On March 12, 2012, India’s Patent Office approved an application by Natco Pharma Limited for a compulsory license to sell a generic version of Bayer AG’s kidney and liver cancer drug Nexavar. In 2008, Bayer had filed and was granted a patent on the drug. Also, Bayer had refused to grant a voluntary license to NATCO previously.

This is the first time that an Indian company has been granted a compulsory license under the Indian Patent Act of 2005, which allows the government to require patent holders to grant licenses to third parties. The Patent Act allows any interested person, after three years from the grant of a patent, to make an application for a compulsory license on the grounds that (i) reasonable requirements of the public with respect to the patented invention have not been satisfied; (ii) the patented invention is not available to the public at a reasonable price; or (iii) the invention is not exploited commercially to the fullest extent in India. In its order, the Patent Office reasoned that Bayer had not met the reasonable requirements of the public with respect to Nexavar. It also concluded that Bayer had not exploited the drug commercially to the fullest extent in India or manufactured it to a reasonable extent in India, and that the drug was not available at an affordable price.