India: Good Endings, Good Beginnings! - Pharmaceutical Executive


India: Good Endings, Good Beginnings!

Pharmaceutical Executive


Global Research and Development (GRAND) Centre, Mumbai, Panacea Biotec
In many ways, India is a country of contrast: the wealth distribution gap, differences between the north and the south, multinationals versus locals—the list goes on. It is not surprising that discussing innovation with India's top industry professionals leads to contrasting views. According to OPPI's Tapan Ray, Indian companies mainly started investing in discovery and research since 2005. "Now there are at least 10 Indian companies engaged in basic research, while 32 NCEs are in early stages of development. It is a very small step the country has taken, but this could not have been possible without a conscious decision to move from replication to innovation," Ray says. On the other hand, Rajeev Nannapaneni, chief operating officer of local generic player Natco Pharma, explains why the former model should not necessarily be abolished already: "If it was not for India, I do not think there would be affordable generics in the world," he says. "Indian companies play a role as finished dosage or chemical suppliers internationally, and have contributed significantly, either directly or indirectly, to a reduction of healthcare expenditure worldwide. I am a defendant of the fact that innovation needs to be rewarded, but we do also need to take into account the economic situation of countries like India, where we need to address certain peculiarities that are inherent to the country. Going forward, the biggest challenge will remain the public policy challenge. We need to find ways to reward innovation, while at the same time take care of the needs of the general public. Both the MNCs as well as local Indian players need to address this challenge together."

Hasit Joshipura, Managing Director and VP of GSK
India's move up the innovation ladder has, to a lesser extent than in China, also driven MNCs to use the country to ramp up global R&D by outsourcing core functions such as drug discovery, new product development, formulation, and preclinical trial management. As a result, the Indian contract research industry has been growing tremendously at a CAGR of 65% from 2007 to 2010, exceeding the $1.5 billion mark last year. SIRO Clinpharm, the second-largest contract research organization (CRO) in India, went one step farther. Positioning itself as an emerging markets specialist, SIRO successfully completed an acquisition spree in Western Europe, where it plays out its twin advantage of low cost and speedy patient recruitment. Commenting on whether India has the potential to evolve into a hub for clinical trials, GSK India's managing director and vice president GSK South Asia, Dr. Hasit Joshipura, sees it as "inevitable that India will evolve towards this status. For our company, the country already serves as a hub in that sense."

Insulin Plant at Biocon
While India may have evolved beyond an attractive outsourcing destination, the importance of the outsourcing trend still reflects in today's statistics. The 2010 global top 100 of outsourcing companies is stacked with Indian success stories, with IT giants Infosys Technologies, Wipro Technologies, and Tata Consultancy Services in the second, fourth, and seventh positions respectively. "IT capabilities and the ability to process and make sense of data via analytics are both crucial in modern clinical trials. If you look at the composition of Quintiles' revenue, approximately 30% comes from clinical trials, while 70% comes from data-related services, processing biomarkers, etc. These peri-clinical services are a unique strength of India, which is something that not many people know," says Anil Raghavan, India's country head of the US-headquartered global CRO. "Outside of the US, this is one of the only places where we have a full service offering. This is as robust as it gets in the CRO space—and we will continue to expand in India," concludes Raghavan. "Data management," for example, "is seen as a well-respected career path in India. There is a vast, trained, English-speaking resource pool with a strong understanding of the discipline," says Baljit Samra, the local Indian managing director of the other renowned US-based global CRO, Parexel. "Leveraging our global resources and worldwide technology infrastructure, we can enable more effective information flow and improve data access, which results in greater visibility into trials—and ultimately in better decision making," Samra explains.

Glenn Saldanha, MD, CEO of Glenmark
Other MNCs have conversely decided to retain or build a direct presence in R&D in India. "The initial interest was sparked by the immense expertise India has in chemistry research and chemistry-driven areas," recounts Sham Nikam, Nycomed's head of global discovery and chief scientific officer of the company's Indian subsidiary. While India's expertise in the chemistry field has certainly benefitted the nation, the very same expert chemists have been insufficiently exposed to the entire R&D process, which has limited the extent of innovative discovery work in India. This is in addition to the fact that the high growth rate of the Indian economy has resulted in dramatic attrition rates for its pharmaceutical industry. The 2005 patent law moved India one step closer to its first new chemical entity (NCE), but it is still too early to tell how far the innovative work of locals such as Biocon and Glenmark will go. "A study by the IPA noted that in 1995, the industry spent just $31 million on R&D work. By 2006, that figure had reached $529 million, and has continued to grow since then. Our largest players routinely invest 10% to 12% of their turnover into R&D," Dilip Shah of the IPA notes. Glen Saldanha, Glenmark's chief executive officer and managing director, remains cautious of speculatation, arguing that the pocket of Indian companies may not be deep enough to take a drug all the way to the market. "This is why partnering becomes an extremely important, and essential, piece of the innovative strategy for most Indian companies. It will take some time before you see true innovation start to come out of India," he says.

Rajiv Chopra, President of DSM India
Yet, innovation can still remain a broader objective that can be achieved in many different ways. Dutch player DSM sets the example, establishing its first innovation centre outside the Netherlands in Delhi by late 2011. Rajiv Chopra, local president, clarifies the difference with R&D. "Globally, at the innovation center, we incubate business models," Chopra says. "From one perspective, these centers enable us to see what we can bring to India from the global basket. A second perspective stems from a technology point of view, where we are looking at open innovation. This relates to the local partnerships we are aiming to build up in India, with local R&D organizations, R&D groups within companies, and so on. The third strategic implication of the innovation center will be to investigate what unique business models we can create in India. This is a way for DSM to export innovation from India, and identify what India can bring to the world. While India has been widely recognized as the center of frugal innovation, it has been moving up the innovation ladder, and we expect to tap into this potential for high-end innovation," Chopra says.

What probably best explains the contrasts in the Indian pharmaceutical landscape is the fact that India can take many shapes and forms, and that different companies in India will keep pursuing different strategies. On a final note, Glenmark's Saldanha says that "there are some who will continue to focus on manufacturing; some who will identify themselves as contract-research outfits; some who will say they want to be global, product-driven companies; some who will say they want to be generic companies; some who will say they want to be API suppliers to the world; and some who want to be truly novel and innovative." Whichever strategy is chosen, embracing innovation in the broader sense will remain instrumental in achieving the crucial degree of differentiation in India's highly fragmented pharmaceutical landscape. Companies that will manage to combine differentiation with strong local and international partnerships can be sure to enjoy the significant growth perspectives of Indian pharma, and secure a strong foothold in this future top 10 market.


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