The Indian pharmaceutical saga: Strong on generics, weak in R&D

The Indian government has loaded the pharmaceutical industry with fiscal sops and other goodies over the years to prop up its growth. Particularly, the largesse given to it to strengthen its research and development (R&D) base to compete in the world market seems to have yielded nothing. It is disappointing that the pharma industry spent as much as Rs15,000 crore on R&D during the past five years without producing a single new molecule. In sharp contrast, the US drug industry spends $55 billion on more than 450 drugs every year to come out with 26 new molecules. A McKinsey report says that Indian drug industry’s R&D costs are 85% lower than the US—thanks to cheaper talent—yet it has not come out with a single new molecule.

The Indian drug industry like the IT sector is knowledge-based and can grow exponentially as it has a vast pool of talent. During the past few years, the drug industry has made a transition from depending on reverse engineering—low knowledge based drugs—to R&D-based drugs aided by high knowledge ingredient. The industry has also realised that talent could attribute substantially to success in R&D.

In fact, a few drug companies such as Ranbaxy, Dr Reddy’s Laboratories, Biocon and Sun Pharmaceutical started research in 1993-94. But it was only during the last five-six years that investment in R&D received major impetus. During 2004-2009, pharma companies have spent $3 billion (Rs15,000 crore) on R&D. These companies spend around 7% to 8% of their sales turnover on R&D now, up from around less than half percent before 2000. Yet this looks miniscule in comparison to US or European companies which spend around 20% of their turnover on R&D. Yet Indian drug companies have not come out with a new molecule. More than 70 molecules have entered phase I of trials but only four-five molecules have entered phase III. Ajay Piramal, chairman, Nicholas Piramal says, “My dream is to develop one drug.” Piramal knows that drug development is very expensive in India, yet economical in comparison to the US. He says, “In the US, it costs around $800 million but in India it should not be more than $100 million.” The question then is: why in India have we not been able to develop a single drug out of $3 billion investment in R&D?

Ranbaxy has invested Rs 2,500 crore and Dr Reddy’s Laboratories Rs 2,000 crore in R&D efforts. Cipla, Cadila, Lupin and Sun have spent Rs 800 crore plus each in R&D. Another 12 companies have spent over Rs 200 crore each in R&D. Piramal, a late entrant in drug discovery with seven years experience, hopes to make a breakthrough in 2010-2011. Nothing hopeful has come from Ranbaxy, Dr Reddy’s, Biocon and Sun Pharma—all companies with over 15 years of R&D experience. The reason is simple. A major part of R&D expenditure has gone to reverse engineering, generics, contract research, clinical research and little to new molecule research. In the US, 80% of R&D expenditure goes to molecule research. That is why the US has high productivity in the entire chain of the molecule development cycle.

Low productivity, inefficient clinical research, low study curve and low learning curve, inadequate networking, long-term finance unavailability, low innovation and testing facilities, lack of trained investigators, no advancement in instrumentation, lack of stringent quality in CGMP (Current Good Manufacturing Services) practices, limited shared infrastructure, unfocussed approach, regulatory failures in phase III and many more reasons are behind the Indian pharmaceutical industry’s failure to produce new molecules. Many companies have separated their R&D divisions for reasons of core research and long-term finance availability as well as accounting jugglery.

“The productivity of the Indian scientist is very low,” says Jai Hiremath, chairman of Hikal Limited. India does not have a scientist credited with a single molecule discovery. Transforming the screening of 10,000 chemicals to one molecule is a complex process as is seen from failures in all stages such as screening, discovery of chemicals, lead development, pre-evaluation, phase I, phase II, phase III and phase IV studies in drug discovery.

Then there is no adequate understanding of complex diseases, that is why developing cures for such illnesses is therefore extremely difficult. For example, there are six blockbuster molecules based on the statin family like lovastatin, simvastatins, pravastatins, atorvastatins, rosuvastatins and fluvastatin molecules. Each of them lowers cholesterol but has side effects. Atorvastatins have been one of the highest selling drugs (called Lipitor) with a market size of $15 billion each year. Different statin molecules have been discovered by various global companies but no Indian company has discovered any molecule in the statin family. The same is the case with hypertension (blood pressure control) drugs. No Indian company has been able to discover any molecule in the sartan family (valsartan, losartan, irbesartan, candesartan, telmisartan, olmesartan) of molecules. Plainly speaking, we have to put together our strategy in a focused manner if we need success in new molecules.

“Continuous improvement is very important, whether it is expanding the use of electronic data capture to reduce errors and improve efficiency, or going global to find the trained investigators and the numbers of patients needed in a timely manner,” says Dr Ferzaan N Engineer, CEO, Quintiles Research (India) Private Ltd. Glenn Saldanha, CEO & MD of Glenmark says, “India has to create a culture for research, else it will be difficult for Indian companies to attain true success in discovery research.”
—Dhruv Rathi [email protected]





7 years ago

This website, which has been in business for 6 years, is one of the leading pharmacies on the Internet. Our goal has been to deliver safe, generic medications at a good price! Our website provides quality generic medicines shipped directly from India. Each of the products that are available through our website are produced with the best raw materials and the greatest care at world-class pharmaceutical manufacturing plants in India.


This is some sample text. You are using FCKeditor.


BJP Saw It Coming…
Defeat after defeat after defeat is making the Bharatiya Janata Party (BJP) smarter. After the earthquake that hit the Party following the Lok Sabha drubbing (which itself came on the heels of its defeat in the state polls in Delhi and Rajasthan), the Party moved quickly and early to pre-empt another round of name-calling. It had earlier announced the next national executive meeting for 28th -29th October to review its performance in elections to the three states (Maharashtra, Haryana and Arunachal). But at the Party’s central parliamentary board meeting in Delhi, LK Advani wisely advised that the 28th October meeting be cancelled to avoid another round of blood-letting. The notable thing is that Mr Advani’s advice did not come after the election results revealed what the electorate continues to think of a Party in drift. His advice came on 15th October, a full week before the results were out. The parliamentary board, for once, anticipated defeat and, hence, prepared to avoid its ugly consequences. That’s not a bad start for a Party hoping to rediscover itself.
What Bangladesh Thinks of India
While discussing Bangladesh we, in India, always assume superior airs. Poor country; underdeveloped; can’t even play cricket; and, on top of that, sends millions of migrants to India because it can’t get its act together. Occasionally, though, it helps to find out what Bangladesh thinks of us. As I write this, I am in Dhaka on official business. I ran into a Whirlpool executive who drives his Dhaka business from Delhi. There is little acceptance of Indian products in Bangladesh, he tells me; Indian goods are looked down upon. Bangladeshis mostly prefer Australian or other foreign products to Indian ones. These countries mop up the high-end products market and, at the lower end, it’s a complete Chinese sweep. That leaves very little space for Indian products. So, after about 10 years of trying to make a dent in Bangladesh, Whirlpool is now trying to shed its ‘Indian’ image and present itself as an ‘American’ company (which it is). It has, thus, dropped the Kajol-as-mascot ads in the Bangladesh market and has shot new commercials with Western models. Hopefully, the strategy works for Whirlpool. But it does work to puncture our ego as the second fastest growing economy, a future world-beater-in-the-making and what not.
Why Jaya Loves the New NREGS
On Gandhi-jayanti, the Congress government at the Centre decided to rename its flagship rural welfare programme after the Mahatma. Thus, the National Rural Employment Guarantee Scheme, NREGS, became the Mahatma Gandhi Rural Employment Guarantee Scheme, MGREGS. Jayalalithaa’s AIADMK is loving it as it gets to appropriate all credit for the programme because of the initials ‘MGR’ associated with it now (MGR or MG Ramachadran, the founder of AIADMK was Mr Karunanidhi’s political nemesis). And DMK chief Karunanidhi is upset because he can’t stand anything more than a smiling Jayalalithaa.
Evil Spirits Get Official Recognition
Ghosts and evil spirits got official recognition on 20th October. On that day, the staff of the ministry of petroleum organised a yagna to scare the evil spirits that seemed to have suddenly taken a fancy to petroleum. The puja was followed at 1pm with a brahman-bhoj at Shastri Bhawan. Reason: Three suicides in two months in the ministry, the latest by a lady officer. Her body was found in one of the toilets. Many employees sported vermillion marks on their forehead for the puja. A fire mud pot, emitting thick black smoke, was taken around all the chambers except the petroleum secretary’s. Hopefully, the ghosts have been gassed out and won’t haunt petroleum minister Murli Deora who has been in the thick of the Reliance gas controversy.
Jaswant’s Operation Clean-up
Jaswant Singh is unpredictable. You would imagine that a man who staked his political career by raking up the past and painting Jinnah, the villain of India’s partition according to the BJP, as a hero, would look kindly upon institutional legacy. Apparently not. Jaswant, who now heads the Public Accounts Committee (PAC), has ordered a clean-up of his room in Parliament. The walls are full of pictures of all the past 49 PAC chairmen, right from the first one, WM Hailey (1921). Jaswant saw no purpose in so many faces staring at him all the time. Of course, among the pictures was one that he would have loved to keep, that of Atal Bihari Vajpayee, his political benefactor. The problem was that Vajpayee had company: Murli Manohar Joshi, Ram Naik and Vijay Kumar Malhotra, all of whom he can’t stand. So word went out that because he can’t tolerate these three men, all had to go. Jaswant gave no reasons for the clean-up, of course. The staff was unsure of what to do; so they wrote to the Lok Sabha secretary-general PDT Achary seeking advice. Mr Achary gave permission to remove the pictures on 19th October and immediately the staff got down to the business of stripping the wall. They dismounted the pictures but carefully packed them with their name tags because Jaswant is chairman only for one year (up to July 2010). What if the next chairman wants them back?
Priyanka Wields the Broom at RGF
Priyanka Gandhi is making waves at the Rajiv Gandhi Foundation (RGF) which she joined as trustee recently. She spends about three hours every day and seems determined to rid the RGF of employees who have made it a resort for the retirees. In one fell stroke, she handed out 25 pink slips to employees who were well into their 70s and had been warming the chairs for more than 15 years. She wants to bring in young blood. If you are in your 30s, write to Priyanka for a place on the high table.
Climate Change in Environment Ministry Jairam Ramesh has taken to his new environment portfolio like a duck to water. He is setting a scorching pace for the ministry and has wowed people with the depth of his knowledge and quick grasp of issues. The green community recently got proof that the new guy in Paryavaran Bhavan not only means business but also knows business. At the meeting to announce the launch of INCCA, Indian Network of Climate Change Assessment (India’s own climate change monitoring body, hitherto non-existent), Jairam was in total command. He not only knew all the issues at hand, he also knew many scientists, drawn from about 100 different institutions, by name. He announced that he would review INCCA’s working every six months and right there, from the podium, announced the dates and venue for the next meeting. That was not all. He left with a warning: “All through the day, I have been listening to presentations where every figure quoted is from 1996 or earlier. When we meet next, I will not accept figures that are not updated till 2008.” Well, that’s real climate change!
BV Rao has wide experience across print, TV and digital media. He was group editor at ZEE News and senior editor with DNA and Indian Express.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)