Expenditures on Research & Development (R&D) by 30 leading Indian pharmaceutical companies have gone up significantly by 19.7 per cent during the year ended March 2013 over the previous year. But the focus of R&D by these companies is on new cost effective generic products in key therapeutic areas and not on new drug discoveries. With higher spending on R&D they are set to tap upcoming opportunities from loss of patent exclusivity in the coming years.
A net outcome of this trend is higher approvals for ANDAs and DMFs from highly regulated authorities like US, Europe and Japan. The higher investment in R&D has assisted well to establish strong presence in emerging markets and overcome fierce competition from multinational players. Biotechnology, CRAMS, and clinical trials will further boost the investments as multinational are looking India as preferred partner in R&D segment with availability of talent pool and affordability.
Despite rising investments in R&D the Indian companies have failed to achieve any major success in discovery and development of new molecules, new chemical entity or novel drug delivery systems during past several years. The companies are trying hard for development of patentable products and technologies. The overall limited success in finding new NCEs worldwide and the high risks involved in their development is forcing the companies to look out for partnership. Several multinational pharma companies are entering R&D partnership with Indian pharma companies. For instance, Biocon has entered partnership with Mylan, Sun Pharmaceutical with Merck and Panacea with Osmotica Pharmaceutical.
The R&D expenditure, on standalone basis, of Pharmabiz study of 30 pharmaceutical companies increased to Rs.5,360 crore during 2012-13 from Rs.4,478 crore in the previous year. This worked out to 7.8 per cent of their standalone net sales during 2012-13 as compared to 7.2 per cent in the previous year. The consolidated R&D expenditure, including domestic and foreign subsidiaries, is much higher than standalone R&D expenditure. Lupin's consolidated R&D expenditure reached at Rs.770 crore (Standalone R&D expenditure is not available). Dr Reddy's Laboratories remained highest standalone spender on R&D activities at Rs.690 crore during 2012-13 and was followed by Cadila Healthcare (Rs.493 crore), Ranbaxy Laboratories (Rs.449 crore) and Cipla (Rs.425 crore). Out of 30 companies, 16 companies registered R&D expenditure of above Rs.100 crore during 2012-13.
The major companies like Shasun Pharmaceuticals, Hikal, Unichem Laboratories, Biocon, Natco Pharma, Fresenius Kabi Oncology has pushed their R&D expenditure over 50 per cent during 20112-13. The R&D expenditure of Shasun Pharmaceuticals went up by 179 per cent to Rs.32.37 crore from Rs.11.62 crore and that of Hikal moved up by 139 per cent to Rs.31.85 crore from Rs.13.34 crore. Biocon's registered strong R&D expenditure growth of 78.5 per cent to Rs.67.30 crore from Rs.37.70 crore. Unichem's R&D investment jumped to Rs.103.34 crore from Rs.59.17 crore.
Sun Pharmaceutical, Piramal Healthcare, Wockhardt, Jubilant Lifesciences, Ipca Laboratories, Glenmark Pharma also registered handsome growth in R&D expenditure. Sun Pharmaceuticals has incurred R&D spending of Rs.310 crore, a growth of 42 per cent during 2012-13 and that of Jubilant Lifesciences moved up by 37.2 per cent to Rs.143.75 crore. Sun Pharmaceutical Advance Research Company's R&D expenditure increased by 5.8 per cent to Rs.109 crore, which is higher than its net sales of Rs.87.82 crore during 2012-13.
The R&D expenditure of Ranbaxy Laboratories, Torrent Pharma, Panacea Biotec, Venus Remedies, Parabolic Drugs and Divi's Laboratories declined during 2012-13.
With higher investments in R&D, Indian pharmaceutical companies and their subsidiaries maintained the momentum in respect of securing higher ANDA approvals from US FDA during the first nine months i.e. January-September 2013. Indian companies received 119 final approvals for ANDAs as well as 31 tentative approvals. The total number of ANDAs approved by US FDA during the first nine months of 2013 stood at 307 and total tentative approvals are 68. This worked out to 38.8 per cent and 45.6 per cent approvals secured by the Indian pharmaceutical companies. The similar trend was exhibited in the corresponding period of last year also.
Sun Pharmaceuticals and Aurobindo Pharma have maintained approval rate and got highest approval of 21 ANDAs and 16 ANDAs respectively during the first nine months of 2013. This was followed by Lupin 17, Dr Reddy's Laboratories 13 and Glenmark generic seven. During the full year ended December 2012, Indian pharma companies got 178 ANDAs approval from US FDA as against total approvals of 476, which worked out to 37.4 per cent of the total.
Similarly, Indian pharmaceutical companies filed 417 Drug Master Files (DMFs) with the US FDA during the year 2012 as against 404 DMFs in the previous year. The DMF filings during the year 2010 and 2009 were at 311 and 271 respectively. This shows that the API segment is spreading its presence in market with higher filings. Hetero Drugs Ltd filed 24 DMFs followed by Emcure Pharmaceuticals Ltd 16, Hetero Laboratories Ltd 15, Aurobindo Pharma and Dr Reddy's Laboratories filed 13 each, Lupin filed 12 and Cadila Healthcare 11 during 2012. Macleods Pharmaceuticals and Sun Pharmaceutical Industries filed nine DMFs each.
The same trend is likely to continue in the current year also as Indian companies filed 79 DMFs during the first quarter ended March 2013. Jubilant Life Sciences filed six DMFs followed by Lupin and Sun Pharmaceutical five each. Thus, the investment in R&D will turn into higher filings and approvals for Indian companies in near future.
Dr Reddy's cumulative filings of ANDAs and DMFs reached at 200 and 577 respectively as at the end of March 2013 and its global generics segment grew by 18 per cent to Rs.8,256 crore from Rs.7,024 crore in the previous year. Ranbaxy has made a total of 197 filings across various markets. It has filed 44 patents in India, including 18 patents in Novel Drug Delivery System. Lupin has filed 21 ANDAs and 15 DMFs during 2012-13 in US and received approval for 14 ANDAs. It has a pipeline of 116 products.
Wockhardt has set up its R&D facilities in India, US and UK and it received 206 patents worldwide till December 2012. Besides NCEs and NDDS, it is focusing on Recombinant Biopharmaceuticals with the help of 607 scientists and research associates. In biotechnology it has made significant progress in developing biosimilars of insulin and its analogs. Cadila Healthcare remained as third largest R&D spender during 2012-13 with total R&D expenditure of Rs.492.70 crore. The company currently conducts basic new drug discovery research with a portfolio of seven candidates in various stages of development. Recently it has completed the construction of a new live viral vaccines manufacturing plant. It has several vaccines in different stage of development. Further, Cadila is developing a pipeline of 19 biologics.
Biocon's small molecules business comprising APIs continued to gain momentum during 2012-13. The company is also focusing on complex new generic products in segments like oncology, CNS and ophthalmics. The company has identified over 20 molecules for developing ANDAs. The first ANDA filing is expected in FY'15 with regulatory filings gradually increasing in subsequent year. The company received strong response for its rh-insulin and insulin Glargine in emerging markets. The company is setting up biopharmaceutical manufacturing and R&D facility at Bio-XCell, a custom built biotechnology park in Malaysia. Its research services business through Syngene & Clinigene going ahead strongly.
Thus, the Indian companies are looking ahead with higher investment in R&D and focusing in high growth therapies like cardiology, central nervous system, diabetology, anti-asthma, neuro-psychiatry, nephrology, gynaecology, anti-infective, gastrointestinal, oncology, etc. and strengthening their presence in international market. A few companies have also generated significant income from in-licensing arrangement through R&D investments.
R&D investment by pharma majors (Standalone)