The Indian pharmaceutical industry, the fourth largest pharma market in the world in terms of volume, is now focussing sharply on research and development (R&D) investing huge funds for developing new products. An increasing presence in high-value markets like the USA and Europe has catalysed industry growth. Several Indian pharma players are seeking generic opportunities by entering non-US markets. With new molecular entity (NME) and New Drug Approvals (NDA) not throwing up spectacular results, leading global innovator companies are seeking cost-effective research alternatives. In view of this, global R&D outsourcing is expected to accelerate and extend beyond in-house R&D spends. R&D outsourcing, including discovery and clinical research, is gaining traction.
The aggregate R&D expenditure of 20 leading pharma companies increased by 6.8 per cent to Rs 2207 crore during 2006-07 from Rs 2067 crore in the previous year, despite few leading companies like Ranbaxy Laboratories, Ipca Laboratories, Strides Arcolab, Glenmark and Shasun Chemicals and Drugs cutting down their R&D spending. The net sales of 20 companies increased by 24.3 per cent to Rs 27,075 crore during 2006-07. R&D expenditure as percentage of net sales during 2006-07 worked out to 8.15 as compared to 9.49 in the last year, basically due to reduced expenditure by the certain companies.
Sun Pharmaceutical and Industries has demerged its R&D activities into separate company called Sun Pharma Advanced Research Company Ltd. Biocon has invested in subsidiaries to focus more research and clinical trials area. Shasun Chemicals and Drugs, a major player in CRAMs, is investing in biotechnology in the recent years in its quest to develop significant capabilities in the area of recombinant biopharmaceuticals.
Wockhardt acquired Negma Laboratories, an integrated research based pharmaceutical company during May 2007 for $ 265 million. Negma has a patented product portfolio and holds leading position in the osteoarthritis/rheumatology, phlebotonic and hypertension segments. Wockhardt has forayed into the patented business acquiring 172 patents and Negma's strong research and life cycle management capabilities.
A strong product pipeline strengthens the foundations of a pharmaceutical company and assures a promising future. The Indian companies are also investing to retain large talent pool for development of new products.
With significant growth in R&D during last couple of years, the leading 75 pharmaceutical companies have posted healthy growth in top line as well as bottom line during the year 2006-07. The standalone net profit of listed 75 companies, with net sales above Rs 75 crore, moved up sharply by 44.5 per cent to Rs 7,692 crore in 2006-07, while their net sales increased smartly by 23.5 per cent Rs 46,008 crore. The growth is mainly due to the aggressive entry into the highly profitable regulated markets, higher filings of DMFs and ANDAs, notable growth in product approvals by regulatory authorities, expansion programmes, mergers and acquisitions and launch of cost effective products.
There are significant risks in execution as the process of development and commercialization of new molecules is time consuming as well as costly. On average, it takes between 9 to 12 years to develop a new molecule from the laboratory stage to a form ready for patented commercial launch. However, in view of the number of patent expires in the near future, sales of generic version of patent expired drugs in the US as well as in Europe represent significant opportunity for all generics and API manufacturers.
Ranbaxy Laboratories has initiated a focused program to optimize the cost structure. The company's efforts have yielded significant results during 2006-07. R&D cost declined to Rs 484 crore from Rs 639 crore, without affecting the overall R&D deliverables. The company continued with its focus on select therapeutic segments of infectious diseases, metabolic diseases and inflammatory/respiratory diseases. It also initiated target-based research in the area of oncology.
For the first half of 2007, the company's R&D spending increased to Rs 175 crore from Rs 155 crore in the corresponding period of last year. The company has successfully completed phase two studies of RBx-11160, an anti-malarial molecule, with the compound indicating good activity against malarial parasites.
In order to expedite its drug discovery activity, the company continues to focus on various research alliances. Ranbaxy and GSK have expanded the original agreement and the company now has the responsibility for advancing the selected compounds to proof of concept in man, whereby the company will be eligible for total milestone payments, excluding royalties, of over US $100 million. The two programs in the respective areas of chronic obstructive pulmonary disease (COPD) and anti-infective, identified under this alliance, are progressing as per plan.
Under an alliance with Anna University, a number of medicinal plants are being evaluated as potential sources for novel pharmaceutical agents. Recently, Ranbaxy entered into a collaborative research agreement with International Centre for Genetic Engineering and Biotechnology (ICGEB) and the Department of Biotechno-logy (DBT), New Delhi for developing novel agents for the treatment of dengue.
The company introduced three products through novel drug delivery system (NDDS) in the domestic market during 2006. The company filed a total of 171 DMFs up to the end of December 2006 and received approval for 156. It filed an additional 24 ANDAs in US and 33 in UK for 26 products. The company is also undertaking herbal drug research, sticking to international quality standards.
Dr Reddy's strengthens DMF profile
The company's R&D investment during the first quarter of the current year increased to Rs 83.70 crore from Rs 77.7 crore in the corresponding period of last year. This worked out to 7 per cent of its total sales. Apart, Dr Reddy's Laboratories (DRL) filed 107 DMF in US up to the end of June 2007 and three DMFs each in Canada and Europe.
DRL's R&D expenditure during the year 2006-07 went up to Rs 292.80 crore from Rs 253.94 crore in the previous year, largely due to greater development activities in generics and discovery segments. The company filed 33 ANDAs in the US including 7 Para IV filings during the period, taking the total ANDAs to over 100. As of March 2007, the company's US generic pipeline comprised of 69 ANDAs pending with the US FDA, including 12 tentative approvals and 29 Para IVs. Similarly, the company filed 56 DMFs globally, taking its total DMFs to 227. The company entered into an agreement with ClinTec International for the joint development of its anti-cancer compound DRF 1042. It also finalized three R&D deals, namely, Perlecan, Rheoscience and Argenta.
Biocon enhances R&D capabilities
Biocon, a discovery-led biopharmaceuticals company, is among the few innovator companies in the world, which is capable of balancing the high cost of R&D with market affordability. Its strong discovery capabilities, cost-effective drug development platforms and significant manufacturing capacity enable it to scale new heights in frontier science. The company's investment in R&D reached at Rs 48 crore during 2006-07 from Rs 40.10 crore in the previous year.
The company has successfully developed Insugen, a recombinant human insulin in 2004 and Biomab EGFR, a proprietary cancer targeting Monoclonal antibody, in 2006. The company has systematically leveraged its expertise from enzymes and small molecules to recombinant proteins and antibodies. Through partnerships and alliances, it has a rich pipeline of biosimilar and discovery-led biologics programs in diabetes, oncology and inflammatory diseases.
Biocon entered into partnership with Bayer Healthcare to register and market its insulin in China. It has also entered into collaboration with a US-based pharma company to access the US market. Syngene International, a subsidiary of Biocon, is a leading, innovation-driven, research services company conducting high value R&D in early stage drugs discovery. Syngene entered into a nine-year discovery partnership with Bristol-Myers Squibb and setup research facility at Biocon Park to develop capabilities in the areas of medicinal chemistry, molecular biology, drug metabolism and pharmaceutical development.
Syngene also entered into a co-operation agreement with Innate Pharmaceuticals AB, Sweden, to jointly develop, manufacture and market virulence blockers to counteract bacterial diarrhoeal disease. Clinigene International, a 100 per cent subsidiary of Biocon, is emerging as a front-runner in rapidly growing clinical research services industry. Clinigene entered into a strategic co-licensing agreement with Bentley Pharmaceuticals Inc, USA, to develop and distribute Nasulin, Bentlely's intranasal insulin, in India and other select markets. The company has successfully completed clinical studies in India for Nasulin and the product is entering into phase II.
Glenmark poised to benefit NCE research
Glenmark Pharmaceuticals, the research-led global and integrated pharma entity, has entered into several tie-ups, apart from setting up subsidiaries to spread its market reach. The company's Swiss subsidiary has purchased two new biological entities from Chromos Molelcular Systems Inc. Glenmark has licensed out its first asthma/COPD molecule oglemilast to Forest Laboratories and Teijin Pharma Ltd for the North American and Japanese markets. Its lead molecules, GRC 8200 also continues to process well in its phase II clinical trials.
The company completed phase I clinical trials for GRC 6211, lead vanniloid receptor (VRI) antagonist compound in Europe on 72 human subjects, using single and multiple doses during the first quarter of current year. The company has now initiated a phase IIA proof of concept study for dental pain in Europe and hopes to complete this study by December 2007. The company expanded its portfolio in the area of biologics research with the buy-out of the two new biologic entities.
Glenmark's R&D expenditure reached at Rs 45 crore during the year ended March 2007, slightly lower than previous year figure of Rs 46.69 crore.
Sun on DMF filing spree
Sun Pharmaceutical Industries, the Rs 2100 crore plus pharma giant from Mumbai, is moving ahead with filing higher number of DMFs, ANDAs and products in the highly regulated markets. The company recently demerged its R&D activity into a separate company - SPARC Ltd. At the end of the first quarter, the company was awaiting approval for 83 ANDAs from US FDA, including 8 tentative approval: 5 from Sun Pharma and 3 from Caraco Pharma, a wholly owned US subsidiary.
The company's R&D expenditure for the year 2006-07 went up to Rs 153.63 crore from Rs 113.44 crore in the previous year. This worked out to 9.24 per cent of net sales for the year 2006-07 as compared to 8.78 per cent in the last year. The company filed 91 DMF/CEP applications and received approval for 43 DMFs. The total number of patents applications submitted stands at 414 and 72 patents granted. The company's R&D spending during the first quarter touched to Rs 60.8 crore, representing 9.9 per cent of net sales.
Sun Pharma is spending $45 million into SPARC, the new R&D based company with total scientists of 150. The company is planning to licence few products to fund the business.