Innovation to be growth engine for Indian pharma

The future of the country's pharma and biotechnology industry lies in innovation. Domestic firms, therefore, need to shift focus from generics to patented novel entities, industry representatives said at the Pharma Conclave organised by Satyam Computer Services in Hyderabad.

"We cannot bet on cost arbitrage for long as international companies are also coming to India and they would get the same advantage in terms of costs. While in the short term, focussing on active pharmaceutical ingredients, generics and services would help, in the long term there would be better opportunities in the drug discovery and research segment," GV Prasad, vice-chairman, Dr Reddy's, said.

The Indian pharma industry is estimated to be $6 billion in size, projected to grow to $25 billion by 2010. The global pharma industry is over $560 billion in size, with the patented novel entities segment being worth about $420 billion in value terms and generics and over-the-counter drugs $75 billion and $65 billion, respectively.

While patented novel entities are the biggest chunk in terms of value, margins that accrue from this segment are also as high as 90 per cent.

"The Indian pharma companies, however, are not major players in the patented novel entities segment. There is, therefore, a significant opportunity for Indian companies to grow," Prasad said, adding that long developmental cycles and high cost could be the reasons for the lack of initiative by Indian companies on innovation. It is estimated that the entire cost to develop a new drug and bring it to the market ranges from $500 million to $1 billion.

Varaprasad Reddy, managing director of Shantha Biotech, said that the lack of funding was a major problem for the industry.

Meanwhile, Shantha Biotech has developed four monoclonal antibodies against lung cancer, melanoma, pancreatic and breast cancer, he said.

It has planned a phase-I clinical trial in the US for the antibody against lung cancer by June 2007.