The global pharmaceutical market is changing rapidly due to pressure on prices, drying pipelines and increasing costs of drug development. This is forcing the industry to produce new models of efficiency and profitability. Blockbuster model no longer seems to be the future of pharmaceutical industry, instead future lies in the novel drug delivery systems, expanding label indications, partnerships and entering the new emerging markets. Many companies have adopted various models for growth including both organic and inorganic methods. Increase in mergers and acquisition of Indian companies is a result of this recent trend. Global pharmaceutical and biotechnology companies are trying to broaden their presence in developing countries and are beginning to see the potential of India’s R&D resources.
Growing Indian companies’ ability in biology, chemistry, genetics coupled with low cost clinical trial operability is making India a favoured destination for drug discovery and outsourced R&D. This process has progressed significantly since 2005, when India became WTO/TRIPS (Trade Related Aspects of Intellectual Property Rights (TRIPs) compliant and started recognizing product patents.
There are a number of firms engaged in various steps of drug discovery such as lead generation, target identification and conducting safety and toxicological studies. Although Indian companies are cashing in on the outsourcing opportunity, innovation of new drugs is the way forward for pharmaceutical industry. Considering the current situation, it is difficult for India - based companies to produce a molecule based on their own research efforts due to lack of funds required to sustain the 10-12 year long period of drug discovery and lack of qualified scientists with the required skills.
Despite various challenges, a few of the big Indian pharma companies have increased their R&D expenditure in order to compete in the future such as Ranbaxy (now a subsidiary of Daiichi-Sankyo, Japan) which topped the R&D spending among Indian companies by spending almost Rs 4.9 billion in 2009-10 which is almost 5% more than the previous year expenditure of Rs 4.7 billion. Various other companies such as Lupin and Wockhardt have also increased their R&D spending. The average R&D expenditure by pharma companies in India is close to 7.5-8 per cent. Ranbaxy spends almost 10.5 per cent of its total sales on R&D and some of the other companies like Sun pharma, Biocon, Dr. Reddy’s labs (DRL) invest about five per cent of their respective sales revenue (Pharmexcil). However, this is still only a fraction of what their American and European counterparts spend.
Indian companies are also investing significantly in drugs that are complex to manufacture such as injectables and biologics. For example, Biomab EGFR is the first indigenously developed monoclonal antibody from Biocon to reach the market and at present is indicated in head & neck cancer. Companies like Nicholas Piramal and Ranbaxy have set their vision on developing new molecules by completely hiving off their R&D units which function separately and are focused entirely on R&D. DRL, for example, known for its generic and manufacturing capabilities, now has an impressive pipeline of drugs. In addition to these companies, there are a number of other players like Zydus Cadila, Torrent, Sun Pharma which are gradually foraying into the field of new drug discovery. A look in to the pipeline of these Indian pharmaceutical companies show that most of the companies have already started targeting specific diseases for their drug development and some of the molecules have even reached the phase III stage.
Partnering and collaboration is the new trend in Indian pharma industry for R&D and most companies already have tie-ups with other specialist research companies for development of new drugs on disease areas like cancer, diabetes, malaria and nervous system disorders. Some of the examples include DRL agreement with ClinTec international for joint development of an anti-cancer compound, DRF 1042. DRL and ClinTec International would co-develop DRF 1042 and also undertake Phase II and Phase III clinical trials with the aim of securing US and Europe approvals. Another joint initiative is the Bristol-Myers Squibb Biocon R&D Center (BBRC), which was formed between Syngene International, subsidiary of Biocon and BMS in 2009 for discovery and early drug development. Biocon also has a tie up with Amylin Pharmaceuticals for developing a peptide drug to treat Diabetes. Both the companies would share the development cost of the drug and would also market the drug jointly in various parts of world depending upon their deal.
Initiatives by govt
One of the major aims of Department of Pharmaceutical of India (DoP) is to promote R&D in the pharmaceutical sector. This department is planning to increase the capacity building in the area of pharmaceutical sector. Government of India is planning for a Rs 30 billion joint venture capital fund to strengthen the Indian pharma industry and drug discovery. Another major initiative is to develop National Institute of Pharmaceutical Engineering and Research (NIPER) Ahmedabad, as a national centre for core competence in medical devices.
The New Millennium Indian Technology Leadership Initiative (NMITLI) is the largest public-private-partnership effort undertaken by the Government of India. The objective of the programme is to build and strengthen India’s position by utilizing and synergizing competencies of public-private partnership programme. In the last 10 years of its existence the programme has evolved 57 R&D projects covering networked projects in diverse areas such as general biotechnology, information and communication technology, bioinformatics, drugs & pharmaceuticals, chemicals, materials and energy. These projects have involved close to 350 industry partners and R&D institutions across the country. The Small Business Innovation Research Initiative (SBIRI) set up in 2005 is a new scheme launched by the Department of Biotechnology (DBT) to boost public-private-partnership effort in the country in the field of biotechnology.
Conclusion
The Indian pharmaceutical industry has changed significantly over the years. As per ORG-IMS, the Industry is expected to grow to US $30 billion by 2020 and the Indian drug discovery market is also growing at a significant pace. Leading Indian companies have established themselves in various countries including the pharmaceutical hubs like US and Europe. As Indian companies are now focusing on in-house R&D, launching a new molecule by their own research capabilities would take another six to eight years. India should develop its talent pool and Indian companies should increase its investments in R&D to develop innovator molecules by ensuring consistent revenues are generated through their present portfolio and by entering into marketing alliances for MNC products in the domestic market. Indian companies must also collaborate with multinationals companies through licensing deals for New Chemical Entities (NCE’s) and for clinical trials development to overcome the high risks of drug development.
Indian companies can also establish themselves as a niche player in the expanding biotechnology sector as the future of the pharmaceutical industry lies in the biotechnology. This is evident from the fact that most of the top selling drugs in the future by 2015, are going to be the biologics. As biotech industry is still evolving, India should try to capture this big opportunity by developing new procedures and unique technology essential for developing new drugs. Though at this point of time Indian pharmaceutical companies are on the right path, various challenges lie ahead. For a brighter tomorrow, they must surpass these challenges with winning strategies and become innovator companies of future.
-The author is Healthcare Analyst, Datamonitor.