The drug industry on Wednesday put a brave face on plans to make it easier for poor countries to override patents on medicines, but analysts said the move exposed an important chink in its armour.
Countries from north and south are expected to sign up to the plan, designed to help fight devastating pandemics like AIDS and malaria, as part of a deal on a new trade round now being hammered out at WTO talks in Qatar.
The US$300-billion-a-year pharmaceutical industry, accused by critics of putting patents before patients, had argued that patent guarantees enshrined in the agreement on Trade-Related Aspects of Intellectual Property (TRIPS) should not be diluted.
In the event, ministers from developed countries opted to give ground on the issue in a bid to secure a broader deal on launching a new series of talks to liberalize global commerce, seen as vital to re-invigorating the world economy.
"Valuations of drug companies were based on the original interpretation of TRIPS, which was seen as very positive for the drug industry," said Franc Gregori, an industry analyst with BNP Paribas in London.
"This is the first chink in that armour."
The draft declaration on medicines cites the need to "protect public health" and "ensure access to medicines for all" by enabling poor countries to produce or buy generic drugs in case of a health crisis.
The least-developed countries would also have an extra 10 years -- until 2016 -- to implement TRIPS, though this would not include two of the world's biggest generic drug producers, Brazil and India.
"There has been a concession -- it would be wishful thinking to deny it," said Thomas Cueni, head of Interpharma, a trade group representing Switzerland's pharmaceutical industry.
"It will be somewhat easier in future for some countries to skirt around the patent issue, unfortunately. But the declaration emphasizes the importance of intellectual property protection for the research of new medicines."
The prime focus of the new declaration is devastating pandemics like AIDS and malaria, where access to life-saving medicines is a major hurdle in treatment.
But the ramifications of a weakening of the 1994 TRIPS accord could be wider, threatening long-term profit expectations for one of the world's biggest industries.
Christophe de Callatay, spokesman for the European Federation of Pharmaceutical Industries, said what had been agreed in Qatar was a "political" declaration confirming the existing flexibility of the TRIPS agreement, which always had allowed governments to override patents in emergencies.
Neil Turner, editor of the British-based Pharma Pricing and Reimbursement journal, said the wording of the declaration remained ambiguous and much would depend on the interpretation of countries' public health needs.
But he believes the climate has changed profoundly, following controversy over AIDS drugs in Africa, recent rows over anthrax drugs in North America and a desire by politicians to build bridges with the developing world after Sept. 11.
"The drug industry has learnt its lessons and will go all out to avoid another public relations debacle," Turner said.
Critics say the case supporting pharmaceutical company rights was undermined by US and Canadian threats to override patents on Bayer AG's Cipro drug for use against anthrax.
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