Partly due to drug makers advancing their pipeline programmes into later-stage clinical trials, which are generally more costly, global pharma majors have increased their research and development (R&D) spending.At the same time the R&D spending of 25 leading Indian pharmaceutical companies increased by 20.6 per cent to Rs. 6,103 crore during the year 2013-14 from Rs. 5,060 crore in the previous year.

Though, this R&D expenditure is negligible as compared to spending by international giants, the Indian companies have been able to introduce several new products with exclusivity period in regulated markets. The investment in R&D has assisted well to overcome stiff competition by launching affordable new products in international market, according to a Pharmabiz study.

The Indian companies investment in R&D will play important role when the returns from R&D investments by international giants is diminishing. For several years major international players have not brought any block buster drug despite huge investment in R&D activities. Thus, on one hand, the outcome from investment in R&D is diminishing and on the other hand several new products are creating new competition for old products. The indigenous developed manufacturing process & technologies and availability of talent pool offered competitiveness to Indian players.

The world’s leading 30 pharmaceutical companies spent a combined $112 billion on R&D in 2013, an increase of $723 million over the previous year, according to a report by research and consulting firm GlobalData.

While Roche was the R&D spending leader, outlaying nearly $10 billion in 2013, Novartis and Johnson & Johnson (J&J) increased their R&D spend the most between 2012 and 2013, with each adding around $500 million to their respective clinics. Novartis’ R&D spending grew by 5.6 per cent to $9.8 billion, and J&J spent $8.2 billion, which was up by 6.8 per cent from 2012, the report state.

Roche’s R&D spending was bolstered by continued investments in its oncology and neuroscience therapeutic areas, such as the company’s investigational anti-PD-L1 antibody targeting lung cancer, and the advancement of its programmes for Alzheimer’s disease, said an analyst.

Novartis’ R&D spending grew largely due to its Alcon subsidiary, which allocated additional resources to R&D to develop new eye care products. The company’s Vaccine and Diagnostics products business invested heavily to bring to market its meningitis B vaccine, Bexsero.

Despite the sector increase in R&D spending, a number of large pharmaceutical firms pulled back on clinical investment in 2013.In efforts to improve profit margins, cost-cutting still remains a strategic necessity for some players. Many companies reduced their workforces to help stabilize profits in the aftermath of patent losses, he added.

Pfizer shaved over $1.2 billion in R&D spend after losing market exclusivity on Lipitor and Caduet, while Merck continued with its multi-year restructuring programme, cutting over $600 million from its clinical operations in 2013 after its respiratory therapy Singular saw its patent lapse.

In the meanwhile according to a study by Chronicle Pharmabiz, R&D expenditure of 15 global pharma giants increased by only 2.6 per cent to $55,223 million from $53,815 million in the corresponding nine months of last year.

R&D expenditure of Novartis remained highest among the 15 pharma companies of Pharmabiz sample. Novartis R&D expenditure increased to $7,190 million and that of J&J's increased by almost 2 per cent to $5,859 million. Pfizer's R&D expenditure moved up by 6.5 per cent to $5,184 million from $4,867 million. Similarly, R&D expenditure of AstraZeneca and AbbVie improved by 16.9 per cent and 16.8 per cent respectively to $3,581 million and $2,742 million. Baxter, Novo Nordisk and Bristol-Myers also pushed their R&D expenditure.

The R&D expenditure of Merck, Sanofi, GSK and Bayer declined during the first nine months of 2014. Merck's R&D expenditure declined by 13.6 per cent to $4,897 million from $5668 million and that of GSK's went down by 12.8 per cent to $4,013 million from $ 4,603 million. Sanofi's R&D expenditure declined by 7.5 per cent to $4,405 million from $4,764 million.

The 15 leading international pharmaceutical companies suffered a major setback during the first nine months period ended September 2014 as the pharmaceutical & vaccines sales of companies like GlaxoSmithKline, Pfizer, Sanofi, Eli Lilly and Merck & Co declined significantly. The aggregate net earnings of 15 companies went down by 10.8 per cent to to $68.1 billion from $76.4 billion in the corresponding period of last year. Slower growth in R&D outcome, expiration of patent, competition from generics, adverse foreign exchange rates and government policies impacted overall profit growth.