pharmaceutical research &...

CHAPTER 2

PHARMACEUTICAL RESEARCH & DEVELOPMENT

“The Indian pharmaceutical industry should turn their attention to invent new drugs from

molecule levels and each manufacturing unit should try to become invention centres, opined Dr

APJ Abdul Kalam, former President of India”.

1.1 INTRODUCTION

Research and Development is defined as a process of scientific approach to discovering relevant

information on a specific topic. It gives new knowledge about products, processes and services

that meets the gap existing in an economic or a social system. Organization for Economic Co-

operation and Development (OECD) defines research and development as a “creative work

carried out on a systematic manner with an aim to increase the standard of knowledge and its use

to develop new applications” (OECD 2002).

Research and development is an on-going process to revitalize the knowledge and expertise to

the development a specific or new technology, improve operational efficiency and effectiveness,

reduce cost and meet social and environmental challenges faced by the humanity. Technological

advancement contributes to the economic progress of the nation thus creating a modern state that

meets the growing needs of its people and self-sufficiency.

In today’s competitive world R & D is a crucial factor in determining nation’s capabilities and

competitiveness and the pace of technological progress is directly proportional to the efforts on R

& D. Therefore, the level of R & D investment acts as a reliable indicator of country’s

innovative capacity. In addition, a country can be called self-reliant only when it can solve

economic, social and healthcare problems of its people. Indeed, nations which constantly invest

in R & D fare better and outperform others in economic development.

In a country, R & D is generally undertaken by the industry, academia and government

institutions. However, industry undertakes R & D depend on the scientific field in which it is

based and the extent of competition it faces in the sector. Though companies have their own

research capabilities in-house, they also undertake collaborative research with other

organizations, institutions and universities. In certain cases, they acquire technology from other

enterprises through licensing or takeovers. About 84% of worldwide research for basic drug

discovery comes from public institutions (Light, BMJ, 2012), and the proportion of public

money only rises where life-saving drugs are concerned.

It is observed that approximately twenty four percent of more than 250 drugs approved by the

USFDA since 1998 to 2007 have come from public research institutions or biotechnology firms

(Hadzimichalis N. 2013),later on these molecules transferred to private companies for further

research and development in order to make a successful medication to be sold in the market.

This confirms that the fundamental role of discovering drugs, in most cases, are initiated from

the research laboratories of universities, which suggests that the transfer of technology is an

important part to the discovery of new drug molecules in the world. In fact university research,

in many cases, has led to the development of well-known discoveries in number of therapeutic

areas. In addition, the university research has harnessed the critical research technology and

chemistry skills required at the basic stage of drug development, which include different

vaccines, medical equipment and utility items.

While the role of large pharmaceutical companies is integral to the development of novel drugs,

it is essential universities and biotechnology firms are made as part of pharmaceutical research

and development. Let industry-academia collaborations represent the future of drug

development and create many more novel drugs from technologies developed by these

institutions.

1.2 PHARMACEUTICAL RESEARCH & DEVELOPMENT

Pharmaceutical research and development (R & D) refers to the discovery of either a new drug

molecule or improvement of existing molecules or processes for the effective treatment of

diseases. In short, researchers use their scientific knowledge and skill to develop new molecules,

test new substances, evaluate existing drugs and create new dosage forms. Thus, it may say so

that pharmaceutical R & D discover New Chemical Entities (NCEs), develop Novel Drug

Delivery Systems (NDDS) or generic drugs. Pharmaceutical research offer promise for finding

new treatments to the human race. It helps in reducing human mortality, improve quality of life

and limit the spread of many communicable diseases pausing risks to public health.

Research and development is the backbone of the pharmaceutical industry, hence companies

should research, discover, develop, manufacture and market or distribute medications in the

context of healthcare to the humanity. Industry must engage in the discovery of new drugs to

solve the problem of public health. The survival of the industry critically depended on the

discovery of as many new molecules as possible. Therefore, R & D is considered to be the key

to the growth of pharmaceutical industry which is why investment in R & D is critical world

over. In other words, the responsibility of discovery and development of newer drugs lies with

the pharmaceutical industry across the world.

1.3 THE PROCESS OF DRUG DISCOVERY AND DEVELOPMENT

In principle, drug research should be in the domain of medical college and of physicians who

undertakes various clinical studies on patients while in their normal clinical practices. Though

clinical trials were not their primary focus area of work, but they had done that with a view to

provide better treatments to patients without seeking any financial benefit. A number of

pharmaceutical inventions were made in these clinics by merely identifying active ingredients or

by chance. Subsequently, successful drug molecules from their clinical experiments were tested

in animal cells and later on human for safety and efficacy.

However, approach to modern drug discovery is quite different where researchers first try to

learn how a particular infection or disease is controlled at the molecular and physiological level

and then targets at the symptom based on the knowledge already acquired. Researchers, with

their intrinsic knowledge of chemistry, guided by pharmacology and experimental sciences have

been able to make great contribution in the area of drug discovery and development. It is further

noted that advancement of molecular biology coupled with genomic sciences have created deep

impacts on the process of drug discovery in the world. The more recent contribution to drug

discovery has come from the understanding of the shape of biological molecules at atomic level,

which has helped scientists across the world to design drug candidates.

Despite all the advancement in understanding human biological systems, technology and

research skills, the drug discovery is still find to be an enduring process plagued with challenges,

protracted, and expensive preposition for the industry. It may take anything between 12 – 20

years and billion plus dollars for a drug molecule to travel from the research lab to the patient

(Mathew Herper 2012). It is because of these reasons the rate of drug hitting success is very low.

However, the huge claim of expenditure for developing new drug molecule has been strongly

disputed by various drug experts including Dr. Brian Druker, the creator of cancer drug

(Gleevec) of Novartis.

Drug Discovery Process:Discovery process begins with the basic identification of an unmet

medical condition in which there is no specific treatment available to the clinical condition that

motivates to initiate a research project. A research project involves various steps, starting with

the identification of candidates, followed by synthesis, characterization, and screening of

molecules, which then go for testing therapeutic efficacy. The data so generated helps to

develop hypothesis that the inhibition or activation of a protein or pathway will result in a

therapeutic effect in disease state. During this process, if a compound demonstrates therapeutic

value, it will then goes from drug discovery stage to drug development.

Drug Development Process: It is the scientific process undertaken to bring out a novel drug

candidate into a human-grade medication after identifying the lead compound through various

process of drug discovery. The drug development process can be divided into three distinct

category of study:

I. Discovery (process of identifying and screening compounds)

II. Pre-clinical Testing (laboratory and animal studies), and

III. Clinical Testing (trials on human)

I. Discovery: This is the first stage in which a number of compounds approximately 5,000

– 10,000 are identified, screened, which are then selected for further studies.

II. Pre-clinical Testing: It is the function of drug development of the selected compounds

prior to human clinical trials in order to assess various drug parameters like

pharmacokinetics, metabolism, safety and toxicity on experimental animals in the

laboratory. The other objective of pre-clinical test is to recommend the right dose and

schedule to be used for the first time in a human clinical trial. In addition, the process

establishes the physicochemical properties such as its chemical makeup, stability,

solubility and suitability.

III. Clinical Testing: This is the clinical testing stage where clinical trial processes are

conducted on human beings which involve three major steps starting from Phase I to

Phase III:

• Phase-I trials are usually conducted in a small number of healthy volunteers

(approximately 20 – 100) to determine the safety and dosage.

• Phase-II trials are conducted in sick patients (approximately 100 – 500) mainly to get

an initial reading of the efficacy of drug and to explore further test on the side effects

of the drug to ensure safety.

• Phase-III trials are highly critical trials where sufficiently numbers of human

subjects (approximately 1000 – 5000) are tested to determine further about the

effectiveness and the reactions to long-term use of the drug molecule.

Human clinical trials are carried out to determine the long-term or chronic toxicities

(fertility, reproduction, immune system, etc.), which previously was not monitored. The

drug compound will undergo carcinogenicity test too to rule out the possibility of any

cancer causing substance involve in it. If the compound emerges from these tests with an

acceptable level of toxicity and safety profile, and have demonstrated the desired effect in

clinical trials, it can then be moved on to a human-grade medication.

FDA Review and Approval: After successful completion of Phase III trial application

stating the safety and efficacy of the investigational drug and containing all information

collected during the drug development process is submitted to the regulatory authority of

the country. In the US such applications are called New Drug Application (NDA), which

is submitted to the FDA.

Phase IV is the post-marketing surveillance and pharmacovigilance studies, in which,

safety update reviews are carried out when drug is in the market and monitored to

identify any unforeseen side effects.

The table 2.1 below provides a descriptive representation of various drug discovery stages

starting from identification and screening of thousands of compounds to clinical testing and

validation, along with number of years taken at each stage.

Table 1.1: Drug Discovery and Development Process

5,000 to 10,000 Compounds Yield 1 New Drug to Market

Step Number of Compounds

Number of Years

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Discovery 5000-10000

Preclinical Study

250

Phase I Clinical Trials

5

Phase II Clinical Trials

1

Phase III Clinical Trials

1

FDA Review/ Approval

Source: PhRMA, based on data from Center for the Study of Drug Development, Tufts University, 1995

1.3.1 The Drug Approval Process in India

The Indian pharmaceutical industry is regulated by Drugs and Cosmetics Act 1940 (DCA). The

office of the Drug Controller General of India (DCGI) deals with the matters related to clinical

trials, product standards, product approvals and introduction of new drugs in the country as well

as licenses for import of new drugs. The application for approvals is to be attached with the

following documents.

• Introduction letter describing the drug and therapeutic class

• Information related to Clinical and pharmaceutical

• Animal pharmacology

• Animal toxicology

• Report of Clinical pharmacology trials conducted on Human subject (Phase I)

• Phase II Exploratory clinical trials reports

• Phase III trials on Confirmatory clinical study

• Special studies, if any

• In case imported drug the Regulatory status of other countries

• Post Marketing information

In case the drug is already approved and marketed in other counties, then required to submit

phase III studies conducted on minimum 100 volunteers in 3-4 locations in India. Suppose the

drug is imported in the public interest, then DCGI may do away with the need for local clinical

trials. However, the clinical trials data conducted in other countries have to be submitted for

approval.

1.4 GLOBAL PHARMACEUTICAL R & D SCENARIO

Pharmaceutical industry ranks the highest among rest of the high

in the world (EFPIA 2012). R & D is the mainstay of pharmaceutical industry and spends a

large amount of money despite low success rate due to which the pressure on pharmaceutical

companies is very high to improve R & D productivity.

collaborative research with leading academic institutions as well as outsource R & D activities

selectively to low cost highly skilled counties in the world.

Despite good intensions, research still is a profit driven activity with number of

developing specialist products (

effluent community than poor patient with primary care products. Country like India with

quality infrastructure and scientific talent must be acti

sufferings from deadly diseases affecting the world over.

Source: IMS Health, New Product Focus, Jan 2011.

1.4.1 Global Spending on Research & Development

Global spending on pharmaceutical R &

period. The estimated expenditure on R & D for 2011 stands at $135bn world

0

5

10

15

20

25

2000 2001 2002

Nu

mb

er

of

NC

E L

au

nch

es

Chart 2.1 NCE Launches driven by fewer Primary Care

Specialist driven

GLOBAL PHARMACEUTICAL R & D SCENARIO

Pharmaceutical industry ranks the highest among rest of the high-tech manufacturing industries

). R & D is the mainstay of pharmaceutical industry and spends a


companies is very high to improve R & D productivity. Companies, therefore,


selectively to low cost highly skilled counties in the world.

Despite good intensions, research still is a profit driven activity with number of

developing specialist products (Chart 2.1) that earn more revenue to the firm while serving


quality infrastructure and scientific talent must be active drug R & D to eliminate human

sufferings from deadly diseases affecting the world over.

: IMS Health, New Product Focus, Jan 2011.

Spending on Research & Development

Global spending on pharmaceutical R & D has touched US$ 1.1 trillion over the last 10 year

period. The estimated expenditure on R & D for 2011 stands at $135bn world-wide, which is an

2002 2003 2004 2005 2006 2007 2008 2009Year

NCE Launches driven by fewer Primary Care

Products

Specialist driven Primary care driven

tech manufacturing industries

). R & D is the mainstay of pharmaceutical industry and spends a


Companies, therefore, resorts to


Despite good intensions, research still is a profit driven activity with number of firms engaged in

) that earn more revenue to the firm while serving


ve drug R & D to eliminate human

D has touched US$ 1.1 trillion over the last 10 year

wide, which is an

2009 2010

increase of 4.9% over 2010. This clearly indicates that R & D undoubtedly is the key driver of

the growth of pharmaceutical industry across the world (EvaluatePharma 2012)

Among regions which spends the largest on R & D is led by USA with more than USD 40.7

billion (46%), followed by Europe with USD 37.8 billion (42%) and Japan USD 10.8 billion

(12%) (EFPIA 2012).

Among Europe UK spends about $6.75 billion, Germany $6.54 billion, Switzerland $6.28 billion

and rest of Europe spends $18.23 billion. Europe accounts 5 out of top 10 pharmaceutical

companies in the world in terms of sales and R & D investments.

Japan is another major pharmaceutical R & D spender in the world with an expenditure of ¥

1276.0 billion by the end of 2010. China is a fast growing pharmaceutical market with an

increasing focus on R & D and a destination for R & D outsourcing in th

1.4.2 World’s Leading Companies with Biggest R & D Investment

The global pharmaceutical R & D composition symbolizes the largest firms dominating the

global R & D investment and holds the maximum patents too.

Europe, 37.8, 4

2%

Japan, 10.8, 12

%

Chart 2.2 Global Region


f pharmaceutical industry across the world (EvaluatePharma 2012).





companies in the world in terms of sales and R & D investments.



increasing focus on R & D and a destination for R & D outsourcing in the world.

World’s Leading Companies with Biggest R & D Investment


global R & D investment and holds the maximum patents too.

USA, 40.7,

46%

, 10.8, 12

Global Region-wise R&D Spending 2010 US$ Bn








e world.

World’s Leading Companies with Biggest R & D Investment


D Spending 2010 US$ Bn

USA

Europe

Japan

The table (Table 2.2) below shows in 2010 company Merck, USA spent the highest amount

(US$ 11 billion) in research and development in the world, followed by Pfizer, USA (US$ 9.41

billion) and Roche, Switzerland (US$ 8.61 billion). Whereas a number of smaller firms from the

rest of the world are solely depending on manufacturing and marketing of drugs that have gone

off-patent in the market, thus spends little or nil on R & D.

Table 2.2: Leading Pharma R & D Spenders in the World for 2010

2011

Rank

Company Country R & D spend

($ Billions)

R & D

spending % to

Sales

1 Merck USA 11.00 16.09%

2 Pfizer USA 9.41 16.90%

3 Roche Switzerland 8.61 12.77%

4 Novartis Switzerland 7.10 27.64%

5 GlaxoSmithKline UK 6.13 22.03%

6 Sanofi-Aventis France 5.15 16.92%

7 Eli Lilly USA 4.88 12.61%

8 Johnson & Johnson USA 4.43 19.79%

9 AstraZeneca UK 4.20 23.13%

10 Abbott USA 3.72 18.71%

Sources: IMAP Healthcare Report (2011), “Pharmaceutical & Biotech Industry Global Report-2011” http://www.imap.com/imap/media/resources/IMAP_PharmaReport_8_272B8752E0FB3.pdf

The data below (Table 2.3) shows that the extent of money companies spent on its research and

development activities that determines the success of producing more blockbuster drugs, such

companies dominates the world pharmaceutical market. The table below indicates companies

with their top earning products.

Table 2.3: Top Blockbuster Products in the World for 2010

2011 Rank

Company Country Top-Selling Drugs USD billions

1 Pfizer USA Lipitor Enbrel Lyrica

10.7 3.3 3.1

2 Novartis Switzerland Diovan/Co-Diovan Gleevec/Glivec Lucentis

6.1 4.3 1.5

3 Sanofi-Aventis France Lantus Lovenox Taxotere

4.7 3.7 2.8

4 Merck USA Singulair Remicade Januvia

5.0 2.7 2.4

5 Roche Switzerland Avastin MabThera/Rituxan Herceptin

6.8 6.7 5.7

6 GlaxoSmithKline UK Seretide/Advair Pandemic Flu Vaccine Flixotide/Flovent

7.9 1.8 1.2

7 AstraZeneca UK Crestor Nexium Seroquel

5.7 5.0 4.1

8 Johnson & Johnson USA Remicade Procrit Risperdal

4.6 1.9 1.5

9 Eli Lilly USA Zyprexa Cymbalta Alimta

5.0 3.5 2.2

10 Abbott USA Humira Trilipix/TriCor Kaletra

6.5 1.6 1.3

Source: IMAP Healthcare Report (2011), “Pharmaceutical & Biotech Industry Global Report-2011” http://www.imap.com/imap/media/resources/IMAP_PharmaReport_8_272B8752E0FB3.pdf

1.4.3 Allocation of R & D Investments by Function

In terms of R & D allocation, clinical trials (Phase I

consumes large chunk of research budgets (US 43%, Europe 58%)

studies (synthesis and extraction, biological screening and pharmacological testing, toxicology

and safety testing, pharmaceutical dosage/formulation and stability) US 26% and Europe 25%.

While Phase IV (pharmacovigilance) and other approval process uses the rest of the budget

allocation (EFPIA 2002).

Source: PhRMA, Annual Membership Survey 2012 (percentages calculated from 2010 data)

1.4.4 Global R & D Pipeline

0%

100%

26% 25%

% o

f S

pe

nd

ing

Chart 2.3

In terms of R & D allocation, clinical trials (Phase I – III) required for approval of medicine

consumes large chunk of research budgets (US 43%, Europe 58%), followed by pre

extraction, biological screening and pharmacological testing, toxicology



: PhRMA, Annual Membership Survey 2012 (percentages calculated from 2010 data)

Global R & D Pipeline

43%

7% 13% 11%25%

58%

6% 10% 2%

Clinical Phases

Chart 2.3 R & D Spending by Stages

US Europe

III) required for approval of medicine

followed by pre-clinical

extraction, biological screening and pharmacological testing, toxicology



Europe

Source: IMS Health, R & D Focus, Jun 2010

As per IMS Health, cancer and diabetes drugs shows long-term promise in the global

R & D pipeline with great improvements in the early-stage product trials for pharmaceutical

industry.

1.5 INDIAN RESEARCH & DEVELOPMENT OVERVIEW

India predominantly spends very little on R & D. It is after 2005 TRIPS agreement India started

looking at R & D seriously. Though there was an initial growth in the R & D spending, but it

has declined considerably due to various factors (Chart 2.7). India’s share to the overall global

R & D investment stands very low at US$ 24.1 billion (roughly 2.1%) as per the chart (Chart

2.5) represented below.

110 102 116 120 130 131 138 139 142

572648

734893 941

9951093

11591205

807864

933990

10621130

1231 12541368

274 258 284 287 299 290 334 340 363

0

200

400

600

800

1000

1200

1400

1600

2002 2003 2004 2005 2006 2007 2008 2009 2010

Act

ive

Mo

lecu

le in

th

e P

ipe

lin

e

Chart 2.4 Global R & D Pipeline

Pre-reg/reg

Phase I

Phase II

Phase III

Source: Battelle, R & D Magazine

However in 2012, India was the 7

largest in 2011. India is expected to retain this position in 2013, with R & D investments

increasing to USD 45.2 billion from USD 38 billion in 2011 (Deloitte 2011) as shown below

(Chart 2.6).

Source: Battelle, Aranca Research. Notes: PPP

Japan

13%

China

12%

India

2%

Chart 2.5

33

0.80%

0

10

20

30

40

50

2010

US

D B

n

Chart 2.6

R&D expenditure (PPP)

However in 2012, India was the 7th largest country in terms of R & D investments, up from 8

India is expected to retain this position in 2013, with R & D investments


Battelle, Aranca Research. Notes: PPP - Purchasing Power Parity, F - Forecast

US

34%

Europe

24%

ROW

15%

Chart 2.5 Global R & D Spending 2009

Total USD 1143.2 Billion

38 4045

0.80%

0.85%0.85%

0.90%

2011 2012 2013F

Chart 2.6 R & D Expenditure in India

R&D expenditure (PPP) % of GDP

largest country in terms of R & D investments, up from 8th

India is expected to retain this position in 2013, with R & D investments


0.74%

0.76%

0.78%

0.80%

0.82%

0.84%

0.86%

0.88%

0.90%

0.92%

1.6 VIEWS ON R & D INVESTMENT FROM INDUSTRY CAPTAINS

In a pharma summit 2007, “Dr. Swati Piramal of Nicholas Piramal, said that the value of R & D

in India would be over USD1200 billion by 2050” (Express Pharma 2007).

Renuka Ramnath of ICICI Venture Fund said that “pharmaceutical industry is going through a

tremendous change from imitation to innovation. However, she agrees innovation is the need of

the hour, but R & D is considered still a high risk, high cost segment (Express Pharma 2007).

The Chairman of Cadila Healthcare Mr. Pankaj R Patel stated that “while there are plenty of

opportunities unfolding in the pharmaceutical industry, but it is the R & D which will play a key

role in leveraging India’s potentials in pharmaceuticals that benefits the millions” (Express

Pharma 2007).

“Mr. Shrinivas Dempo, the CII Chairman for Western Region view that low R & D penetration

in country will pose a major challenge for the industries in India”(Express Pharma 2007).

1.7 PHARMACEUTICALR & D IN INDIA

Despite industry’s many laudable achievements in production, technology and process chemistry

skills, the pharmaceutical industry in India is yet to discover a new drug molecule of marketable

grade in the country. According to (Chaudhuri 2010), since 1947 Indian pharmaceutical R & D

has developed 17 new drugs, but none of these drugs could find commercial success(Reji K

Joseph 2010). Indian companies spend very low (less than 2%) on R & D as compared to their

global counterpart who spends on an average 15 per cent of their sales turnover on R & D. The

chart below (Chart 2.7) shows the pattern of R & D investments by Indian companies to the

percentage of their sales turnover.

Chart 2.7:R & D Expenditure to the percentage of Sales turnover of

Indian Pharmaceutical Industry from 1990 - 2010

Source: Prowess. www.ris.org.in/images/RIS_images/pdf/dp176_pap.pdf

There may be many factors responsible for the low R & D investments and intensity in the

country such as (i) Indian companies were predominantly engaged in manufacturing of generic

drugs, (ii) recognition of process patent enabled Indian companies to manufacture and market

patented drugs conveniently using reverse engineering technology resulting less concentration on

new drug development, (iii) new drug development is lengthy and expensive. However, the

domestic R & D start picking up as India got closer to TRIPS 2005.

1.7.1 Leading Indian Pharmaceutical Companies with R & D Spending

during 2012

R & D is the key to pharmaceutical industry, but the combined spending on R & D inclusive of

expenses for the production, generics and new drug delivery systems (NDDS) by leading Indian

pharmaceutical companies during 2012 is as little as Rs. 3370 crores (Chart 2.8), which is

roughly 6% of Pfizer’s R & D expenditure of USD 9.5 billion during 2010.

Source: Ace Equity

Even the combined R & D investment of India’s top 12 pharmaceutical companies during 2005 –

2013 amounts to only $3.66 billion (Chart 2.9), which is only 39 per cent of Pfizer’s R & D

investment in a single year during 2010. The fact of the matter is that despite the introduction of

strong product patent and the advantage of being a low cost country, India has not made

significant improvements in R & D, particularly the new drug development.

7%

5%

9%9% 5%

9%

13%

4%

8%

3%

6%5%

0

100

200

300

400

500

600

700

0%

2%

4%

6%

8%

10%

12%

14%

Rs.

Crs

Chart 2.8 Pharma R & D Expenditure during 2012

R&D Expenditure % to Sales turnover

Source: Ace Equity, http://www.accordfintech.com/ace-equity 1.7.2 Pattern of R & D Investments in India

The culture and belief of R & D investments across the world follow an identical pattern with a

few industries leading the pack, as usual is: healthcare, computing, auto and electronics. India is

no exception to this global phenomenon as the analysis of the sector wise spending outlay for the

Department of Scientific and Industrial Research (DSIR), Government of India shows that

among various industries, pharmaceutical sector stand in second position in terms of R & D

spending (Deloitte 2011) as shown below:

5094 4927 4443 3460 2940 2687 2189 2107 1646 1485 1366 1108

10%

5%

11%

8%

4%

10%

11%

4%

8%

4%

10%

6%

0%

2%

4%

6%

8%

10%

12%

0

1000

2000

3000

4000

5000

6000

Rs

Crs

Chart 2.9 Ave. R & D expenditure % to Sales Turnover

from 2005-13

Ave. Sales Revenue Ave. R&D Expenditure % to Turnover

Chart 2.10:Sector wise R & D outlay under the XI Plan, Government of India

Source: Research & Development expenditure- A concept paper – July 2011, by Deloitte.

As per the study (Jean O. Lanjouw et.al 2005), the pattern of R & D investments and intensity by

Indian pharmaceutical companies found to be heavily tilted towards specialist diseases rather

than primary care treatment which are prevalent in Indian conditions. This clearly indicates a

dangerous trend followed by the private sector investors of protecting profit at the cost of

neglected diseases of the poor world.

When profit is outdone the social good, the option before the government is to step in to save the

public health of the nation before leading to serious health crisis. Hence, it is of great

significance for public sector pharmaceutical companies in India to be revived and involved in

active research and development of new drug molecules especially of neglected diseases with the

support of the Government.

1.7.3 Indian Pharmaceutical R & D Pipeline

Although, new drug research is a high-risk high-return field, the Indian pharmaceutical

companies are putting their best efforts to move up in the R & D value chain to book place

among the innovator league. It is therefore encouraging to observe that many Indian companies

are into new drug discovery process in the areas of infections, diabetes, inflammation,

respiratory, obesity and cancer ailments (Table 2.4), and companies leading the pack are Dr.

Reddy’s, Ranbaxy, Glenmark, Piramal Healthcare, Biocon and Lupin Laboratories.

Table 2.4: R & D Pipeline of Indian Pharmaceutical Companies

Compound Therapeutic Area Status Dr Reddy’s

DRF 2593 Metabolic disorders Ongoing. Phase III Several Compounds Respiratory disorders Ongoing. Phase I DRL 17822 Metabolic disorders /

Cardiovascular disorders Ongoing. Phase I

Ranbaxy RBx 11160 (Arterolane) Anti-malaria combination

drug Ongoing. Phase III Studies in India and Thailand

Unnamed Respiratory problems Ongoing. Completed Phase I in collaboration with GSK and received related milestone payment from GSK

Glenmark GRC 10693 Naturopathic Pain,

Osteoarthritis & other Agonist inflammatory pain

Ongoing. Entered phase II trials

GRC 8200 (Melogliptin)

Diabetes type-2 Ongoing. Entered phase III

GRC 3886 (Oglemilast) COPD, Asthma Ongoing. Phase II Completed GRC 4039 (Revamilast) Rheumatoid arthritis,

multiple sclerosis and other inflammatory disorders

Ongoing. Entered phase II

GBR 500* Multiple Sclerosis and inflammatory disorders

Ongoing. In phase I

GRC 15300 Osteoarthritis pain, Naturopathic Pain, Skin Disorders

Ongoing. In phase I

GBR 600* Anti-platelet, Adjunct to Ongoing. Completed

Piramal Healthcare P 276 Oncology (head and neck

cancer) Ongoing. Entered phase II. Trials are going on in India, US and Australia.

P 276 combination with Gemcitabine

Oncology (pancreatic cancer)

Ongoing. Phase I.

P 276 combination with Radiation

Oncology (pancreatic cancer)

Ongoing. Phase I.

P 1446 Oncology Ongoing. Phase I in India and Canada

NPB-001-05-Bcr-Abl Oncology (chronic myeloid leukemia)

Ongoing. In phase II.

P 13 Kinase Oncology Ongoing. Lead selection. Microbial leads Oncology Ongoing. Lead selection. Target X - Merck Oncology Ongoing. Lead selection. Target Y - Merck Oncology Ongoing. Lead selection. NPS 31807-TNFa Inflammation (rheumatoid

arthritis) Ongoing. Phase II Completed

P 979-TNFa Inflammation Ongoing. In preclinical. P 3914 Inflammation Ongoing. In preclinical. IL 6 Inflammation Ongoing. Lead selection. TNFa Inflammation Ongoing. Lead selection. P 1736 – Non PPARy Diabetes and metabolic

disorders Ongoing. Phase I.

P 1201 - Lilly Diabetes and metabolic Ongoing. Phase I.

PCI/ Acute Coronary Syndrome

preclinical trials

Crofelemer Anti-diarrhoeal Successfully completed phase III. In-licensed from Napo Pharmaceuticals, USA.

Biocon PEG-GCSF* Oncology Ongoing. Pre-clinical Bmab 100* Oncology Ongoing. Pre-clinical Bmab 200* Oncology Ongoing. Pre-clinical BVX-20* Oncology Ongoing. Pre-clinical IN 105 (Oral Insulin)* Diabetes Ongoing. Phase III T1h* Inflammation Ongoing. Phase II BIOMAb EGFR (Glioma, NSCLC)*

Oncology Ongoing. Phase III

disorders P 2202 - Lilly Diabetes and metabolic

disorders Ongoing. Phase I.

DGAT1 Diabetes and metabolic disorders

Ongoing. Lead selection.

NPH30907# -Dermatophytes

Anti-infective Ongoing. Phase I Completed

PP 9706642# – Anti-HSV2

Anti-infective Ongoing. Pre-clinical

PM 181104 – MRSA/VRE

Anti-infective Ongoing. Toxicity studies.

Lupin LL 2011# Anti-migraine (Amigra) Ongoing. In phase III.

LL 4218 Anti-psoriasis (Desoside-P) Ongoing. In phase II

LL 3858/4858# TB (sudoterb) Ongoing. In phase I

LL 3348 Anti-Psoriasis (Herbal Desoris) Ongoing. In phase II

Unnamed Diabetes type 2 Ongoing. In preclinical Unnamed Rheumatoid arthritis Ongoing. In preclinical

Source: Based on the annual reports of the companies from 2001 - 2007 www.ris.org.in/images/RIS_images/pdf/dp176_pap.pdf

However, most of the R & D efforts of Indian companies are concentrated in chronic lifestyle

disease segments such as cancer and diabetes, which is not a good sign when compare diseases

relevant to tropical regions like India (Reji K Joseph 2010).

While there are roughly about 70 – 80 new molecules in the pipeline at different phases of

clinical trials from Indian players, Dr. Reddy’s Laboratories’ is the first Indian company to

indigenously develop a New Chemical Entity (NCE) called ‘Balaglitazone’ an anti-diabetic

agent. However, after a prolonged phase of development spread over six to seven years in

United States and Europe, the new anti-diabetic molecule has failed due to the side-effect

profiles of the glitazone family compounds (DNA 2011).

Dr. Reddy’s has invested a large amount of money over 6 - 7 years to develop the anti-diabetic

molecule with no success. In the case of Lupin’s TB research program, the company is already

in the process of terminating the program in favour of drug that give better returns such as

diabetes and anti-inflammatory which are globally very hot areas these days (Business World

2010).

1.7.4 Regulatory Filing by Indian Companies with USFDA

The US legislation of Hatch-Waxman Act (patent restoration act 1984) has facilitated the entry

of generic versions of previously approved innovator drugs to be brought into the market. Many

Indian companies have taken the advantage of this provision and made several regulatory filing

with USFDA for Drug Master File (DMF) and Abbreviated New Drug Application (ANDA).

This has brought a new dimension to India’s exports to well established international market like

US and Europe. India has made great inroads into these markets with its generic version of the

inventor drugs.

Drug Master File (DMF): A Drug Master File is a submission of detailed information about

facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of

one or more human drugs to the US Food and Drug Administration (US-FDA), which may later

be used to support an investigational new drug application (IND), a new drug application (NDA),

an abbreviated new drug application (ANDA), export application or amendments and

supplements to any of these (USFDA 2014).

Abbreviated New Drug Application (ANDA): ANDA is a generic drug application termed as

‘abbreviated’ because they are generally not required to include pre-clinical and clinical data to

establish safety and efficacy and are only required to demonstrate the bioequivalence of the

product).

It’s quite encouraging to find the achievements of Indian companies with respect to DMF filings

and ANDA with USFDA despite there being a stringent regulatory environment. There are total

962 DMF filings and 537 ANDA approvals during 2001 to 2010 from leading Indian

pharmaceutical companies as detailed below (USFDA 2014).

Table 2.5: DMF Filing and ANDA Approvals by USFDA

Company 2011 - 2010

ANDA DMF

Aurobindo 99 144

Dr Reddy's 83 153

Ranbaxy 81 101

Sun 67 70

Wockhardt 64 43

Glenmark 46 45

Lupin 40 100

Orchid 30 77

Matrix 17 139

Cipla 10 90

Total 537 962

Source: US FDA 2011

1.8 R & D BY MNCs OPERATING IN INDIA

There are approximately 34 foreign drug companies operating in India, among them 15 are

world’s 20 largest pharmaceutical companies. Despite their strong presence, the track record of

developing or introducing new drug molecules in India is very poor. However, they still

command a good market share about 30 percent of the total Indian pharmaceutical market.

The introduction of strong patent law saw many MNCs setting up their R & D centres in India.

Currently there are more than 300 R & D Centres in India by MNC (Deloitte 2011). Although

there is considerable increase in number of patents filed by MNCs post 2005 TRIPS agreement

in India, the amount of patents filed for doing indigenous research in the country is somewhat at

less than 20 per cent of the total patent filed (Deloitte 2011). This clearly points out that the R &

D centres including MNCs are yet to produce a new drug molecule in India.

According to FICCI (FICCI-ORF Report 2009), MNCs are yet to launch new products in India,

but they have made investments in new production facilities and R & D centres. They are also

engaged in contract manufacturing, clinical trials, and other forms of outsourcing activities in

India mainly to reap the benefit of India’s rich talent pool, low costs etc.

1.9 THE R & D ECOSYSTEM IN INDIA

India is the fourth largest economy by PPP in the world. It has a healthcare market of USD 68.4

billion in 2011 (IBEF study 2013). Country has some of the finest pharmaceutical and biotech

companies operating in the domestic sector with robust capability and scientific skill to develop

new drug molecules. India has an enabling R & D environment with stable economic, political

and legal system, quality infrastructure, excellent IT support with digital and transport

connectivity, which are pre-requisite to conduct flawless drug research and development

activities in the country.

There are more than 150 established Clinical Research Organization who conducts various

clinical studies for MNCs as well as Indian pharmaceutical companies, fair number of hospitals,

physicians, nurses, diagnostic labs etc., spread across the country, which can easily support any

clinical studies in the country. Despite massive infrastructure at its disposal, the drug research

in the country is still at the infant stage.

The table (table 2.6) below shows the statistics of India’s economic advantages to be exploited

for creating India as hub of drug research and development.

Table 2.6: India and Its Resource Advantage

Indian Statistics

(2007 - 2012)

1 Population 1.21 billion

2 GDP $2.2 trillion

3 GDP growth (average) 8.0%

4 Universities 409

5 Key Research Institutes 14

6 Pharmacy Colleges 1162

7 Medical Colleges 200

8 M. Pharms and PhD offering colleges 191

9 Pharmacy Students 51716

10 Medical Graduates 22000

11 Master and PhD students 5648

12 Healthcare Market $68.4 billion

13 Per capita healthcare spending $57.90

14 Total Pharmaceutical Market 107809 Cr.

15 Domestic Market 62055 Cr.

16 Export Market 45754 Cr.

17 Pharmaceutical Companies 10563

18 Biotech Companies 350

19 Clinical Research Organizations 100

20 USFDA approved plants 160

21 Dedicated Pharma R & D centres 250

22 Researchers 155000

23 R & D expenditures to Sales 4.5%

24 Hospitals 15622

25 Health Centres 163181

25 Diagnostic Labs 14000

26 Practicing Physicians 600000

27 Nurses 737000

Source: GOI-DoCP annual report 2011-12, IBEF 2013, CIA Fact book, CDSCO, Mediminds 2007

However, there are plenty of studies which indicate that India is significantly ahead in chemistry

services such as analogue preparation, analytical chemistry, focus library, combinatorial

chemistry, structural chemistry, structural drug design, computer aided drug design, high

throughput screening and assay development. It lacks enough skills in biology and medicinal

chemistry, which are fundamental prerequisites to undertake new drug development process

(WHO Report 2006).

1.10 CLINICAL RESEARCH AND OUTSOURCING SERVICES

Global clinical research industry is estimated to be US$ 64 billion (FICCI report on Clinical

Research), witnessing key transition in the area of drug development. Due to increasing costs,

declining productivity and rising drug development timelines have compelled many leading

pharmaceutical and biotechnology companies to look for new and smarter ways of conducting

clinical research. Emerging markets like India, China, Latin America and Eastern Europe offers

great scope for clinical research outsourcing business.

The Indian clinical research industry, with its strategic advantages, is estimated to be USD 2.2

billion with a high growth rate of 23% (Invest India 2012). Outsourcing in India has gradually

moved up the value chain from intermediates and APIs to new drug discovery, clinical trials,

marketing, and sales. A firm subcontract their clinical research activities to another firm, may be

in another country, due to factors like:

• Time and Cost Competitiveness

• Clinical Research Expertise

• Healthcare Infrastructure

• Scientific Feasibility and Favourable Regulatory Environment

Time and Cost Competitiveness: Sluggish sales due to patent going off in the home market,

declining R & D revenues, and rising costs have made many MNCs to outsource their R & D

activities to low cost destinations in the world. India offers a significant cost advantage of

roughly 40-60% lower than in developed countries and around 10-20% lower than emerging

economies (FICCI report on Clinical Research). It can employ more scientists and investigators

at low cost. Therefore, MNCs across the world prefer to outsource their clinical trial activities to

low cost countries rather than continuing in the high cost home countries.

Clinical Research Expertise: India offers rich and growing pool of talented and experienced

medical professional with apt chemistry and English language skills. India also achieved a

tremendous record in the area of development and cost-effective chemical syntheses of different

drug molecules in the country (Invest India 2012).

Healthcare Infrastructure : India is a favoured destination for clinical research outsourcing for

MNCs due to its urban healthcare infrastructure in terms of beds/ physicians/ nurses per 1000

global average. It has high levels of compliance with internationally harmonized standards in the

specific area of clinical research with respect to Good laboratory Practices (GLP), Good Clinical

Practices (GCP), and current Good Manufacturing Practices (cGMP) including many US FDA

approved plants. India also offers well developed communication networks with information

technology capabilities (Pharmainfo.net 2010).

Scientific Feasibility and Favourable Regulatory Environment: The diverse disease profile

and abundance of study subjects across major therapeutic segments provides a perfect setting for

clinical trials in India. In addition, a favourable regulatory environment allows a flawless

conduct of global trials.

Table 2.7: Clinical Trials Registered with CTRI India

Year No. of DCGI approved trials

2007 3

2008 65

2009 391

2010 500

2011 321

2012 262

Total 1548

Source: http://www.cdsco.nic.in/DCG(I)

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