Review Article

Intellectual property rights: An overview and

implications in pharmaceutical industry
Chandra Nath Saha,
Sanjib Bhattacharya1 Abstract
Quality Assurance Department, Intellectual property rights (IPR) have been defined as ideas, inventions, and creative
Claris Lifesciences Ltd., Ahmedabad,
expressions based on which there is a public willingness to bestow the status of property.
Gujarat, 1Pharmacognosy Division,
Bengal School of Technology (A College IPR provide certain exclusive rights to the inventors or creators of that property, in order
of Pharmacy), Sugandha, Hooghly, to enable them to reap commercial benefits from their creative efforts or reputation.
West Bengal, India
There are several types of intellectual property protection like patent, copyright,
J. Adv. Pharm. Tech. Res. trademark, etc. Patent is a recognition for an invention, which satisfies the criteria of
global novelty, non-obviousness, and industrial application. IPR is prerequisite for
better identification, planning, commercialization, rendering, and thereby protection of
invention or creativity. Each industry should evolve its own IPR policies, management
style, strategies, and so on depending on its area of specialty. Pharmaceutical industry
currently has an evolving IPR strategy requiring a better focus and approach in the
coming era.

Key words: Drug, intellectual property, license, patent, pharmaceutical

INTRODUCTION good emanates from it. There has been a quantum jump in
research and development (R&D) costs with an associated
Intellectual property (IP) pertains to any original creation jump in investments required for putting a new technology
of the human intellect such as artistic, literary, technical, or in the market place.[2] The stakes of the developers of
scientific creation. Intellectual property rights (IPR) refers technology have become very high, and hence, the need
to the legal rights given to the inventor or creator to protect to protect the knowledge from unlawful use has become
his invention or creation for a certain period of time.[1] These expedient, at least for a period, that would ensure recovery
legal rights confer an exclusive right to the inventor/creator of the R&D and other associated costs and adequate profits
or his assignee to fully utilize his invention/creation for a for continuous investments in R&D.[3] IPR is a strong tool,
given period of time. It is very well settled that IP play a vital to protect investments, time, money, effort invested by
role in the modern economy. It has also been conclusively the inventor/creator of an IP, since it grants the inventor/
established that the intellectual labor associated with the creator an exclusive right for a certain period of time for
innovation should be given due importance so that public use of his invention/creation. Thus IPR, in this way aids the
economic development of a country by promoting healthy
competition and encouraging industrial development and
Address for correspondence
economic growth. Present review furnishes a brief overview
Sanjib Bhattacharya,
Pharmacognosy Division, Bengal School of Technology of IPR with special emphasis on pharmaceuticals.
(A College of Pharmacy), Delhi Road, Sugandha,
Hooghly - 712 102, West Bengal, India. BRIEF HISTORY
E-mail: [email protected]

The laws and administrative procedures relating to IPR have

Access this article online their roots in Europe. The trend of granting patents started
Quick Response Code: in the fourteenth century. In comparison to other European
Website:
countries, in some matters England was technologically
www.japtr.org
advanced and used to attract artisans from elsewhere,
on special terms. The first known copyrights appeared in
DOI: Italy. Venice can be considered the cradle of IP system as
10.4103/2231-4040.82952 most legal thinking in this area was done here; laws and
systems were made here for the first time in the world, and

88 Journal of Advanced Pharmaceutical Technology & Research | Apr-Jun 2011 | Vol 2 | Issue 2
 Saha and Bhattacharya: IPR Overview and implications in pharma industry

other countries followed in due course.[4] Patent act in India Convention. Therefore, copyright may not be considered a
is more than 150 years old. The inaugural one is the 1856 territorial right in the strict sense. Like any other property
Act, which is based on the British patent system and it has IPR can be transferred, sold, or gifted.[7]
provided the patent term of 14 years followed by numerous
acts and amendments.[1] Role of Undisclosed Information in Intellectual
Property
Types of Intellectual Properties and their Description Protection of undisclosed information is least known
Originally, only patent, trademarks, and industrial designs to players of IPR and also least talked about, although
were protected as ‘Industrial Property’, but now the term it is perhaps the most important form of protection for
‘Intellectual Property’ has a much wider meaning. IPR industries, R&D institutions and other agencies dealing
enhances technology advancement in the following ways:[1-4] with IPR. Undisclosed information, generally known as
(a) it provides a mechanism of handling infringement, trade secret or confidential information, includes formula,
piracy, and unauthorized use pattern, compilation, programme, device, method,
(b) it provides a pool of information to the general public technique, or process. Protection of undisclosed information
since all forms of IP are published except in case of trade or trade secret is not really new to humanity; at every stage
secrets. of development people have evolved methods to keep
important information secret, commonly by restricting
IP protection can be sought for a variety of intellectual the knowledge to their family members. Laws relating to
efforts including all forms of IPR are at different stages of implementation
(i) Patents in India, but there is no separate and exclusive law
(ii) Industrial designs relates to features of any shape, for protecting undisclosed information/trade secret or
configuration, surface pattern, composition of lines and confidential information.[10]
colors applied to an article whether 2-D, e.g., textile, or
3-D, e.g., toothbrush[5] Pressures of globalisation or internationalisation were
(iii) Trademarks relate to any mark, name, or logo under not intense during 1950s to 1980s, and many countries,
which trade is conducted for any product or service including India, were able to manage without practising
and by which the manufacturer or the service provider a strong system of IPR. Globalization driven by chemical,
is identified. Trademarks can be bought, sold, and pharmaceutical, electronic, and IT industries has resulted
licensed. Trademark has no existence apart from the into large investment in R&D. This process is characterized
goodwill of the product or service it symbolizes[6] by shortening of product cycle, time and high risk of reverse
(iv) Copyright relates to expression of ideas in material engineering by competitors. Industries came to realize that
form and includes literary, musical, dramatic, artistic, trade secrets were not adequate to guard a technology. It was
cinematography work, audio tapes, and computer difficult to reap the benefits of innovations unless uniform
software[7] laws and rules of patents, trademarks, copyright, etc.
(v) Geographical indications are indications, which identify existed. That is how IPR became an important constituent
as good as originating in the territory of a country of the World Trade Organization (WTO).[11]
or a region or locality in that territory where a given
quality, reputation, or other characteristic of the goods Rationale of Patent
is essentially attributable to its geographical origin[8] Patent is recognition to the form of IP manifested in invention.
Patents are granted for patentable inventions, which satisfy
A patent is awarded for an invention, which satisfies the the requirements of novelty and utility under the stringent
criteria of global novelty, non-obviousness, and industrial examination and opposition procedures prescribed in the
or commercial application. Patents can be granted for Indian Patents Act, 1970, but there is not even a prima-facie
products and processes. As per the Indian Patent Act presumption as to the validity of the patent granted.[9]
1970, the term of a patent was 14 years from the date of
filing except for processes for preparing drugs and food Most countries have established national regimes to provide
items for which the term was 7 years from the date of the protection to the IPR within its jurisdiction. Except in the case
filing or 5 years from the date of the patent, whichever is of copyrights, the protection granted to the inventor/creator
earlier. No product patents were granted for drugs and in a country (such as India) or a region (such as European
food items.[9] A copyright generated in a member country Union) is restricted to that territory where protection is
of the Berne Convention is automatically protected in all sought and is not valid in other countries or regions.[1] For
the member countries, without any need for registration. example, a patent granted in India is valid only for India and
India is a signatory to the Berne Convention and has a not in the USA. The basic reason for patenting an invention
very good copyright legislation comparable to that of any is to make money through exclusivity, i.e., the inventor or
country. However, the copyright will not be automatically his assignee would have a monopoly if,
available in countries that are not the members of the Berne (a) the inventor has made an important invention after taking

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 Saha and Bhattacharya: IPR Overview and implications in pharma industry

into account the modifications that the customer, and operating procedures and
(b) if the patent agent has described and claimed the (ii) commercial information such as customer lists and
invention correctly in the patent specification drafted, sales data, marketing, professional and management
then the resultant patent would give the patent owner procedures.
an exclusive market.
Indeed, any technical, trade, commercial, or other
The patentee can exercise his exclusivity either by marketing information, may be capable of being the subject of
the patented invention himself or by licensing it to a third protection.[13]
party.
Benefits to the licensor:
The following would not qualify as patents: (i) Opens new markets
(i) An invention, which is frivolous or which claims (ii) Creates new areas for revenue generation
anything obvious or contrary to the well established (iii) Helps overcome the challenge of establishing the
natural law. An invention, the primary or intended technology in different markets especially in foreign
use of which would be contrary to law or morality or countries – lower costs and risk and savings on
injurious to public health distribution and marketing expenses
(ii) A discovery, scientific theory, or mathematical method
(iii) A mere discovery of any new property or new use Benefits to the licensee are:
for a known substance or of the mere use of a known (i) Savings on R&D and elimination of risks associated
process, machine, or apparatus unless such known with R&D
process results in a new product or employs at least (ii) Quick exploitation of market requirements before the
one new reactant market interest wanes
(iv) A substance obtained by a mere admixture resulting (iii) Ensures that products are the latest
only in the aggregation of the properties of the
components thereof or a process for producing such The Role of Patent Cooperation Treaty
substance The patent cooperation treaty (PCT) is a multilateral
(v) A mere arrangement or re-arrangement or duplication treaty entered into force in 1978. Through PCT, an
of a known device each functioning independently of inventor of a member country contracting state of PCT
one another in its own way can simultaneously obtain priority for his/her invention
(vi) A method of agriculture or horticulture in all or any of the member countries, without having to
(vii) Any process for the medicinal, surgical, curative, file a separate application in the countries of interest, by
prophylactic diagnostic, therapeutic or other designating them in the PCT application. All activities
treatment of human beings or any process for a similar related to PCT are coordinated by the world intellectual
treatment of animals to render them free of disease property organization (WIPO) situated in Geneva.[14]
or to increase their economic value or that of their
products In order to protect invention in other countries, it is
(viii) An invention relating to atomic energy required to file an independent patent application in each
(ix) An invention, which is in effect, is traditional country of interest; in some cases, within a stipulated time
knowledge to obtain priority in these countries. This would entail a
large investment, within a short time, to meet costs towards
Rationale of License filing fees, translation, attorney charges, etc. In addition, it
A license is a contract by which the licensor authorizes is assumed that due to the short time available for making
the licensee to perform certain activities, which would the decision on whether to file a patent application in a
otherwise have been unlawful. For example, in a patent country or not, may not be well founded.[15]
license, the patentee (licensor) authorizes the licensee to
exercise defined rights over the patent. The effect is to give Inventors of contracting states of PCT on the other hand
to the licensee a right to do what he/she would otherwise can simultaneously obtain priority for their inventions
be prohibited from doing, i.e., a license makes lawful what without having to file separate application in the countries
otherwise would be unlawful.[12] of interest; thus, saving the initial investments towards
filing fees, translation, etc. In addition, the system provides
The licensor may also license ‘know-how’ pertaining to the much longer time for filing patent application in the member
execution of the licensed patent right such as information, countries.[15,16]
process, or device occurring or utilized in a business activity
can also be included along with the patent right in a license The time available under Paris convention for securing
agreement. Some examples of know-how are: priority in other countries is 12 months from the date of
(i) technical information such as formulae, techniques, and initial filing. Under the PCT, the time available could be as

90 Journal of Advanced Pharmaceutical Technology & Research | Apr-Jun 2011 | Vol 2 | Issue 2
 Saha and Bhattacharya: IPR Overview and implications in pharma industry

much as minimum 20 and maximum 31 months. Further, biotechnology route especially those involving utilization
an inventor is also benefited by the search report prepared of genes. It is likely that the industrialized world would
under the PCT system to be sure that the claimed invention soon start canvassing for longer protection for drugs. It is
is novel. The inventor could also opt for preliminary also possible that many governments would exercise more
examination before filing in other countries to be doubly and more price control to meet public goals. This would
sure about the patentability of the invention.[16] on one hand emphasize the need for reduced cost of drug
development, production, and marketing, and on the other
Management of Intellectual Property in Pharmaceutical hand, necessitate planning for lower profit margins so as to
Industries recover costs over a longer period. It is thus obvious that
More than any other technological area, drugs and the drug industry has to wade through many conflicting
pharmaceuticals match the description of globalization and requirements. Many different strategies have been evolved
need to have a strong IP system most closely. Knowing that during the last 10 to 15 years for cost containment and trade
the cost of introducing a new drug into the market may cost advantage. Some of these are out sourcing of R&D activity,
a company anywhere between $ 300 million to $1000 million forming R&D partnerships and establishing strategic
along with all the associated risks at the developmental alliances.[19]
stage, no company will like to risk its IP becoming a public
property without adequate returns. Creating, obtaining, Nature of Pharmaceutical Industry
protecting, and managing IP must become a corporate The race to unlock the secrets of human genome has
activity in the same manner as the raising of resources and produced an explosion of scientific knowledge and spurred
funds. The knowledge revolution, which we are sure to the development of new technologies that are altering the
witness, will demand a special pedestal for IP and treatment economics of drug development. Biopharmaceuticals are
in the overall decision-making process.[17] likely to enjoy a special place and the ultimate goal will be
to have personalized medicines, as everyone will have their
Competition in the global pharmaceutical industry is driven own genome mapped and stored in a chip. Doctors will look
by scientific knowledge rather than manufacturing know- at the information in the chip(s) and prescribe accordingly.
how and a company’s success will be largely dependent The important IP issue associated would be the protection of
on its R&D efforts. Therefore, investments in R&D in the such databases of personal information. Biotechnologically
drug industry are very high as a percentage of total sales; developed drugs will find more and more entry into the
reports suggest that it could be as much as 15% of the sale. market. The protection procedure for such drug will be a
One of the key issues in this industry is the management little different from those conventional drugs, which are
of innovative risks while one strives to gain a competitive not biotechnologically developed. Microbial strains used
advantage over rival organizations. There is high cost for developing a drug or vaccine needs to be specified in
attached to the risk of failure in pharmaceutical R&D with the patent document. If the strain is already known and
the development of potential medicines that are unable reported in the literature usually consulted by scientists,
to meet the stringent safety standards, being terminated, then the situation is simple. However, many new strains
sometimes after many years of investment. For those are discovered and developed continuously and these are
medicines that do clear development hurdles, it takes deposited with International depository authorities under
about 8-10 years from the date when the compound was the Budapest Treaty. While doing a novelty search, the
first synthesized. As product patents emerge as the main databases of these depositories should also be consulted.
tools for protecting IP, the drug companies will have to shift Companies do not usually go for publishing their work, but
their focus of R&D from development of new processes for it is good to make it a practice not to disclose the invention
producing known drugs towards development of a new through publications or seminars until a patent application
drug molecule and new chemical entity (NCE). During has been filed.[20]
the 1980s, after a period of successfully treating many
diseases of short-term duration, the R&D focus shifted While dealing with microbiological inventions, it is
to long duration (chronic) diseases. While looking for the essential to deposit the strain in one of the recognized
global market, one has to ensure that requirements different depositories who would give a registration number to the
regulatory authorities must be satisfied.[18] strain which should be quoted in the patent specification.
This obviates the need of describing a life form on paper.
It is understood that the documents to be submitted to Depositing a strain also costs money, but this is not much
regulatory authorities have almost tripled in the last ten if one is not dealing with, for example cell lines. Further,
years. In addition, regulatory authorities now take much for inventions involving genes, gene expression, DNA, and
longer to approve a new drug. Consequently, the period of RNA, the sequences also have to be described in the patent
patent protection is reduced, resulting in the need of putting specification as has been seen in the past. The alliances
in extra efforts to earn enough profits. The situation may could be for many different objectives such as for sharing
be more severe in the case of drugs developed through the R&D expertise and facilities, utilizing marketing networks

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 Saha and Bhattacharya: IPR Overview and implications in pharma industry

and sharing production facilities. While entering into an Some Special Aspects of Drug Patent Specification
R&D alliance, it is always advisable to enter into a formal Writing patent specification is a highly professional skill,
agreement covering issues like ownership of IP in different which is acquired over a period of time and needs a
countries, sharing of costs of obtaining and maintaining IP good combination of scientific, technological, and legal
and revenue accruing from it, methods of keeping trade knowledge. Claims in any patent specification constitute
secrets, accounting for IP of each company before the alliance the soul of the patent over which legal proprietary is
and IP created during the project but not addressed in the sought. Discovery of a new property in a known material
plan, dispute settlements. It must be remembered that an is not patentable. If one can put the property to a practical
alliance would be favorable if the IP portfolio is stronger use one has made an invention which may be patentable.
than that of concerned partner. There could be many other A discovery that a known substance is able to withstand
elements of this agreement. Many drug companies will mechanical shock would not be patentable but a railway
soon use the services of academic institutions, private R&D sleeper made from the material could well be patented.
agencies, R&D institutions under government in India and A substance may not be new but has been found to have a
abroad by way of contract research. All the above aspects new property. It may be possible to patent it in combination
mentioned above will be useful. Special attention will have to with some other known substances if in combination they
be paid towards maintaining confidentiality of research.[1-18] exhibit some new result. The reason is that no one has
earlier used that combination for producing an insecticide
The current state of the pharmaceutical industry indicates or fertilizer or drug. It is quite possible that an inventor
that IPR are being unjustifiably strengthened and abused has created a new molecule but its precise structure is not
at the expense of competition and consumer welfare. The known. In such a case, description of the substance along
lack of risk and innovation on the part of the drug industry with its properties and the method of producing the same
underscores the inequity that is occurring at the expense will play an important role.[23]
of public good. It is an unfairness that cannot be cured by
legislative reform alone. While congressional efforts to close
Combination of known substances into useful products
loopholes in current statutes, along with new legislation to
may be a subject matter of a patent if the substances have
curtail additionally unfavorable business practices of the
some working relationship when combined together. In
pharmaceutical industry, may provide some mitigation,
this case, no chemical reaction takes place. It confers only
antitrust law must appropriately step in.[21] While antitrust
a limited protection. Any use by others of individual parts
laws have appropriately scrutinized certain business
of the combination is beyond the scope of the patent. For
practices employed by the pharmaceutical industry, such as
example, a patent on aqua regia will not prohibit any one
mergers and acquisitions and agreements not to compete,
from mixing the two acids in different proportions and
there are several other practices that need to be addressed.
obtaining new patents. Methods of treatment for humans
The grant of patents on minor elements of an old drug,
and animals are not patentable in most of the countries
reformulations of old drugs to secure new patents, and the
(one exception is USA) as they are not considered capable
use of advertising and brand name development to increase
of industrial application. In case of new pharmaceutical
the barriers for generic market entrants are all areas in
which antitrust law can help stabilize the balance between use of a known substance, one should be careful in writing
rewarding innovation and preserving competition.[20] claims as the claim should not give an impression of a
method of treatment. Most of the applications relate to drugs
Traditional medicine dealing with natural botanical products and pharmaceuticals including herbal drugs. A limited
is an important part of human health care in many developing number of applications relate to engineering, electronics,
countries and also in developed countries, increasing their and chemicals. About 62% of the applications are related
commercial value. The world market for such medicines has to drugs and pharmaceuticals.[1-24]
reached US $ 60 billion, with annual growth rates of between
5% and 15%. Although purely traditional knowledge based CONCLUSIONS
medicines do not qualify for patent, people often claim so.
Researchers or companies may also claim IPR over biological It is obvious that management of IP and IPR is a
resources and/or traditional knowledge, after slightly multidimensional task and calls for many different actions
modifying them. The fast growth of patent applications and strategies which need to be aligned with national
related to herbal medicine shows this trend clearly. The patent laws and international treaties and practices. It is no
applications in the field of natural products, traditional herbal longer driven purely by a national perspective. IP and its
medicine and herbal medicinal products are dealt with own associated rights are seriously influenced by the market
IPR policies of each country as food, pharmaceutical and needs, market response, cost involved in translating IP into
cosmetics purview, whichever appropriate. Medicinal plants commercial venture and so on. In other words, trade and
and related plant products are important targets of patent commerce considerations are important in the management
claims since they have become of great interest to the global of IPR. Different forms of IPR demand different treatment,
organized herbal drug and cosmetic industries.[22] handling, planning, and strategies and engagement of

92 Journal of Advanced Pharmaceutical Technology & Research | Apr-Jun 2011 | Vol 2 | Issue 2
 Saha and Bhattacharya: IPR Overview and implications in pharma industry

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