J Technol Transfer (2007) 32:397–423 DOI 10.1007/s10961-006-9025-8

Technology transfer perspectives in globalising India (drugs and pharmaceuticals and biotechnology) S. P. Agarwal Æ Ashwani Gupta Æ R. Dayal

Published online: 9 January 2007
Springer Science+Business Media, LLC 2007

Abstract The paper briefly outlines the status of technology transfer related issues in drugs & pharma and biotechnology sectors in India. The paper also outlines the contemporary business strategies including R&D and technology transfer models.The study indicates that present technology transfer policies and mechanisms are weak and need to be restructured. The current fiscal incentives and tax concessions etc. available for R&D in industry seem to have outlived and are no longer attractive because of continuous lowering of tariff rates and tax rates in the context of WTO and liberalization of policies. Moreover, the issue of R&D support to industry is not covered in the WTO as in case of subsidies. Therefore, it is advisable for the government to revisit the existing promotional measures for R&D. FDI policies also need to be tailored to encourage Technology transfers and capability building. Recommendations are made for making Technology Transfer more effective for the growth and competitiveness of the industry. A technology transfer management model is suggested. Keywords Technology Æ R&D Æ Drugs & pharma Æ Biotechnology Æ Competitiveness Æ Policy Æ WTO Æ Incentives Æ Globalization Æ Model Æ Technology transfer JEL Classification

O33

S. P. Agarwal (&) Æ R. Dayal Centre for International Trade in Technology, Indian Institute of Foreign Trade, New Delhi, India e-mail: [email protected] A. Gupta Technology Transfer, DSIR, Ministry of Science & Technology, New Delhi, India e-mail: [email protected] R. Dayal e-mail: [email protected]

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1 Introduction Technology, globalisation, new world trade rules, and competitiveness are mainly driving the developments in knowledge-based economies today. In India, policies are being continuously liberalised towards a market based economy specially since 1991 and in line with WTO, since its birth in 1995. Liberalised foreign direct investment policies (FDI) are essentially aimed at enhancing international competitiveness and exports, besides as an additional source of investment. Most of the sectors including drugs & pharmaceuticals and biotechnology have been opened up through automatic route for FDI up to 100%. The Union Budget 2005–2006 proposals identified infrastructure, education, health care, rural development including rural health missions and employment as the main thrust areas for development, and continued to be thrust areas for development in union budget 2006–2007, except addition of social sector. The budget also envisaged India to be an attractive destination for outsourcing in drug discovery and clinical research, and for co-development of drugs and manufacturing. In bio-technology, the industry has a potential to be a global leader supplying novel technologies and products to the health and agriculture sectors. A stable policy regime and necessary incentives to help the two industries become world leaders, are committed. In the new policy regime, the conventional objectives of technology development such as development or re-engineering of existing products and processes, for domestic markets or self-reliance have given way to innovations and new products/ processes for international markets. The technology transfer perspectives are fast changing from acquisition of second or third generation of technologies through lump sum payment or royalty or through import of plant & machinery on turnkey basis to FDI related transfers of competitive technologies, or through partnerships or joint ventures or R&D collaborations with foreign companies, or subsidiaries abroad, besides increased domestic R&D efforts. The intellectual capabilities, strong S&T policy framework and institutional facilities, the industrial production capabilities in several sectors including drugs & pharmaceuticals, and biotechnology, the extensive bio-diversity, the access to large markets, globally proven ICT capabilities, etc. have placed India as a favoured destination for development and transfer of technologies for global markets (The Economist, 2005). India is today one of the most favoured nations for FDI, though technology and productivity are the weaknesses according to a recent World Competitiveness Report, 2004. It is being globally acknowledged in the context of generic drugs manufacturers that staying ahead of the competition, particularly the various low cost Indian firms with their sights on western markets, is a further challenge to big pharmaceutical companies in the World (The Economist, 2005). The paper briefly reviews the S&T policies and mechanisms and related issues including industry status with reference to technology transfers in drugs & pharmaceuticals and biotechnology. It is hypothesized that the existing Technology Transfer policies and mechanisms need to be tuned to the emerging needs, and there is a large business potential for international Technology Transfer cooperation and alliances. What India lacks is large financial resources required for R&D and commercialization of newer technologies in sectors such as drugs & pharmaceuticals and biotechnology, and a change of mind set on the part of various players in technology transfer. It is therefore a win–win situation for advanced countries, to

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team up with globalizing India, to leverage their comparative advantages for domestic and global markets, through appropriate technology development & transfer, and investment mechanisms.

2 Policies 2.1 S&T policy Over the years, the government of India has made conscious efforts to promote and support S&T development and applications, through policy initiatives and setting up institutional mechanisms besides providing various types of fiscal incentives and tax exemptions for encouraging R&D in industry as well as strengthening linkages among institutions and industry for effective development and transfer of technology. The new S&T policy of 2003 has recognized the need to make Indian industries globally competitive, and to increase our share of high tech products in world markets. Bio-technology is a thrust area for future development. Deriving value from technology led exports and export of technologies is to be facilitated through new policies and incentives (Science & Technology Policy, 2003). There is increased emphasis on promoting international collaborations and technology transfers. The total S&T expenditure is expected to be increased to 2% of GNP from the present level of 0.8%, in next few years, which however would still be quite small in absolute terms compared to the international standards. Recent initiatives include setting up of National Manufacturing Competitive Council, National Knowledge Commission, National Commission for Informal sector including SMEs, mission oriented approach, development of growth centres linked to large companies as well as TNCs across the country, centres of Academic Excellence such as Indian Institute of Science (IISC), Bangalore, and other skill development programmes (research and development in industry, 2004). 2.2 Drug policy The Department of Chemicals of the Government of India has been formulating national drug policies including that of 2004, in coordination with Ministry of Health and other concerned organizations, for development of drugs & pharmaceutical industry which is internationally competitive, R&D oriented and ensuring that the medicines are available to the public at reasonable prices. Appropriate controls and support mechanisms are also evolved to ensure a healthy growth of the industry. 2.2.1 Industrial licensing (Annual Reports, 2004) Industrial licensing for all bulk drugs cleared by Drug Controller General (India), and for all their intermediates and formulations has been abolished, subject to stipulations laid down from time to time in the Industrial Policy, except in the cases of: (i) bulk drugs produced by the use of recombinant DNA technology, (ii) bulk drugs requiring in-vivo use of nucleic acids as the active principles (iii) Specific cell/tissue targeted formulations.

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2.2.2 Foreign direct investment Foreign direct investment up to 100% is permitted, subject to stipulations laid down from time to time in the Industrial Policy, through the automatic route in the case of all bulk drugs cleared by Drug Controller General (India), and all their intermediates and formulations, except those, referred to under industrial licensing. Total FDIs inflows have been to the tune of US $32.3 b during 1991–1992 to 2004– 2005, the inflow during 2003 were at US $4.27 b and investment trends have been positive in 2004 and 2005. The main sectors of inflows have been fuels, telecom, transport, electrical equipment and services, from countries such as Mauritius, USA and Japan. Drugs & pharmaceuticals has also been an area of interest to foreign investors/companies (Economic Survey, 2005). During 2004, there were 16 foreign collaborations, all financial except one technical collaboration relating to Schering AG Mullerstr of Germany. Foreign equity ranged from less than one percent to almost 95%. The countries included Singapore, Germany and USA. There was one collaboration with Joan Biris of Canada, with 20% equity (Monthly Newsletter, 2004). There were 47 cases approved in 2002 for drugs & pharmaceuticals, out of which 10 were technical, involving royalty/lump sum payments. The collaborating countries included USA, Switzerland, Sweden, Netherlands, Germany, UK. There was only one collaboration with Brantford Chemical Inc of Canada, for manufacture of bulk drugs & drug intermediates with 50% equity (Foreign Collaborations 2002, 2004). There is very limited FDI in biotech industry. The FDI inflows in pharmaceutical sector accounted for only 0.4% of total FDI approvals during the period 1991–1999, amounting US $260 m (India, the World’s R&D Hotspot, 2004; UNCTAD, 2003). In recent years, there has been almost as much foreign investment outflows as inflows, indicating that Indian industry is maturing. One of the objectives relates to promoting technology flows both ways. The government has also initiated several measures to encourage outflows, which is evidenced by increasing number of acquisitions abroad (WIR 2003, 2004). 2.2.3 Foreign technology agreements Automatic approval for foreign technology agreements is available in the case of all bulk drugs cleared by Drug Controller General (India), all their intermediates and formulations, except those, referred to above, kept under industrial licensing for which a special procedure prescribed by the Government is to be followed. Automatic approvals are for cases involving lump sum payment up to Rs. 20 million and 8% royalty. It may be mentioned here that the number of technical collaborations has reduced considerably since the new policy regime in 1991. Limited data tend to indicate that technology transfers in foreign collaborations have not been as could be expected. In fact, the R&D expenditures of TNCs in India seem to have generally reduced after 1991 while that of Indian companies has considerably gone up (Agarwal & Geetanjali Natraj, 2002). This could be a matter of interest to the policy makers and researchers (Foreign Collaborations 2002, 2004; Monthly Newsletter, 2004). There were a total 187 technical collaboration approvals in the drug industry during 1991–1999, which constituted 3.1% of all technical collaboration agreements approved during that period. This is a very small figure for such a technology intensive sector (India, the World’s R&D Hotspot, 2004).

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2.2.4 Fiscal incentives The pharmaceutical and biotechnology industry is eligible for weighted tax deduction for R&D expenditure up to 150%. Commercial R&D companies also enjoy tax holiday for 10 years. These are in addition to those mentioned at Para 4 (Pharmaceuticals Research and Development Support Fund, 2005). 2.2.5 Policy concerning small scale units (http://www.dcssi.nic.in; Annual Reports, 2003) The present investment limit for units to qualify as a small-scale unit is Rs.10 million. However, the Government has raised this limit to Rs. 50 million in case of some specified products. These include the following drugs & pharmaceutical products, which are reserved for exclusive manufacture by the small-scale units. The FDI limit through automatic route is 24%. (a) (b) (c) (d) (e) (f) (g) (h)

Nicotinic acid/niacinamide Paracetamol Parabens and their sodium salts starting from p-hydroxy benzoic acid Calcium gluconate Benzyl banzoate Pyrazolones Aluminium hydroxide gel Para amino phenol (industrial grade)

The government has taken several initiatives to enhance the competitiveness and growth of the SMEs in recent times which include setting up of a SME Development Fund (venture capital), a National Commission for Informal sector including SSI sector, a specialized Stock Exchange INDONEXT to facilitate the liquidity and fund flows. The strong SSI sector and innovative entrepreneurs can significantly contribute in the development and transfer of technologies. There are examples of entrepreneurs which have successfully grown into large companies in biotechnology and pharma (Union budget, 2006). 2.3 Bio-tech policy The National Biotechnology policy which is on anvil, proposes biotechnology as a business segment for India with potential of generating revenues to the tune of US $5 billion and creating 1 million jobs by 2010 through products and services. This is supposed to propel India into a significant position in the global biotech sweepstakes. As per the draft strategy biopharmaceuticals alone have the potential to be a US $2 billion market opportunity largely driven by vaccines and bio-generics, clinical development services to generate in excess of US $1.5 billion whilst bio-services or outsourced research services may garner a market of US $1 billion over the period envisaged. The balance US $500 million is attributable to agricultural and industrial biotechnology. The Biotech policy is expected to endeavor to: • Facilitate the availability of scientific and technical human resource in all disciplines relevant to the life science and biotechnology sector.

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• Create infrastructure required to take up R&D in areas like molecular modeling, protein engineering, drug designing, immunological studies, pre-clinical studies, clinical trials, etc. • Foster an international competitive environment for investment and enterprise development and to maximize opportunities in the area of contract research, manufacturing and to promote discovery and innovation. • Institute ‘‘Small Business Innovation Research Initiative (SBIRI) scheme in the Department of Biotechnology for supporting small and medium size enterprises and to encourage them to avail equity support from the SME growth Fund of Small Industries Development Bank of India (SIDBI). • Set up a central body ‘‘Biotechnology Parks Society of India (BPSI)’’ for the promotion of biotechnology parks in the country on the same lines of the Software technology parks of India (STPI) and equipping biotechnology parks with basic minimum components such as research laboratories for product development, multi-purpose pilot facility for manufacturing and process development, quality control and validation of technologies, common effluent treatment plant, a GLP Animal House, a recognized human resource training centre, administrative support centre etc. for the growth of the biotechnology industry, either through public-private alliance or public/private sponsorships. • Establishment of a scientific, rigorous transparent, efficient, predictable, and consistent regulatory mechanism for bio-safety evaluation and release system/ protocol. • Build public awareness about opportunities and challenges presented by biotechnology development and to inspire public trust and confidence on the safety, efficacy as well as social and ethical acceptability of products among consumers and civil society through the dissemination of accurate information in a coherent, balanced, well articulated, user-friendly and transparent manner. • Allow 100% FDI in biotechnology sector. Though, to finance commercialization of new technologies and small scale entrepreneur a venture capital mechanism has become a reality through ‘‘Small Business Innovation Research Initiative (SBIRI) scheme and Biotech parks are coming up in various states of the country, a clear focus is lacking for attaining the various goals and the sustainability of the mechanisms. Creation of 1 million jobs also seems to be unrealistic projection, instead category of jobs should be identified so that aptly skilled manpower is developed in specialized areas and made available to take up the future challenges. 2.4 Analysis The S&T policy 2003 now aims at developing internationally competitive technologies rather than self reliance, besides establishing International networking and alliances. However, this policy remains more of a guide line than a legal document, and therefore has limited impact on the economic ministries and other implementing agencies. The drug policy is essentially evolved by the ministry of Chemicals & Fertilizers while the Biotech Policy is evolved by the Department of Biotechnology of ministry of S&T. The ministry of Health has its own charter for health care related policies and research. Thus, there are multiple ministries concerned with S&T, drugs

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& pharma, biotech, and health, leading to difficulties in implementation of policies, though there are interdepartmental committees set up. Inadequate reviewing mechanism to assess the impact of policies and incentives, and evolving sustainability mechanisms for the programmes are some of the weaknesses in the implementation framework. Developing public–private partnerships seem to have begun to be realized now (IIFT, 2005).

3 Infrastructure for R&D in drugs & pharmaceuticals Infrastructure for research and development activities in the country could be classified into two categories namely (i) infrastructure for funding R&D and (ii) infrastructure for undertaking R&D activities. In the former category falls various government departments such as Department of Science & Technology (DST); Department of Biotechnology (DBT); Department of Scientific & Industrial Research (DSIR); Indian Systems of Medicines (ISM) and in the latter category falls the scientific agencies like Council for Scientific and Industrial Research (CSIR); Indian Council of Medical Research (ICMR), Central Council for Research in Unani Medicine; Central Council of Research in Ayurveda, Central Council for Research in Yoga and Naturopathy. These councils have a chain of national institutions to undertake research on various facets of drug development. Some of the national laboratories such as Central Drug Research Institute, Lucknow (CDRI); Indian Institute of Chemical Technology, Hyderabad (IICT); Regional Research Laboratory, Jammu (RRL, Jammu); Institute of Genetics and Integrative Biology (IGIB); Indian Institute of Chemical Biology, Calcutta (IICB); Centre for Cellular and Molecular Biology, Hyderabad (CCMB) who come under the CSIR umbrella and National Institute of Immunology (NII) and International Centre for Genetic Engineering and Biology (ICGEB) under DBT, are specifically dedicated to drug research. Illustrative activities of Department of Bio-technology are given in Annexure 1 (http://www.nic.in/icar/icar9.html). Apart from these, there are 21 laboratories under ICMR where research in medical science is carried out in various areas of national importance (http://www. icmr.in). Indian Council of Agriculture Research (ICAR), under which 50 laboratories function, is also engaged in conducting research especially in veterinary drugs (http://www.nic.in/icar/icar9.html). Indian Council of Medical Research also coordinates the processing, implementing and monitoring of biomedical research programmes carried out under the auspices of either bilateral agreements between India and other countries such as USA, UK, Russia and other CIS countries, France, Germany or as assistance from international agencies such as the WHO, Ford Foundation, Rockefeller Foundation, NIH, World AIDS Foundation (WAF), UNDP, IDRC, etc. (http://www.icmr.in).

4 Programmes and support measures for R&D 4.1 Drugs and pharma research programme The government has taken several initiatives for supporting drug research from basic stage to commercialization stage. In addition, government has provided certain fiscal

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incentives to promote drug research in the industry. The Department of Science and Technology has been operating a programme specifically on Drugs and Pharmaceutical Research to support research as well as to set up national development facilities (Pharmaceuticals Research and Development Support Fund, 2005). The government, under this programme which was initiated during 1994–1995 established ‘‘Pharmaceutical Research and Development Support Fund (PRDSF) in January 2004 which provides grants-in-aid to academic institutions/universities to carryout the research and development efforts while the industry supports the research work to be undertaken within the industry. The industry is also required to share partially the recurring expenditure to be incurred at the institution. Under this programme national facilities have been set up at 9 R&D laboratories in different areas of pharmaceutical research and 30 collaborative projects have been completed so far including 20 new chemical entities, 2 vaccines, 2 assay systems, 2 drug delivery systems and 4 herbal drugs 50 industry—institutional alliances have taken place involving 35 industries, 11 R&D laboratories and 22 academic institutions. At present work on 33 collaborative projects is going on. In addition, the Department of Biotechnology, Indian System of Medicine, Health and Family Welfare and Indian Council of Medical Research etc. have various programmes to support drug research. 4.2 TIFAC The Department of Science and Technology has set up Technology Information Forecasting & Assessment Council (TIFAC) as an autonomous body to help the industry and institution on various facets of technology. The TIFAC has mounted a programme ‘‘Home Grown Technology’’ under which financial support could be provided to the industry or to the institution to upscale the technology, generated indigenously. The scheme is open to all sectors including drug and pharmaceuticals. Under the scheme loan is provided to the industry on soft terms (6% at present) and in case the programme is not successful, the loan could be written off. The thrust areas include biotechnology for agriculture (http://www.nic.in/snt/dst_em.html). 4.3 Technology Development Board The government has set up a Technology Development Board in 1996 with the objective of providing financial assistance to industry to develop and commercialize indigenous technology or adapting imported technology for domestic applications. The board provides loans on soft terms, currently @ 6% on simple interest. The board provides financial support to all sectors including drugs and pharmaceuticals (http://www.nic.in/snt/dst_em.html). A list of projects and industries in Health Sector supported under TDB is given in Table 1. 4.4 Programme aimed at technological self reliance The Department of Scientific and Industrial Research provides partial financial support in the form of grant to industry for developing process/product in various sectors including drugs and pharmaceuticals. This support is available to industry for R&D on its own or in association with national laboratories (http://www.dsir.nic.in, 2000).

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Table 1 Illustrative R&D projects in TDB Name of company

Name of product/service

Shantha Biotechnics Pvt. Ltd., Hyderabad Shantha Biotechnics Pvt. Ltd., Hyderabad Bharat Biotech International Ltd., Hyderabad Bharat Biotech International Ltd., Hyderabad Ranbaxy Laboratories Ltd., Distt. Ropar Ranbaxy Laboratories Ltd., Distt. Ropar J.K. Drugs & Pharmaceuticals Ltd., Kolkata South India Drugs & Devices Pvt. Ltd., Chennai Prathista Industries Ltd., Secunderabad Samudra Biopharma Pvt. Ltd., Hyderabad Matrix Laboratories Ltd., Chennai Proalgen Biotech Ltd., Chennai Ravindranath GE Medical Assiciates Pvt. Ltd., Hyderabad Biocon India Ltd., Bangalore

Hepatitis-B vaccine Interferon alpha Hepatitis-B Va007ccine (Revac-B) Streptokinase (Indikinase) Anti-infectives Cardio-vasculars Cefixime (antibiotic) Membrane oxygenator Calcicum gluconate salts for pharma etc. Beta carotene Active pharma ingredients Beta carotene Organ transplantation facility

Issar Pharmaceuticals Pvt. Ltd., Hyderabad

Mycophelonate mofetil through ‘PlaFractir’ technology Peptide lotion/gel/ointment to treat vitiligo

Source: www.dst.nic.in

5 Fiscal incentives for research (http://www.dsir.nic.in, 2000) 5.1 Tax exemptions 5.1.1 Tax deduction for donations for scientific research (125%) Under section 35(i) (ii) and 35 1(iii) of Income Tax Act, the donations made to approved associations engaged in scientific research are allowed exemption @ 125%. Such incentives have encouraged privately funded non-profit institutions engaged in research and development activities. Tax deduction for sponsored research in IITs, IISc, Universities, CSIR, ICAR labs (125%), is available. Weighted tax deduction @ 125% is provided for sponsored research programmes in approved national laboratories, universities functioning under the aegis of the Indian Council of Agricultural Research (ICAR); Indian Council of Medical Research (ICMR); Council of Scientific and Industrial Research (CSIR), Defence Research and development Organization (DRDO); Department of Electronics; Department of Biotechnology; Department of Atomic Energy; universities and IITs. The head of the concerned national laboratory or the university or the Indian Institute of Technology can give the requisite approval for the sponsored research programme with effect from 1st October, 1996. Prior to this, DSIR, a Government of India Department was the nodal scientific department to administer this incentive. 5.1.2 Deduction of research expenditure in drug sector (150%) Weighted tax deduction @150% on R&D expenditure to companies engaged in the business of manufacture or production of drugs, pharmaceuticals, electronic equipment, computers, telecommunication equipment and chemicals and manufacture of aircrafts and helicopters in governments approved in-house R&D centres.

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5.1.3 Enhanced depreciation allowance on plant and machinery for commercialization of indigenous technology (40%) This incentive is designed to encourage investment to commercialize the technology developed indigenously. It envisages higher rate of depreciation on the equipments installed for the purpose. 5.1.4 Customs duty exemption on government funded research The incentive has been designed exclusively to promote industry–institution interaction. This provides duty free import of equipments and consumables required for undertaking the research projects jointly funded by the government and industry. 5.2 New millennium Indian technology leadership initiative (NMITLI) (http://www.csir.res.in) Council of Scientific and Industrial Research (CSIR) launched the NMITLI programme in 2002 with a view to capture global technology leadership position. The programme demonstrates largest public private partnership with 50 private sector companies collaborating with 150 R&D institutions. Under the NMITLI scheme several projects in the pharma sector have been supported. In one project, a new TB Molecule has been discovered after 25 years. A new pharmacophore for treatment of tuberculosis is being developed towards Investigational New Drug (IND) filing under a project on ‘Latent M, tuberculosis: new targets, drug delivery systems, bioenhancers and the rapentics’. In another project, oral herbal formulation for treatment of ‘Psoriasis’—the most common dermatological disease is being developed towards IND application filing. In yet another project, ‘Biosuite’—versatile portable software package for bioinformatics has been developed (Feature, 2003). 5.3 Analysis The trade policies and tariffs including import duties, and tax structure etc. have been rationalized and liberalized in tune with the WTO requirements. Therefore the usefulness and attractiveness of various fiscal incentives and tax concessions presently available for R&D to industry are not as effective as at the time of their introduction, say about two decades back. Also, the R&D support to industry is not yet covered in the WTO agreements, as in case of subsidies. It is therefore desirable now to review the efficacy of existing fiscal incentives and tax concessions for R&D in industry (Agarwal, 2003a, 2003b). Most of the promotional schemes are operated subcritically. New initiatives related to Integrated development of pharma parks and health parks would encourage innovations and technology transfers, specially when India is being projected as a medical hub for international patients. These parks could also attract more FDIs and foreign R&D, and alliances in pharma and biotech sectors as well as research consultancies.

6 Drug research and R&D services The drug research is resource and knowledge intensive, time consuming and full of uncertainties. It is estimated that nearly 800–900 million dollars are required to find

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a new molecule. It requires consistent efforts of 10–12 years and synthesis of thousands of molecules to see the success of one drug commercially. At the same time, there are number of stages of drug development i.e., Laboratory and Animal Studies (3–4 years), Phase 1 Clinical Studies (1 year), Phase 2 Studies (2 years), Phase 3 Clinical Studies (3 years), Review by Drug Controlling Authority (2–3 years) where there is no return on investment. Over and above, there is no guarantee for such a return. The chances of success are extremely low. There is no other industry, which can be compared with the drug industry for such a long chain of efforts and such a high risk right from the stage of discovery of the molecule in the laboratory to the stage of approval by the Drug Controller General to reach the market place. The drug research in today’s context is a multi-disciplinary activity encompassing design and synthesis of compounds, bio-activity, screening, toxicity study, pharmokinetic studies, bio-availability etc. Thus, it needs expertise in areas such as medicinal chemistry, molecular modeling, biochemistry, microbiology, toxicology and pharmacology etc. Promotion of drug research is a priority sector for Government of India. A chain of R&D institutions including Indian Council of Medical Research, technology transfer agencies, and other facilities have been set up. These facilites, incentives and measures have been discussed elsewhere in the paper. The overall spending on R&D is about 2% of the industry turnover, spread in the private and public sector. Recognising the potential of international business in R&D services under the GATS agreement of WTO, a pilot study was undertaken at Indian Institute of Foreign Trade (IIFT) during 2004–2005 with the support of DSIR, Ministry of Science & Technology, to assess the market potential and needs of R&D services in the CSIR system, for possible trade and collaborations (Agarwal & Dayal, 2003a; Agarwal & Geetanjali Natraj, 2002; Foreign Collaborations 2002, 2004). The Council for Scientific and Industrial Research has identified about 10 out of its 38 laboratories to work on drug development. The studies have indicated that apart from the R&D work on drug development, these laboratories also offer their R&D services to Indian medical industry as well as medical companies abroad. Their services include testing and evaluation, training, consultancy, epidemiological studies and surveys, IPR services, and contract research for product, process and design development. The main areas in which some of these laboratories are working are given in Table 2 (Agarwal & Dayal, 2003b; Draft Report A Study on R&D Services in CSIR System 2005). The above study shows that there are strong expertise and facilities available in CSIR and other places in India for some R&D services in drugs & pharmaceuticals and biotechnology which can be advantageously availed by other countries for mutual benefits.

7 Industry performance India ranks 4th globally in terms of volume of drugs produced, 13th. In terms of value and hold a leadership position in the third world in terms of technology, quality and range of medicines manufactured. The domestic Indian pharma market is valued at $4.5 billion which is about 1.6% of the global market. The Indian market is growing at the rate of 8–9% yearly. Nearly 95% of the domestic demand of pharmaceuticals is met through indigenous production. Presently, import of pharmaceuticals are limited to a few life-saving drugs like anti-cancer, cardiovascular,

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Table 2 Illustrative areas of R&D services in select CSIR labs Name of laboratory

R&D services provided

Institute for Genomics and Integrative Biology, New Delhi

1. 2. 3. 4. 5. 1.

Center for Cellular and Molecular Biology, Hyderabad Indian Institute of Chemical Biology, Kolkata

Central Drug Research Institute, Lucknow

Sequencing Services (for DNA and protein) Genotyping Services MALDI TOF services Primer design and synthesis Gene chip and micro array analysis services Novel assay system for screening of anti cancer drugs

1. Custom synthesis of organic molecules 2. Extraction and characterization of natural products 3. In vitro and in vivo testing (preclinical level) for a number of diseases such as Asthma, Leukemia, Type I &II Diabetes, gastric ulcers, neurodegenerative diseases, narcotic addiction, infectious disease (Leishmaniasis and cholera), as well as activities such as immunomodulators, antioxidants, antifertility agents, etc. 4. Diagnostics kits development and their validation 1. Analytical services of samples (synthetic, plants, marine) 2. Supply of cultures 3. Biological screening of samples 4. Regulatory pharmacology and toxicological studies 5. Supply of animals for experimentation

anti-hypertension and newer drugs, which are not yet cleared for manufacture and marketing in the country. Apart from about 60,000 pharma formulations, India also produces roughly 400 bulk drugs and over 500 active pharmaceutical ingredients (API) from basic stage. Full range of pharmaceutical equipments is also manufactured and the ancillary industry is fully developed as well. There are about 250 manufacturing and formulation units in the organized sector, which account for over 70% of total sales. The unorganized sector is made up of over 20,000 manufacturing units, which contribute to about 30% of total sales. 45 manufacturing units have international presence. The annual turn over of these units is about Rs.226 billion and the growth rate is 5.1%. India exports its drugs and pharmaceuticals to 65 countries including USA, Canada, Germany, France and Latin American Countries and the industry employs about 500,000 persons directly and provides indirect employment to about 2,400,000 people. Many Indian companies, in addition to having WHO and GMP approvals, have also been getting plant approvals from International regulatory agencies like USFDA, UKMCA, TGA of Australia and MCC of South Africa etc. (Biotechnology and Pharmaceuticals Market in India; Feature: A Different Leadership Role in Science and Technology, 2003; http:// nppaindia.nic.in, 2002). Biopharmaceuticals contribute about 80% of overall Indian biotech pie, at about Rs. 5 billion. Over 80% of this is hogged by imported products (Transfer of Technology for Successful Integration into the Global Economy, 2003; www.news_medical.net/?id=8199). Biotechnology based research in healthcare is being carried out in many drugs and pharmaceutical companies in India such as in Ranbaxy Laboratories, Dr. Reddy’s Labs and Sun Pharma, among others. Reliance Life Sciences is recognized by the US National Institutes of Health for stem-cell research (Kher Priyanka, 2004). The R&D expenditure of the top nine pharmaceutical companies along with their turnover for the year 2003–2004 is given in Table 3 (Agarwal, 2004).

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Source: www.pharmabiz.com

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(Rs. Million)

Ranbaxy Laboratories Dr. Reddy’s Lab Nicholas Piramal Aurobindo Pharma Lupin Cadila Healthcare Sun Pharma Wockhardt Orchid Chem. & Pharma Total

R&D exp., 2003–2004

% to turnover, 2003–2004

2761.2 2260.5 558.6 486.8 459.9 882.0 1076.8 604.1 396.5 9486.4

7.3 13.0 3.9 3.6 3.9 7.5 10.2 7.9 5.6

India currently is giving Europe tough competition as a growing pharma R&D hub. A recent Ernest and Young study has identified India as an emerging hub for collaborative and outsourced R&D in drug development, biotechnology and chemicals. The report follows a European Commission communication that called for increased cooperation between the European Union and India in various fields, including biotechnology. ‘‘The EU is the world’s second-largest center of biotechnology research activity after the USA. Indian biotechnology has been advancing rapidly in the past few years. Its next challenge is to successfully integrate the Indian biotechnology industry into the global biotechnology innovation system.’’ India’s biotech sector itself is expected to generate $5 billion in revenues and create over a million jobs in the next 5 years, according to Ernest & Young 2004 ‘‘Progressions’’ report. As the companies focus on accelerating productivity, collaboration is the way forward for several US and European companies faced with a resource crunch. With its abundant high quality and low cost technical manpower, India is emerging as a partner of choice. India has become world’s biggest producer of recombinant Hepatitis-B vaccine due to the efforts of Shanta Biotechnics, Bharat Biotech, Panacea Biotech, Wockhardt and Serum Institute. The country is also emerging as a global player in recombinant Human Insulin on which the work is going on at Biocon and Wockhardt. Indian companies, having built up a substantial presence in Asia and Eastern Europe, are now expanding their operations in the West. They are looking at acquisitions of companies as well as brands. Since the year 2002 the industry has acquired more than 100 brands. Ranbaxy has acquired one company each in Germany, France and Japan during 2000–2003 where as Dr. Reddy’s have acquired BMS and its subsidiary Meridian Healthcare in UK. The Table 4 gives some of the subsidiaries established abroad by Indian companies. It is reported that primary goal of companies in India is to replicate what western firms have been doing for decades, but faster and cheaper (Nair, 2001). Nicholas Piramal recently claimed that it would bring a medicine to market on a budget of $50 million against a western figure of $1 billion as India is now emerging a research hub for global players. The next few years are likely to see a spate of mergers and takeovers that could restructure the 9000 existing companies into as few as 500.

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Table 4 Subsidiaries of Indian pharmaceutical companies abroad

1. 2. 3. 4. 5. 6. 7. 8.

Indian company

Subsidiaries established abroad

Ranbaxy Dr. Reddy’s Laboratory Reddy Cheminor Lupin Chemicals Torrent Wockhardt Glenmark Himalaya Drugs

China, Malaysia, Poland, Vietnam, Germany, Japan, France Netherlands, Hong Kong, Russia USA Thailand Russia Ireland, Saudi Arabia, USA, UK, Germany Canada, Portugal Russia

Further, unless companies change their business models from imitation to innovation they will not survive, according to a company. This seems to be corroborated by some of the recent happenings in India (CII study: Indian Pharmaceutical Industry). For example, major generic companies such as Teva, Watson, Ivax and Pliva have forged alliances with Indian companies. The tremendous chemistry skills, low costs and a seemingly uncanny ability to manufacture top end formulations, could be some of the factors for Indian generics to be the next big thing in the west, where the generic market is growing in a very big way, according to ABN AMRO Bank (http:// www.pharmabiz.com) 7.1 Exports and imports The pharmaceutical sector is adding substantial amount to countries export earnings and the segment is known as net foreign exchange earner. The exports on FOB basis of our top 10 companies increased by 27.9% to Rs. 66,310 million in 2003–2004 from Rs. 51,840 million in 2002–2003 as against their import bill of Rs. 25,220 million and Rs. 24,740 million in 2003–2004 and 2002–2003, respectively. These companies are focusing more and more on regulated markets of USA and Europe. Ranbaxy was the star performer in respect of exports and achieved exports of Rs. 23,460 million as against Rs. 17,750 million. Dr Reddy’s exports touched to Rs. 9,820 million during 2003–2004 as against Rs. 9,190 million in the previous year. Similarly, Cipla, Aurobindo, Lupin and Orchid pushed there export during 2003–2004. The export and import figures of top 10 pharmaceutical companies for the years 2002–2003 and 2003–2004 are given in Table 5 (Agarwal, 2004; New Scientist, 2005). The total export of drugs, pharmaceuticals and fine chemicals and imports of medicinal and pharmaceutical products during the last 4 years has been as indicated in Table 6.

8 Technology transfer Development of new molecules & technologies, and commercialization and transfer of technology is a time consuming, expensive and risky business in drugs & pharmaceuticals. It includes a large number of players such as inventors/R&D institutions, hospitals, manufacturers, and consumers, besides enablers such as government, consultants, NGOs, etc. In India, the basic research including development of new molecules is now being largely carried out in publicly funded institutions and select

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Table 5 Exports and imports of select companies (Rs. billion)

Ranbaxy Laboratories Cipla Dr. Reddy’s Lab Nicholas Piramal Aurobindo Pharma Lupin Cadila Healthcare Sun Pharma Wockhardt Orchid Chem. & Pharma Total

Exports

Imports

2003–2004

2002–2003

2003–2004

2002–2003

23.46 8.12 9.82 0.97 6.42 5.59 1.78 2.04 2.80 5.31 66.31

17.75 5.66 9.20 0.39 5.64 4.01 1.03 1.40 2.27 4.48 51.83

5.32 2.84 2.19 1.28 5.40 2.75 1.07 0.92 0.88 2.58 25.23

5.08 2.80 1.63 1.28 4.93 2.22 1.35 0.86 0.77 3.81 24.73

Source: www.pharmabiz.com Table 6 National exports & imports Year

Exports (in Rs. billion)

1999–2000 72.30 2000–2001 87.58 2001–2002 98.35 2002–2003 119.25 Pharmaceutical exports have clocked a growth rate of 15.57% in 1999–2000, 20.73% in 2000–2001 and 11.13% in 2001–2002 and 21.2.% in 2002–2003 (provisional)

Imports (in Rs. billion)

17.01 20.26 27.18

Source: Directorate General of Commercial Intelligence and Statistics (DGCIS)

large pharmaceutical companies in-house or through sponsored research. Bench scale new processes are usually licensed by R&D institutions to industry for scale up, clinical trials, and commercialization, through a technology transfer agency such as National Research Development Corporation (NRDC), or directly to industry. Also, the large industries commercialize their own technologies developed in-house, or acquire competitive commercialized technologies from abroad through payment of royalty and know-how fee mostly. In recent years, the industries are making collaborative R&D arrangements, attracting FDI with technology transfers, setting up joint ventures or subsidiaries abroad or acquiring foreign companies. The focus is now on development of new molecules though the capacity to invest in R&D is limited, and sometimes the companies license the developed molecules to other companies abroad for further development and commercialization. There is a vast technology transfer potential for development of alternate processes for off-patent molecules and also for intermediates. R&D institutions have not been as successful as expected in providing commercialize able technologies to industry and the industry is not able to invest adequate funds for making the laboratory scale processes commercially viable. Recognizing the fact, the government has taken several initiatives to evolve new models for more successful development and transfer of technologies through funding the R&D components of a company in a public funding institution, or through provision of soft loans as well as grants to industry. In addition, FDI related technology transfers, R&D collaborations and

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research companies are encouraged (Economic Times, 2005; Online; Drugs and Pharma Strategies and Trends, 2003). The success of technology transfers also lies beyond the inventor and the manufacturer, in the form of other players as mentioned earlier. India has a strong network of these players. Technology transfer support system and mechanisms are rather weak in India though there are a few players promoted by the government but generally lack the linkages with the various partners and also the infrastructural facilities as well as resources in tune with the needs, besides a long term vision. Nevertheless, some of the technology transfer agencies such as NRDC have been able to commercialize and transfer know-how to industry in India and abroad, at various levels of development. Venture capitalism has also not taken off much in India for pharmaceutical sector though there are examples of successes. The technology transfer in India is generally being done by technology transfer companies as well as by individual laboratories and industry. Many research laboratories and universities are licensing the technologies developed by them through National Research Development Corporation (NRDC)—a government of India enterprise, Biotech Consortium—promoted by DBT and IDBI etc. A list of a few technologies in the area of biotechnology licensed by NRDC during the last 5 years is given in Table 7 (Asaf Shamsi; Issues and Strategies in the post-GATT/WTO Era). Contrary to many advanced countries, the university system in India is generally not geared to promote start ups in new technologies though S&T parks have been promoted in select universities. The basic reason seems to be that academic institutions are concentrating more on teaching than on R&D. Since the literacy rate in India is still low, the emphasis has been on teaching. Also, since the innovations and R&D are primarily driven by competition, and there was regulated economy till 1990, the culture and environment were not conducive for R& D, and linkages between industry and R&D were weak. The industry is now maturing and becoming innovation conscious. It is expected that academia would also start now concentrating on R&D and entrepreneurship. Keeping the complexities in technology transfer in pharmaceuticals and Biotechnology in mind, a Technology Transfer Management model is suggested in Fig. 1. Partnership and networking among various players in the country and abroad, are important for efficient and economic transfer of technologies. The costs in technology transactions are also important.

9 Potential for clinical trials The clinical research environment has become extremely competitive and commercialized. Every year about 80,000 clinical trials conducted in the world are estimated to cost about $12 million. Though, it is becoming increasingly difficult and expensive to find enough people for Phase III clinical trials that require hundreds of thousands of participants. Dozens of Clinical Research Organizations (CROs) have suddenly proliferated in India and 100s of hospitals both public and private, are busy carrying out industry driven clinical trials. US drug companies are also moving their trials overseas, because of the fact that India has no dearth of willing doctors/ researchers in the162 medical colleges that produce 17,000 doctors every year who are capable of enrolling enough patients into clinical trials to satisfy the needs of the drug and device industry (http://www.mohfw.nic.in).

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Shrimp Feed Bioactive Compounds from Methi, Garlic etc. Bakery Margarine IBR Vaccine Liposomal Amphotericin-B A formulation for Amphotericin-B using Nanotechnology An improved formulation for ocular delivery Bioactive compounds from Banyan Bark, Methi and Garlic Virosome based targeted gene delivery system A newly formulated herbal ophthalmic formulation for the prevention of cataract Ca-phosphate non-viral gene delivery system Crystoscope Mineral mixture for bovines

Crystoscope PPR Vaccine

1. 3. 5. 6. 7. 8. 9. 10. 11. 12.

16. 17.

Source: NRDC, 2005

13. 14. 15.

Name of the process/know-how

S. No.

Table 7 Major technologies licensed during 2000–2004 by NRDC

American BioScience Inc. USA Ranbaxy Ltd. (1) Tarun pharma, (2) Kamdhenu feeds, (3) Lyka exports Lyka exports Indian Immunologicals

Pratistha Industries, Hyderabad Diakron Pharmaceutical, USA Prime Enterprise, Mumbai Hoechst Roussel Vet, Pune Lifecare Innovations Pvt. Ltd, Delhi Shantha Biotechnics, Hyderabad Panacea Biotec Ltd. New Delhi Earth Remedies Ltd. Kolkata Panacea Biotec Ltd. New Delhi Promed exports Pvt Ltd.

Name of the party

IVRI IVRI

Delhi University IVRI IVRI

IIT Kharagpur Dr. Murthy & associates Super Bake Food Products BAIF KEM Hospital Delhi University Delhi University Dr. Murthy & associates Delhi University AIIMS

Name of the laboratory developed the technology

Technology transfer perspectives in globalising India 413

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Approvals

Partnerships

Indigenous R&D

IT Agents & Consultants

Process & Technology Development

Incubating & Clinical trials

FDI Support Agencies

Production

edback

Partnerships

Hospitals Chemists Dispensaries

Consumer

Markets

Fig. 1 Technology transfer management

The Indian Council of Medical Research (ICMR) laid down comprehensive ethical guidelines within which biomedical research should function. However at present the council lacks statutory power to ensure that they are being implemented. There is a substantial inbound investment in this area. Multinationals like Roche, Bayer, Aventis and Chiron have made India their regional hub for advanced pharmaceutical ingredients and bulk supplies. Clinical research outsourcing is seeing fast growth too. Pfizer doubled its R&D spending in India to around $13 million. Others such as Novartis, Astra Zeneca, Eli Lilly and GlaxoSmithKline have also committed to making India a global hub for their clinical research activities.

10 Business potential, strategies & trends According to a recent study (CII study: Indian Pharmaceutical Industry) of Confederation of Indian Industry (CII), the Indian Pharmaceutical industry has the potential to reach $48 billion by the year 2007, against the present global industry of $550 billion. A special focus on R&D on chronic diseases and life style drugs is recommended, apart from business potential in clinical trails and contract manufacturing (http://nppaindia.nic.in). Most Indian pharmaceutical companies are going for alternative business models to draw on competition and opportunity. They have shifted from business-driven research to research-driven business. So much so that Indian pharma companies topped drug filings with the US Food and Drug Administration (FDA) in 2003, having filed a total of 126 Drug Master Files, accounting for 20% of all drugs coming into the US market, higher than Spain, Italy, Israel and China. Of the 108 abbreviated new drug applications pending approval from the FDA in February 2005, as many as 52 were patent challenges, and nearly half of these were for first-to-file (180 day market exclusivity) applications. Data from WIPO shows that PCT applications from

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415

India are on the rise from 190 in the year 2000 to 295 in 2001 to 525 in 2002 and 764 in 2003 with the highest Compounded Annual Growth Rate (CAGR) of 22.2% against 12.6% of China, 12.1% of Korea, 11.7% of Japan, 0.12% of Germany, –1.2% of UK and –2.3% of USA (Economic Times dated 4th March 2005). The recent trends on which major and progressive Indian pharmaceutical companies are putting emphasis on are: 10.1 R&D Considering the uncertainty regarding the outcome of research activity and longer time span to reach conclusion some cash rich companies are undertaking major research activity. Ranbaxy has spent over $100 million for capacity expansion in the year 2003–2004 and Nicholas Piramal were planning an investment of Rs. 2 billion on R&D and upgradation. Lupin was to investing Rs. 200 million in Aurangabad on manufacturing anti-TB products. It is easy for the company to adopt another way of tie-ups with major international companies. Several Indian companies are exploring and signing agreements in this respect with foreign pharmaceutical companies (Agarwal, Ashwani Gupta, & Gandhi,2004a; Nair, 2001). Some major Indian companies like Ranbaxy laboratories, Cipla, Lupin laboratories, Dr. Reddy’s laboratories, Wockhardt and Nicholas Piramal are focusing on R&D targeting on New Drug Discovery as well as on Novel Drug Delivery Systems. The emergence of Indian pharma giants, taking an active place in global R&D fields, has also helped Indian companies to develop manufacturing processes for eight of the world’s top 10 blockbuster drugs which include specialized rheumatic analgesic blockbuster drugs Celecoxib and Refecoxib, which were globally launched in 1999 by Pfizer and Merck. Both drugs were launched in India in 2000 by leading domestic firms, Sun Pharma and Torrent respectively, Sildenafil Citrate (popularly known as Viagra) for erectile dysfunction, globally launched by Pfizer in 1998 was introduced in India by Ranbaxy and Cadila in 2001. Likewise, cardiovascular blockbuster drug Atorvastatin, globally launched by Pfizer in 1997, was also introduced in India by domestic firms Ranbaxy, Zydus Cadila and Sun Pharma within 3 years. More striking is the example of the anti-diabetic drug Rosiglitazone Maleate that was imitated and launched by leading domestic firms DRL, Sun Pharma and Torrent within the first year of its global launch in 2000. 10.2 Marketing alliances Indian companies have entered into product specific marketing arrangements and alliances with Indian as well as foreign pharma majors e.g., Ranbaxy has entered into marketing alliance with Cipla and Glaxo and Piramal with Hoechst for increasing market penetration and their presence. Lupin entered into marketing tie-up with Allergan Inc, US. To expand marketing base, Cadila has setup Zydus Pharmaceuticals USA Inc and also acquired Alpharma France. It also entered into marketing tie-up with global pharma majors such as Schering and Boehringer Ingelheim. 10.3 Joint ventures, acquisitions & mergers Some of the Indian companies are setting up their R&D joint Ventures/subsidiaries/ partnerships abroad. For example Ranbaxy’s acquisition of RPG Aventis’ French

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Table 8 India joint ventures and WOS abroad during 1999–2004 Year

1999 2000 2004

JVs

WOS

No.

US$ million

No.

US$ million

7 13 20

5.5 5.4 49.4

4 33 52

1.7 40.2 100.6

Source: Monthly news letter, India Investment Centre

business; Wockhardt’s acquisition of CP Pharmaceuticals in the UK; Zydus Cadila’s acquisition of Alpharma in France and Sun Pharma’s acquisition of Detorit-based Caraco Pharmaceutical Labs—all of which have catapulted these Indian companies into the global league. Table 8 shows number of joint ventures and wholly owned subsidiaries (WOS) approved during 1999–2004 (Monthly Newsletter, 2004). Mergers are also helping companies to boost their revenues in the more profitable markets. Wokhardt acquired a German Pharmaceutical company Espharma GmbH for Rs. 490 million and Dr Reddy acquired Tringenesis Therapeutics Inc, US in an $11 million Deal. Nicholas acquired the API business of global bulk drugs. 10.4 Launching of new products For increasing product portfolio and expanding their therapeutic reach and to overcome the challenges of competition, the companies are launching new generics for last couple of years. The Indian top companies are going ahead aggressively and filing new DMFs or launching new products. Ranbaxy is set to launch 20 new products and Lupin is launching herbal products. Dr Reddy launched Iburpofen and Nefzodone in North America. Ranbaxy’s subsidiary in US received approval from US FDA for manufacture of Auinapril Hydrochloride tablets for hypertension drugs. During 2003–2004 Cipla filed 7 DMFs, Dr Reddy 5 nos and Sun Pharma 4 nos. Lupin filed 32 patents including 10 finished products. Cadila is planning to launch 16–18 ANDAs in current year. Wockhardt has also filed 3-DMFs in US. The Indian pharma companies are undertaking new molecular research and around 25 to 30 products are in pipeline. These NCEs will be crucial for post-WTO period. 10.5 Acquisition of brands Pharma majors are on the look out for brand acquisitions in order to expand their therapeutic reach and market penetration such as Nicholas Piramal acquired Dobotrex Brand (a cardiac stimulant) from Eli Lily & Co. USA. 10.6 Contract manufacturing Many medium and small Indian companies like Dishman Pharma, Divis labs and Matrix labs to name a few, have been established exclusively for the purpose of manufacturing and supplying of bulk drugs and intermediates to MNCs. Among the larger companies, Jubilant Organosys, Shasun Chemicals, Orchid Pharmaceuticals etc. are also manufacturing and supplying APIs on contract basis to larger companies in USA and Europe. Large MNCs like Pfizer, Merk, Glaxo Smith Kline, Aventis,

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Novartis and Teva are regularly sourcing their supplies of APIs and intermediates from Indian companies. 10.7 Entering international generic market A large number of Indian companies have shifted focus to the generics markets of the US and Europe seeing tremendous opportunities (http://www.pharmabiz.com). They are either entering into exclusive agreements with innovator companies for supplying manufacturing services for complex patent protected molecules (Nicholas Piramal has entered into a JV with Advanced Optics for supplying ophthalmic products to the regulated markets) or are entering into agreements with global generic companies for off-patent molecules.

11 Indian patent system The new Patent Act 2005 allows product patents for drugs, food products and agrochemicals. Some of the provisions relate to allowing copycat production of post 1995 patents drugs provided Indian manufacturers pay a reasonable royalty to the patent holder; the definition of a patentability is that a pharma patent will have to be a new entity involving one or more inventive steps, and new use of an existing product will not be patentable. The Act also allows challenging a patent 6 months before or after it is granted. Further, the Act allows exports even if importing country merely notifies its requirement. Indian firms that are producing under compulsory licence for the domestic market can also export their product to poor nations (Hindustan Times dated 23 March 2005). There are about 8,000 applications received in the mail box for EMR, majority of which may not be eligible under the new Patent Act, and the examination of the rest might take lot of time in the patent office. 97% of all drugs manufactured in India are off patents, and so will remain unaffected. This apart, contract research and loan manufacturing would also be lucrative business areas for Indian companies, particularly those complying with Good Clinical Practices (GCP) and having US-FDA certified manufacturing plants. Major industry players say that the patent regime will generally benefit the industry enormously in the long-term provided appropriate national policy is in place, in respect of pricing etc. the new regime is expected to positively impact the flow of new drugs into the Indian market. On the other hand, Indian companies will also benefit on account of import of generic drugs. A large number of Indian companies have shifted focus to the generics market of the US and Europe seeing tremendous opportunities. The key implications of this shift are increasing exposure to regulatory policies in these countries.

12 Conclusions India has adequate resources in terms of manufacturing base, scientific manpower and facilities to manufacture as well as to undertake R&D on bulk drugs. The biotech industry is also at take off stage. India is known for her strength in finding alternative route of manufacturing existing bulk drugs. This will facilitate introduction of all those drugs in the Indian market, which will be off the patent in the near future. It is expected that huge market is available from off the patent drugs.

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Industry can take this as a great opportunity to boost India’s export market besides introducing these drugs in the Indian market. Biotech based drugs are expected to have good potential for development and manufacture, specially for tropical diseases, not only for India but other developing countries as well. The Indian pharmaceutical industry presently occupies a unique position as a very cost-effective producer of both bulk drugs and formulations of globally acceptable quality. Since India has started working on generic drugs, time has now reached to give equal boost to drug research to develop new molecules (synthetic and herbal) to meet the challenge under the new patent regime. It is expected that with appropriate strategies it will come up as one of the leading countries for discovering drugs of relevance to both developed and developing world especially with respect to tropical diseases. This would, however, require joint efforts of the industry, institutions and the government to augment resources both financial and technical. New technology areas such as bio-informatics and nano-technologies open up collaboration potential for R&D, technology transfer and manufacturing business. Adoption of an integrated approach combining modern systems of medicines with Indian System of medicines and Homeopathy etc. also have vast technological and business potential for India and other countries such as Canada. Increasing IT applications and new technology transfer as well as business models would accelerate the overall manufacturing and trade opportunities globally. Management education contents and techniques will also need to be examined in the light of emerging technology transfer and business experiences in developing and advanced countries so that the same are more relevant to all concerned. FDIs in drugs & pharmaceuticals and bio technology would also be an important mechanism towards above objectives. Bio-tech industry is at initial stages of development, predominated by SMEs, but has the potential to grow as in case of computer software and IT. There are very few large companies in India, having strong R&D capabilities and financial resources to develop and commercialize new drugs. Therefore, new technology transfer and business models could be based on leveraging strong S&T infrastructure and capabilities in India, with deep pockets and marketing capabilities of large companies abroad, including multinationals. Indian drug industry is likely to under go a major restructuring since it is largely dominated by small companies, most of which have very limited vision and resources. However, small and medium enterprises would continue to be important in the supply-chain management, in modified forms. Such enterprises would need access to technology from abroad. Technology transfers associated with investments would be preferred, and unpackaging of technology, involving only required components or activities, may be sought. As income levels rise, demand from large population base is set to burgeon, open up new growth opportunities for pharmaceuticals and biotechnology companies. Even as emerging markets such as Brazil, Mexico, Poland and Russia exhibit strong development potential, the most exciting growth prospects are forecast for two Asian powerhouses—India and China (Agarwal, Ashwani Gupta, & Gandhi, 2004b). The strategies for development of global businesses could include deploying a cluster approach to operations, establishing collaborative knowledge networks, maximizing the value of physician-focused marketing efforts, developing provider/patient and information-based approaches (Major Biotech technologies during 2000–2005, 2005). The management institutions are expected to play an important role in shaping the new management perspectives of the pharmaceuticals and biotechnology industry since it involves a large number of players, and is critical to the welfare of the society.

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Annexure 1 Illustrative activities of department of biotechnology (http://www.nic.in/icar/ icar9.html)

Biotech industries (2003–2004) • • • •

Number of Industries: 200 Bio-scientists employed by modern biotech industry: 15,000 Investment made: US$ 137 million (Rs. 616.50 crores) Annual turnover: US $705 million (Rs. 3172.50 crores)

Autonomous bodies • • • • • • •

National Institute of Immunology (NII), New Delhi National Centre for Cell Science (NCCS), Pune Centre for DNA Fingerprinting and Diagnostics (CDFD), Hyderabad National Brain Research Centre (NBRC), New Delhi National Center for Plant Genome Research (NCPGR), New Delhi Institute of Bio resources and Sustainable Development (IBSD), Imphal Institute of Life Sciences (ILS), Bhubaneshwar

Public sector undertakings •

Bharat Immunologicals & Biologicals Corporation Limited, Bulandshar (BIBCOL) • Indian Vaccines Corporation Limited, Manesar (IVCOL) International institution co-promoted by DBT Ø International Centre for Genetic Engineering and Biotechnology (ICGEB), New Delhi Number of institutes running DBT supported PG/not so big programmes (area wise)

Number of Universities

No of Universities

Annual intake of students

General Biotechnology Agriculture Biotechnology Medical Biotechnology Marine Biotechnology Neurosciences Industrial Biotechnology M. Tech. Biotechnology~ M.V. Sc Post MD/MS Certificate PG Diploma

41 09 01 02 03 01 09 02 02 04

530 110 010 030 025 010 140 015 009 056

Total

74

935

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Programme support for promotion of excellence • Indian Institute of Science, Bangalore • Bangalore University, Bangalore • Rajiv Gandhi Centre for Biotechnology, Thiruvananthapuram Research & development Number of R&D Projects funded so far Number of projects funded during 2003–2004 (Cost, Rs. in Lakhs)

1841 271 (Rs. 15480.22)

Mission programmes • • • •

New generation vaccines Genomics Development of new drugs and molecules from important medicinal plants Bioresources characterization, inventorization and documentation from the special ecosystems

Technology transfer Technologies transferred Technologies commercialized

54 17

Vaccines Vaccines developed

Stages of trial/Commercialization

a. Human Combined DNA rabies vaccine for animals Animal trials being conducted, likely to be commercially available after the regulatory approvals DNA/MVA based HIV-1 subtype C Poised for preclinical toxicology studies vaccine for HIV/AIDS Vi-conjugate typhoid vaccine GMP grade preparation and preclinical toxicology studies planned Rotaviral Diarrhoea vaccine Rotaviral diarrhoea vaccine: completed phase-I clinical trial in adults and older children Malaria vaccine Entering into pre-clinical studies Edible vaccine for cholera Large scale antigens were produced in tomato plants and immunogenicity test carried out in mice Cholera (1 candidate) Phase I &II trial JEV (1 candidate) Animal toxicology studies Tuberculosis (6 candidates) Animal immunology studies b. Marine Commercialized marketed in India and A heat killed whole cell vibrio middle-east countries immunostimulant for white spot shrimp virus c. Animal Infectious Bovine Rhinotracheitis Commercialized (IBR) vaccine for livestock animal Recombinant Anthrax vaccine Phase I/II human clinical trial

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10.

9.

8.

6. 7.

5.

3. 4.

The process for the targeted and site specific gene/drug delivery system

Simultaneous detection of white-spot shrimp virus (WSSV) and monodon baculo virus (MBV) for aquaculture industry Process for targeted and site specific gene/drug delivery system Development of nutraceuticals Polyherbal formulation (BHU-x) for artherosclerosis Elite lines of Mucuna pruriens with improved yield and high L-dopa content Production of Xanthan Gum Development of Diagnostic kit for detection of HIV Antibody in Human Serum or PlasmaWestern Blot HIV-1&HIV-2 kit Rapid Naked Eye Visible Agglutination (NEVA) assay for the differential detection and screening of antibodies to HIV-1 &HIV-2 in whole blood. Manufacture of Liposomal Amphotericin-B

1.

2.

Title of the technology

S. No.

Technologies transferred to industries during 2002–2004

UDSC, New Delhi and clinical trials completed by G.S. Medical College and KEM Hospital, Mumbai University of Delhi South Campus, New Delhi

Delhi University South Campus, New Delhi

M/s Panacea Biotec Ltd., New Delhi

M/s Life Care Innovations Pvt. Ltd., Gurgaon (Commercially available as FUNGISOME)

M/s Cadila Pharmaceuticals Ltd., Ahmedabad

M/s Shriram Biotech Limited, Hyderabad M/s J. Mitra &Company, Delhi (already commercialized)

M/s Zandu Pharmaceutical Works Ltd., Mumbai

M/s Parry Nutraceuticals Ltd. Chennai M/s Surya Pharmaceuticals, Varanasi

M/s Panacea Biotech Ltd. New Delhi

Mangalore Biotech Laboratory, Mangalore

College of Fisheries, Mangalore

University of Delhi, South Campus, New Delhi Anna University, Chennai Institute of Medical Sciences, Banaras Hindu University, Varanasi Zandu Foundation for Healthcare, Valsar, Gujarat BISR, Jaipur CRI, Mumbai

Company technology transferred to

Institute where developed

Technology transfer perspectives in globalising India 421

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Commercial launch of technologies transferred 1. Shantest-AFP (Alphafeto protein)

2. Oil Zapper 3. Simultaneous detection of white-spot shrimp virus (WSSV) and monodon baculo virus (MBV) for aquaculture industry

National Instt. of Chemical Biology, Kolkatta TERI, New Delhi College of Fisheries, Mangalore

Shantha Biotechnics Pvt. Ltd., Hyderabad Sriram Biotech Ltd. Hyderabad Mangalore Biotech Laboratory, Mangalore

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Nair, M. D. Emerging R&D scenario in the Indian pharmaceuticals industry, RSIC, New Delhi, December 2001. New Scientist, 19 Feb. 2005, pp. 44–46. Online; Drugs and Pharma Strategies and Trends, August, 2003. Pharmaceuticals Research and Development Support Fund (PRDSF) Programme of DST, New Delhi, January 2005. Research and Development in Industry; An Overview; DSIR, Govt. of India, New Delhi, No.2004. Science & Technology Policy; Ministry of S&T, govt. of India, New Delhi, 2003. The Economist; Feb.26–March 4, 2005, p. 59. Transfer of Technology for Successful Integration into the Global Economy, UNCTAD, Geneva, 2003 UNCTAD/ITE/IPC/2003/6. UNCTAD; World Investment Reports, Geneva, 2003 & 2004. Union Budget 2005–2006, Govt. of India, New Delhi. Website of Deptt. of Health, Ministry of Health & Family Welfare, http://www.mohfw.nic.in www.nic.in/icar/icar9.html, Indian Council for Agricultural Research, New Delhi and www.dbt.nic.in

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