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From service to innovation
November 2007
by Randall C. Willis  |  Email the author
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BANGALORE—As both a thorn in the side and a potential savior of its North American and European counterparts, the Indian pharmaceutical industry has seen significant growth in the last decade or so.
 
During the earliest phases, this growth came at the expense of Western companies, as Indian companies found ways to drop generic versions of patented drugs into the growing developing world marketplace. More recently, however, the Indian industry has increasingly been seen as a resource for Western companies looking for ways to cut ever-growing costs associated with drug development, clinical trials, and pharmaceutical manufacture.
 
In a January 2006 report, Frost & Sullivan suggested that the $7.3-billion Indian and Chinese drug discovery outsourcing markets were poised to triple that take in the near future, snagging upward of 40 percent of the $50-billion global market. Similarly, a new report from RNCOS suggests that the Indian clinical trials market will grow at a CAGR of almost 36 percent between 2006 and 2011 to surpass the $500 million mark.
 
Despite these numbers, however, if the rhetoric coming out of India is any indication, the paradigm of India solely as a source of cheap labor and knock-off generics is about to shift.
 
"The world is changing, and India is making a transition to innovation-driven R&D," says Dr. Rashmi Barbhaiya, CEO and managing director of Bangalore-based Advinus Therapeutics. "With the success that India has enjoyed in the generics area, this is a natural transition. The perception about India will change gradually with the success in the innovation-driven area."
 
Barbhaiya's sentiments are echoed by Mr. GV Prasad, CEO and Vice-Chair of Hyderabad-based generics giant Dr. Reddy's.
 
"We, as a company, have recognized this early on and have focused on using innovation as a long-term growth driver," he told attendees at the recent Conference Board 2007 Global Leadership meeting in Mumbai. "While building a global generics business based on access and affordability, we have used the surpluses to build strong capabilities in developing novel products for unmet medical needs. As an industry, we have also developed the ability to solve the problems that the innovation-based industry is facing.
 
The recent discovery collaboration between Advinus and the Drugs for Neglected Diseases initiative (DNDi) is likely to be characteristic of the types of efforts where discovery-focused Indian companies will be able to shine (see "Neglected no longer?").
 
"Medicines for neglected as well as rare diseases are not likely to become blockbusters," Barbhaiya says. This means that these drugs are likely to offer little attraction to traditional big pharma companies looking to expand (or fill holes in) their pipelines.
 
"New medicines for these diseases need to be discovered and developed in the most cost-effective way while maintaining global standards for safety and efficacy assessments," he adds. "This is where India and companies such as Advinus can play a vital role. This is where alliances such DNDi and Advinus can create options for cost-effective and efficient R&D that were virtually nonexistent before."

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