NEW DELHI – India’s patent appeals office has rejected Bayer AG’s plea to stop the production of a cheaper generic version of a patented cancer drug in a ruling that health groups say is an important precedent for getting inexpensive lifesaving medicines to the poor.

Last year, India’s patent office allowed local drug manufacturer Natco Pharma Ltd. to produce a generic version of Bayer’s kidney and liver cancer drug Nexavar on the grounds it would make the drug available to the public at a reasonably affordable price. It was the first use of compulsory licensing under Indian patent laws passed in 2005.

The Intellectual Property Appellate Board rejected the German drugmaker’s appeal of the 2012 ruling last week. It also ruled that under the license Natco must pay 7 percent in royalties on net sales to Bayer.

Bayer sells a one month supply of the drug for about $5,600. Natco’s version would cost Indian patients $175 a month.

Western pharmaceutical companies have been pushing for stronger patent protections in India to regulate the country’s $26 billion generics industry, which they say frequently flouts intellectual property rights.

However, health activists and aid groups counter that Indian generics are a lifesaver for patients in poor countries who cannot afford Western prices to treat diseases such as cancer, malaria and HIV.

Bayer said it “strongly” disagreed with the appeal panel’s decision and would pursue the case in the high court in India’s commercial capital Mumbai.

It said one of the main barriers to access to medicines in developing countries such as India is the “lack of adequate health care services and infrastructure ensuring that drugs will effectively bring treatment to those who most need it.”

Health groups welcomed the panel’s ruling saying it would check the abuse of patents and open up access to affordable versions of patented medicines.

“The decision means that the way has been paved for compulsory licenses 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,” said Leena Menghaney of medical humanitarian aid organization Medecins Sans Frontieres.