The company had been trying to obtain a patent in India for a newer version of Glivec, but the court said a substance used in the drug is already a known one and hence the company cannot seek a patent for the drug using that substance, the Press Trust of India news agency reported.
Other foreign pharmaceutical companies seeking to enter India's growing market for drugs had been keenly awaiting the ruling.
The PTI report said a monthlong supply of Glivec costs about 15 times that of the generic variety in India.
Advocate Pratibha Singh, appearing for Indian drug firms Ranbaxy and Cipla, which had opposed Novartis' plea, said the judgment is a victory for Indian companies because they can now manufacture cheaper drugs as long as there is no patent over a medicine.
"Patents will now be granted only for genuine inventions and not on repetitive inventions. The Supreme Court said there was no new invention in the Novartis' drug," Singh said.
She said foreign firms need not be concerned by the ruling because they would still get patents if they have genuine inventions, PTI reported.
Novartis, in a news release, said the patent was denied despite global recognition of Glivec as a life-saving, breakthrough drug for certain forms of cancer, with patents granted in about 40 countries including China, Russia and Taiwan.
"Novartis has never been granted an original patent for Glivec in India. We strongly believe that original innovation should be recognized in patents to encourage investment in medical innovation, especially for unmet medical needs," said Ranjit Shahani, managing director of Novartis India Ltd.
The ruling "is a setback for patients that will hinder medical progress for diseases without effective treatment options," he said.