India dealt a fresh blow to the international pharmaceutical industry on Friday as its patents appeal board revoked a patent granted six years ago on Roche's hepatitis C drug Pegasys.

The Intellectual Property Appellate Board (IPAB) cited a lack of evidence that the drug was any better than existing treatments and its high price as reasons for the decision.

Pegasys was the first medicine to win protection in 2006 under India's new patent regime and the revocation will rekindle tensions between New Delhi and global drugmakers worried by the country's tough stance.

The decision follows another high-profile setback for the industry in March, when India granted the first ever compulsory licence to domestic drugmaker Natco to sell cheap copies of Bayer's cancer drug Nexavar.

Multinational drug manufacturers see India's $12 billion drug market as a huge opportunity, but are wary of what they see as lax protection for intellectual property in a country where generic medicines account for more than 90% of sales.

Indian generic companies, which do not need to plough money back into future research, can produce drugs at a fraction of the cost of originator firms like Roche or Bayer.

Sankalp Rehabilitation Trust, an advocacy group for cheaper medicines, had challenged the Pegasys patent with the IPAB, saying the drug was costly and gave the Swiss company a monopoly in the market for the drug.

The market price of Pegasys is 436,000 rupees ($8,100) for 48 weeks of treatment, although it is also available at a discounted price of 314,496 rupees, Sankalp said in a statement.

Pegasys is given in combination with another drug, ribavirin, which costs 47,160 rupees for the same period, Sankalp added.

The appeals board on Friday termed Sankalp's plea "valid."

Paying for innovation

Roche, which can appeal the decision to India's Supreme Court, said it was reviewing the IPAB decision and could not comment on it in detail. But it said a solid system of patent protection was essential to ensure research into new treatments.

"Many of the generic drugs today used in India were once patent-protected and are only available to society because companies such as Roche were willing to take a risk by investing in new innovative drugs," a company spokesman said.

He added that Roche was assessing a number of different ways to make drugs accessible to patients in poorer countries, including volume discounts, rebates and price capping.

Campaigners for greater healthcare access contend that the best way to ensure low drug prices is to maximise generic competition by challenging unjustified patents.

Leena Menghaney, a manager in New Delhi for Medecins Sans Frontieres (MSF), said this was particularly important in a disease area like hepatitis C, which is a growing problem in many Asian countries and often hits the most vulnerable in society.

"This case shows that if people choose to use different public health safeguards in Indian law to check abuse of the patent system, then indeed they do work," she said.

Another case involving drug patents is currently in front of India's the Supreme Court, with Novartis battling against an earlier decision refusing it a patent on cancer drug Glivec.

India is also taking a tougher line on drug pricing more generally, with plans to increase dramatically the number of essential drugs subject to price regulation.