Editorial + Font Resize -

RESEARCH SPEND & PHARMA COMPANIES
P A Francis | Thursday, March 27, 2003, 08:00 Hrs  [IST]

A recent study of research & development spend by pharmaceutical industry in India by a leading business daily has brought out one truth. Indian pharma companies, particularly the big ones, are now serious in investing in research and development, a critical area they have been constantly neglecting for years. The study, covering 11 top companies having a turnover of Rs 500 crore and above, reveals that their combined expenditure on R&D accounted for Rs 525.8 crore during 2002 as against Rs 337.2 crore recorded in the previous year. The R&D expenditure of these companies thus account for 4.4 percent of their combined annual turnover in 2002. In 2001, this ratio is shown as 3.7 percent in the case of these 11 companies. The R&D expenditure by another 10 mid-sized companies, covered under this study, with annual sales ranging from Rs 200 crore to Rs 500 crore recorded a 41 percent growth during 2002. Among the top pharma companies, Ranbaxy and Dr Reddy's stand out as the leading spenders in R&D. In terms of R&D as a percentage to annual turnovers, Dr Reddy's stands out as the number one company at 6.3 percent as against 5.5 percent of Ranbaxy. But in absolute terms, Ranbaxy spent Rs 161.1 crore on research in 2002 whereas Dr Reddy's R&D expenditure during the same year was only Rs 98 crore. Lupin is another major, which has been investing heavily in R&D in recent years. Its percentage of R&D expenditure to sales stands at 5.6 during 2002. Torrent, Cipla, Wockhardt, Cadila Healthcare and Nicholas Piramal are other serious players in R&D with definite plans. Although some of these large Indian companies do spend a good amount of money on R&D now, it is still far less when compared to the R&D expenditures incurred by international pharma companies in the US and Europe. On an average pharmaceutical industry in Europe and the US spend 10-to-12 percent of its turnover on R&D. Indian Pharma industry should take a few more years to reach this level of spending on research. That is understandable. But, this realization of India's pharmaceutical entrepreneurs that without investing in R&D there is not much of a hope in the years to come is certainly laudable. And the pressure on pharma companies to spend more on R&D will only increase with the advent of the product patent regime going to be in place from 2005. It is a fact that all companies may not be able to embark on new molecular research but then they could go for options like new drug delivery system or even clinical trials. The government support for R&D in any industry should be incidental and true entrepreneurs should not expect for state subsidy or support for undertaking this activity.

Post Your Comment

 

Enquiry Form