The pharmaceutical industry,one of the fastest growing sectors of the Indian economy, has made rapid strides during the last few years. From being an import dependent industry in the 1950s, it has gained global recognition as a producer of low cost , high quality bulk drugs and formulations. Indian pharma majors have developed infrastructure in over 60 countries including developed markets like the US and Europe.
In the recent past, many Indian pharma companies have also demonstrated their acumen in commercially viable research and development (R&D) activities and have become significant players in the international arena. R&D activities have become more prevalent now as the industry is raring to move away from the core manufacturing of generic drugs.
Now many of the MNCs are looking towards Indian companies for partnership in R&D. The easy availability of talent pool, cost-effectiveness and state-of-the art facilities have proved to be a great attraction for them. India has become a hub for global clinical trials and also for establishing R&D units by pharma majors
India is poised to offer the global pharmaceutical industry high quality and cost-effective contract services to support drug discovery, clinical trial, data management and manufacturing, say industry cognoscenti.
Despite many shortcomings, India has a proven track record in some of these areas and has the enthusiasm to expand into services at the higher end of the value chain, they point out.
According to Dipta Chaudhury, Program Manager - South Asia and Middle East, Pharma and Biotech
Practice, Frost & Sullivan, R&D in Indian pharma companies has seen a steep increase in the past few years. Fuelled by their success in generics and increased capital availability, many of the big Indian pharma companies have invested in research for new molecular entities. This has resulted in a strong pipeline in India in the Phase I and Phase II stages mostly.
While pharma companies like Glenmark have developed the molecules and looked at collaborations to proceed to further phases, many companies like Dr. Reddy's Laboratories Ltd. have also opted to develop their molecules to commercial stages in their own R&D labs. Companies like Zydus Cadila are also developing products on their own as well in collaborations with international research companies. Even emerging companies like Suven life sciences have developed molecules in the Phase I stage which involve small scale human studies.
Research activities have also resulted in many scientists opting to work for Indian companies who would have otherwise moved to research labs for MNCs in international locations.With increasing international focus on conducting research in India, the number of independent research labs in India have also increased. Many MNCs have also opened their own research labs in the country where studies are performed by Indian scientists for their global studies.
R&D in Indian pharma is expected to continue on its growth path as more MNC companies also enter strategic tie-ups with their Indian counterparts to invest in research molecules and have a stake in the final molecules.
However she pointed out that even though research activities in India had increased, generic molecules continue to be the main revenue stream for most companies. As a result , a lot of research by Indian pharma companies continues to be on development of generics suitable to specific countries like the US, Europe, etc.
Moreover R&D is a time consuming process with a molecule reaching Phase IV after almost 10 years of research.During this period the molecule does not generate any revenues and also has a high risk since it may fail in any stage. Many Indian pharma companies as well as the Indian stock market are still not ready to take that risk. This results in poor investor confidence in a company that intends to research on a new product. As a result, the investment into research by most Indian companies is still below 10 per cent of their net revenues, she said.
According to her , investor confidence in India towards research capabilities needs to be improved. This will not only help spur pharma companies to invest more into R&D, but also allow the growth of start-ups with their own research molecules.
Indian companies also need to look at collaborations in their initial stages as not only will it help mitigate risk and improve finance flows, but also help them learn and understand the global research practices. This will help them climb up the value curve faster than by developing their own systems from scratch, she added.
According to a Pharmabiz study,the Indian pharmaceutical companies have spread their wings in the world market with higher investments in R&D activities during the last couple of years. These companies have focused on R&D to tap the upcoming opportunities from expiration of patents of several blockbuster products. However the time factor, uncertainty regarding final outcome, stringent approval system by regulators and delaying tactics by multinationals have put pressure on the activities.
Despite several odds, Indian companies are moving ahead with increased R&D investments , which transform into higher approvals from highly regulated markets. For instance, the research-based companies, including subsidiaries, have obtained 142 final ANDAs approvals and 49 tentative approvals from the US FDA during the year 2010 as against 132 and 34 respectively during the previous year. The Indian companies could get almost 34 per cent of total final approvals during 2010. Investment in R&D has thus paid rich dividends to Indian companies and help them establish strong presence in the international markets.
Commenting on the current scene of R&D in the biotech sector in India,Dr. Satya Dash, Chief Operating Officer, Association of Biotechnology Led Entrepreneurs, India (ABLE) says the Indian biotechnology sector is at a cusp. For future growth to occur based on innovation, massive injection to R&D needs to happen.
Several innovative firms from across all segments of Indian biotechnology be in bio-pharma, bio-agri or systems biology, have been endeavouring to integrate R&D into their business models with success. Even CROs that have reached a threshold are strategizing themselves to grow as “drug discovery” firms rather than just remain as a contract research entities, he adds.
In bio-pharma, exciting R&D is taking place in combination vaccines, diabetes research, oncology, stem cell research, medical devices and diagnostics.Another important development has been in systems biology with several firms conducting cutting edge work in predictive biology be it in signalling pathway analysis, developing tools to analyse and integrate information such as next generation sequencing and imaging data, as well as developing virtual organ or disease models to facilitate drug discovery.
However according to him there are certain challenges unique to biotechnology. For example the long gestation period for products to reach the market and hence projects are risky. This sector lacks funding for early stage R&D projects that are essential to de-risk projects as well as boost innovation. Importantly in India we need to have a clear and streamlined regulatory process. These two go hand-in-hand. Investor confidence in this sector can only increase if they see a clear and streamlined regulatory landscape.
At present we have too many regulatory bodies. What is needed is a single window framework but more importantly regulatory decisions based on scientific evidence rather than based on emotion as was the case in Bt-Brinjal. There needs to be a constant engagement between the regulators and industry.
There are few other challenges too, lack of infrastructure as basic as having cold chain facilities, at the airports as well as across the distribution channels. What is also lacking is availability of well trained ‘industry ready’ workforce that is technically competent as well as possessing other business skills.
For improvement of R&D activities in India, he said there needs to be massive injection of funds for early stage projects in the form of “ignition grants”. More fiscal and tax incentives for R&D, contract research as well as manufacturing needs to be provided. There should be a clear, streamlined, single window regulatory body needs to be established which is empowered to make decisions that are transparent and based on scientific evidence.Moreover massive boost to infrastructure and capacity building is needed, he adds.
According to a senior official of DBT, “There are essential linkages between research and manufacturing which are not clearly made. While the Department of Biotechnology has a substantial research budget, there is no necessary connection with the requirements of the health care delivery system.A roadmap for the next five years is being be prepared. The roadmap will detail the priority programmes in research and make provisions for equitable distribution of funds both for the public and the private sector, as per the need of the hour.”
According to some of the officials of Micro Labs,although there is a huge scientific talent pool in India, R&D has not taken off in the country. Much of our research is based on technology transfer and patent expired drugs. It is estimated that at any given point of time a pharma or biotech company allocates over 30 per cent of the total turnover on R&D. Mere scientific resources is not adequate, R&D needs considerable support from the government going by the presence of national labs in the country. Though there has been considerable effort in the research institute and industry collaboration and a plethora of grants coming forth from the CSIR, DST and DBT, there is need for concrete government concessions to nurture innovation and encourage the culture of the patents.
R&D in biotech sector is at a very premature stage in India. The biotech R&D involves development of complex biotech processing which incur huge cost for research and development. The success rate of biotech products from R&D to commercialization is very low as compared to pharmaceutical products due to various factors in developing biotech products such as stability concerns of biotech products.
According to them the Budget 2011 was lackluster and a huge disappointment for the pharma and biotech sector. Despite the extensive representations made to give a fillip to R&D, the government has turned a deaf ear. “We witnessed miniscule encouragement either to produce new drugs or to manufacture and export of existing generics. The industry sought to increase research and development from the current Rs. 100 crore to triple the revenues. The rate of weighted deduction was asked to be increased from 200 to 300 per cent , considering the long gestation period to break-even and match R&D incentives globally offered by other countries”, he points out.
According to estimates, it requires more than Rs. 1,000 crore to develop and commercialize one molecule. But now the government has increased weightage deduction on research and development from 175 -200 per cent which comes with a rider. The 200 per cent weighed deduction comes in for payments made to national laboratories and universities. This exemption can be availed only if companies conduct research in a government laboratory. For many private companies, research requirements and the infrastructure is different from what is available in government labs. Therefore this weightage deduction would have little or no impact at all. A weightage deduction on expenses incurred on obtaining international certification would have helped firms on capital expenses.
The industry has been clamouring for permission to sell generic versions of life saving drugs. While the Indian Patent Act and the relevant rules do contain a provision, it has not been made use of till now. Utilization of this provision on wider scale would have helped the industry not only in making life saving drugs cheaper but would have also opened new avenues in treatment.
The biotech sector requires huge cost and specialized infrastructure for R & D as compared to pharmaceutical sector. Presently very few Indian companies can afford to invest such huge amounts with very low success rate for products. However since biotech based products are need of hour as the pipeline of pharmaceutical NCEs is drying out , it is essential to have more initiatives from the Government for the growth of the industry.
According to them for the improvement of R&D activities in India,we need to nurture innovation and encourage the culture of the patents.
According to Prof. Govindasamy Mugesh, associate professor, Department of Inorganic and Physical Chemistry, Indian Institute of Science ,after the information technology, the biotech sector in India is making a good progress. The investments in biotech-related sectors are increasing and this should help the R&D in this sector.
However he feels that research collaboration between biotech companies and academic institutions in India is not very strong. Both academic institutions and biotech companies should interact more closely and try to address multidisciplinary problems for improving the R&D activities in India, he added.
According to some experts, the biggest challenge the industry faces today is the drought in its research pipeline with very few new molecules coming out into the market. Despite annual spending of several millions of dollars for new drug research, the results are disappointing for most top global pharma companies such as Pfizer, GSK, Novartis,Sanofi Aventis etc.
The main reason for this trend is the decreasing R&D productivity. High failure rate of new drug entities at different stages of clinical trials on account of serious adverse reactions is another major concern of drug researchers, they point out.