Gilead, a leading biopharmaceutical company based in Foster City, California (603806). The company announced this week that it has entered into a collaboration agreement with seven generic drugmakers in India, who have acquired the technology to manufacture hepatitis C star drug sofosbuvir tablets (Sovaldi) through sales-based royalty payments to Gilead, and to manufacture generic versions of the drugs, which the Indian companies produce for sale in 91 developing countries. This is another benefit offer by Gilead within two months. In August this year, Gilead said it would sell sofibuvir tablets in India at 1 percent of the price, or about $10 per tablet, while a course of treatment would cost about $900. In the U.S., one sofosbuvir tablet costs nearly $1,000, and a course of treatment costs more than $80,000. As a brief introduction, sofosbuvir tablets were launched in the U.S. in December 2013, the heaviest new drug of the year, with sales of a staggering $5.1 billion in the first half of 2014. (The largest prescription drug in the world by far is AbbVie’s Xumel, for rheumatoid arthritis, with global sales of $10.6 billion in 2013.) Before this drug was introduced, the standard clinical treatment for hepatitis C required taking up to 12 tablets of the drug daily, along with mandatory injections of interferon, which had a clinical cure rate of only about 75% and could cause serious side effects similar to flu symptoms. Sofosbuvir, on the other hand, is highly preferred because it has fewer side effects and a cure rate of 80 to 90 percent. Since its launch, sofosbuvir tablets have been controversial, and the problem comes from the high price. Patient organizations and even the U.S. Congress have called for lowering the price of the drug, but Gilead insists on its own price system. Why is it difficult for Gilead to be tough in India, given the price reduction and transfer of manufacturing technology? This may have no small relationship with India’s domestic regulations on drug patents. Unlike the mainstream practice in some countries, including China, patented drugs are less protected in India. Since the 1970s, India has stipulated that patents are granted only for the manufacturing process of drugs, not for the drugs themselves. Firstly, if the drug being patented is an improved version of an existing drug, it has to meet very high conditions to enjoy patent protection, most notably, the improved drug must demonstrate improved efficacy. What is even more damning for multinational pharmaceutical companies is that India believes that in cases where patents are unavailable, unaffordable or not properly provided, local companies can apply to the Indian Intellectual Property Office for a compulsory license, and domestic companies that obtain a compulsory license can manufacture and sell generic drugs. The most famous failed patent application is for the Swiss Novartis drug “Gleevec” for chronic granulocytic leukemia, which not only failed to be patented in India, but also has been forcibly copied by companies, with the generic price more than 10 times lower than Novartis’ product. In recent years, patented drugs from multinational pharmaceutical companies, including Roche, GlaxoSmithKline and Bayer, have had their patented drug status revoked in India or simply not patented. Notable drugs of interest include Herceptin, a breast cancer treatment, and Nexavar, an anti-cancer drug. When patented drugs are not protected, the Indian drug market is the domain of some forced generics. With the previous experience, Gilead is certainly avoiding the risk that if it does not reduce the price, it may be forced to be copied by domestic companies in India, and the relevant products will be exported to other countries. A large part of the price of the drug itself comes from the research and development costs, the manufacturing costs are not high, the low price of the drug can still get part of the profits, technology transfer can also charge the relevant fees, in this way to deal with, better than the basket of water is empty, right? Thanks to the policy, India’s generic drug industry is at a high level. According to some statistics, 20% of the world’s generic drugs are produced in India, and about half of the generic drugs produced in India are exported to other countries, making it the world’s largest supplier of drugs, known as the “third world pharmacy”. In China, the listing of a drug requires approval from the State Food and Drug Administration, and sofosbuvir tablets have not yet been approved, so there is no legal way for this hepatitis C star drug to debut in the country for a while. With patient demand, illegal overseas resellers may be taking aim at this drug.