The research and development (R&D) activities are gaining immense momentum for the pharmaceutical companies after India became the part of Patent regime. The declining trade barriers have increased the competition, mainly in the regulated markets, during last couple of years.
The PHARMABIZ study of 25 drug companies revealed that the R&D expenditure of these companies went up sharply by 42 per cent to Rs 1814.65 crore during the fiscal year 2004-05 from Rs 1278.08 crore in the previous year. Dr Reddy's Laboratories, Torrent Pharmaceuticals, Sun Pharmaceuticals and Ranbaxy Laboratories are spending more than ten percent of their net sales on R&D. Further, Cadila Healthcare, Shasun Chemical, Glenmark Pharmaceuticals and Nicholas Piramal have invested huge amounts. The Indian companies are adopting new ways and focusing on biotechnology for future growth.
Though the Indian companies entered late in R&D space as compared to large MNCs, they have established strong presence in the international scene within short time and becoming a preferred business partner. Currently, Indian pharma companies are engaged in widening product portfolio, development of new molecules and creation of intellectual property. The companies are strengthening product development capabilities in API, generics and formulations.
Indian pharmaceutical companies have set up cGMP facilities with approvals from regulatory authorities. The companies have also entered collaboration in R&D with major international players.
During the year 2004-05 several companies like Ranbaxy, Wockhardt, Sun Pharmaceuticals, and Nicholas Piramal have commissioned their new R&D facilities. Shasun Chemical is setting up new R&D Centre and expected to commence operations in the current year. Wockhardt has set up the country's largest biotech Park in Aurangabad. This facility has six dedicated manufacturing plants with capacities catering to 10-15 per cent of the global demand for major biopharmaceuticals. Wockhardt launched recombinant insulin Wosulin and Biovac-B (hepatitis -B vaccine).
Dr Reddy's Laboratories' R&D expenditure went up by 41 per cent to Rs 298 crore in 2004-05 from Rs 226 crore in the previous year. DRL is the largest spender on R&D in the Indian pharmaceutical segment as its R&D expenditure to its net sales worked out to 19.11 per cent. The same is worked out to 18.29 per cent of its total turnover during 2004-05. DRL has incurred 48 per cent of its R&D expenditure on innovation-led business of drug discovery and 39 per cent on APIs & finished dosage. The company entered US$ 56 million agreement with ICICI Venture for the development and commercialization of ANDAs in US during current year and following year. DRL has acquired Trigenesis Therapeutics Inc, USA, a specialty R&D company, for a consideration of $ 11 million.
Ranbaxy Laboratories is the largest spender on R&D in value terms in the Indian pharmaceutical industry. Its R&D spending went up by 44.7 per cent to Rs 399.65 crore in 2004-05 from Rs 276.13 crore. Its R&D expenditure as per cent of its net sales of Rs 3498 crore worked out to 11.4 per cent as against 8.1 per cent in the previous year. Ranbaxy is known as one of the top 10 generic company in the world. The phase one clinical trials for a molecule for the treatment of urinary incontinence has been completed and the phase II is underway. Further, its two more compounds are in the pre-clinical stage.
Ranbaxy entered into R&D tie-up with GlaxoSmithKline. The company filed 6 ANDAs during 2004-05 with US FDA and 2 products with the European regulatory agencies.
Sun Pharmaceutical Industries added additional 2.50-lakh sq.ft area for its research facilities in Mumbai and Baroda. Currently more than 400 scientists are engaged in projects in new chemical entity and novel drug delivery systems. One of its projects has completed phase I human trials in Europe and entered in to phase II.
Nicholas Piramal India Ltd (NPIL) has set up its new pharmaceutical research facility at Goregaon in Mumbai during 2004-05. The new R&D centre has a capacity to house 400 scientists. Its R&D expenditure moved up sharply by 94 per cent to Rs 108.44 crore from Rs 55.86 crore in the previous year. The R&D expenditure as per cent of net sales worked out to 8.80 per cent as against 4.40 per cent in the preceding year.
NPIL's top 10 brands formed 31.1 per cent of consolidated formulation sales portfolio of Rs 953 crore in 2004-05. The company launched 36 new products. The R&D efforts are related to cancer, diabetes and inflammation. Its lead oncology molecule, P276-00 has recently moved to phase-I clinical trials. The company has several tie-ups with academic institutions in India and abroad.
Cadila Healthcare, a Rs 1063-crore pharma giant of Gujarat, is investing huge amounts on R&D with the force of 230 scientists dedicated to NCE research alone. The company entered French generic market with 61 generic presentations in 2004-05. It has introduced new products like pitavastatin, duloxetine and simvastatin. Its R&D centre conducted 27 bio-equivalence studies for in-house purpose and focusing on ushering in the phase I clinical studies o ZYH1 in the current year.
Lupin's R&D thrust has resulted in the filing of 42 patent applications during 2004-05. It filed 15 DMFs and 14 ANDAs to strengthen its presence in the highly regulated markets. The company's R&D expenditure went up by 81.8 per cent to Rs 83.61 crore from Rs 45.99 crore Lupin is promoting a range of efficacious herbal products in therapeutic areas including diabetes, common paediatric problems, GI disorders, pain management and gynecological problems.
Relatively new companies like Biocon, Divi's Laboratories and Matrix Laboratories have incurred R&D expenditure of Rs 24.09 crore, Rs 9.45 crore and 27.20 crore respectively during 2004-05. The R&D expenditure as per cent of net sales for these companies worked out to 3.7 per cent, 2.7 per cent and 4.3 per cent respectively. Biocon's R&D spending as per cent of net sales declined from 4.64 per cent. The company is focusing more on diabetes and oncology. After launching Insugen in the Indian market, the company entered into branded formulations segments. Biocon's association for in-licensed R&D pogramms with CIMAB, Nobex and Vaccinex Inc is progressing well.
Orchid Chemicals and Pharmaceuticals' total R&D expenses constituted 7.7 per cent and 5.71 per cent of its net sales during 2004-05 and 2003-04 respectively. Torrent Pharmaceutical is pending 14.3 per cent of its net sales on R&D activities. Its R&D expenditure increased by 69.7 per cent to Rs 67.32 crore in 2004-05. Torrent signed a research collaboration agreement with AstraZeneca. Currently, the company is working on 5 in-house NCE projects related to diabetes, cerebro-vascular diseases and obesity.
The significant rise in the R&D expenditure will give necessary boost to launch of new products in the regulated as well as domestic markets. Currently, MNCs in India are not undertaking any major R&D work. But the things are likely to change and several MNCs will enter India through collaborative R&D efforts. The lower cost of research and availability, well-equipped scientific base in India will play a crucial role.