India's top court has dismissed Swiss drug maker Novartis AG's attempt to win patent protection for its cancer drug Glivec.
The decision sets a benchmark for intellectual property cases in India, where many patented drugs are unaffordable for most of its 1.2 billion people.
It cements the role of local companies as big suppliers of inexpensive generics to India's rapidly growing $13 billion-a-year drugs market and also across the developing world.
Among the chief beneficiaries of the Supreme Court ruling will be India's Cipla Ltd and Natco Pharma Ltd, which already sell generic Glivec in India at around one-tenth of the price of the branded drug.
Ranjit Shahani, managing director of Novartis India Ltd , the firm's locally listed unit, said it would be cautious about investing in India, especially over introducing new drugs, and seek patent protection before launching any new products.
It will continue to refrain from research and development activities there.
Healthcare activists have asked the government to make medicines cheaper in a country where many patented drugs are too costly for most people and where patented drugs account for under 10% of total drug sales.
"This appears to be the best outcome for patients in developing countries as fewer patents will be granted on existing medicines," said Leena Menghaney, Medecins Sans Frontieres' Access Campaign manager for India.
Over 16,000 patients in India use Glivec and the vast majority of those get it free of charge, Novartis says.
By contrast, generic Glivec is used by more than 300,000 patients, according to industry reports.
The US industry trade group Pharmaceutical Research and Manufacturers of America, or PhRMA, said the decision reflected a deteriorating environment for innovation in India.
The Supreme Court's decision comes after a legal battle that began when Novartis was denied a patent for Glivec in 2006.
Novartis had argued it was entitled to a patent for the amended version of Glivec because the original patented compound was never suitable for making into a pill.
Developing the final chemically stable form took years of extra work and it was this effort that marked the real breakthrough in developing Glivec as a life-saving cancer medicine, the Swiss company said.
Glivec is used to treat certain forms of leukaemia and gastrointestinal cancer, as well as some other rare tumours.
Pfizer's cancer drug Sutent and Roche's hepatitis C treatment Pegasys lost their patented status in India last year, decisions the companies are fighting to have reversed.
The Supreme Court's latest ruling will make it tougher for them to win back patent protection.