The Indian Patent Office has issued Natco Pharma with a compulsory license, the first time an Indian pharmaceutical company has been granted one.

The company has been granted the license to sell a generic version of Bayer‘s cancer drug Nexavar, and Natco intends to market its product, to be called Sorefinat, by the end of March 2012.

Natco chief final officer Bhaskar Narayana confirmed the release of the drug, citing a significantly cheaper price in comparison to the cost at which Bayer markets the branded version of the drug.

“We will be sell it at Rs8,800 for a bottle of 120 tablets (one month dose), against around Rs28,000 that Bayer charges for Nexavar,” said Narayana.

Whilst Natco has been granted the license, a royalty of approximately 6% of net sales will be payable to Germany-based Bayer AG, and the drug is thought to have a market of around Rs300m ($6m) in the country.

Despite the issue of a compulsory license being an attempt to make life-saving drugs more affordable, the decision has been criticised by the Organisation of Pharmaceutical Producers of India (OPPI).

OPPI president Ranjit Shahani told businesstoday, “OPPI is disappointed with the decision to issue a compulsory license. We believe compulsory licenses should be used only in exceptional circumstances, such as times of a national health crisis. If used arbitrarily, compulsory licenses will serve to undermine the innovative pharmaceutical industry and will be to the long-term detriment of the patient.”

It is thought that the decision, which could pave the way for similar licenses being issued, could harm the prospects of investment from major pharmaceutical companies into the country.

Multinational pharmaceutical companies including the likes of Pfizer, GlaxoSmithKline and Novartis have identified India as a notable emerging market, but have expressed concerns over property protection.