Bayer has suffered a blow after an Indian patent appeals board stuck with the decision to allow a generic version of its cancer drug Nexavar on the market.

In March last year, India issued its first-ever compulsory licence allowing the company Natco to legally make and sell a low-cost version of Nexavar (sorafenib), which is used to treat kidney and liver cancer, in order to secure a more affordable alternative in the interest of public health.

The landmark move brought the price of the drug down 97%, from over $5,500 per month to $175, and set a new precedent for allowing the sale of generic versions of new medicines that are still under patent to widen access to those in the country who need them most. 

In its appeal, Bayer argued that the compulsory licence should be withdrawn because a generic form of Nexavar is already sold in India by Cipla - in breach of the patent - and therefore there is already a low-cost alternative available.

But on Monday the board ruled against the company, deciding that the patent authority was indeed right to allow a compulsory license for Nexavar to make it more affordable.

Bayer said in a statement it "strongly disagreed" with the Board's conclusions.

"The challenges faced by the Indian healthcare system have little or nothing to do with patents on pharmaceutical products as all products on India's essential drug list are not patented," it stressed.

But humanitarian agency Médecins Sans Frontières (MSF) has welcomed the decision, which, it says, "means that the way has been paved for compulsory licences to be issued on other drugs, now patented in India and priced out of affordable reach, to be produced by generic companies and sold at a fraction of the price".

"We hope that, in the near future, compulsory licences will be issued for the newest drugs to treat HIV and affordable generic versions will be available not only in India, but in the rest of the developing world," it added.

Bayer said it would appeal the ruling, which it argues "weakens the international patent system and endangers pharmaceutical research", and plans to pursue the case in front of High Court in Mumbai with a writ petition.