Patents are a vital aspect of the global pharma industry. Patent protection is essential to spur basic R&D and make it commercially viable. But, only the developed nations endorse product patents. Most third world countries have patent laws but enforcement is totally lax.
2.3 New Drug Approval (NDA)
Prior to launching its products in any country, a pharma company undertakes patent registration to protect its own interests. To protect the interests of the consumers, it is necessary that the product be approved by the drug authorities in that country. Mostly the process for seeking approval is initiated alongside the patent registration process.
Due to pressure from the developed countries, across the world uniformity in patent laws is being implemented under WTO (World Trade Organization - earlier GATT i.e. General Agreement on Tariffs & Trade). Presently, different countries have different patent types and life period. WTO has decided upon a product patent life of 20 years in all countries.
2.5 RESEARCH & DEVELOPMENT (R&D)
The pharmaceutical industry is characterized by heavy R&D expenditure. It is only the large pharmaceutical companies who can allocate significant resources for R&D to introduce new products. As the products are an outcome of significant R&D expenditures incurred by these companies, they have their products patented. The patent allows the companies concerned to wield immense pricing power for their new products.
2.6 THE COMPETITION
The level of competition on day to day basis in very high in Acute segment however the degree of competition in not as much as high in Chronic therapy area. As doctor has to prescribe drug for a long time in chronic cases and patient is suppose to consume it without any change of brand. While in acute cases doctor is changing brands on day to day basis. In acute area however there is a large competition from local and propaganda companies.