimed to set a precedent for future patent applications. Legal arguments
emphasized TRIPS’ “minimum standards” for patentability, but Indian courts deferred to
domestic public health imperatives (9)
Public Relations: Stories Over Statistics
Glivec International Patient Assistance Program (GIPAP) provided free Glivec to 95% of
Indian patients (targeting around 16,000 patients) unable to afford treatment. This program was
showcased as part of Novartis’ $1 billion global "access-to-medicines" initiative. While Indian
activists framed Glivec as a symbol of “evergreening” (a practice of seeking new patents by
the pharmaceutical companies for minor modifications to existing drugs to extend the and profit
for longer periods), Novartis countered with patient narratives. Campaigns featured
testimonials Glivec’s lifesaving benefits and countered the narratives paintied Novartis as
profit-driven. These stories aimed to shift the discourse from “profits” to “lives saved” (6).
Thus, the GIPAP became Novartis’ moral anchor. By providing free drugs to ~16,000
Indians (95% of users), the company positioned itself as socially responsible. It was circulated
even by the medical practitioners that mane patients, could access Glivec because of GIPAP
program.
4. Outcomes
While Novartis lost the patent battle, the Supreme Court reinforced India’s strict interpretation
of patentability, limiting "evergreening". Novartis retained a 5% market share among affluent
patients and avoided reputational collapse. The Corporate citizenship initiatives mitigated
backlash, positioning Novartis as socially responsible, despite aggressive IP litigation. The case
underscored emerging markets’ willingness to prioritize public health over multinational IP
claims, influencing pharma strategies in similar jurisdictions. Such as in Brazil and South
Africa, this case emboldened to adopt similar strict patentability criteria, reshaping pharma
strategies in emerging markets. Later, there competitors like Roche, replicated Novartis’ the
similar approach of combining the non-market strategy of litigation and CSR in hepatitis C
drug disputes (8).
Terms used: Evergreening refers to a strategy used by some pharmaceutical companies to
extend the commercial life of a drug patent beyond its original expiration date by making minor
modifications to the original drug and seeking new patents on those changes.
Videos:
Views on the case: [Link]
WTO TRIPS: [Link]
References used in this note:
• Bach, D., & Allen, D. B. (2010, April 1). What Every CEO Needs to Know About
Nonmarket Strategy. MIT Sloan Management Review.
[Link]
strategy/
• "Novartis v. Union Of India & Ors on 1 April 2013" (PDF).
• Post, G. (2024, February 26). Novartis A.G. v. Union of India : case analysis - iPleaders.
iPleaders. [Link]
• Shetty, P. (2012). Novartis challenges India’s patent law. Nature.
[Link]
• Why was Novartis denied a patent for Glivec in India? (2013, April 2). The Economic
Times. [Link]
was-novartis-denied-a-patent-for-glivec-in-india/articleshow/[Link]
• Goel A., (n. d.). Why Does Novartis Prefer to Give Away Glivec for Nothing in India?
Man In India, 96 (10), 4009-4013. [Link]
ashwani_final_pdf.pdf
• Post, G. (2024, February 26). Novartis A.G. v. Union of India : case analysis - iPleaders.
iPleaders. [Link]
• Bench, B. &. (n.d.). IPAB Order Dated 26-Jun-2009 in Novartis v. Union of India.
Scribd. [Link]
in-Novartis-v-Union-of-India
• Gabble, R., & Kohler, J. (2014). “To patent or not to patent? The case of Novartis’ cancer
drug Glivec in India”. Globalization and Health, 10(1), 3. [Link]
8603-10-3
• Padma, T. V. (2013). Indian court rejects Novartis patent. Nature.
[Link]
• Post, G. (2024, February 26). Novartis A.G. v. Union of India : case analysis - iPleaders.
iPleaders. [Link]
• [Link]
df
• [Link]
