Vol. 6, No. 1 January 2002

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Glaxo chairman Richard Sykes said that GlaxoSmith Kline (GSK) will consider carrying out clinical trials (testing of drugs on human subjects) of new drugs in India. He said that GSK was supporting research on diseases occurring in developing countries like malaria and tuberculosis. He said it was important to carry out the studies in countries in which the diseases occurred. Also samples of the drugs have to enter and leave the country smoothly and good clinical practises have to be followed. GSK India's manufacturing sites could become a sourcing base for group firms, thereby generating export revenues.

Mr Sykes also said that GSK India is not going to launch several products in India unless intellectual property rights are assured for these products (Glaxo's sales fell by 0.8 per cent in November 2001). He also hinted that the multinational will hike its stake in GSK India from below 50 per cent to the 51 per cent level.

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Cadila Pharmaceuticals has launched an anti-ulcerant durg, rabeprazole sodium, under the brand name of Rabeloc. The drug is basically for treating ulcers like duodenal and gastro ulcers. Cadila Pharma has a significant presence in the anti-ulcerant market (Rs 445 crore) with products like Aciloc, Lancus, Domperon, Olit and Morsat. The company claims to have done extensive clinical trials in All-India Medical Institute, New Delhi, Lok Manya Tilak Medical College, Mumbai and V S Hospital, Ahmedabad.

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Ranbaxy Laboratories has received tentative approval from the US Food and Drug Administration for a generic version of Merck's Prinizide anti-hypertension drug. It has received tentative approvals for three dosages of lisinopril and hydrochlorothiazide, the generic name of the drug. Lisinopril is the generic name of AstraZeneca's hypertension drug Zestril. The company said that the combined US market for these two drugs was over $ 1.2 billion in 2000 and the patent-holder's exclusivity expires in June 2002.

Meanwhile, Ranbaxy has filed for exclusive marketing rights (EMR) for Cipro-OD, its once-a-day form of antibiotic ciprofloxacin. Ranbaxy owns a process patent for the drug and not a product patent and this move is believed to be to keep competition in check. Usually it is a multi-national drug company that makes an EMR application for their patented products and Ranbaxy could be the first Indian company to make an EMR for which it only holds a process patent. So far, EMRs have not been granted by the government and lobbying is going on. EMRs can only be given until 2005 that too in cases where patent application has been granted in or after 1995. The industry is watching keenly whether the EMR is granted and whether it will help the company defend Cipro-OD from competition. Torrent also has received Drug Controller General's approval to market once-a-day version of ciprofloxacin. Torrent is preparing to launch its version of ciprofloxacin (Quintor OD) in January 2002 and the company claims it will be priced competitively.

Cipro-OD is the product of Ranbaxy's research and it already has multi-million dollar collaboration going with Bayer for the regulated Western markets. The ciprofloxacin market has been affected by intense competition and such a product (once-a-day version of Cipro) is believed to be the best way to revive it.

Ranbaxy is also planning a big thrust into enter the herbal segment. The company is making a change over from a generics to a branded prescription company. The margin from generics is very thin and the company sees branding and proprietary products as the new thrust areas. Ranbaxy has crossed $ 100 million in revenues in the US market.

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Reliance Life Sciences (RLS), after making a foray into medical biotechnology is now expanding to include plant and industrial biotechnology in its ambit. The company is in the process of creating a database for medicinal plants of Indian origin for manufacturing alternative drug molecules from plant sources through recombinant DNA technology. It is working on a project for the propagation of rare medicinal and aromatic plants through tissue culture. The medicinal plants that are cultivated by the company now include: Patchouli, Geranium, Ashwagandha, Aloe Vera, Lemon Grass and Guggul. The project is aimed at opening up avenues for nutritional supplements, plant chemicals and functional foods in addition to various flavours and fragrances. It will be starting research in plant biotechnology shortly, concentrating on improvement of medicinal and aromatic plant species and thereby promoting genetic diversity.

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Torrent Pharmaceutical (sales: 405 crore) is planning to enter the anti-HIV market in a big way. The company had lined up three drugs for launch by the end of 2001 in Brazil. The company is waiting for approval from the Drug Controller General of India (DCGI) for this launch. At present a price war is raging between other companies in the same segment like Ranbaxy, Cipla and Aurobindo who have cut prices several times. Indian pharmaceutical companies are, of late, vying for a piece of the Latin American pie, expecially Brazil. Recently Hetero Drugs received an order worth Rs 24 crore to supply an intermediate for anti-HIV drug to a company in Brazil. It must be noted that though a WTO country Brazil has made an exception for anti-HIV drugs, as a policy.

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The union health minister CP Thakur is expected to release the guidelines for clinical trials on human beings during the inauguration of the 153^rd Indian Pharmaceutical Congress. According to the Drug Controller of India, the Good Clinical Practices (GCP) would specify conditions to ensure quality of clinical research, data to be generated – in order to make it acceptable internationally – and audit trials.

Instances of unauthorised medical experiments like the contraceptives trial in AIIMS, cancer trials in Thiruvananthapuram and gene therapy for cardiac disorders are sought to be prevented by the new guidelines. This would also give the impetus for multinationals to conduct clinical trials in India. To protect the patients, the GCP would envisage taking the patient's 'informed consent' after making them know the risks as well as the after effects of taking the drug. The study data should be in a format that can be verified easily. The trials and adverse reactions if any should be carefully monitored and recorded.

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Hyderabad-based Dr Reddy's Labs' American research subsidiary, Reddy US Therapeutics has discovered a novel molecular target responsible for the three leading causes of restenosis (reclogging of arteries induced by surgery like balloon angioplasty). At present there are only drugs that affect one or the other causes of restenosis but not all of them. This discovered represents a $ 1 billion opportunity in the US by market estimates. The company is looking for a licensing partner to work on the drug development.

The molecular target identified by Dr Reddy's is a gene or a protein which plays an important role in the disease mechanism. By blocking or stimulating a biological target it is possible to interfere with the disease process. Identifying these targets has been facilitated by advances like mapping of human genome which has increased the targets around which new drugs can be developed.

Dr. Reddy's is also setting up a new research and development laboratory in Pune. Chairman Mr Anji Reddy said the company would focus on lipids.

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Orchid Chemicals and Pharmaceuticals has dropped plans to buy Secunderabad-based bulk drug manufacturer Medicorp Technologies. Instead Orchid is concentrating on a green-field project near its Aurangabad plant. Both parties are believed to have not been able to reach an understanding on price. Orchid's proposed new plant in Aurangabad will manufacture non-cephalosporin and non-Pen G drugs for export to regulated markets. The project cost is estimated at Rs 35-40 crore. Additionally Orchid has signed an equal partnership with a company in China to manufacture cephalosporin drugs up to the penultimate stage and export it to the Chinese partner who will complete the manufacturing process.

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US-based Baxter International (medication delivery and biosciences) is believed to have clinched the deal to buy the IV fluid busines of Wockhardt Life Sciences. The price is being reported to have been Rs 120 crore. However, an announcement is yet to be made. Baxter has a turnover of $ 6.9 billion and is a world leader in transfusion medicines and has a 40 per cent share in this segment in India.

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Aurobindo Pharmaceuticals has placed 1 million shares with Franklin Templeton at an estimated Rs 226 per share. This would immediately bring in Rs 22.6 crore right away and in about four months another Rs 22.6 crore when the share warrants are converted into an equal number of shares. An ADS issue is on the cards in 18 months. The promoters of Aurobindo will also pick up 1 million equity shares and 1 million share warrants through the private placement. Franklin Templeton will pick up the shares through its Templeton Emerging Markets arm. It is believed that Templeton has the international financial expertise and its expertise in the pharmaceutical business will help Aurobindo.

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The leading speciality drugs company Sun Pharmaceutical industries is looking for buyers for a few prescription brands that has been identified as low-priority brands after a review of its portfolio of products. These products have sales of Rs 25 crore annually, the largest of which is Tidigesic a painkiller (annual sales Rs 12 crore). Tidigesic is the brand name for buprenorphine which is in the same class as morphine. It is a strong analgesic that is given in burns cases and after surgeries. The other big brand is Coldact, an antihistamine drug which has various extensions like Coldact Drops, Coldact Plus Liquid and Coldact TR (timed release). The Coldact range has sales of Rs 9 crore. Morepen is currently evaluating Coldact range of products as it has the potential of being turned into an OTC product in future. Other products include cardio drug Cardicap, anti-depressant Flunat, analgesic Dolotram and anti-convulsant Carmaz. The company's strategy is to capitalise on the buying spree the industry has witnessed recently and to promote its more promising brands.

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2001 saw a spate of mergers and acquisitions in the pharmaceutical industry. There were many new trends like getting the best price of cutting edge research, leveraging speed in the generics market to get profits, getting your competitor or co-market your drug and avoid price wars. 2002 could be better with the new drug policy with the new drug price control norms that is expected in the earlier half of this year. This policy will spell out which drug will continue under control and which will be out of control, literally. The Patents Amendment Bill coming up for Parliament's approval will influence the trend in the industry. Again the 2005 WTO deadline is also approaching fast which will bring in drug product patents. India wangled its choice of keeping patents flexible keeping the public health situation in India in mind at the Doha conference of WTO. As big companies focus on core brands there would be an array of low end products in the market to be taken over. 2002 is also the year that could see deals involving ICI's pharmaceutical business and Abbott US's Indian subsidiary Abbott India.

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A recommendation of the joint committee of both houses of parliament has suggested that Indian off-patent drugs may be freed from the limiting provisions of the Patents (Second Amendment) Bill. The report has suggested a change in clause 51 of the Bill which deals with certain acts not to be considered as patent infringement. According to the clause, manufacturing a patented product to seek approval for marketing it exclusively after the patent expires should be done within three years before the patent expires. Indian companies targetting the US generic market have to start researching the product long before this allotted three years. This clause of three years has been found superfluous and has been removed under the advice of the Indian Pharmaceutical Alliance (IPA), a lobby of top Indian pharmaceutical companies. No other WTO company has this restriction and, it was felt, that India also shouldn't have this time frame.

After the patent expires exclusive marketing rights are given for a period of six months during which the patent holder and the exclusive marketer are the only two entities marketing the product. Dr. Reddy's made an application to market the generic version of Prozac in the US in September 1998 when the patent was to lapse in August 2001. Only after the expiry of the exclusive marketing period of six months can other generic companies market the product in that country. However, it is still unclear whether manufacture and export of patented drugs to less developed countries would be allowed after the implementation of the WTO regime in 2005 (when India has to implement WTO rules) till the implementation of WTO rules in the less developed countries in 2016 (where product patents will not implemented till then).

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The government has decided to reduce the list of drugs under price control from 74 to 33. Multinationals like GlaxoSmithKline, Pfizer, Parke-Davis and domestic companies like Cipla, Dr. Reddy's, Ranbaxy, Torrent and Zydus Cadila will benefit while companies like Novartis, Hoechst and Alkem will be affected since some of their products will come into the ambit of price control.

Major drugs that will come out of price control include antibiotic ciprofloxacin, toxycycline, cefadroxyl and tetracycline, CVS formulations like atenolol, tyltitazem and amlotipine and anti-ulcer drugs like omeperazole and ranitidine, anti-TB drug ethambutol and anti-asthma drug salbutamol.

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The Indian Pharmaceutical Alliance (IPA) has a new member in USV (formerly US Vitamins). IPA is a relatively new but powerful pharmaceutical lobby and has 11 top drug manufacturers as members. USV is a leading drug company having stakes in diabetes, heart disease and other chronic ailments. Besides USV the other members of IPA are: Ranbaxy, Cipla, Wockhardt, Sun, Nicholas Piramal, Dr. Reddy's, Alembic, Torrent, Unichem, Lupin and Zydus Cadila. USV has domestic retail sales of Rs 217 crore and exports of Rs 43 crore. IPA members have been brought together by the looming implementation of the product patent post-2005.

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An estimated Rs 600 to 700 crore will be infused into the Pharma City coming up in Vishakhapatnam, Andhra Pradesh. The city is to be set up with land given by the Andhra Pradesh government and is developed by a company experienced in working on large-scale pharmaceutical projects and will be operational by 2004. 1900 acres of land had been allotted by the government near the upcoming special economic zone at Vishakhapatnam. This city is designed to attract pharmaceutical companies in India as well as abroad to set up shop there. A feasibility study is already under way to study the return on investment. The land will be given by the government while the developer would take the responsibility for the completion of the project and its functioning afterwards. The park will provide infrastructure in areas like drug discovery, research, clinical trials, manufacturing, marketing and effluent treatment.

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Prices of main heart drugs have seen a steep decline recently as the following table shows:

This is believed to be a strategy to gain volume by pricing drugs at cheaper prices. Statins are the fastest growing group in the cardio-vascular drugs segment. Atorvastatin brands rake in Rs 55 crore in annual sales and the market is growing at 78 per cent annually. Ind-Swift is targetting the highly effective anti-clotting drug clopidogrel on which it has pinned high expectations.

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Domestic pharmaceutical companies grew faster in November 2000 than multinations as the following table would show:

The overall pharmaceutical industry grew by 12.7 per cent.

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