Though much has been said about India becoming a pharma research and development (R&D) powerhouse, things have so far not been turned out as expected. However, with the pharmaceutical industry witnessing innovation deficit, largely due to Big Pharma's dry R&D pipelines, Indian pharma players, with a couple of promising molecules in their kitty, seem to be well placed to break this alarming innovation deficit that has of late brought new business equations in the industry worldwide.
With focus on therapeutic areas such as oncology, diabetes, dyslipidemia, obesity, infectious diseases, dermatology, respiratory disease, anti-inflammation, cardiovascular indications and neurodegenerative diseases, Indian pharma players, who have been until last decade focusing on generics R&D, are determined to prove the global pharma that they are indeed capable of making it big on innovative, new drug R&D.
"As regards R&D efforts by Indian pharma companies are concerned, I believe, they are putting in their best efforts in order to launch new molecules. This is evident from the number of New Chemical Entities (NCEs) - as much as approximately 60 - that Indian pharma companies collectively have under various stages of development," said, Hitesh Gajaria, executive director, KPMG India to Pharmabiz.
"We could expect the launch of new molecules by Indian pharma in the near future, may be as early as 2010-12. No doubt, India does have the capabilities and the resources to make it big on the innovation front," he stressed.
Though the domestic pharma players also believe that they are indeed competent enough to bringing life-saving medicines to global market from India (and thereby bridging innovation deficit), some of them feel expectations built on India becoming a pharma R&D powerhouse was just out of proportion. Given the low R&D spends by Indian firms, lackadaisical support from the government, lack of funds and inadequate infrastructure and resources, the expectations piled up on Indian players were, for sure, high and beyond their reach.
Asked why haven't India lived up to the hype of becoming a pharma R&D powerhouse, a spokesperson of Sun Pharma Advanced Research Company Ltd., said, "The expectations built were high. Let us look at some numbers in this context. Annual pharma R&D spend in US by pharma companies alone is estimated to be more than US $25 billion. Another large chunk is contributed by the government. Despite this high intensity work by companies and government for decades, in 2008 only 24 new products were approved by the US Food and Drug Administration (FDA). Of this, only 10 really represent a significant therapeutic advance.
"In India, all pharma companies taken together are estimated to spend only around Rs 3000-4000 crore annually on R&D. Most of it is used for generic drug development. Investment on products with significant intellectual property will probably be less than Rs 500 crore annually. Even accounting for significant cost differential in conducting R&D in India and US, it is clear that we have a long way to go to emerge as a pharma R&D powerhouse."
It's clear that the Indian pharma has got only itself to blame for not being able to fund its innovative R&D. With its main R&D focus on generics till late 1990s, the Indian pharma was in no position to amass enough capital to carry out their new drug R&D, as generics price was fractional in relation to innovator drug. Now, without resources for higher revenues for increased spends on innovative R&D, Indian players are finding it difficult to meet the current demand for huge investments in innovative R&D.
However, notwithstanding the plight the country's drug players find themselves in, the Sun Pharma Advanced Research Company spokesperson feels that Indian pharma is capable of breaking the innovation deficit in the industry over time, but with the right investment resources.
Also, pinning hope on Indian pharma's dedicated R&D efforts to become innovators, Dr Harsha of Mulbere Healthcare Pvt. Ltd., said, "Yes, India is capable of bridging the innovation deficit. But the country needs fillip to create the infrastructure and monetary policy to infuse funds. This path needs long horizon of thinking and committed actions."
The fact that Indian pharma companies have only begun innovative R&D on new molecules and delivery systems in the last decade underscores why the country is still lagging behind in this lifeblood of pharma firms and why the recent uproar about Indian potential in pharma R&D was absurd. Since expectations built-up were high, disappointment was huge.
"Research is time intensive, takes upwards of ten years for a single product to reach market and requires skills in several disciplines. On this journey, several products fail at different stages for one product to succeed. Indian companies have begun their R&D efforts just in the last 10 years. It is a bit too early for reaching any conclusions on success or failure," the Sun Pharma Advanced Research Company Ltd spokesperson apprised.
Endorsing a similar point of view, Hitesh Gajaria of KPMG said, "The R&D efforts of Indian players have been thus far good and we must allow a sufficiently long time, before we conclude that Indian R&D efforts have failed to strike big. It was in the late 1990's that genuine R&D activities were started in India. Moreover, they were confined to a couple of players. It has been only four years since amendments to the Patent Act (in 2005) have brought home the dire need for Indian pharma companies to venture into serious R&D efforts - a relatively short time to give a conclusive verdict on success or failure of R&D efforts."
"Given the global innovator pharma companies have decades of experience in new drug discovery programmes, I think, the progress Indian pharma companies have made in the R&D segment is very good and a large number of companies have gained the confidence to not only execute these projects on their own, but have also been able to win the trust and confidence from multinational pharma companies for R&D partnerships," he added.
BUMPS AHEAD
The innovative ride taken up by the Indian drug makers is not going to be that easy, as there are issues like half-hearted government help, incompetent regulations, difficulty in finding funding, inadequate high-class infrastructure and scarcity of technically skilled manpower, restraining the strides India is making on this front.
Since requirements for innovative, new drug R&D are entirely different from that of generics R&D, India has to work on things like infrastructure and skill sets, though the country is known for ample scientific talent, skills in chemistry and plenty of US FDA approved facilities. Hence, it's imperative to lay stress on making investments for developing proper infrastructure needed for R&D activities.
When it comes to funding for innovative R&D, though to an extent the Indian pharma players have succeed in attracting enough funds to carry out new drug R&D over the past several years, funding still poses a major headache for these players. According to Hitesh Gajaria of KPMG India, the most important challenge or hurdle that Indian drug makers face is difficulties in terms of funds.
"Drug discovery requires massive and constant influx of funds. Unavailability of funds at any stage during the development phase can seriously damage the innovator company's efforts. This problem is likely to intensify in the current recessionary scenario. Considering the high risk and uncertainty in returns that the R&D segment face, funding is a major hurdle and hence must be utilised effectively," he quipped.
Since multinational (MNC) pharma companies are good sources for financial assistance, it is always better for Indian companies to partner with them to take their R&D efforts ahead. It is noted that sometimes in the advanced stages of R&D, Indian companies face problems on account of lack of capital and regulatory proficiency. In this context partnering with MNCs would be beneficial, as it would take care of consistent flow of financial assistance and regulatory matters. But the big problem arises, when these MNCs leave the Indian drug makers on half way.
SUPPORT REQUIRED
The government needs to come forward with right packages to propel the Indian pharma's new drug R&D efforts, as there is a strong sentiment growing against the government among industry players.
"The Indian players' R&D efforts are damaged by government's poor fiscal and technological support to identify R&D as a primary sector. Extending repeated fiscal policy support to established industry like IT and ITES or any other segment cannot continue endlessly. In fact, such policies paralyse government funding or fiscal support to emerging sectors like pharma R&D," said, Dr Harsha of Mulbere Healthcare.
Though the Indian government offers a 150 per cent weighted deduction for companies that invest in R&D, the players and industry experts think that the government needs to do much more to help them bring out innovative, life-saving drugs to global market from India.
In this context, it's high time that the Indian government has taken a leaf out of developed nations that offer pharma players incentives, support or sops for carrying out R&D activities. The Obama government's proposed move to make permanent the R&D tax credit deserves particular mention, as it would encourage US drug makers to make significant investments in domestic R&D over a long term period. In this wake, the Indian government's reported move to inject around Rs 5,000 crore annually into pharma R&D, in no way represents a major boost to new drug discovery in the country.
"Since discovery and innovation in the pharmaceutical sector would ultimately result in the development and growth of the Indian economy as a whole, the government must provide its full support to enhance the R&D focus of Indian players that would result in improved productivity. Support should be provided in areas like funding, tax incentives, development of infrastructure, setting up proper training and educational institutes exclusively focussed on R&D and bridging deficiencies in education and training in the country," said Hitesh Gajaria of KPMG India.