Pharmaceutical history is set to be written where the next three to five  years will become India’s golden years for generics drugs.

The past decade has seen changes of tectonic proportions in the global pharmaceutical industry!

Generic drugs, once perceived as serious threats to global pharmaceutical companies are now considered part of the solution to the declining revenues generated from innovator drugs.

Emerging markets such China and India and others in developing countries have become the focus for future revenue growth while the US  healthcare system changes to cut costs will produce less revenue from what appears to be minimal growth from western markets in the US and Europe.

Globally, the share of drug spending will shift markedly, too. The U.S.'s share of global drug sales will drop to 31 per cent in 2015, down from 41 per cent in 2005. The top five European countries, which accounted for 20 per cent of spending in 2005, will make up only 13 per cent. But the 17 "pharmerging markets," led by China & India , will account for 28 per cent of total spending by 2015, up from 12 per cent in 2005. In other words, those emerging markets will surpass the top five Euro-markets--and will be hot on the heels of the US

India has been well positioned to take advantage of the generics boom. Apart from a large ever expanding domestic market, India has led the world in small molecules & generics drugs production supplying even the most regulated markets in the US and Europe. India leads the world in the number of US FDA approved manufacturing plants, a tribute to the Indian pharma companies many of which now want climb up the value chain away from APIs and bulk drugs.

But will the Indian global dominance for  generic drugs be sustained  as we shift more and more into biotech drugs?  Maybe.

Biosimilars or biogenerics are the equivalent to innovator biotech drugs as today’s generic drugs  are to small molecules. In other words, off-patent copy biologics drugs developed when an innovator biotech drug goes off-patent.

In the new age of pharmaceutical industry soon to be dominated by  biotech drugs -we seem to be  missing that “milestone trigger”  in India. It is helpful to compare Indian popular generic drugs industry to the highly successful IT industry to illustrate this point.

Roll clocks back in the year 2000. Indian global IT industry was growing and making some headways in the west. Indian software prowess was beginning to get recognized for cheaper IT outsourcing, western IT and senior management knew little about India’s talents beyond the fact that there were ample  cobol programmers and that we love tea and curry ! India had just been discovered as a  destination for outsourcing non-critical IT systems. Hence there was tremendous interest in India when the so-called Millennium Bug anomaly set in.

Credit goes to Indian IT majors  which leveraged the low-visibility exposure to sell western senior management that India was capable of more than just shifting two-character year code into four characters in millions of lines of software code to fix the Millennium Bug. Indian IT majors then started the process of developing more relevant and mission critical IT systems for the west.

The golden age of Indian IT  industry was born, i.e. the Millennium Bug and India’s strategic positioning of its IT prowess to the west served as the “milestone trigger”. The  rest as they say is history.

The Indian IT industry is now set  to become a US$ 225 billion industry by 2020. The Indian information technology (IT) industry has played a key role in putting India on the global map. India’s  IT-BPO sector has become one of the most significant growth catalysts for the Indian economy. In addition to fuelling India’s economy, this industry is also positively influencing the lives of its people through an active direct and indirect contribution to various socio-economic parameters such as employment, standard of living and diversity.

The India generics pharma industry of course had its own “milestone trigger”.  

The 1970 Patent Act allowed Indian pharma to invent new processes to deliver the same drugs as west but India perfected skills to produce cheaper –in some cases even purer.

According to Dr. Anji  Reddy, Chairman  of one of India’s venerable pharma pioneers, Dr. Reddys Laboratories, process expertise made Dr. Reddy's the success it is today. The law forced a limitation such that  drug makers' patent protection was limited to only the drug production processes, and not the drug products itself. That limitation, along with acceptance of bioequivalence as a benchmark, led to the generics industry in India. This auspicious milestone in India was soon followed by another one in the US, Hutch-Waxman Act, which made it possible for the US to become a major  generics drugs market.

Meantime, Indian pharma industry   perfected its skills in producing bulk drugs.  Dr. Reddy  uses the example of ibuprofen, launched by Boots Co. in 1969 whereby Dr. Reddy managed to invent an even more efficient process of production which lead to a purer form of ibuprofen. Many others followed suit and the Indian generic industry was on its way, i.e. the “milestone trigger” sparked innovation in the Indian pharmaceutical sector which unleashed cheap but safe but effective copies of innovator drugs.

Today, despite heavy investments in drug research and discovery by the west, few new drugs have been created yet alone approved by the US FDA in the US for example, still the largest pharmaceutical market in the west. Pharmaceutical companies invested more and more into R&D  yet got less in terms of new discovered molecule. The global recession sets in and  a new healthcare regime is born in the US with President Obama’s healthcare reform.

Big pharma has made a total reversal! While in the past they could not find enough ways to “kill” generic drugs, these days Big Pharma cannot get enough of them. So far so good for India.

But in this new age of the Indian pharmaceutical industry soon to be dominated by biotech or biologics based drugs, we seem to be missing a “milestone trigger” to help propel India to the leading position once again!

Biologics or biotech drugs are revolutionizing modern medicine and will continue. These class of drugs made from living organisms or cell lines can bind to specific targets simply not possible any other way. Biotech drugs are however enormously complex, large proteins that will be a challenge to manufacture.

Equally challenging are the key factors for growth of biotechnology and bio-manufacturing in India. The challenges in order of importance include: availability of funding, a structured bio supply chain,  supporting legal framework to protect intellectual property, etc.

Biotech drugs are very costly to manufacture due to their complexity. In a recent survey, more than 54 per cent of the total cost to biomanufacturing comes from capital expenditures that include materials and consumables used in the manufacture with labour accounting for only 15 per cent or less.

India today lacks a structured venture capital network needed for biotech manufacturing. This is a large risk-large pay-off game.  Seed or angel funding with bio-manufacture will not be sufficient. Indian government is attempting to make funds available to the private sector via Dept. of Biotechnology public-private funding partnerships  and others but these are far and few in between. Meantime-investments in biotech industry are from foreign sources and in some case via mergers & acquisitions.

Biotech drugs are fragile & sensitive to manufacture, store and distribute. Cold chain storage and distribution is in a nascent stage in India. Regulatory framework for biogenerics or biosimilars do not exist for the large part due to biotech being still the exception rather than norm in India.

So what/where is India’s “milestone trigger” for the new biotech industry generics?