"What is a generic drug?" shrugs Nissar, who has travelled over 1,500 km (900 miles) from his home in the hope of treatment.

"I have borrowed money from friends and relatives and it is running out fast," says Nissar, his pale eyes filling with tears.

A ruling this week that for the first time allowed an Indian drugmaker to make and sell a blockbuster cancer drug at a fraction of the market price has been hailed as a breakthrough by campaigners for cheaper medicine in the emerging economy.

The generic version of the drug, German drugmaker Bayer's Nexavar, will be produced under what is known as a compulsory license, available to nations to issue in certain cases where life-saving treatments are unaffordable.

Yet no amount of compulsory licenses will help the millions of poor Indians suffering from diseases like cancer, because even the generic version of Nexavar will be priced beyond the reach of India's poor, experts and medical professionals say.

Increased state spending on free and accessible healthcare and policies to extend insurance cover to its poorest citizens would be far more effective weapons.

"The government has to start taking cancer seriously. They haven't done anything," said Dr M. Krishnan Nair, an award-winning Indian oncologist. "Even at generic prices, the drugs are too expensive for the poor. They don't get anything."

India allocated 268 billion rupees ($5.4 billion) for healthcare in 2011-12, around a sixth the size of the defense budget. That represents 2.13 percent of total government spending, or $4.50 for each person in the country.

With around 40 percent of the population living below the poverty line, healthcare is an upper-middle-class luxury in much of India where spending in private clinics is four times the amount of that in government hospitals. The poorest would-be patients literally beg for treatment on the outside of a chronically underfunded and overstretched health system.

As chairman of a committee tasked with formulating India's cancer strategy in the five years to 2012, Nair advocated 23 billion rupees ($460 million) for cancer control. Around $40 million was eventually spent, he says.

AFFORDABILITY

Last Monday, India granted its first ever compulsory license, allowing Natco Pharma to manufacture and sell Nexavar, a liver and kidney cancer drug, inside the country. It effectively ends Bayer's exclusive rights to the drug in India.

Campaigners for cheaper access to drugs hailed the decision, which was taken after the country's patent office said Bayer's Nexavar was not "reasonably affordably priced".

But the ruling has reignited fears amongst global drugmakers like Pfizer, GlaxoSmithKline and Novartis. They see huge potential in rapidly growing economies such as India but are wary of intellectual property protection.

Natco will retail Nexavar at 8,800 rupees ($180) for a monthly dose, a fraction of the 280,000 rupees ($5,600) Bayer's version cost.

But medical experts say cheaper drugs are just one tiny part of India's health deficit.

"The compulsory license system might not really work because poor people cannot even afford the discounted price," said G. Balachandhran, former head of the National Pharmaceutical Pricing Authority (NPPA), India's drug price watchdog regulator.

"Instead of dealing on a case-to-case basis, India needs to have a policy that will bring more and more people under medical cover ... We need to increase the health insurance penetration, so that even poor people can afford treatment," he added.

Only 15 percent of India's 1.2 billion population is covered by health insurance, according to business lobby group the Federation of Indian Chambers Commerce & Industry, meaning even at a lower price, Nexavar will be out of reach for many.

Still, the head of Pfizer, the world's largest drugmaker, told Reuters on March 12 that there were around 100 million people in India with "wealth equivalent to or greater than the average European or American, who don't pay for innovation".

Pravin Anand, managing partner at Indian law firm Anand and Anand believes that compulsory licenses should primarily be granted in the case of pandemics, suggesting that affordability is a tricky gauge of necessity.

"Affordability is not an absolute concept; therefore something that is affordable for one individual might not be so for others," said Anand.

NEWSPAPERS FOR DRUGS

On the congested street in downtown Mumbai, scores of cancer sufferers sit, lie and sleep on the hard concrete pavement outside the Tata Memorial Hospital, clutching X-rays and medical documents and wait to be prescribed drugs they cannot afford.

"Look what has happened to my boy," said 65-year-old Debiprasad Sharma, wiping his tears as he pointed to the large tumor on the side of his six-year-old grandson Prithvi's neck.

"We don't have insurance ... and we have spent more than 6,000 rupees already, double our monthly income," said Sharma, who had travelled from northern India to the Mumbai pavement.

"Hundreds of people come here every day. Whatever money we can collect is spent on their treatment. There is no help from the government," says H.K. Savla, managing trustee of Jeevan Jyot Cancer Relief & Care Trust.

His charity, run from a cramped office around the corner from the hospital, collects and sells used newspapers and glass bottles to pay for drugs, medical supplies and food for the cancer sufferers who arrive from across the country with little or no money for treatment.

Savla, who has been working for cancer sufferers for 27 years, says he needs 1.5-2 million rupees ($30,000-$40,000) a month to provide basic services to the people who come to him for help. His budget stretches to just $3,000 a month.

Even if all of that money were spent on the generic version of Nexavar, it would buy enough for barely 16 sufferers.

Tata Memorial, which gets government and private funding, performs about 70,000 major and minor cancer surgeries every year and chemotherapy sessions for more than 300 patients a day.

Patients with oxygen tubes in their noses sleep on benches in the corridors and families huddle on the floor of the teeming waiting area for cancer patients. Upstairs the ward is filled to the brim. At night, many will go back to sleep on the roadside or to cheap dormitories that charge 50 rupees a night.

"Here, consultations are free. But drugs are expensive. And so is the cost of an overnight stay," says Savla, as people queued for bowls of rice from his charity's pot by the roadside.

"HUGE DEBT"

Natco expects to sell $5-$6 million worth of generic Nexavar a year, its finance chief has said, equivalent to around 2,500 people using the drug for a full 12 months.

India has around 2.5 million people living with cancer, or about one in every 500 people, according to government reports and medical organizations. That figure might be below the mark.

"This is a gross underestimation," said Nair, who is the country's only representative on the advisory committee for the World Health Organization's Director General.

"Suppose someone in a rural area has cancer of the stomach," Nair explained. "He will have pain for 2-3 months. He will try indigenous medicines. Finally he will die. No one will record his true cause of death."

There is a growing focus among global healthcare campaigners on the burden in poor countries of non-communicable diseases (NCDs) - chronic diseases like cancer and heart disease that kill millions who would survive with Western-style treatment.

The scale of the problem is immense. More than 36 million people die every year from NCDs - 80 percent of them in poor nations where access to diagnosis and treatment is very limited, according to the World Health Organization.

United Nations (UN) Secretary-General Ban Ki-moon told a high-level UN meeting in New York on the subject last September: "NCDs hit the poor and vulnerable particularly hard and drive them deeper into poverty."

India has joined Thailand as only the second country to grant a compulsory license for a cancer drug, and legal experts say compulsory licensing could follow for other expensive treatments, including the latest types of HIV/AIDS medicines.

A provision of the Indian Patents Act allows for a compulsory license to be awarded after three years of the grant of patent on drugs that are deemed to be too costly.

But in a country where around 65 percent of the population incur lifetime debts as a result of healthcare spending, according to the National Sample Survey Organization, cheap generics might not be the only answer.

"Forget about costly drugs," says 48-year-old Hasmukh Shah, whose 5,000 rupee wage pales in comparison with the 250,000 rupees ($5,000) he needs to treat his cancer. "I cannot even afford cheap medicines now because I have piled up huge debt."

($1 = 49.9 rupees)

(Additional by Ben Hirschler in LONDON; Editing by Mark Bendeich and Jonathan Thatcher)

• A Permanent Economic Emergency