POSITIVE IPR DEVELOPMENTS IN EGYPT

UNCLAS SECTION 01 OF 02 CAIRO 003755

SIPDIS

SENSITIVE

USTR FOR SAUMS
USDOC FOR 4520/ITA/MAC/SAMS AND JACOBS/WIEHAGEN

E.O. 12958: N/A
TAGS: ETRD KIPR EG USTR
SUBJECT: POSITIVE IPR DEVELOPMENTS IN EGYPT

Sensitive But Unclassified -- Please Protect Accordingly.


1. (SBU) Minister of Health and Population Hatem El Gabaly
issued an order directing an Egyptian pharmaceutical company
to cease production of a generic copy of Lilly's innovator
drug Zyprexa. Marketing approval for the generic drug Olapex
had been granted to Apex Pharma in December 2005 by El
Gabaly's predecessor and the generic has been available
locally since January. The order requires Apex Pharma to
suspend sales of Olapex pending the outcome of its legal
challenge to Lilly's exclusive marketing rights for Zyprexa.
These exclusive marketing rights expire August 7, 2006. If
the court rules against Lilly prior to August 7, then the
order stipulates that Apex Pharma will be permitted to resume
sales of Olapex indefinitely. If the court does not make a
ruling, or rules in favor of Lilly before August 7, then
Alpha Pharma will be prohibited from selling Olapex until
Lilly's rights expire on August 7. The only way Alpha Pharma
will be prevented from selling Olapex after August 7 is for
the Egyptian Patent Office (EPO) to approve Lilly's patent
application for Zyprexa before the expiration of Lilly's
exclusive marketing rights or an unfavorable court ruling.
If the EPO grants a timely patent for Lilly, then Apex Pharma
will be prohibited from resuming sales of Olapex until the
expiration of Lilly's patent in 20 years. If the EPO does
not approve Lilly's patent application by August 7, then the
restraining order on Alpha Pharma sales of Olapex will be
lifted.


2. (SBU) Ayman Hassenein, Egypt Director for Eli Lilly,
recently met with the EPO to ascertain the status of its
pending patent application for Zyprexa. According to
Hassenein, the EPO is in the final stages of the approval
process. One of the last steps is for the EPO to send the
Ministry of Health and Population a letter stating that a
patent will be issued for Zyprexa at the end of 90 days
unless the Ministry responds with a formal objection.
According to the head of USAID's IPRA project, the Ministry
can respond any time during the 90-day period with either an
objection or no objection to the patent. After that, a
notice is published in the Patent Gazette stating the EPO's
intention to issue a patent if there is no opposition from
another rights holder to the product to be patented.
According to EPO contacts, there are four pharmaceutical
patent applications in the final stages. Once granted, these
pharmaceutical patents will be the first issued in Egypt
under the WTO TRIPS mailbox procedure. As for Zyprexa, if
these final steps are completed before the expiration of
Lilly's exclusive marketing rights on August 7, Lilly will
have an inviolable patent for Zyprexa in Egypt.


3. (SBU) Although the window of opportunity to get patent
protection for Zyprexa is narrow, Lilly's representative here
is extremely pleased with the Minister's order. He praised
Minister El Gabaly for trying to rectify a bad decision made
by his predecessor, who ignored Egyptian legal procedures by
issuing a marketing approval for a Zyprexa generic while the
legal challenge to Lilly's exclusive marketing rights was
still pending. Minister El Gabaly's decision, said
Hassenein, at least revives the possibility of patent
protection for Zyprexa in Egypt, which was dashed when the
marketing approval for Olapex was issued last December.
Moreover, said Hassenein, Lilly's lawyers are investigating
the option of challenging Apex Pharma's right to sell Olapex
after August 7 should its patent for Zyprexa not be issued by
then.


4. (SBU) The GOE's interest in stronger IPR protection has
been quite evident of late. During a recent public
appearance, El Gabaly promised to meet all of Egypt's IPR
obligations under WTO, and Minister of Trade and Industry
Rachid has been making numerous public statements about
creating a positive IPR environment in Egypt. Minister
Rachid has also taken concrete steps to promote his vision,
the latest being his hiring of a respected IPR attorney (and
former USAID IPRA project employee) to be head of the
Trademark Office. Another positive step is a request made to
the USAID IPRA project by the Minister's deputy for a list of
specific steps the GOE could take to improve IPR protection
in Egypt. The stated goal was to get Egypt off the Special
301 Priority Watch List.


5. (SBU) Comment: Minister El Gabaly's decision on Zyprexa
is welcome, as are Minister Rachid's public support and
concrete steps for stronger IPR protection in Egypt. We
suspect that Minister Rachid will be more proactive in
promoting IPR protection than Minister El Gabaly, who readily
acknowledges the indispensable role inexpensive generic drugs
play in Egypt's health care system. While we may not see
seismic changes in Egypt's IPR regime in the near term,
Egypt's economic reformers recognize the benefits of stronger
IPR protection are moving toward that goal. End comment.
RICCIARDONE