Delhi High Court allows SMS Pharma to export Sitagliptin API subject to conditions

New Delhi, July 23, 2021:

The Delhi High Court has modified its earlier ex-parte interim order to allow Hyderabad-based SMS Pharmaceuticals to export the active pharmaceutical ingredient (API) Sitagliptin, an anti-diabetic drug, to its foreign clients Chemo and Verben for research and development purposes, subject to certain conditions.

US drug major Merck Sharp and Dohme (MSD) Corp holds patent rights for Sitagliptin and gained an ex-parte interim injunction order from the High Court on October 21, 2020, against the alleged patent infringement of SMS Pharmaceuticals.

MSD holds the patent for Sitagliptin which is valid till July 5, 2022 and has been in litigation with various Indian firms to protect the patent rights for the same in the country.

MSD alleged that SMS Pharma has advertised Sitagliptin hydrochloride in its list of APIs for sale and has been exporting the API since 2016.

SMS Pharma, in a written submission to the Court, said that the drug is not manufactured for commercial purpose. The company has a joint venture with Chemo AG Lugano, a Switzarland-based company, for development and manufacturing of certain products, so that they could be launched in the market after patent terms expired. It has also obtained permission from the governmental and drug control authorities and its activities are within the parameters of patent laws.

It has received permission from the drug control administration to manufacture the drug of specified quantities for export to Switzerland, Spain, Cyprus and the UK, it said. According to Section 107 A of the Patents Act, "any act of making, constructing, using, selling or importing a patented invention solely for uses reasonably related to the development and submission of information required under any law for the time being in force, in India or in a country other than India...," are not to be considered as infringement.

MSD argued that if allowed to export for research and development purposes, there is every likelihood of the permission being misused and of the exports being exploited for commercial purposes. It alleged that the Indian firm has exported almost 800 kg of the API.

Hearing both sides and taking similar cases in the past into consideration, Justice C Hari Shankar ordered that SMS Pharma is permitted to export the API Sitagliptin to Chemo and Verben, as prayed.

However, it should file an affidavit, before the Court before such export, setting out the quantities of Sitagliptin/Sitagliptin hydrochloride being cleared and exported by the company. The affidavit shall also contain an undertaking that the exports are intended only for the purposes of research and development by the foreign buyers Chemo and Verben. It should also undertake to comply with all the safeguards contained in the judgement of the Division Bench of the Court in a similar litigation involving Bayer Corporation.

"The defendant (SMS Pharma) shall also remain bound by any further orders to be passed by this Court in that regard Consequent on receipt of the consignments by Chemo and Verben, the said buyers would also tender, to the defendant, formal undertakings, agreeing to use the imported product only for research and development purposes. These undertakings shall also be placed on record by the defendant in these proceedings," said the Order issued on Tuesday.

"Subject to the above, IA 7615/2021 stands allowed. The ex-parte ad interim injunction granted by this Court on 21st October, 2020 stands modified accordingly," it added.

The Court also pointed out that in an earlier litigation between MSD and Honour Lab Ltd, the former allowed the Indian firm to export, on condition that the latter should comply with the directions contained in the Bayer Corporation case. The decision in Bayer Corporation, from both the Single Judge and the Division Bench, was to the effect that there can be no restraint of export of a patented invention, provided such export is for research and development purposes.

"Denial of like benefit to the defendant in the present case is, therefore, also likely to place the defendant at a disadvantage vis-à-vis at least HLL. In like circumstances, the Court is expected to adopt a like stance," said the Judge. PharmaBiz