The drug industry has seen the number of new drugs approved in the US fall to a seven year low of 24 in 2001 despite a doubling of investment in R&D. US patents on 35 blockbuster drugs will expire by 2008, yet only 14 potential new best sellers are in the pipeline. The pharmaceutical industry, however, is poised for a revolution, which will see a decline in blockbuster drugs and bring in targeted treatment based on a new understanding of human biology.

These new generation of treatments present an opportunity for huge profits. Companies that learn to make such medicines would triple their shareholder value by 2010 and those that fail to respond to these emerging trends, will see their value continue to plummet. The new generation of drugs will be based largely around complex molecules, such as proteins, whose composition is increasingly becoming the focus of research. These molecules will however be developed much faster with the help of biochemistry software. This will require a much better grasp of biological sciences and a phenomenal increase in computing power.

The speed of development of such 'treatments' will also make them much cheaper to produce, as compared to conventional drugs. This would enable developing countries, which have greater needs but lesser cash, to budget for them. These drugs will, however, demand greater understanding of the progress of a disease and will be more accurate in terms of treatment. They will therefore have less side effects. It is estimated that most of the drugs currently in use work only in 40-60 per cent of the patients for whom they are prescribed and could cause side effects in others, because most medicines are prescribed today, or rather have been prescribed, without regard to the variations in body size, even though there is a roughly two to three fold difference between the smallest and the biggest adults.

Indian scenario

The future of the pharmaceutical industry in India is bright as it will be largely dependant on the growth of the biotech industry. After the completion of the Human Genome Project, Indian scientists can now meet any challenge. It is believed that in India alone, there are over 200 research institutes and more then 100 companies involved in biotech activities.

The biotech industry should grow to US$ 4.5 billion by 2010, which is slightly larger than the current Indian Pharmaceutical market. Huge investments in basic and clinical research in India, due to cost advantage for new drug development, augurs well for India. More and more pharma companies and research institutes from the west will look at India for contract research business.

Research in drug delivery in biotech products will spur the growth of the market as new systems will be developed by which biomedicines would also be given orally.

There would be a shift in R&D from generic to innovation with most of the investment in the latter. Apart from low cost R&D and chemical research, emerging CROs, the availability of scientific and technical manpower, competency in the development of generic products, APIs as well as dosage forms, the rich biodiversity and herbal resources will make India an attractive location for R&D, chemical research and manufacturing.

It is expected that $ 30 billion worth of drugs will be going off patent by 2009. India, undoubtedly, would be the leading generic drug supplier given its penchant for developing cost-effective techno-processes for generics. Given the high costs of healthcare around the world it would not be surprising if India also becomes the top supplier of low cost high quality drugs to the health authorities across the globe.

The pharmaceutical industry is also likely to witness serious consolidation by 2010. During the last two decades, the number of international research and development based companies has been falling due to their mergers into larger units. This trend will continue, as they will not be able to renew their product portfolios. To avoid negative consequences for their revenues and profits, they must be able to reinvent their product portfolios every 20 years.

The increasing specialization of new treatments and products however would make this renewal process much more difficult than it was in the past. This will force them into further mergers and consolidation. It is estimated that out of the 25 to 30 major international companies expected to operate by 2010, only 10 very large companies will dominate the rest.

-- The author is a pharmaceutical consultant based in New Delhi