Pharmabiz
 

Indian cos spread wings on higher R&D spend

Sanjay Pingle, MumbaiThursday, March 10, 2011, 08:00 Hrs  [IST]

The Indian pharmaceutical companies have spread their wings  in the world market with higher investments in research and development (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, considering the time factor, uncertainty regarding final outcome, stringent approval system by regulators and delaying tactics by multinationals through legal cases,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 grab almost 34 per cent of total final approvals during 2010. Investment in research and development has thus paid rich dividends to Indian companies and  help them establish strong presence in the international markets.

The US FDA's total number of final approvals reached  418 ANDAs in 2010 as against 419 ANDAs in the preceding year and tentative approvals worked out to 121 ANDAs as compared to 124 ANDAs in the preceding year. Aurobindo Pharma's final approval during last four years reached  85 ANDAs and that of Sun Pharmaceutical at 79 ANDAs (including approvals for its US - based subsidiary Caraco Pharma). Dr Reddy's Laboratories has obtained  54 approvals and Glenmark 50 final approvals.

At  the international level, several major entities have started cutting down their R&D spending as a part of cost -cutting measures. Further, these companies have failed to discover new blockbuster products during last few years and are dependent on old products for generating revenues. The Indian pharma companies are giving a tough time to them with investments in R&D, biotechnology, clinical trials and contract research activities.

Many of the  MNCs are now looking more and more to Indian companies for partnership in R&D. The easy availability of talent pool, cost-effectiveness and state-of-the art facilities have attracted many multinational companies, including companies from Japan.

The overall R&D spending of sample  20 companies studied by Pharmabiz increased  just by five 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, 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 could maintain the R&D expenditure at Rs 54.46 crore which  worked out to 4.33 per cent of its turnover during 2009-10 as against 4.53 per cent in the previous  year. Though the R&D expenditure of a few companies like Lupin, Cadila Healthcare, Ind-Swift Laboratories, Ipca Laboratories and Parabolic Drugs went up sharply, the  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 up 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.

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 had 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.

 
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