Indian pharmaceutical companies have substantially stepped up investments in R&D during 2014-15 to overcome stiff competition and to create product pipeline and strengthen their presence in world market. A Pharmabiz study of leading 25 companies shows that there is a 28.8 per cent growth in R&D expenditure at Rs. 9,250 crore during the year ended March 2015 from Rs. 7,179 crore in the previous year. These companies have spent almost seven per cent of their consolidated net sales in 2014-15, which is slightly higher from 6.6 per cent in the previous year.
These companies have created strong product pipeline by filing ANDAs, DMFs and patents in the world market. With rising healthcare cost, several countries are undertaking cost cutting measures and moving towards cost effective generics and biosimilars products. Indian companies are focusing on novel drug discovery & development (NDDD), generics, biotechnology and biosimilars. These companies are taking steps to strengthen intellectual property area to tap expiration of patent opportunities.
Though the R&D investment by Indian companies moved up to Rs. 9,250 crore, it is negligible as compared to major international pharma which are spending over 15 per cent of their net sales on R&D. Indian companies have successfully received higher approvals for ANDAs from the highly regulated authorities. For the nine months ended September 2015, Indian companies received final approval for 113 ANDAs from US FDA as against 122 final ANDAs approval during full year ended December 2014 with Aurobindo Pharma, Lupin, Glenmark Pharmaceuticals, Alembic Pharmaceuticals, Jubilant Life Sciences, Natco Pharma, Sun Pharmaceuticals, Hetero Labs, etc., received good number of approvals.
These companies are working towards creating niche and complex products through investments in R&D. Despite high risk of success, gestation periods and uncertainty regarding returns on investment, Indian companies are continuously investing higher funds in R&D efforts. These companies are entering new tie-ups with major international players, universities, academicians and absorbing new technologies. Indian pharma companies are engaged in contract manufacturing in a big way and R&D investments are offering necessary support for these activities. Even these companies are taking up clinical trials for MNCs.
Sun Pharmaceutical Industries, after merging Ranbaxy Laboratories during 2014-15, remained on top in R&D spending. Its consolidated R&D expenditure increased almost 87 per cent to Rs. 1,856 crore from Rs. 993 crore in the previous year and enhanced its ability to invest further in R&D. Its consolidated net sales also moved up by 71 per cent to Rs. 27,433 crore from Rs. 16,080 crore. R&D spending as percentage of its consolidated net sales worked out to 6.8 per cent as compared to 6.2 per cent in the previous year.
Sun has entered into an exclusive worldwide in-licensing agreement for Merck's investigational therapeutic antibody candidate tidrakiziumab, (MK-3222) to treat chronic plaque psoriasis, a skin aliment. It has setup a joint venture with Intrexon Corporation for developing gene-based therapies for ocular diseases. Sun has strengthen Taro's R&D pipeline and Taro had a pipeline of 35 ANDAs awaiting US FDA approval as at the end of 2014-15.
Dr Reddy's Laboratories has pushed its R&D spending by 33.4 per cent to Rs. 1,685 crore during 2014-15 from Rs.1,263 crore, and remained as second highest R&D spender. This was followed by Lupin with R&D spending up by 16.8 per cent to Rs. 1,118 crore from Rs. 958 crore. The fourth largest R&D spender, Cipla invested an amount of Rs. 844 crore in R&D as compared to Rs.518 crore in the previous year, a significant growth of over 63 per cent. Glenmark's R&D investment remained almost same at Rs. 600 crore.
Further, Aurobindo Pharma, Biocon, Sun Pharmaceutical Advance Research Co (SPARC), belonging to Sun Pharmaceutical and Ajanta Pharma registered noticeable growth of over 30 per cent in R&D expenditure during 2014-15. Similarly, Ipca Laboratories and Natco Pharmaceuticals also shown strong growth of over 25 per cent in R&D spending during 2014-15. However, the R&D expenditure of Piramal Healthcare, Unichem Laboratories, Orchid Chemicals and Pharmaceuticals, Jubilant Lifesciences, Panacea Biotec and Strides Arcolab declined during 2014-15.
Lupin has intensify is research efforts to address opportunities in difficult-to-do generics, dermatology, inhalation, complex injectables and the biosimilars space. It has undertaken biotechnology development program with the help of 190 highly-qualified bio-technologists. Its biosimilars pipeline includes 12 blockbuster molecules. Its two biosimilars are ready to launch in India under the brand names Lupifil and Lupifil-P. Its cumulative ANDA filings with the US FDA reached at 210 with 111 approvals received. Its cumulative DMF filings reached at 157 as at the end of 2014-15.
Biocon is developing novel biologics and biosimilars for addressing chronic diseases like cancer diabetes and autoimmune conditions for patients across the globe. Biocon, Asia's largest insulins producer, has stepped up its R&D spending by over 50 per cent to Rs. 200 crore during 2014-15. Its oral insulin under development has the potential to transform diabetes management the world over. The company is setting up integrated insulins manufacturing facility at Malaysia. It is offering niche services to multinational companies like Bristol Myers Squibb, Abbott and Baxter. Its subsidiary Syngene has built a strong reputation of being the 'innovation partner' for many of its clients and well positioned to tap global contract research organization opportunity. It filed over 1,150 patent applications and holds over 530 patents. Syngene International, a leading contract research organisation of Biocon, entered the capital market and now setting up a new manufacturing facility at Mangalore SEZ and is in the process of acquiring 40 acres of land and obtaining necessary approvals. The estimated expenditure for setting up the facility is US$ 100 million.
DRL's R&D expenditure increased sharply by 33.4 per cent to Rs. 1,685 crore during 2014-15, which worked out to 11.5 per cent of its consolidated net sales. It filed 77 DMFs, taking the cumulative number of DMF filings to 735 as at the end of March 2015. Similarly it filed 13 ANDAs with US FDA and cumulatively 68 ANDAs pending approval. It has more than 2000 scientists across its development centers in India, UK, US and Netherlands. The company launched 61 new products in FY2015.
Aurobindo Pharma, which has set up a revenue target of US$ 3 billion by 2017-18, is moving ahead strongly by investing in R&D activities. Its R&D expenditure increased by 33 per cent to Rs. 360 crore during 2014-15. The company has started investing in peptide technology and is building a commercial facility with two modules commensurate with cGMP standards. It has developed technologies for more than ten products. The company cumulatively filed 192 DMFs and 376 ANDAs. It received total 193 ANDA approvals and 183 ANDAs were under review.
Aurobind has developed and made penem filings for four products in injectable portfolio and it is planning to launch products in Brazil and Mexico in current year. The company is now entering the vaccines business with a joint venture for developing pneumococcal conjugate vaccine. The company is also working on 15 oncology products.
Glenmark's consolidated R&D spending remained almost stagnant at Rs. 600 crore during 2014-15. It announced first clinical development candidate in oncology, GBR 1302, a bispecific antibody for cancer treatments. The company is initiating a phase I clinical trial for GBR 1302 in Germany. It another product GBR-900 is entering clinical development in current year and first t anti-OX40 monocional antibody has completed phase I and phase II studies in US and EU. The company is moving fast in NCE front also and its mPGES-1 discovery program, GRC 27864 has moved forward in human trials and is nearing completion of phase I. Currently it has 70 applications pending with the US FDA, of which 33 are Paragraph IV applications.
Panacea Biotech's R&D expenditure declined sharply by over 47 per cent to Rs. 46.82 crore during 2014-15 from Rs. 88.88 crore due to heavy losses. It has set up four disciplinary R&D centers. at Navi Mumbai, Lalru, Mohali and New Delhi for development of vaccine, biopharmaceuticals, proteins, peptides, monoclonal antibodies, NDDS, etc., It invested 6.8 per cent of net turnover on R&D during 2014-15. Its R&D center is focusing in the fields of oncology and organ transplantation. The company has filed more than 1,500 patent applications worldwide including 230 patent applications in India.
Thus, the rising investment in R&D will give necessary push to overall working and presence in regulated and emerging market. Indian companies are pushing the boundaries of innovation to meet niche unmet medical needs. These companies are focusing on R&D to develop new chemical or molecular entities. Anti-cancer treatments and diabetes attract the large R&D investments. It is expected that the new government may initiate steps to offer tax incentives or favorable tax environment for investment in R&D in near future.
R&D Expenditure 2014-15