Friday, July 13, 2007
Necessity is the mother of invention. India’s pill pushers show this better than most. With a new drug patent law in place, some of India’s pharma companies, hitherto only copycats, are now discovering and developing their own formulations. "The Indian pharma industry has risen above the generics (copycat) label," says a survey on Asia’s pharma industry conducted by PricewaterhouseCoopers.
Take the Rs 1,206-crore, Mumbai-based Glenmark. In September 2004, CEO and managing director Glenn Saldanha struck the largest pharma licensing deal in Indian history with New York’s Forest Laboratories. Forest agreed to pay up to $190 million (Rs 875 crore then) in milestone payments to Glenmark for an untested asthma and Smoker’s Lung drug. It would also pay for the human testing phase and would get marketing rights in North America if the drug got to the market (see ‘Beginner’s Luck’, BW, 14 November 2005).
The compound they licensed, oglemilast, is called a PDE-4 inhibitor, which blocks the PDE-4 enzyme in lungs that causes inflammation. However, with nausea being a known side-effect, no company has been able to show that it can balance safety and efficacy in human testing to get marketing approval. According to Glenmark, animal tests show that it has cracked this problem. The potential market for such drugs is roughly $10 billion-12 billion (Rs 41,000 crore-49,200 crore). Milestone payments from the deal already equal twice the amount Glenmark spent on R&D until the deal was struck.
Forest is one of several western pharma companies whose patents are expiring. New drugs from their labs are not being commercialised fast enough. Increasingly, they are looking at research happening in labs like Glenmark’s. Saldanha has not stopped with oglemilast (which is moving far slower than expected). Earlier this year, it licensed a novel diabetes compound to German drug company Merck for up to E190 million (Rs 1,083 crore). This compound is from a new drug class known as dpp-4 inhibitors, which enhance the ability to lower blood sugar levels. Glenmark will earn royalties if these drugs hit the market. "If you have an asset that’s worth something, companies will chase you no matter where," says Saldanha.
The company is doing exactly the reverse for other types of drugs — where it currently lacks capabilities — by tying up with smaller innovators, such as the US biopharma company Dyax. Glenmark will pay for early research in Dyax’s labs on three drugs with the intention of jointly out-licensing them later to a larger company. A recent report by Mumbai-based brokerage HDFC Securities says Glenmark is poised for “remarkable growth in revenue and net income in the coming years on the back of its strong research pipeline”.
By the time Saldanha began hatching his plans, another low-profile Ahmedabad company had already begun playing the game. Torrent Pharmaceuticals was among the first Indian companies to successfully sell knock-off products in niche segments like psychiatry and cardiology. When India’s new patent law sharply curtailed this business, the Rs 691-crore Torrent began investing in drug discovery. Among its first breakthroughs was a compound known as AGE-breaker. AGE, whose build-up can seriously damage vital organs, is generated during human metabolic processes. AGE-breakers can prevent this.
In 2004, Torrent licensed its AGE-breaker to Switzerland’s Novartis for $3 million (Rs 13.8 crore then). Though Novartis returned the compound to Torrent, the company gained a lot from the experience. By 2005, Torrent announced a different sort of collaboration with the Anglo-Swedish AstraZeneca, involving joint research to discover a new drug for high blood pressure. “Over time, we have developed sound R&D that helps us enter research collaborations with foreign partners with confidence,” Mehta said while announcing the tie-up.
Similarly, the Rs 706-crore Alembic, best known for its Glycodin cough syrup, recently licensed its extended release version of Belgian firm UCB’s $1-billion epilepsy brand Keppra to the latter in exchange for milestone payments and royalties. Alembic’s drug will allow UCB to keep its sales going once the patent on Keppra expires, by migrating patients to the once-daily version. Alembic’s success is rooted in the fact that its chairman and managing director, Chirayu Amin, saw the writing on the wall early. “Innovation will be critical to survival”, he wrote to shareholders in 2003-04. Instead of looking for completely new drugs, Alembic takes known compounds to develop new delivery systems that agree better with patients. The company is in talks with four or five foreign firms on such deals, says Amin.
That these companies are actually surviving and growing may not be surprising. Mohan Bhandari, chairman and managing director of Bilcare, bet a decade ago that India’s pharma story had only just begun.
The Pune-based company guessed correctly that as the industry expanded, expectations from suppliers would also grow. So, it focused only on pharmaceutical packaging. Such niche moves were new to the packaging industry as established players such as India Foils always offered packaging services to multiple industries.
“When Bhandari chose to focus on pharma packaging, eight out of ten would’ve said it was the wrong thing to do”, says M. Venkateswarulu, the Drugs Controller General of India.
But Bhandari reckoned suppliers like him could ride the coat tails of the pharma industry to success. Today, the Rs 332-crore Bilcare packs medicines from around the world. Besides doubling revenues in the past two years, it also has a presence in Singapore and the US, and has 15 international patents pending. Bilcare works like a service provider, anticipating customers’ needs and figuring out solutions. One of its innovations ‘Patina’ is an anti-counterfeit packaging material used by well-known brands, such as the calcium supplement Shelcal, and the antibiotic Cifran.
Now Bilcare also wants to introduce an electronic tracking device in its packaging. It is also playing in the booming clinical testing business, not just through its packaging units (which manufacture and mask products meant for testing), but through a training school for clinical research professionals that it started this June in Pune. Run in partnership with the US-based Association of Clinical Research Professionals, the school is a pioneer in its field. As more companies — Indian and western — test new drugs in India, “the demand for trained professionals is going to be huge”, says Bhandari. More schools around the world are in the works. Bhandari says his aim is to “uplift clinical research in the Asian region”.
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