The Indian pharmaceutical segment has established strong presence in the international market with higher investments in Research and Development (R&D) during last decade and launched several new affordable high quality generic products. These companies are focusing to grab upcoming opportunities from expiration of patent in highly regulated markets. Higher investments in R&D has started yielding results and these companies received higher approvals for Abbreviated New Drugs Applications (ANDAs) and Drug Master Files (DMFs) from regulatory authorities. Further, investments in biotechnology, clinical trials and contract research activities will play key role in future growth.
The R&D expenditure of 30 companies, with R&D spending above Rs.20 crore, has increased by 19.6 per cent to Rs.4,678 crore during the year ended March 2012 from Rs.3,911 crore in the previous year. This worked out to 7 per cent of their net sales. The R&D expenditure of 6 companies viz., Ranbaxy Laboratories, Torrent Pharma, Fresenius Kabi Oncology, Unichem Laboratories, Biocon and FDC declined during 2011-12 and that of Dr Reddy's Laboratories (DRL), Ipca Laboratories and Suven Life Sciences have recorded only single digit growth. These companies are focusing on major therapeutic areas like cancer, diabetes, inflammation, nephrology, cardiology, immunotherapy and infectious diseases.
DRL maintained its top position in the R&D spending during 2011-12 and its R&D expenditure increased by 5.4 per cent to Rs.624 crore from Rs.592 crore. DRL filed 17 ANDAs and 68 DMFs in 2011-12. Lupin remained as second largest R&D spender as its R&D spending increased by 12.1 per cent to Rs.594 crore from Rs.530 crore in the previous year. Lupin has created strong generic product pipeline. Lupin's biotechnology group is working on 10 proteins which are in different stages of development. Ranbaxy Laboratories has reduced its R&D expenditure by 5.6 per cent to Rs.470 crore from Rs.498 crore with third largest R&D spender.
Piramal Healthcare's R&D expenditure increased by 358 per cent, highest in the sample of 30 companies, during 2011-12 to Rs.189 crore as the company merged NCE business of its subsidiary Piramal Life Sciences during last year. The company has strong pipeline of 17 drugs with 11 drugs in clinical trials phase.
Surya Pharmaceuticals also increased its R&D expenditure to Rs.70 crore from Rs.16 crore. Orchid Chemicals has almost double its R&D expenditure to Rs.79 crore. Wockhardt and Ajanta Pharma pushed their R&D investment by over 50 per cent during 2011-12 to Rs.174 crore and Rs.40 crore respectively. Similarly, Cadila Healthcare, Ind-Swift Laboratories, Jubilant Lifesciences, Strides Arcolab, Sun Pharma Advance Research Co (SPARC), Parabolic Drugs, Alembic Pharma and Divi's Laboratories recorded handsome growth of over 30 per cent in R&D expenditure during the year ended March 2012.
The higher investment in R&D has assisted well for more and more filings and approvals from various regulatory authorities. The Indian companies have set up subsidiaries in US, Europe and Japan to focus on approvals. During January-September 2012, Indian pharma companies received final approval for 146 ANDAs from US FDA out of 368 ANDAs. This worked out to almost 40 per cent of total approval by US FDA. Similarly, Indian companies received 34 tentative approvals out of 71 tentative approval granted by US FDA during first nine months of current year. This shows that the investment in R&D is giving strong support for growth in international markets.
Indian major companies and their subsidiaries received higher approval through enhance investment in R&D. Aurobindo Pharma received approval for 19 ANDAs during Jan-Sept 2012 from US FDA and was followed by DRL (18), Strides Acrolab, including Onco Therapies (15), Sun Pharmaceutical (14), Macleods Pharma (10), Glenmark (9), Wockhardt (8), Torrent Pharma (7), Lupin (6) and Emcure Pharma (6).
Indian Active Pharmaceutical Ingredient (API) manufacturers have maintained momentum of filing Drug Master Files (DMFs) in US. Indian companies filed 269 DMFs in US during the first nine months ended September 2012. The major companies like Hetero Drugs, Emcure Pharmaceuticals, Aurobindo Pharma, Dr Reddy's Laboratories, Lupin, Macleods Pharmaceuticals filed more than 8 DMFs. The total DMFs filed by the Indian companies stood at 404, 311 and 271 during the year 2011, 2010 and 2009 respectively. Thus, the higher investment in R&D is translating into higher approvals for Indian products.
The significant rise in R&D costs and lower than expected output impacted the overall working of several international players. These entities have started cutting down R&D expenditure to improve bottom line. These companies are now looking out for collaboration with other partners for the discovery and development process in pursuit of improving productivity and time gap. This enables to reduce fixed costs, access high quality scientific talent, greater operating flexibilities and reduce cycle times. With easy availability of talent pool and state-of-the-art R&D centres, Indian R&D companies are getting more acknowledgement from multinational players.
R&D spending of 30 pharma companies