Vol. 6, No. 4 Apr.-May. 2002

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April 9. Swiss multinational Novartis Pharma has opened a clinical development centre for international projects in India called the Novartis International Clinical Development Centre India (NICCI). The centre is set up with the objective of doing statistical analysis of clinical data, which will be generated from global human trials of Novartis’ experimental drugs. NICCI will be one of four such Novartis centres in the world and the first in Asia. India was short-listed after considering six Asian countries that include: China, Philippines, Singapore, Malaysia and Australia. The reason was that India was cheaper, had plenty of English-speaking statisticians and adequate communication and information technology infrastructure.

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April 1. Onconova Therapeutics, a US start-up which has a tie-up with Zydus Cadila Healthcare is preparing to apply for US FDA approval to start human clinical trials on a new anti-cancer compound. Zydus has bought 16 per cent of Onconova last year for $ 3 million. Onconova is likely to make an investigational new drug application (INDA) for a cancer drug in the last quarter of this year. An INDA filing is made after preliminary data on the drug is made available through animal trials. An INDA approved from the US FDA would allow Onconova to commence phase one of a three-phase trial on human volunteers to prove its effectiveness.

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April 1. Meanwhile, Wockardt has received the Drugs Controller General of India’s (DCGI’s) approval to commence the first phase human trials for its new anti-infective compound. The experimental drug will be tested on healthy, male volunteers at KEM hospital, a municipal hospital in Mumbai. The drug will be led through three phases of trials to prove its effectiveness. It can only be marketed after successful clinical trials. Wockhardt is actively preparing itself for the advent of the drugs patents regime after 2005 as per the guidelines of the World Trade Organisation.

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March 29. Shanta Biotechnics (which launched the country’s first indigenous recombinant Hepatitits-B vaccine) is all set to launch another recombinants vaccine, Shanferon 2B (interferon) used to treat cancer patients. Shanferon 2B will be priced competitively compared to its competitors. Interferon 2B is being sold in the market for Rs 800-1000 per vial and Shanferon 2B will be at least 20 per cent to 30 per cent cheaper than the current market price. The company is planning to bring out about a million dosages per annum. Currently interferon is marketed by its innovator Schering-Plough (SP) through its subsidiary Fulford India. Interferon is a protein that is generated in the human body when it is exposed to a virus and is usually given as an intra-muscular injection for three days and is repeated every four to eight weeks.

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March 25. Indian smokers seem to have said an emphatic "no" to anti-smoking pills going by the poor sales of the smoking cessation drug bupoprion hydrochloride of only Rs 3.5 crore. Sun Pharmaceuticals had launched the product under two brand names, i.e., Smoquit and Bupron. Its sales fell short by 15 per cent. Cipla which markets bupropion under the brand name Bupep and Nicotex is facing a shortfall in sales of 20 per cent. GlaxoSmithKline, the first to launch bupoprion under the brand name Zyban, is facing a problem moving the drug from the shelves to the consumer. It seems Indian smokers would rather have the real thing than go for kicking the habit. Glaxo has gone to the extent of advertising a helpline, on phoning which, the name of a consumer’s local doctor (who can prescribe the drug) will be made known. Marketers are even going to the extent of contacting companies to encourage their employees to buy the drug to say goodbye to the cancer sticks. The cost of treatment ranges from Rs 2,200 to Rs 5,000 for a one-shot seven week treatment.

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March 14. Ranbaxy is close to selling an off-patent version of the blockbuster antibiotic Augmentin (originally owned by innovator Glaxo) in the US. A court ruled that certain patents surrounding the product were invalid which allows Ranbaxy and other off-patent drug companies to bring their product to the market earlier than 2017 when the patent was scheduled to lapse. A court in Virginia ruled that three patents on Augmentin expiring in 2017 were invalid. The court however upheld a 2002 patent. Ranbaxy along with Israeli firm Teva and the Swiss Geneva Pharmaceuticals is challenging Glaxo’s patents on the $ 1.8 billion antibiotic. Ranbaxy which notched $ 113 million in sales in the US is targeting sales of $ 1 billion by 2004. However, Glaxo is going to appeal the decision of the court.

Meanwhile, China is being targeted by Ranbaxy as a focus area. The company has shortlisted eight Chinese centres to perform clinical trials for its new drug for prostatic hyperplasia (BPH). Reportedly, the Chinese authorities have cleared these centres. Trials for Parvosin, already launched in India, will begin in China by end 2002. Ranbaxy’s sales in China were $ 11 million in 2001.

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March 8. Dr. Reddy’s is in the process of completing human clinical trials to launch its Hepatitis-B vaccine. This is the company’s second biotech product after Grastim, an import substitute cancer therapy drug. The company feels that biotechnology is the technology of the future and has created Zenovus Biotech which will focus on building a technology platform for monoclonal antibodies. Analysts feel that the prospects for Hepatitis-B vaccine is tremendous as India has 50 million carriers of the disease against 400 million world-wide.

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March 8. Hetero drugs has launched Lopinavir and Ritonavir, two more drugs in the anti-AIDS segment. It had already launched Lamivudine, Zidovudine, Stavudine, Nevirapine, Indinavir, Nelfinavir, Efavirenz, Abacavir, Saquinavir, Didanosine and Zalcitabine. Hetero has so far exported drugs valued at Rs 190-crore in the current financial year. The domestic market for anti-AIDS drugs which is currently at Rs 25 crore is expected to double in the coming year. The company is supplying $ 10 million worth of anti-AIDS drugs to Brazil, which will be a combination of Ritonavir and Lopinavir. The Brazilian government faced with rising prices of drugs is opening up its market for generic products through a special law enacted in 1999.

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Ranbaxy’s once-a-day antibiotic Ciprofloxacin will be marketed by Bayer in the US. Bayer has applied to the US FDA for permission to market the drug. Ranbaxy has also revised its sales estimate to $ 750 million from $ 700 million taking into account the approval to market anti-bacterial cefuroxime axetil in the US. Bayer had licensed the ciprofloxacin product from Ranbaxy paying milestone payments and will be paying royalty on sales. Bayer had meanwhile developed a once-daily form of ciprofloxacin and it was feared that they would go ahead and promote their own product. Ranbaxy is also planning to introduce a new asthma drug for clinical trials by June 2002. Swiss drug maker Roche’s acne drug Accutane is also being introduced in June.

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Exclusive Marketing Right (EMR) were meant to encourage multinationals to launch their research products in India. However Indian companies are lobbying with the government to allow them EMRs for products developed by them. EMRs are a precursor to the product patent regime that will be introduced from 2005. Once this regime comes into force the EMRs will cease to apply. EMRs are a sort of temporary patent protection to multinationals to introduce their products in India. However companies like Dr. Reddy’s and Ranbaxy realised that it can be to their benefit as they had researched products, which can qualify for EMR. Ranbaxy has applied for an EMR for ciprofloxacin. The government has agreed in principle that EMR can be granted for a process patent application and not just a product patent application.

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The World Health Organisation (WHO) has included Cipla in its list of preferred international suppliers of AIDS drugs. Cipla had offered a triple-drug anti-AIDS cocktail for less than $ 1 a day to poor patients in Africa. The other suppliers mentioned in the list are: Glaxo, Bristol-Myers Squibb, Abbott, Roche, French Doms Recordati and Spanish Combino Pharm and Laboratorios Cinfa. However analysts believe this won’t translate into large sales volumes.

Meanwhile Ranbaxy has offered to supply AIDS drugs at $ 295 per person per year to Medicins Sans Frontieres undercutting other companies’ offer of $ 350 per person per year. This is the lowest offer for AIDS drugs in the world.

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E Merck fears that with the reduction of peak customs duty from 35 per cent to 30 per cent the landed cost of vitamin E will become cheaper thereby giving a boost to imports from China. E Merck is the only manufacturer of vitamin E bulk drug in India and had decided to apply to the government to impose anti-dumping duty on vitamin E imports. However it has dropped this plan so as not to alienate its fellow multinationals that import vitamin E from other countries. The company intends to close 2002 with a 12 per cent growth in sales. It has declared a 100 per cent total dividend for 2001 and will change its name to Merck instead of E Merck.

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Aurobindo Pharma plans to buy 79.4 per cent stake in Ranit Pharma. The board of directors of Aurobindo has agreed to buy 68,97,525 shares of Rs 10 each of Ranit Pharma at Rs 14.50 a share at a cost of Rs 10 crore. Ranit Pharma will thus become a subsidiary of Aurobindo Pharma.

Meanwhile, the board of directors of Aurobindo has allotted one million equity shares and an equal number of warrants to Templeton Strategic Emerging Markets Fund. The promoters of the company have also allotted themselves an equal number of shares and warrants. The shares were priced at Rs 227 per share. The placement was made after a resolution was okayed at the company’s extraordinary general meeting.

In another development Aurobindo Pharma and Citadel Fine Pharmaceuticals have come together to form an equal partnerships, Citadel Aurobondo Biotech (CABL) to promote domestic brands of both companies exclusively. Citadel brands would contribute 70 per cent of the turnover of CABL which is projected at Rs 135 crore. Aurobindo will be transferring the branded formulations of its Aurgus, Immunus and Indus division to CABL. Aurobindo and Citadel would bring Rs 1 crore each towards the equity of CABL.

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Micro Labs has acquired the Rs 22-crore Eros Pharma for Rs 18.5 crore. This acquisition will strengthen Micro’s presence in some key segments. Both are closely held Bangalore-based pharmaceutical companies. Micro Labs is expecting sales of Rs 200 crore for fiscal 2002. Micro Labs group also includes Brown & Burke and Micronova and it also owns a stake in Bal Pharma. Eros Pharma has presence in the anti-microbials and vitamins segments.

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April 18. Zydus Cadila has offered to buy the remaining stake of 44.6 per cent in German Remedies at Rs 300 a share so that it can merge the latter with itself. The open offer is scheduled to open in June 2002. Zydus will pay around Rs 110.3 crore and post-merger German Remedies will be merged with Zydus. Zydus will also seek the delisting of German Remedies if its stake in the company exceeds 90 per cent. German Remedies shares rose 2.7 per cent to close at Rs 287.7 on the BSE following this announcement.

In another development Zydus is planning to invest Rs 20.5 crore in buying the entire stake of Vadodara-based Banyan Chemicals (sales: 20 crore). Banyan exports bulk drugs and is promoted by a group of non-resident Indians based in the US. This acquisition will also pave the way for Zydus’ entry into the US market. Banyan was part of the Invamed group, which was acquired by Novartis in 1999.

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The US-based Pharmacia’s open offer for 20 per cent of Abbott has been oversubscriber 1.6 times. Pharmacia had acquired Abbott earlier buying a 51.5 per cent stake. Therefore according to the takeover code it had to acquire another 20 per cent through an open offer. However Pharmacia has no intention of acquiring a further stake in Abbott.

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April 3. The French Sanofi-Synthelabo is contemplating legal action against Dr. Reddy’s Laboratories, which is in the process of launching a generic version of Sanofi’s clotbuster Plavix in the US. Dr Reddy’s has filed an application to manufacture a generic version of Plavix hoping to get permission from the US regulatory authorities to market it there before Sanofi’s patents expires in 2003, 2011 and 2014. A Canadian firm Apotex also has done a similar filing and Sanofi has filed a legal complaint against it in New York alleging patent infringement.

Apotex had filed an application for a generic version of Plavix with the US FDA by challenging the existing patents held by Sanofi and is expected to get market exclusivity if it wins the case. With market exclusivity generic firms can challenge weak patents and introduce their generic products in the market faster with low-cost off-patent drugs. Plavix is the world’s leading blood thinning agent and is one of Sanofi’s star product accounting for a third of the group’s profits which is expected to balloon to 40 per cent by 2005.

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Cipla has entered into talks with the US biotechnology firm Biogenerics for marketing and manufacturing alliance. Under this alliance Cipla will market some Biogenerics products in India and also make some niche biotechnology products for them at the Cipla plant in India. The products could include darbopoietin, a modern blood booster and a range of products going off patent in the US. Cipla is India’s second-largest drug company by market share.

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Nicholas Piramal proposes to use diagnostic laboratories as one of the agents of growth. The company has planned a network of about 40 diagnostic laboratories in the next three years. Initially the company will focus on the western and eastern regions of the country. Nicholas already has narrowed down on Mumbai, Kolkata, Pune, Nasik, Akola and Nagpur for diagnostic facilities. In Mumbai it has a tie-up with Dr Phadke’s Pathology Laboratory and Infertility Centre since September 2000. Nicholas Piramal has such tie-ups with S Roy in Kolkata and Ajit Golwilkar in Pune. These local partners will bring in goodwill and expertise and Nicholas will supply the equity, standardisation and information technology.

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February 27, 2002. Ranbaxy Laboratories has decided to divest its entire stake in Speciality Ranbaxy to the promoters and will get Rs 14.35 crore from the deal. The company has said that its reference laboratory business is not a core activity and has not provided synergy with its mainline business that is pharmaceuticals. The company has been suffering losses since its inception in 1995 and the cumulative losses have stood at Rs 33.2 crore.

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Glaxo SmithKline (India’s largest drug maker) is rationalising its distribution network in an attempt to save on costs and increase margins. During 2001 the company reduced the number of stockists from around 6,000 to around 4,500 and cut down to half the number of clearing and forwarding agents from 60 to 31. This is to improve the distribution chain and bring down costs to increase profits. Another 500 stockists are expected to get the axe in the near future. This follows the world-wide merger of Glaxo and SmithKline Beecham Pharma. Also targeted were stockists and C&F agents of Burroughs Wellcome, a part of the Glaxo group. Also, creditworthiness of the stockists were taken into consideration before the rationalisation. This network overhaul is part of a process of "destocking" whereby Glaxo is moving away from a system of overloading the stockists with products and thus increase inventory.

In another development Glaxo has decided to merge Croydon Chemical Works, a subsidiary, with itself. Glaxo also plans to merge another fully-owned subsidiary, Meghdoot Chemicals with itself. Croydon and Meghdoot belong to the erstwhile Biddle Sawyer group that was acquired by Glaxo in 1997-98. However, Biddle Sawyer itself has not been included in the merger process. The company will seek its shareholders’ go ahead for the mergers. Croydon doesn’t own a manufacturing unit and Meghdoot owns one in Kalyan and Biddle Sawyer owns one in Goregaon all in Mumbai suburbs. Croydon had sales of Rs 6 crore in 2000 while Meghdoot had sales of Rs 2.2 crore.

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March 6, 2002. Wockhardt Life Sciences has announced that it will divest its intravenous (IV) fluids business to Baxter India, a subsidiary of the $ 7 billion American healthcare company Baxter Healthcare International for Rs 195 crore. Apparently this has been done to restructure the Wockhardt group to enhance shareholder value. The IV fluid business has sales of Rs 80 crore which forms 40 per cent of Wockhardt Life’s 2000 turnover of Rs 210 crore.

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The customs duty on 88 imported life-saving drugs listed in the budget works out to a steep 22 per cent when countervailing duty of 16 per cent is added to it. The industry was unaware that the 5 per cent duty imposed on such drugs was apart from the countervailing duty applicable to these drugs of 16 per cent and the total works out to nearly 22 per cent. Importers are planning to lobby the government to remove the countervailing duty of 16 per cent.

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Under the new DPCO norms drugs controllers at state level would be authorised to collect data from pharmaceutical companies. A meeting of the NPPA decided to inform the stakholders about the changes being implemented in the DPCO 2002. This will be announced towards mid-June. State drug control authorities would be empowered to seek data from pharmaceutical companies, trigger an alarm on any price rise in non-scheduled drug prices (if it jumps beyond 20 per cent) and also warn about shortages.

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The Delhi High Court threw out an application filed by Pfizer seeking a stay on Zydus Cadila’s use of the brand name "Penegra" for its impotence-curing drug, also its diamond shape which coincided with its "Viagra". The use of the name rhyming with Viagra and the diamond shape as well as the blue colour had led Pfizer to file a suit in Delhi. An ex-parte injunction was granted to Pfizer restraining Zydus from using the brand name which was later vacated. However, the court asked Zydus to change the colour of the pill from blue to pink. Pfizer, however, doesn’t sell Viagra in the Indian market. Similar suits had also been filed against Cipla and Sun Pharma who had also jumped on the bandwagon and brought out Viagra clones.

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The NPPA has revised the prices of anti-helmeinthic (deworming) drug pyrantel pamoate, diabetes drug based on insulin and asthma-drug ephedrine. NPPA fixed non-ceiling prices (including excise duty and local taxes) for 13 packs including formations imported from Eli Lily and Novo Nordisk. Monocomponent insulin from Eli Lily has risen from RS 198.74 to Rs 208.94 and highly purified insulin mixtures from Novo Nordisk has increased by 5.13 per cent and 7.82 per cent. A 10-mil vial of Actrapid HM costing Rs 508.15 will now cost Rs 547.89 and a 5x3 cartridge of insulated HM Penfil 1001U/ml priced at Rs 990.55 would cost Rs 1044.70.

Meanwhile, NPPA plans to present a brand new list of price-controlled drugs to the ministry of chemicals and fertilisers in the near future. From the ministry of chemicals and fertiliser the list will go to the law ministry to be vetted by two departments separately to verify consistency with existing laws and clauses. The final list will be out in June.

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India’s largest drug-maker GlaxoSmithKline (GSK) has won a landmark case against the government of India over an allegation of drug pricing. The Delhi High Court set aside demand of Rs 71.79 crore raised by the government in 1990 for alleged overpricing of a steroid named Betamethasone. The government also claimed an interest on this amount of Rs 117.66 crore. Betamethasone is a sterioid with anti-inflammatory properties which GSK sells under the brand name Betnelan and Betnosol. GSK had written to the government with details of the quantities based on which the demand has to be raised according to which it owes the government a mere Rs 18.68 crore a portion of which has already been paid.

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Indian pharmaceutical companies have started 2002 with a bang, or so it seems. Indian pharmaceutical industry grew at an average rate of 13 per cent while growth has been sluggish for the multinationals in January 2002. During mid-2001 the growth rate had plummeted to 5.7 per cent and it looked up around August 2001. During the period from October 2001-December 2001 the growth has been an impressive 14.5 per cent. The growth figures for January 2002 are as follows for Indian companies and multinationals.

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