India's pharmaceutical sector has stepped up its research & development expenditure in a bid to capture a larger market share in highly regulated and emerging markets. The R&D expenditure of the top 25 pharma companies have thus increased by almost 17 per cent at Rs.3210 crore during 2008-09 from Rs 2,747 crore in the previous year. The R&D expenditure as per cent of their standalone net sales worked out to 7.75 per cent in 2008-09 as compared to 7.60 per cent in the previous year. The same was at 8.11 per cent and 8.78 per cent during preceding two years. The Pharmabiz Study shows that very few companies are spending over 10 per cent of their net sales on R&D.

With these investments, Indian drugs companies have been able to get more and more approvals from highly regulated markets and spread their presence in the international market. Indian companies have created strong base of R&D facilities and several multinational companies and renowned institutions are looking forward for R&D tie-ups with them. Besides, anti-infectives, cardiovasculars, gastrointestinals, musculoskeletal, diabetes, CNS, respiratory and oncology therapy segments, these companies are working hand in hand with the government and other voluntary agencies to step up their medical and social interventions to deal with critical issues like HIV/AIDS, tuberculosis, malaria, swine flu and female foeticide.

The generic segment is getting immense importance on account of its affordability and many blockbusters are likely to be off-patent in the near future. Further, clinical trials, biotechnology and CRAMS have also opened up new avenues for the R&D based companies. Though the final out come from R&D activities is very slow and carrying high risk of uncertainties, the Indian drugs firms are stepping up their investments in R&D. It plays a vital role in developing and adopting new technologies to enhance their operational efficiencies also. The venture capital funds are likely to overcome liquidity problem and set to play important role in developing new product pipeline

The R&D expenditure by major companies like Jubilant Organosys, Matrix Laboratories, Ind-Swift Laboratories, Sun Pharma Advance Research Co (SPARC), Piramal Healthcare and Stride Arcolab increased significantly by over 40 per cent during 2008-09. Lupin, Cadila Healthcare, Biocon, Ipca Laboratories and Fresenius Kabi Oncology (formerly known as Dabur Pharma), stepped up their R&D investments by 15 to 40 per cent. However, few majors like Dr Reddy's Laboratories, Wockhardt, Panacea Biotec, Aurobindo Pharma, Glenmark Pharma, Orchid Chemicals, Unichem Laboratories, Ajanta Pharma and Shasun Chemicals cut down their R&D expenditure during 2008-09.

Further, Ranbaxy Laboratories, Cipla, Sun Pharmaceutical, Torrent Pharma and Alembic achieved single digit growth in R&D expenditure. Ranbaxy, a subsidiary of Daiichi Sankyo of Japan, has invested highest amount of Rs 471.38 crore in R&D among the Pharmabiz sample during 2008-09 as against Rs 460.52 crore in the previous year, a small growth of 2.4 per cent. Followed by DRL of Rs 421.20 crore and Lupin of Rs 266.91 crore. Ranbaxy's R&D investment as per cent of its standalone net sales worked out to 10.54 per cent as compared to 10.60 per cent in the previous year. The R&D expenditure as per cent of sales of DRL, Matrix Laboratories, a subsidiary Mylan Inc, Cadila Healthcare, Torrent Pharma, Panacea Biotec, Ind-Swift Laboratories, SPARC, Stride Arcolab and Fresenius Kabi Oncology worked out to over 10 per cent during 2008-09.

With these investments in R&D, the pharmaceutical companies filed several ANDAs and DMFs in the US, Europe and emerging markets and received approvals for launching products. DRL filed 23 ANDAs and its tally reached at 159 ANDAs. The company received approval for 23 ANDAs. It launched 16 new products in the US during 2008-09. Ranbaxy filed 6 ANDAs, Lupin (28), Orchid (58), Matrix Laboratories (20), Aurobindo Pharma (19), Alembic (8), Glenmark(22) Cadila Healthcare (19) during 2008-09.

Aurobindo Pharma's cumulative filing of ANDAs upto March 2009 reached at 1,068. The cumulative filing of ANDAs of DRL reached at 159 followed by Cadila (92), Ranbaxy Laboratories (241), Lupin (90), Sun Pharma (107), Matrix Laboratories (61), Alembic (19). Further, these companies stepped up their DMF filing also. Ind-Swift Laboratories filed 219 DMFs upto July 2009 and Aurobindo filed over 1461 DMFs.

Glenmark Pharmaceutical received set back on the R&D front during 2008-09 as it did not receive any income from its product pipeline. Further, the recessionary conditions delayed out-licensing of its new chemical entity or new biological entity portfolio. The company also received setback on GRC 6211 (part of TRPV1 portfolio out-licensed to Eli Lilly).

The clinical trial segment of R&D activities is also increasing in the country. Sun Pharma has set up bioequivalence facility with a functional capacity of 220 beds, Phase I clinical unit and ECG Core Laboratory for clinical studies and safety studies. Biocon inaugurated its new research and development facility to develop new drugs in partnership with Bristol-Myers Squibb. It also set up Laboratory Animal Research Centre, Pilot plant facility to meet cGMP standards and Biological pilot plant. It's Clinigene division is undertaking over 30 clinical programs for pharmaceutical and biotechnology companies. In collaboration with over 160 investigators across India, Clinigene is managing clinical data for more than 4,000 patients.

To achieve clear focus on important segment of R&D, Sun Pharma, Piramal Healthcare and Glenmark Pharma de-merged few activities into separate entities. SPARC, a recently demerged entity of Sun Pharma, has incurred higher spending on R&D than its sales of Rs 68.07 crore as compared to Rs 44.71 crore in the previous year. It employees 210 highly qualified and experienced scientists as at the end of 2008-09. Piramal Life Sciences Limited (PLSL), an independent research driven drug company, was recently de-merged from Piramal Healthcare (formerly know as Nicholas Piramal India Ltd). PLSL was formerly the NCE R&D division of Nicholas. PLSL has state-of-the-art R&D laboratories built over 200,000 square-feet of space in Mumbai, India and over 300 scientists engaged in drug discovery and development. Considering the nature of of activities and time span, both the companies have incurred net loss in 2008-09.

The first of SPARC leads, SUN 1334 H has completed phase II studies in US for seasonal allergic rhinitis and in India for urticaria. SPARC has developed a Dry Powder Inhaler device used for the treatment of asthma and COPD. PLSL is focused on four therapeutic areas – Cancer, Diabetes, Inflammation and Infectious Diseases. The Company has a pipeline of twelve compounds, including eight in clinical trials. PLSL’s lead chemical compound, a selective Cdk inhibitor, has completed two phase 1 studies and is being tested in two phase II trials in United States and India, and another phase I/II trial for multiple myeloma in India.

Thus, the Indian pharmaceutical segment is getting returns from their investments in R&D activities and set to increase their presence in international market. The lower cost of R&D, easy availability of talent pool and strong scientific base will bring more and more multinational players for collaborative research. Indian companies have built up strong product pipeline with the help of R&D investments and awaiting approvals for several ANDAs from regulatory bodies from the US and Europe and set to launch cost effective generic products in these markets.

View Table R&D expenditure