pharmaceutical sales in India and ranked # 5 in 2008, it is arguably less important than anti-infectives from a public health perspective (Goldberg 2010). Nevertheless, it represents a useful starting point to investigate the impact of the newly introduced product patent regime on the pharmaceutical industry in India.

The data contains 2,425 CNS products across 21 sub-therapeutic categories in the Indian CNS market. For simplicity, we focus on single ingredient products (products containing one active molecule) where there is only one innovator, and this causes our sample to go down by approximately 28 percent. We further drop 35 products that have zero number of doses sold throughout our six-year study period. When duplicate products appear (i.e. same product in different sub-therapeutic categories), we combine all sales for a product and keep the observation with the highest sales value. As a result, we are eventually left with 1,693 single ingredient products containing 160 molecules with total sales, total number of doses and average price per dose for 24 quarters from 2003-2008.

The second main source of data was obtained from the Patent office of the Government of India and contains data on CNS pharmaceutical product patents granted from January 1, 2005 to December 31, 2008. We were able to obtain detailed data on the application number, year the patent application was filed, date of patent grant, patent number, molecule, disease, and the innovator company for this category of drugs.<sup>20</sup> Unfortunately, the classification of granted product patent type was not provided to us initially by the Government. However, we worked with an examiner of drug patent applications in India to code each granted product patent according to whether it contained an active ingredient claim. Surprisingly, 90 percent of the granted product patents in the CNS therapeutic segment turned out to not claim the active ingredient, lending support to observations by Chaudhuri (2005), and Sampat (2010) who note the high rate of ―low quality‖ patents being filed and granted in India.

From a total of 150 product patents, 42 percent of the patents are for combination drugs (drugs made of two or more active ingredients) that we exclude from the current analysis. In instances where multiple secondary product patents are granted (such as product patents for a new salt, a new formulation, or a new derivative of a drug), we consider the earliest granted secondary product patent to a molecule, causing us to be left with 39 unique single ingredient product patents, though we later explore the sensitivity of the main results using the number of granted patents as an additional explanatory variable.

Figure1 shows the percentage of molecules in the CNS category of drugs that were granted product patents in each year. There were 0 product patents granted in 2005 (the first year of the reform). By the end of 2006, 5 percent of the molecules (8 out of 160) had received a product patent, rising to 16 percent in 2007 and 24 percent (39 out of 160) by the end of 2008.

> 20 We are in the process of collecting detailed data on product patents granted in other therapeutic segments to extend the analysis to the entire pharmaceutical market in India.

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