R&D spending of 20 pharma cos up by 5% to Rs. 2,989 cr in FY'10

The top Indian pharmaceutical companies seem to be less enthusiastic about  the research and development activity if one goes by the expenditure incurred by them during last year. This has been revealed by a Pharmabiz study of R&D expenditure by 20 leading Indian pharma companies having an R&D spending of Rs. 40 crores and above.

The overall R&D spending of these 20 companies increased by just 5 per cent during 2009-10 to Rs. 2,989 crore as against Rs. 2,845 crore in the previous year. This worked out to 7.5 per cent of their standalone net sales during 2009-10 as compared to 7.9 per cent in previous year.

Out of 20 pharma companies from Pharmabiz sample, the R&D expenditure of six companies viz., Dr Reddy's Laboratories, Aurobindo Pharma, Jubilant Organosys, Panacea Biotec, Sun Pharma Advance Research (SPARL) and Glenmark Pharmaceuticals declined during 2009-10.

Orchid Chemicals managed to maintain the R&D expenditure at Rs. 54.46 crore but this worked out to 4.33 per cent of its turnover during 2009-10 as against 4.53 per cent in the last year. Though the R&D expenditure of a few companies like Lupin, Cadila Healthcare, Ind-Swift Laboratories, Ipca Laboratories, and Parabolic Drugs went up by sharply. But the growth in R&D spend by Ranbaxy Laboratories, Cipla, Sun Pharmaceuticals, Torrent Pharmaceutical, Biocon and Alembic remained below five per cent.

However, the debt ridden Wockhardt stepped its R&D expenditure by 8.5 per cent to Rs. 119.87 crore from Rs. 110.46 crore in the previous year and Stride Arcolab also stepped up its R&D spending by 9 per cent to Rs. 58.05 crore.

Ranbaxy Laboratories, a subsidiary of Daiichi Sankyo Co of Japan, remained the top R&D spender in absolute terms during 2009-10 at Rs. 494.38 crore as compared to Rs. 471.38 crore in the previous year. Ranbaxy's R&D spend as compared to standalone net sales worked out to 10.3 per cent as against 10.5 per cent in the previous year. The company submitted 5 ANDAs and it filed 13 products in the European Union. In other key markets like CIS countries, Australia, China and in South Africa it made 209 filings. Its research team filled 42 patents in India, including 12 patents for NDDS. The technology transfer was completed for 8 new APIs and scale-up studies were completed for nine other new APIs. It filed 179 DMFs comprising 46 APIs, across various countries and 64 patents in India.

For the first half ended June 2010, Ranbaxy's R&D expenditure increased to Rs. 292.78 crore from Rs. 225.03 crore in the corresponding period of last year. While commenting on second quarter performance, Atul Sobti, CEO and managing director, said, “The company delivered another quarter of good growth as a result of our effort to maximize first-to-file opportunities in the USA, and a healthy operational performance led by key geographies. The transfer of New Drug Discovery Research assets to Daiichi Sankyo will provide a sharper focus to our R&D effort, in our core area of generics. This is in line with our commitment to optimize synergies through the Hybrid Business Model.”

Lupin's R&D spending increased by 54.3 per cent in 2009-10 to Rs. 411.91 crore from Rs. 266.91 crore in the previous year. The Research Park at Pune is focusing on Advanced Drug Delivery Systems (ADDS) Novel Drug Discovery and Development (NDDD) and Biotechnology Research. The ADDS programme emerged as a key growth driver and area of strategic focus within the overall R&D programme. Its BioResearch Center for Bio-Availability and Bio-Equivalence clinical studies is now fully operational. The company emerged a one of the top 10 ANDA filers in the US market. During 2009-10, the company filed 19 US DMFs taking the cumulative total to 104 and four EDMFs/AU DMFs. Further, it filed 37 ANDAs with the UF FDA and received seven approvals. The cumulative number of ANDA filings stands at 127, with 40 approvals, including 6 tentative approvals. Its total cumulative filings within the EU stands at 65.

S. Ramesh, president--Finance & Planning of Lupin said, “Lupin’s continued and consistent investments in R & D over the last 6 years has helped it develop world class capabilities across the spectrum of its research initiatives: right from developing complex APIs to formulating value-added, difficult-to-make products to a fast evolving drug delivery & drug discovery program.   

S Ramesh added, “Another important aspect of scaling higher orbits of growth would be our focus on introducing products in new therapy areas and high value niche segments. FY 2010 saw the addition of development in new therapeutic areas such as Oral Contraceptives and Ophthalmics. The Advanced Drug Delivery Systems (ADDS) initiative within Lupin’s R & D program has also been a key area of focus for us over the last few years.”

Lupin's revenue expenditure on R&D amounted to Rs. 103.80 crore during the first quarter ended June 2010 and it worked out to 7.9 per cent of its net sales. Lupin's cumulative ANDA filings with the USFDA rose to 130 with the company having received 45 approvals as at the end of June 2010. Cumulative filings with the European regulatory authorities stands at 65 with the company having received 33 approvals.

Dr Reddy's Labs' R&D spending declined by 7.5 per cent to Rs. 389.70 crore from Rs. 421.20 crore in the previous year. This worked out to 8.8 per cent of its total turnover as against 10.4 per cent in the last year. The company entered into a strategic partnership with GlaxoSmithKline plc to develop and market select products across emerging markets outside India. The company filed 13 drug applications in North America. Its US generic pipeline now comprises 73 ANDAs pending with the US FDA, including 11 tentative approvals. DRL filed 36 Drug Master Files (DMFs) in 2009-10 and its cumulative filings reached at 378 DMFs, with 156 in US.

The R&D expenditure of Glenmark Pharmaceutical declined by 16.2 per cent to Rs. 51.85 crore from Rs. 61.90 crore in the previous year. However, its product pipeline is progressing well with seven molecules in clinics, of which two are ready for phase III trials. Further, it is out-licensing its molecules and during 2009-10 it received an income of Rs. 23.24 crore. Its US based subsidiary, Glenmark Generics Inc., received 16 ANDA approvals in 2009-10 and its cumulative filing of ANDAs reached at 108 upto August 2010.

Aurobindo Pharma incurred a slightly lower R&D expenditure of Rs. 101 crore during 2009-10, but it filed 22 ANDAs with US FDA. The company's cumulative filings in US reached at 173 products as on August 5, 2010 and it received 121 product approval. In Europe it filed 87 products and get nod for 51 products and in South Africa it filed 244 products with approval for 68 products. The company filed 148 DMFs in US.

To give more focus for R&D activities, some companies had demerged their R&D divisions into separate companies during last couple of years. Sun Pharmaceuticals created Sun Pharma Advance Research Co and Piramal Healthcare restructured its activities into separate company, Piramal Life Sciences (PLSL). In September 2010 PLSL has commenced phase-II study of P1736-05, in India and Europe. P1736 is a non-PPARgamma insulin-sensitizing compound and is being developed for the treatment of type II diabetes. The company has received an approval by Indian regulatory authorities to conduct phase II clinical trial in India. In Europe, phase II study is approved by various regulatory authorities in European Union like CCMO (Netherlands), NIP (Hungary) and SIDC (Czech Republic). P1736-05 has undergone extensive evaluation in various phase-I studies conducted in central Europe under the approval of European authorities.

DRL established new R&D entity called Perlecan Pharma Pvt Ltd, but it wound up the operations due to exit of financial partners. Though the demerger of R&D activities will reduce the pressure on bottom line, the final outcome of demerger will be seen in next couple of years.

During the first half ended June 2010, twenty Indian pharma majors and their subsidiaries received 72 US FDA approvals for original Abbreviated New Drug Applications (ANDAs) as against 80 approvals for 21 companies in the corresponding period of last year. Glenmark Pharmaceuticals, a Rs. 2475 crore plus pharma giant, has received highest number of approvals for 9 ANDAs during the first half of 2010. This was followed by Lupin with approvals for 8 ANDAs and 7 each by Aurobindo Pharma, Dr Reddy's Laboratories, Matrix Laboratories (now subsidiary of Mylan Inc) and Sun Pharmaceuticals.

Claris Lifescieinces, Fresenius Kabi Oncology, Strides Arcolab, Wockhardt and Zydus Pharma received three ANDAs approval each during first half. Alembic, Emcure Pharma and Torrent Pharma got two ANDAs approvals. Alkem, Granules India, Hetero Drugs, Natco Pharma, Orchid Chemicals and Unichem Laboratories received one approval each. With investments in R&D, Indian companies are set to get more and more approvals in the regulated markets.

R&D Expenditure during 2009-10 & 2008-09