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By Sumeet Chatterjee and Ben Hirschler
MUMBAI/LONDON, Feb 6 (Reuters) - Global pharmaceutical firmsare pressuring the United States to act against India to stopmore local companies producing up to a dozen new varieties ofcheap generic drugs still on-patent, sources with directknowledge of the matter said.
An Indian government committee is reviewing patented drugsof foreign firms to see if so-called compulsory licences, whichin effect break exclusivity rights, can be issued for some ofthem to bring down costs, two senior government officials toldReuters.
The drugs that are part of the review process are used fortreating cancer, diabetes, hepatitis and HIV, said the sources, declining to give details. No timeline has been given forcompletion of the review process.
Emerging markets, from South Africa to China and India, arebattling to bring down healthcare costs and boost access todrugs to treat diseases such as cancer, HIV/AIDS and hepatitis.
Western drugmakers, including Pfizer Inc, NovartisAG, Roche Holding AG and Sanofi SA,covet a bigger share of the fast-growing drugs market in India.
But they have been frustrated by a series of decisions onpatents and pricing, as part of New Delhi's push to increaseaccess to life-saving treatments where only 15 percent of 1.2billion people are covered by health insurance.
India is currently on the U.S. government's Priority WatchList - countries whose practices on protecting intellectualproperty Washington believes should be monitored closely.
The U.S. industry trade group Pharmaceutical Research andManufacturers of America (PhRMA) believes Washington should takea tougher line by downgrading it to a Priority Foreign Country,a classification for the worst offenders, which may triggerpossible actions, sources said.
"The multinational companies are exploring all options -from paring their investments in the country to forcing the U.S.to take some actions," said a source in New Delhi, who isdirectly involved in the situation.
"Companies feel something should be done at the earliest tocheck the violations of their intellectual property in thecountry. They want government-to-government pressure to changethings," he said.
All the sources declined to be named due to sensitivity ofthe matter. A PhRMA representative declined to comment.
If India gets relegated by the United States to PriorityForeign Country level, it will join Ukraine as the secondcountry in that segment. Countries in the Priority Watch Listinclude China, Indonesia, Pakistan, Russia, Thailand andArgentina.
"PhRMA makes submissions to the U.S. government every yearon trade issues but this year they really want to ratchet up thepressure on India," said one executive with a multinational drugcompany.
PhRMA is currently drawing up a submission to the U.S.government ahead of a Friday deadline for filing concerns aboutcountries to be included in the so-called Special 301 Report,which is prepared annually by the Office of the United StatesTrade Representative.
POLITICALLY SENSITIVE
Making medicines cheaper is a politically sensitive issue in India where many patented drugs are too costly for mostpeople, 40 percent of whom earn less than $1.25 a day, and wherepatented drugs account for under 10 percent of total drug sales.
Picking a fight with an emerging economy like India, wheremillions of people cannot afford basic healthcare, will not beeasy and without risks.
The industry has recently run into fierce controversy inSouth Africa for taking on Pretoria over its plans to overhaulpatent laws to favour cheaper generic drugs, leading someexecutives to urge a softer approach.
"I don't believe there is any need for any kind of moreassertive stance. This is a situation where constructiveengagement is the way forward," GlaxoSmithKline Plc Chief Executive Andrew Witty told Reuters.
With sales of patented drugs in Western countries slowing,emerging markets are a vital growth driver for companies. India,however, has so far failed to be much of a money-spinner for theworld's top pharmaceutical companies.
India's $14 billion-a-year drugs market - driven these daysby chronic diseases, such as diabetes, as well as infections -is expected to be worth $22-32 billion by 2017, which would rankit as the 11th largest globally, according to IMS Health.
"Any obstruction or action by the U.S. government can have avery adverse impact on the trade relations between the twocountries," said D.H. Pai Panandiker, president of NewDelhi-based RPG Foundation, an economic think-tank.
"So, both sides will be cautious, but to protect their own interests they won't hesitate to take actions under the WTO(World Trade Organisation) provisions."
In 2012, India issued its first ever compulsory licence todomestic drugmaker Natco Pharma Ltd on a kidney andliver cancer drug, Nexavar, patented by Germany's Bayer AG, in a move that it had said endangered pharmaceuticalresearch.
AstraZeneca Plc last month decided to shut its R&Dcentre in Bangalore citing broader global business strategy.Some analysts expect a few other global drugmakers to pare R&Dspending given the uncertainty about the patent regime.
"If the authorities are going haywire and looking to grantcompulsory licences lock, stock and barrel, in that event youwill lose the credibility in India as a system," Ameet Hariani,managing partner at Mumbai-based law firm Hariani & Co, said.
"You are going to see much more litigation on this issue.People are going to be unwilling to introduce new drugs in themarket," he said. "You can't expect to get a new drug at a priceof an aspirin."
