FORTY YEARS AGO, A BRITISH COMPANY called ICI Pharmaceuticals developed a potent high blood pressure medication called propranolol. It was the first beta blocker, a class of drugs that inhibits fight-or-flight hormones like adrenaline. But it was expensive. So Yusuf Hamied, a 34-year-old chemist at an Indian drugmaker, got his company to start manufacturing a cheaper version. ICI protested to the Indian government, and Hamied found himself face to face with prime minister Indira Gandhi. "Should millions of Indians be denied the use of a lifesaving drug just because the originator doesn't like the color of our skin?" he asked her.

It was a specious argument – ICI was worried about profits, not skin color – but Gandhi was persuaded. She urged parliament to change the laws governing drug patents, making them apply not to the chemical compounds themselves but to the processes used to manufacture them. If a company like Hamied's could come up with a different way to make the same beta blocker (or whatever), it could sell its own version in India free and clear.

That one law transformed India's pharmaceutical industry. Today, Hamied's company, Cipla, is the third-largest in India, with sales of $651 million in 2005. That's not much compared to multibillion-dollar concerns like GlaxoSmithKline, but Cipla is still the medicine cabinet to the developing world. As much as 40 percent of the AIDS patients in poor countries who take medications take Cipla drugs.

What Hamied does is legal in India and the countries where Cipla sells drugs. But the company is still making copies largely without permission of the people who hold the patents on the compounds. So to most of the international pharmaceutical industry, Hamied is a pirate.

He is 70, portly, with white hair and wire-frame glasses. But his rhetoric is still inflammatory. Pacing around the Cipla boardroom, he tells the story behind every drug the company makes, punctuating each anecdote by pulling a box of samples from the floor-to-ceiling cabinets and throwing it on the table. These are the copied drugs that earned Cipla its outlaw reputation: anti-cholesterol pills, antibiotics, AIDS treatments. He tosses in an asthma inhaler and a box of ciprofloxacin, the powerful antibiotic popular with bioweapon-fearing Americans.

Hamied made the greatest waves last year, when global fears of a bird flu pandemic inflated demand for oseltamivir, the only drug thought to be effective against the disease. Its maker, Switzerland-based Roche Pharmaceuticals, said it couldn't produce enough. Hamied stepped in, without a license from Roche, and started manufacturing the drug with the intention of selling it in countries where Roche didn't hold the patent – and, though he won't acknowledge it overtly, anywhere else. As is his style, Hamied made a lot of noise about his planned defiance. He has built his business on challenging the companies and patent structures that dominate the global drug market, because it's a worthy cause and because it's good for his bottom line. Now the Indian laws that let Hamied get away with all that are changing. In 2005, the Indian government brought its patent laws in line with those of the developed world. Indian companies can keep making certain knockoffs, but they can't copy drugs patented after 1995 without a license. So Cipla needs a new business model: It's going to sell legal generics to rich Americans.

BIRDS, LIKE PEOPLE, GET VIRUSES. They get sick, and usually they recover. They go back to waddling or flying or chirping. But one avian flu virus breaks the rules. This strain, called H5N1, is a killer – of birds, certainly, but also of people. Since 2003, more than 250 humans who work or live with sick birds have caught it, and more than 150 of them have died. Not a big number, but nearly three out of five, making H5N1 one of the most efficient viral assassins in the world. Global public health agencies worry that if it started moving from human to human, it could lead to a pandemic.

This isn't paranoia. The three flu pandemics of the 20th century claimed at least 43 million lives – 1918 started as a bird flu, and both 1957 and 1968 had genetic material from both bird and human viruses. H5N1 has hopscotched around the globe, from Asia to Europe, the Middle East, and Africa. But recent research has bred optimism. Turns out, H5N1 infections settle deeper in the lungs than other kinds of influenza. The usual coughing doesn't aerosolize virus particles, making it harder for people to give it to one another. And the virus doesn't seem to pick up new genetic traits as readily as some bugs, which is good news if you're worried about killer mutants. Nevertheless, the World Health Organization has recommended that nations stockpile drugs thought to work against avian flu.

There aren't a lot of choices. Oseltamivir, an antiviral manufactured by Roche under the trade name Tamiflu, is the best bet. But at the time of the 2005 southeast Asian outbreak it cost $60 for a five-day course of treatment, far too pricey for developing countries like Vietnam, where bird flu hit hardest. Wealthy nations couldn't get their hands on the drug either: Even though it quadrupled production during the outbreak, Roche had a backlog of orders at least a year long. Company spokespeople said they were at maximum output, due in part to a worldwide shortage of star anise, a key ingredient of oseltamivir. Furthermore, Roche wouldn't license the drug to other companies. The company claimed other drugmakers would have a hard time starting their own pipelines because synthesis of the drug was complicated and dangerous, requiring the use of an explosive chemical. Another firm would take two or three years just to figure out how to do it.

Nonsense, thought Hamied. One of his competitors in India, a company called Hetero, was already quietly making its own unlicensed oseltamivir knockoff, and Cipla was producing drugs with the explosive intermediate chemical Roche was so worried about. Hamied went shopping for star anise, and found that while it wasn't cheap, it was available. He bought a few tons and set his chemists to work reverse-engineering the drug. "Right or wrong, we're going to commercialize and make oseltamivir," Hamied told The New York Times in October 2005. When bird flu hit India four months later, Hetero had 700,000 doses ready. And Cipla, Hamied said, had 10,000 and was geared up to crank out 100,000 a week. "It wasn't all that difficult," Hamied says. "I think Roche had been dishonest."

Roche, for its part, denies that it had a problem with the Tamiflu supply. Spokesperson Terry Hurley insists that the company didn't have a backlog but instead "implemented a proactive inventory management plan." And it wasn't trying to block other manufacturers or hoard its intellectual property, either. "Roche has involved contract manufacturers into its supply chain to increase global Tamiflu production capacity," Hurley says. "This demonstrates that it's possible to collaborate with third parties and respect IP rights at the same time."

In the past decade, Cipla has been at the center of nearly every international health panic involving a patented medicine. Five years ago, Hamied defied patents and international law regarding antiretroviral medications, the drugs used to fight AIDS. When pharma firms refused to cut prices, he announced he'd make the "AIDS cocktail" for a dollar a day. Hamied also combined three medicines, each made by a separate company, into a single pill, making it easier for patients to stay on their treatments.

Big Pharma fights pretty hard to get countries to outlaw Cipla-like behavior, but the industry also knows that governments can change all the rules in times of crisis. "Compulsory licenses" allow companies to make drugs even if they don't own the patents, or compel the originating firm to ramp up production. Often all it takes is the threat of a compulsory license to get the actual patentholder to increase output. And in general, when small-timers like Cipla stay in their own (poor) backyard, the big manufacturers pay little attention.

Oseltamivir was different. Even though European and North American countries could afford the drug, there was none available. Hamied couldn't legally sell it to them. Yet he talked to The New York Times to ensure everyone knew he had it. Hamied's $20 million oseltamivir project wasn't a charity mission. It was a calculated gamble that a flu pandemic would hit before Roche could fill its orders. "If there was a pandemic, and the Americans fell short of the drug, would they come to me to buy?" he asks. Bird flu didn't turn into a pandemic last year, but governments tasted panic – and Hamied figured they'd be ready to buy from him or anyone else who had it to sell.

Roche denies that the prospect of competition had any impact; the company was granting manufacturing licenses to Vietnam and China before Hamied's announcement. Soon after, it granted one to Hetero in India. Nevertheless, Hamied says that getting involved in the fight against bird flu "had much more impact than what we did five years ago on HIV/AIDS, because at that time HIV/AIDS was regarded as the black man's disease. But now I was talking about a white man's disease."

HAMIED'S FATHER, A CHEMIST and an Indian nationalist, founded Cipla in 1935, when there wasn't a single pharmaceutical company in the country. It was a nation-building project; Hamied the elder wanted to do everything he could to make India self-sufficient. His timing was perfect. Embroiled in World War II, Great Britain asked its colonies for help, and Cipla gladly began churning out medicines for the war effort.

Hamied says his father never pushed him to carry on the legacy. He went to Cambridge to study chemistry anyway. At graduation, he was offered a fellowship. "There were many chemists much, much better than me, and I could not compete intellectually," Hamied says. "There was no point in following an academic career." He flew back to India and took a research job at Cipla.

As Hamied grew older, he developed a more complicated relationship with his homeland. His father, devout in his patriotism, linked Cipla's fortunes to India's. But Hamied is often perplexed and saddened by India today – by the sectarian violence, for example, that periodically engulfs Mumbai. In fact, he and his wife have what's called nonresident Indian status, which requires them to live outside of the country for six months a year. (They spend the time in Europe and Mauritius.) It also happens to give them a nice tax break.

It's exactly that fiscal pragmatism that brought Bill Clinton to Hamied. When the Clinton Foundation was looking for a pharmaceutical partner in its attempts to bring AIDS drugs to Africa, Cipla was an obvious choice. "I say this with complete respect," says Anil Soni, who works on the Clinton Foundation's HIV/AIDS initiative. "Hamied is not an AIDS activist. He's a businessman. He has a deep personal commitment to providing antiretroviral drugs at a price that is sustainable for him and his company, but that is a part of his business."

And it's as a businessman that Hamied feels the lopsidedness of the way drug patents work around the world. In the US and many other countries, new drugs are patent-protected for 20 years. When a company wants intellectual property protection in a new country, it needs a patent there, too. After 20 years, any company can start making its own version, called a generic.

In practice, makers like Cipla often manufacture and sell drugs owned by other companies in countries where the patents aren't enforced. Pharmaceutical giants like Roche or GlaxoSmithKline see that as pirate behavior, arguing that if you start messing around with the patent system, you take away their profit incentive to invent new medicines. According to a 2003 study in the Journal of Health Economics, it can take 12 years and $800 million to discover one novel drug.

But the truth is that Big Pharma hardly innovates at all these days. It uses the profits from its patents to market existing drugs and buy new ideas from academic researchers or smaller firms. According to the consultancy Strategic Decisions Group, "40 to 50 percent of products in development by global pharmaceutical firms are externally sourced." Oseltamivir, for example, was invented not at Roche but at a small biotech company called Gilead. Roche then bought the rights to make (and market) it. In 2004, just 36 new drugs were approved by the US Food and Drug Administration – down from a peak of 53 in 1996. So drugmakers have devised an arsenal of tactics for extending the life of their patents: Altered dosages, different combinations of meds, and novel uses for existing drugs all keep aging medications under patent – and profitable – by qualifying as new versions of old meds. That staves off competition from generics.

Hamied doesn't consider himself a pirate. "Cipla never breaks the law," he says. "It lives by the law of the land it is working with." But he doesn't deny that he feels the system favors the rich and the Western. "The third world cannot afford the prices of medications that are prevailing in the first world," Hamied says. "So don't talk about patents in isolation. Talk about access to medicine at affordable prices."

That's what happened after Cipla's flirtation with oseltamivir. Rich nations – the ones responsible for propping up the current patent system – came to see the risks of the legal monopolies. In May, the member states of the World Health Organization passed a resolution expressing concern about the "impact of high prices of medicines on access to treatment." The resolution also declared that patents aren't helping poor patients get new medicines.

It sounds like a bureaucratic victory at best. Cipla didn't come out a winner. ("We have large stocks of oseltamivir, but no customers," Hamied says. "It was a good humanitarian gesture, but in retrospect, it was a big mistake.") But for public health advocates and patent activists it was huge. Developed countries had previously blocked any attempt to get the WHO to take a stand on patents. But the May resolution passed because Big Pharma's traditional supporters like the US backed it – even they are starting to question patent laws. "People are beginning to see that this is not a problem of very poor countries not being able to afford medicines," says Ellen 't Hoen, policy director of the Campaign for Access to Essential Medicines at Doctors Without Borders. "It's a question of who controls what and who has access to what, and that goes beyond developing countries."

ONE OF CIPLA'S MANUFACTURING facilities is in Pune, 100 miles east of Mumbai. It's a clean, manicured oasis amid blasted red-dirt scrubland, the air scented sweet and toxic by a nearby petrochemical plant. In the main building, a vast, sparkling room houses seven massive stainless steel vessels, looking like submarines that have dived halfway into the floor. A tangle of color-coded pipes and hoses is connected to each. The entire room hums and groans with the sounds of industrial motors and pumps.

Inside one of the vessels, thousands of gallons of clear liquid froth and swirl. This is pure sertraline – an antidepressant sold in the US under the brand name Zoloft. Hamied's is a generic that will eventually be dried, shipped to the US, pressed into pills, and legally sold to sad Americans.

Next door, massive sifters are processing thousands of pounds of sildenafil citrate. Hamied markets it as Erecto; you probably know it as Viagra. Nobody has a patent on it in India yet, so it's legal for him to make – he just can't sell it in, say, the US. In the packaging department downstairs, a dozen women are assembling white cardboard boxes like the ones Hamied threw around his conference room, filling them with pills to treat yeast infections. They're generics, too – legal, and destined for US pharmacies.

These are not exactly the drugs that are going to save humanity. But they might save Cipla. This year, 50 percent of its sales came from exports – up 44 percent from the year before. And Hamied predicts that exports will keep growing. Brand-name drugs cost too much for even patients in the US. "What is the frightening scenario for America, and also a very interesting scenario for America, is the fact that if more and more companies enter the American generic market, the local generic industry will die," Hamied says. "And the people in Medicare and the old-age pensioners will benefit." Forget copycatting; the real action is in legitimate generics sold back to a drug-hungry West.

That's convenient, because just as Hamied is winning abroad, he is losing at home, now that India has closed the loophole that Indira Gandhi had opened. The government wants the country to join the World Trade Organization, and current members – under pressure from pharmaceutical companies – made the change a precondition. It's illegal to copy newly patented drugs in India. International do-gooder organizations protested the change, concerned that the new law would mean the end of affordable drugs for India and other poor nations. "This is a disaster for the common man," Hamied says. And for Cipla, unless it can start making big-ticket generics for sale abroad.

Hamied's competitors in India have vowed to expand their R&D to compete with Big Pharma. But Hamied doesn't think it'll work. Western drug companies feed off massive federal research grants that the Indian government couldn't possibly match. The future, Hamied says, is legal, licensed drugs.

Well, mostly legal. At Hamied's factory, a full ton of powdered oseltamivir is stashed in plastic drums. A Cipla manager proudly brandishes the tangible proof behind his boss's bluster: a plastic baggie heavy with the stuff. He says he watches the news daily for updates. If a pandemic hits, what does he think the Americans will do? "We are waiting," the manager says with a smile.

Erika Check (erika.check@gmail.com) is a reporter for Nature in San Francisco.

credit Oksana Badrak



credit Ed Hepburne Scott

Yusuf Hamied says the drug patent system favors rich Western nations at the expense of the developing world.



credit Oksana Badrak



credit Ed Hepburne Scott

Yusuf Hamied says the drug patent system favors rich Western nations at the expense of the developing world.



credit Oksana Badrak



credit Ed Hepburne Scott

Yusuf Hamied says the drug patent system favors rich Western nations at the expense of the developing world.