India drugmakers spread wings abroad

BOMBAY: No longer able to rely on selling copycats of drugs patented abroad, more Indian drug makers have begun setting up foreign partnerships to expand into overseas markets.

Since new laws took effect in January, Indian generic-drug makers have completed at least a dozen deals with foreign partners who will sell their drugs, while three other deals involve Indian firms licensing new molecules or drug delivery systems.

“The model is veering around partnerships across various segments, such as sharing of intellectual property, becoming vendors of first choice for developing generics and supplying bulk ingredients,” said Utkarsh Palnitkar, an analyst with Ernst & Young in Hyderabad.

“Mitigation of risk is driving such partnerships,” he said.

For more than three decades, Indian companies thrived with the protection of laws that allowed them to copy drugs under patent elsewhere. To meet World Trade Organisation obligations, India changed the law at the start of this year to disallow copying of drugs patented after 1995.

“Since India has adopted a product patent regime, revenue from copycat drugs will reduce after a few years, so it is better for Indian companies to derive revenue from other markets,” said Sanjay Ramdas Dongre, who manages a pharmaceutical and health care fund at Unit Trust of India (UTI), India’s largest mutual fund.

While larger players Ranbaxy Laboratories Ltd., Dr. Reddy’s Laboratories Ltd. and Cipla Ltd. have led the way, others are now turning to exports.

Billions of dollars worth of drugs lose their patent protections over the next few years, luring Indian drug makers overseas to coepete with their cheaper generic versions. Indian firms also need to keep expanding, and foreign markets offer the best opportunities.

India’s Cadila Healthcare Ltd., Strides Arcolab Ltd., Matrix Laboratories Ltd., Orchid Chemicals & Pharmaceuticals have partnered with firms such as Mayne Pharma, Actavis, Aspen Pharmacare, Alpharma Inc, Tyco International and Stada Pharmaceuticals.

Win-win: Pharma multinationals, which have had only limited success with new drug research, have learned they need to seek promising new drugs wherever they can find them.

“There is pressure on them to cut costs to maintain profits and one way to reduce costs is to source from places where it can be cheaper,” UTI’s Dongre said.

“Indian companies have U.S. FDA-approved plants but don’t have a front-end in the U.S., so collaboration will help them. It’s a win-win situation for both.”

Besides the 70-plus Food and Drug Administration-approved manufacturing facilities — the largest number outside the United States — India also has chemistry skills and cheap labour, which multinationals can easily tap through partnerships. reuters

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