Pharmabiz
 

R&D enables corporates to achieve core competency

Our Bureaus, Bengaluru, MumbaiThursday, June 23, 2016, 08:00 Hrs  [IST]

The national IPR policy of India has created an ecosystem in India which is conducive to foster innovation and creativity not only in terms of IP creation but also commercialization and enforcement. Specific to pharma industry, it prohibits grant of patent for a new form of the same substance till improved efficacy is established.

There has been a clear emphasis on protection, exploitation and enforcement of IP but at the same time, attempt has been made in order to protect public health, food security and environment, among other areas of socio-economic importance.

This policy is expected to create an environment in the country where awareness of IP is established across R&D organizations, educational institutions, corporate entities including start-ups, and micro, small and medium enterprises.

R&D is the key driver to growth which enables corporations to achieve core competency and derive economies-of-scale to globalize their operations. With the Union government reducing the benefits of deductions for research from 150 per cent to 100 per cent from April 1, 2020, the pharma and biotech industry in the country feel that it could impact the funding for research.

Pharmaceutical companies are increasing their research and development (R&D) spending to launch differential and specialty products .Indian companies have started recognizing the importance of R&D and have started spending anything between two per cent and four per cent of their sales for the same.

“Over the past few years, pharma companies have increased their R&D budgets significantly, in view of their growing focus on both regulated markets and complex molecules/therapy segments. Aggregate R&D spends of the top few companies in domestic pharma increased from six per cent of sales in FY11 to more than nine per cent in FY16,” ICRA said in a research note.

Leading companies are trying to expand their presence in the complex therapy segment such as injectables, inhalers, dermatology, controlled-release substances and biosimilars. This ensues Union government insisting pharmaceutical companies to increase investment in R&D to emerge as a hub of innovation in low cost health products and services, according to ICRA report.

However ICRA expects the growth trajectory for Indian pharma to moderate, with slowing US growth, given the relatively moderate proportion of large-size drugs going off-patent, increased competition, generic adoption reaching saturation levels, regulatory overhang and the base effect catching up.

According to an earlier report, increase in investments and collaborations are seeing Indian pharma and biotech companies up their investments in R&D by over 25 per cent. Most of the leading companies are in the midst of expanding presence in complex therapy segments like injectables, inhalers, dermatology, controlled-release substances and even branded bio-formulations and biosimilars.

At the same time a Crisil report points out the  urgency for the Indian pharma sector to shift away from export-oriented manufacture of generics, towards investing in R&D to develop new molecules and biosimilars. Generics, for little over a decade now, have been the poster-drug of Indian pharma. This was all on the back of many drugs going off-patent. But given the pool of drugs going off-patent which has been shrinking since 2012, Crisil forecasts Indian generics’ export-growth to contract to 10-12 per cent in the next five years, declining further post 2020. Therefore this according the research agency  is a pointer to the Indian drug-makers to move up the value-chain, from making cheap copies of off-patent drugs to creating and owning intellectual property through new discovery and biosimilars.

At the same time according to a recent report, Indian drug makers are embarking on a research spending spree to master more complex therapies. It is evident going by the current scene globally,  Indian drug firms cannot afford to delay their reinvention as their traditional business model is deteriorating. “There is little choice but to put in more money in R&D,” stated the  report.

In the meanwhile calling for greater research and innovation in the healthcare sector, a senior official of the World Health Organisation (WHO) said investments in research can increase the share of healthcare to India’s GDP from the current one per cent.

 
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