WTO members this week approved a measure that would make permanent a waiver -- put in place in 2003 -- that allows countries that cannot manufacture their own generic versions of patented drugs to import them from WTO members that manufacturing such drugs.

The waiver effectively set aside a provision of the WTO agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS.

"It will probably have a pretty limited impact" on branded drugs, because the major pharmaceutical companies don't generate significant revenue from sales in developing nations, A.G. Edwards analyst Al Rach told United Press International.

The biggest concern for the major manufacturers is if the generics produced by developing nations get exported to industrialized countries, Rach said.

One example of this, he said, is that some medications being sold online as originating in Canada actually are coming from developing countries.

"That's still not a major problem for pharmaceutical companies, but it's a growing concern for the regulatory agencies," Rach said.

The Pharmaceutical Research and Manufacturers of America applauded the WTO's move.

"PhRMA welcomes the completion of the negotiations on TRIPS," PhRMA President and Chief Executive Officer Billy Tauzin said in a statement.

Tauzin noted that the WTO preserved the anti-diversion measures that were part of the 2003 decision, saying, "These safeguards will be critical in ensuring that medicines produced and exported under the solution reach the intended countries, and it is significant that WTO Members agreed in Geneva to implement those safeguards."

As for the generic manufacturers, Rach said, "Some of the really low-cost pharmaceutical producers, such as Ranbaxy and Dr. Reddy's, might benefit." However, any gain is likely to be small, he added.

"It could be easier for them to do business, but once again it's pretty low-margin," he said.

China's emerging domestic pharmaceutical market might capitalize on the TRIPS agreement and could be a region to watch in the future.

"China seems to be developing a low-cost pharmaceutical industry, so they might be looking to participate in something like this (TRIPS agreement)," Rach said. "I think China is going to be an up-and-growing market for generics," he said, but noted that currently there are few companies operating there, and "as long as China is using it in-house and isn't exporting it, it's going to have a minimal impact."

However, because of China's potential, major drug firms may ultimately look to tap into it. "In the long term, if Big Pharma is looking for growth, they're going to want intellectual-property protections there and in India," Rach said, noting that obtaining patent protections in China will "be an even greater uphill battle than we've seen in India."

Ian Sanderson, an analyst with S.G. Cowen, said he didn't think the WTO action would translate into a big moneymaker for Ranbaxy and other generic manufacturers in India.

"What it does enable them to do is work on formulations well before their patents expire," Sanderson told UPI. In particular, this will apply to HIV drugs, many of which don't go off patent until the next decade.

"India will have a head start on those formulations and will be able to produce them under this compulsory licensing agreement," he said.

The same situation might apply to China, he said, and that could pose a concern for Big Pharma. As the Chinese pharmaceutical industry becomes more established, "the bigger threat is that they ... learn how to formulate the drugs, and then when patents expire, they're a player not only in China but in Europe and other regions," Sanderson said.