India taps into global drug
pipeline By Indrajit Basu
KOLKATA - Amid the anti-outsourcing brouhaha
that is currently rocking the Unites States, there is at
least one aspect of the controversial phenomenon that
the Americans can't complain about. For this, unlike
most other forms of outsourcing, doesn't just involve
the mundane issues of cost-saving and the moving away of
jobs, but with more profound ones like well-being and
health.
Driven by the need to invent new drugs
at much lower costs against the backdrop of the billions
of dollars of wasted research of the past years that has
ended up in what is called an "innovation deficit",
US-based multinational drug companies like Eli Lilly,
Pfizer, Aventis, Novo Nordisk, GlaxoSmithKline and Merck
are increasingly turning to India to leverage their drug
development activities, as well as to invent new drugs.
And aided with an efficient drug regulatory system, an
experienced drug industry, a vast talent pool and an
obviously much lower cost of research, India is suddenly
emerging as the destination of choice in Asia for
drug-related research.
In fact, although the
US-based drug industry is one of the biggest and most
lucrative in the world, it is ailing. Having spent
billions of dollars since 1991 chasing new blockbuster
drugs, the drug companies are suddenly staring at the
fact that the pipeline of new drugs, on which their
future health depends, has been drying up for some time.
For instance, global research funding has doubled to
over US$200 billion since 1991, but the number of new
drugs emerging each year has fallen by less than half.
Last year, the US Food and Drug Administration (FDA)
approved only 21 "new molecular entities" - industry
jargon for new drugs - down from 53 in 1996.
Clearly, the more they spend on research and
development the less the drug giants seem to have to
show for it. But more importantly, the cost of new drug
development is turning out to be too enormous to bear
for these drug companies especially after having spent
huge sums of money during the 1990s that yielded little
results. Boston's Tufts Center for the Study of Drug
Development, the leading research center of new drug
regulation economics, calculates that total pre- and
post-approval research averages $900 million per drug.
But the time required for the trials process - which may
take 10 years - is a greater cost factor and an
impediment to releasing beneficial new drugs.
The costs are especially challenging to smaller
drug and device companies that are often started by
doctors and scientists turned entrepreneurs. Some of the
promising startups, which have created what might be
highly beneficial new drugs, are also strangled by the
amount of money and time needed to pass FDA-certified
trials, as well as the FDA approval process itself. In
September last year, for example, a Santa Monica,
US-based company, Balance Pharmaceuticals, which had
been working on a promising drug for use against both
breast cancer and fibroids for 11 years, simply ran out
of money and was unable to raise the $50 million
necessary to finish clinical trials. A classic startup
founded by scientists from the University of Southern
California medical school, the company fatally
underestimated the amount of time and money that
clinical trials and FDA approval would take.
"The cost of drug development needs urgent
attention, which is why cost-effectively developed drugs
in lower-cost countries like India are gaining a
significant advantage over those that do not," says
Kiran Mazumdar-Shaw, founder of the Bangalore-based
famous biotechnology drug maker and R&D company
Biocon.
Indeed, with a widespread base of highly
trained scientists, doctors, technicians, support
workers, and in some areas, robust IT systems, the cost
of testing drugs is significantly lower in India.
"Generally, developing drugs in Indian laboratories is
70 to 80 percent cheaper than in the US," says A Lal,
chairman of Dr Lal Path Labs. And a recent study by Rabo
India Finance, a subsidiary of Rabobank, Netherlands,
estimated that cost savings could be even higher for the
more expensive research, which can cost $100 million or
more and take several years to complete in the US.
Cost saving is not India's only advantage,
though. Genetically and culturally, India is perhaps the
most diverse country on the face of the earth, says
biologist Madhav Gadgil of Bangalore's Indian Institute
of Science. "Genetic diversity is an important asset for
developing and testing new drugs because people with
different genetic make-ups may respond to drugs in
different ways."
Smelling a "lucrative
opportunity" from this apathy of the multinationals to
spend on research, Indian drug companies too have jumped
on the R&D bandwagon. "With the continued reduction
in the selling price of drugs in the regulated markets,
the manufacturers operating in these markets have to
bring down their costs. We have to strengthen our
facilities to take advantage of this," says Ajay
Piramal, chairman and managing director of Nicholas
Piramal. Over the past year, his drug company, along
with a few more, has tripled its R&D expenditures,
while the next two years could see spending double again
from the current level, say industry sources.
Nevertheless, research on newer drugs in the
country is still restricted to "vanilla" drugs like
vaccines and drugs for ailments like heart disease,
which unlike cancer and Alzheimer's, are less complex to
handle. "So far Indian R&D has responded with
research on smaller drugs and work on flashy blockbuster
drugs like Prozac or Viagra is a distant dream," says an
official of Rabo India. Besides, there is another
significant issue that comes in the way of expansion of
drug research in India: the country's weak and uneven
track record in the protection of intellectual property
and patents - which is already making some drug
companies wary of India.
"Still, it is in this
arena where India, with its vast capabilities, can now
show competence at nearly a third of the costs compared
to the West," says an official from Pfizer India's
research lab. "There is also a growing recognition for
India as a center contributing world-class quality data
acceptable by major regulatory agencies around the world
including the US FDA," said Dr R S Nadig, medical
director, Eli Lilly India, "and that augurs well for the
country."
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