According to a report from the India Brand Equity Foundation, India is among the top five emerging pharma markets across the globe and has grown at an estimated compound annual growth rate (CAGR) of 13 per cent during FY 2009–2013. In fact, the domestic pharma industry in India has been growing faster than the average CAGR of emerging markets, clocking a CAGR of over 14.5 per cent for the past four years.
Dr Manu Chaudhary, Jt. Mng. Director, Venus Remedies, and Director, Research, Venus Medicine Research Centre |
In the past few years, Indian companies are investing a considerable part of these earnings on research and development (R&D) towards building strong product pipelines. Dr Manu Chaudhary, Joint Managing Director, Venus Remedies, and Director, Research, Venus Medicine Research Centre observes the new trend in the pharma sector and says, “The trend in Indian pharma is shifting from process patent-based research to innovative solution-based research.” She admits that global acceptance of this research will take time.
Bhavin M Mehta, Director, Kilitch Drugs |
Market forces justify the need for innovation-led drugs science. Bhavin M Mehta, Director, Kilitch Drugs simplifies the necessity to invest in scaling up research pipelines and says, “It has become necessary for pharma companies to invest in the technology pipeline of discovery research which will help them to sustain in the market with new products time to time.”
Opportunities knocking at door
By 2016-17 most of today’s branded drugs will be off patent and foreseeing these opportunities, Indian pharma companies are planning to launch various drugs across the globe. Chaudhary explains, “The Indian pharma companies are going all out to launch various generic drugs across the globe. The first generic is the key and the one who has the best R&D capabilities and expertise will be the one to lead the show.”
Domestic pharma companies have proven capabilities in branded generics and are now focusing on the development of innovative drugs. To meet global requirements, many Indian pharma companies have a strong product pipeline for both the domestic as well as for the international markets which are in different stages of the development process.
Aditi Kare-Panandikar, Managing Director, Indoco Remedies |
Analysing the potential of Indian pharma companies to deliver better medicines to the world at an affordable cost, Aditi Kare-Panandikar, Managing Director, Indoco Remedies avers, “The Indian pharma industry is highly fragmented and R&D can create a good measure of differentiation and distinction to companies. Only those companies which spend substantial amount on research activities will have products ready as per the market requirements, fuelling a sustainable growth.”
“India’s large talent pool and cost effective strategies have helped pharma giants to cut short budgets involved in pipeline projects. On the other hand, small companies coming up with innovative technology pipelines are becoming outsourced partners for giants in generating IP for newer molecules,” Mehta highlights.
Strategies
Indian pharma companies are investing considerably on its R&D projects. As per data available, R&D investments in India have grown from Rs 347 crores ($ 52.5 million) in 2000 to Rs 4,276 crores ($ 646.5 million) by 2010. Of which, nearly 80 per cent is accounted for by the domestic companies while the remaining 20 per cent comes from foreign companies. It is the result of pharma outsourcing to the Indian market which is constantly growing at a CAGR of 62 per cent over an eight-year period.
Chaudhary spells out, “Research is the key driver for any industry to be competitive. In a country like India which has a vast talent pool of intellect, an encouraging research environment can bring laurels to the country. There is nothing which India cannot do or deliver to the world either in new drug development, contract research or joint research. These new avenues hold great potential and a promising future lies ahead.”
Kare-Panandikar feels, “For almost a decade now, Indian companies have shown a very good understanding for early product selection, process chemistry, patent challenge and market entry strategies. These are needed to take advantage of being early entrants in the generic space. And the generisizing of several products in the developed markets produces a good opportunity for the Indian pharma companies. Many have a distinct advantage of early filing to go after the First to File (FTF) opportunity. However, for the other companies, the opportunity to manufacture for leading pharma players globally, in itself is a great opportunity.”
Challenges
Over the last one and half years, the Indian pharma industry’s image has been somewhat sullied in the global pharma market. Manufacturing facilities of Indian pharma companies have been under the US FDA scanner while drugs manufactured in India and exported to other countries have been labelled as ‘sub-standard’ or spurious.
Besides facing increased scrutiny from global regulators, pharma companies are facing the heat on home ground as well. Delays in the approval process have also negatively impacted most companies’ commitment timelines and the recent efforts to bring more medicines under price control are further agitating the industry.
As Kare-Panandikar points out, “Uncertainty in the pricing policies is becoming a major challenge for the industry. The recent announcement by the NPPA, reducing the prices of products not covered under National List of Essential Medicines (NLEM), has come as a surprise. The regulatory framework in the country clearly needs to orient itself for the speedy development of the pharma industry.”
“Due to lack of clarity, most of the clearances are delayed, especially new drug approval, R&D test licenses, import/ export licenses, etc. The customer focus is lost, leading to delays in product approvals in the domestic markets and custom clearances of imports/ exports, which is highly detrimental to the growth of any company,” Kare-Panandikar emphasises.
And the fallout may not be exactly what the government expected. Chaudhary comments, “This (regulatory delay and increasing price control) is one of the reasons why many pharma companies may exit or sell few of their brands to remain in the race.“
Even more worrisome than brands being sold, is the fact that many of these companies have started looking at overseas options where doing business will be smoother. As Chaudhary says, “The slowdown in clinical R&D, patent processes and delayed regulatory approvals are pushing a lot of Indian pharma companies to think of shifting their operations to South-East Asia. In pharma nothing can be launched without human clinical trials and though the new laws imposed on the industry were intended to streamline processes, some of them proved to be hasty decisions. Awareness among various stakeholders, government support and a conducive healthy atmosphere for creating a research ecology are the only means to tackle it.”
Survival model
Kare-Panandikar feels the stringent regulatory approval process is an opportunity as it helps the company to continuously upgrade itself to a high technical competency. She speaks on how challenges can be converted into opportunities and says, “We are expanding and investing in our regulatory and quality teams to stay abreast with the new guidelines issued by the regulatory authorities globally.”
Chaudhary’s message will certainly encourage the community as she says, “R&D is a very satisfying work to show your creativity, a sense of responsibility towards society, a feeling of pride for the achievements and a continuous motivational factor to move ahead.”
Mehta explains, “Molecules worth $250 billion are going off patent. Although the generic industry will benefit in the short term, it will also see a slowdown in revenue growth after 2015 because fewer blockbusters will be coming off patent for them to replicate, hence the time is ripe for pharma companies to invest in R&D in order to benefit in the long run.”
Kare-Panandikar’s statement reflects through her action. The company has expanded its R&D facility from a 200 sq ft area created in 1993 in Rabale, to a state-of-the-art R&D facility covering 100,000 sq ft area, employing 200 scientists. “We are planning to further expand R&D activities in Goa,” she informs.
Indoco Remdies encourages R&D activities by involving the core team in strategy planning so that they have a long-term perspective, are aware of the market needs and are prompted to come out with innovative ideas. This ensures a continuous pipeline of new products and improvement in the existing ones.
Better approach
There is a need to bridge the gap between industry and academia but unfortunately not too many efforts have been taken on this front. Pharma companies need to work closely with academia for better research output. Over a period of time the sector has been rattled by various reasons. Chaudhary analyses, “The challenges being faced by research companies include lack of funding for research as investor sentiment in India is not pro research, lack of specialised infrastructure because each company cannot invest in costly instruments and there is need for Central Instrumentation Labs (CIL) in the acadamic set up to support companies. Further, the approach at the academia level needs to be changed for industry-academic collaborations to come up with some economic solutions for industry.”
In India, companies like Kilitch Drugs have already taken a step ahead by investing in promising small start up companies. This helps in working closely with them in leveraging the company’s growth. Mehta reveals, “We have been encouraging R&D activities every year by investing in small/ start-up companies who have the capability to bring innovation in the pharma market. In 2013, we invested in a start-up “Novo Informatics” based in Indian Institute of Technology Delhi. Their expertise in computational drug discovery helped them to collaborate with pharma companies and academic units globally to discover new chemical entities.”
Aspiration for next level
The Indian pharma industry has been in the limelight recently for all the wrong reasons. The industry is trying to communicate their side of the story to the Government but there has not been too much response. The industry had really high hopes from the Union Budget 2014-15, but unfortunately, it did not meet their expectations.
Stakeholders feel that to combat these prevailing issues, industry needs more attention from the Government. Chaudhary suggests, “The centre must create a healthy ecosystem and environment for research, especially with respect to funding by venture capitalists, private equity players along with an industry-academy collaboration for low cost research. There must be a change in academic study design to ensure that at least 50 per cent of the project work done by students in universities at M.Pharm/Ph.D/MD levels must be industry-sponsored. This will not only bring industry and academy closer but will also fetch good talent pool and low cost research to industry.”
Kare-Panandikar too puts forwards her wishes and says, “The research-based pharma companies will need speedy issuance of licenses to conduct bio-studies, clinical trials, import of innovator product samples and hassle-free custom clearances of imports and exports. We plan to raise these issues with the Government through industry associations.”
Chaudhary suggests, “There must be special recognition and incentive for intellectual wealth creation. As pharma and healthcare industry go hand in hand, grants to Government hospitals to conduct investigator initiated studies by centre will be a big assistance to industry.” She sums up, “We plan to meet the Prime Minister directly if he gives us an opportunity to listen to us.”