Sunday Reading
New Delhi, 15 July 2009
Pharma Industry
KEEPING GOOD HEALTH
By Radhakrishna Rao
Notwithstanding recent custom duty
concessions, the dynamic Indian drugs and pharmaceuticals industry is expected
to log a steady and stable growth as it would stand to benefit to some extent
by an increasing global demand for low-cost drugs and formulations. This news
comes from a study by the rating agency Fitch.
An excellently documented report: “Indian
Pharmaceutical Sector 2009 Outlook”, released sometime back points out that
the our pharma industry would remain stable since it is driven by both domestic
as well as growing international demand for core pharmaceutical products,
including generic drugs.
Clearly, the fact-filled study has
highlighted the ground reality that a weak global economic environment in
tandem with the appreciation of the American dollar against the Rupee is
expected to contribute to a surge in the export of low-cost Indian made generic
drugs and an increased demand for low-cost contract research and manufacturing
activities. In the ultimate analysis, the study leaves an impression that the
overall profitability of the sector could be under pressure on account of the
stringent regulations in the markets of West Europe and North
America, in addition to high depreciation costs and losses
inherent in the violent fluctuations witnessed in the global currency market.
Despite odds, many Indian drugs and
pharmaceutical companies are going ahead with their ambitious research plans
aimed at producing new and novel drugs and pharmaceutical formulations. Though
as of now there are no clear indications on the “cut backs” in research
spending, the ongoing liquidity crunch could put pressure on the process of
drug discovery and clinical trials, both of which are highly time-consuming and
capital intensive. It is the mind-boggling investment required for brining a
drug to the market that prevents many medium and small drug companies from
investing on research and development focused on drug discovery.
Meanwhile, in a significant development,
a Mumbai-based pharmaceuticals firm has stated that its novel molecule for
diabetes melogliptin has successfully completed the Phase-II clinical trials
and is now getting ready to go through the Phase-II trials by year end. Clinical
trials are vital for proving the efficacy, reaction and safety levels of new
drugs under development. The company is planning to invest around US$50-million
on research and development activities during the year 2010. In fact, the
company is asserting that it has moved a step closer to notching up the distinction
of being the first Indian company to have a truly global innovative drug.
On another front, India is also
emerging as a favourite and cost-effective destination for the global pharma,
biotech and drugs’ outfits to set up their research hubs. In this case, the availability
of skilled manpower at an affordable cost is a major advantage for these
overseas companies to zero in on the potentials of India. For instance, Cell Works
Group Inc, an American company based in California, has set up its research and
development centre in the IT city of Bangalore with a focus on providing
technology-based solutions for speeding up the process of drug discovery.
Cutting down the time involved in
the evolution of a new drug makes for considerable savings on the cost. The
thrust of the Bangalore
research hub would be in areas of oncology, inflammation, metabolic disorders
and skin ailments. Along with Hyderabad, Bangalore has emerged as
a hub for research-related activities of many overseas pharma companies. For many of these companies are keen on
exploiting the IT and software expertise available in Bangalore for giving a forward thrust to
their activities meant to discover new drugs and formulations.
India is also making its mark in the area
of stem cell-based therapies aimed at tackling many of the difficult-to-cure
diseases and disorders afflicting humanity. All said and done the technology of
stem cell therapy is still in its infancy and it would be quite sometime before
stem cell therapy emerges as a mode of routine treatment on a large scale. Another
Bangalore-based company is involved in developing stem cell lines possessing
potentials to treat a number of disorders and ailments including myocardial
infarction, leg ischemia and diabetes.
However, the acquisition spree of
the Indian pharma sector, whose value has been estimated at Rs.76,000-million
seems to have slowed down on account of the liquidity crunch, lower profits and
instability in the global currency market. Till recently, acquisition and consolidation
was the mantra of growth for the pharma and drugs industry in the country. The
export earnings of our pharmaceutical industry have been pegged at
Rs.33,000-crore for the current year.
Interestingly, most pharma companies
are export-oriented with 50 per cent of the revenues coming from export of
drugs and pharma products to the developed countries. However, the earnings
from export are likely to show a downward trend during 2009-10. At the same
time, the pharmaceutical and drugs industry is worried over Chinese outfits
flooding low-quality “made in India”
drugs in the African market.
Today, the country’s pharma industry
ranks fourth in the world in terms of volume and is able to meet the requirements
of drugs and formulations of the people through indigenous production.
Meanwhile, captains of the Indian pharmaceutical sector have made a strong plea
to the Government of India to strongly back its research and development
efforts aimed at developing new drugs. However, it has in this Budget, reduced
the basic customs duty on influenza vaccine and nine specified life saving
drugs used for the treatment of breast cancer, hepatitis-B, rheumatic arthritis
etc on the bulk drugs used for the manufacture of such drugs, from ten to five
per cent. They will also be totally exempt from excise duty and countervailing
duty.
Well, if India has to move ahead in the
development of innovative drugs, then the Central Government would need to
provide significant breaks for the companies involved in high-end discovery
research. For the innovative drugs could help boost the export market for our pharmaceutical
outfits. Two other promising areas of growth for the pharmaceuticals and drugs
sector is the contract research and manufacturing services and clinical trials.
India
has now emerged as an attractive destination for outsourcing clinical trials
and contract research and manufacturing services. How healthy it will be, times
will tell. –INFA
(Copyright,
India News and Feature Alliance)
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