IP AND GLOBALISATION OF INDIAN PHARMACEUTICAL INDUSTRY: EMERGING CONCERNS FOR INNOVATION AND ACCESS

Santhosh M.R.Centad

17-18, March 2012National Law University Jodhpur

India: Health/ill-health Profile

• Problem of double burden of diseases• The major communicable diseases (CDs)

– infectious and parasitic diseases, – respiratory diseases

• The major non-communicable diseases (NCDs)– malignant neoplasm, diabetes mellitus, neuropsychiatric disorders,

sense organ disorders, cardiovascular diseases, respiratory diseases, digestive diseases, musculo-skeletal diseases, congenital anomalies and oral diseases

• Besides these we have – maternal conditions, perinatal conditions and nutritional deficiencies.Maternal mortality rate and Infant mortality rate are still high.

Health Profile….

Health profile ….

SrilankaBangladesh

India US

Neglected Diseases

1.Malaria-2.Tuberculosis- 3.Leishmaniasis (Kala Azar)- 93 deaths 4.Lymphatic filariasis 5.Leprosy6.Dengue7.Schistosomiasis8.Onchocerciasis9.Chagas Disease10.African trypnosomiasis

Trachoma*Meningitis*

* MSF

Post-1990 policy environment

Post -1990: Major Changes

• IPR regime- TRIPS compliant- Patent act• Foreign investment- 100% FDI• Import and Export- liberalised• Price control- only 74 bulk drugs under DPCO• Quality standards – GMP/Schedule M

Mixed Responses from commentators• Keayla (1994) and Amit Sengupta (1994) cautioned about

the possible threats and ramifications of new policy reforms.

• Sengupta (1999) and Jayashree Watal (2000) argued that there would be sharp increase in the drug prices in India.

• “India may become a centre of global importance in pharmaceutical production and research and thereby, enhance its position in the world economy” (Smith 2000:12).

• “a number of Indian firms will successfully weather the transition and come out as more innovative companies.” Lanjouw (1997)

Major concerns

• Changing Policy direction• Unfettered entry and Exit of Capital• Mergers and Acquisitions (M&As)• Increasing contract manufacturing• Increasing contract research• Out- licensing of molecules under

development• Increasing import- dependence

Policy Environment

• Meager public investment in Health• Export- centric- Regulated markets targeted

– High Value -Low-volume • FDI- centric policies

– 100 FDI-automatic route-• Self-reliance is no more important concern• Local manufacturing is not encouraged

– More profitable to import from cheaper destinations such as China

Disease Focus of New Chemical Entities’ based Drug Discovery Pipeline

Source: Abrol, Dinesh et.al(2011)

Share of star researchers involved in communicable and non communicable disease 1991 2011‐

NCD, 78%

CD, 22%

Abrol, Dinesh et.al (2011)

 Year Drugs &

Pharmaceuticals

Total FDI % Pharma

1991-1995 2317.7 131735.9 1.8

1996 2426.9 103970.2 2.3

1997 1881.5 164258.2 1.1

1998 838.4 133398.6 0.6

1999 757.3 168678.2 0.4

2000 2079.9 123537.5 1.7

2001 4081.8 167777.6 2.4

2002 2510.5 181955.6 1.4

2003 2793.3 116171.7 2.4

2004 15704.2 172665.2 9.1

2005 5107.3 192990.9 2.6

2006 9757.3 503856.4 1.9

2007 11405.7 797355.6 1.4

2008 11085.9 1397688 0.8

2009 9783.6 1309820 0.7

Source : compiled from - SIA News letters and DIPP website

Foreign Direct Investment in pharmaceuticals in India (Rs. Million)

M&AsTarget company Acquirer Country

of originYear

Amount (USD)

Matrix lab Mylan Inc US August 2006 $736 mn

Dabur Pharma Fresenius Kabi Singapore April 20, 2008

$219 mn

Ranbaxy Laboratories Limited

Daiichi Sankyo Japan June 11, 2008

$4.6 bn

Shantha Biotech Sanofi Aventis France July 27, 2009 $783 mn

Orchid Chemicals (injectible business)

Hospira US December 16, 2009

$400 mn

Piramal Healthcare (domestic formulation)

Abbott Laboratories

US 21 May 2010 $ 3.72 bn

Paras Pharmaceuticals

Reckitt Benckiser Group

UK 14 December 2010

$ 720.6 Million

Select cases of PE in pharma Year Company Investor Size(In $ Mn)

Feb 2004 Matrix Laboratories Temasek 74

Feb2004 Aurobindo Pharma StanC PE 20

Dec2004 Glenmark Pharma Actis 67.7

Mar2005 Malladi Drugs India Advantage Fund 23

Aug 2005 Jubilant Organosys General Atlantic LLC 60

Jan2006 Unichem Laboratories New Vernon PE 13

Mar2006 Claris Lifesciences Carlyle Asia 20

Nov2006 Arch Pharmalabs India Advantage Fund 22

Jun2007 Morepen Laboratories StanC PE 24.4

Sep2007 Morepen Laboratories Avenue Capital 19

Nov2007 Unimark Remedies Citi Venture Capital 29

Dec2007 Cadila Healthcare ChrysCapital Investment Advisors 14

Dec2007 Torrent Pharma Greater Pacific Capital 16.61

Jan2008 Gland Pharma Evolvence India 30

Jun2008 Bioplus Lifesciences AIF Capital 31

Jul2008 Inventia Healthcare NYLIM Jacob Ballas 21

Aug2008 Nectar Lifesciences Citi Venture Capital 23.6

Oct2008 Strides Arcolab HSBC Global 35

Oct 2009 Deccan Health Care Pvt. Ltd. Nexus India Capital Advisors Pvt. Ltd. 3.22

Aug 2009 DiagnoSearch Life Sciences Pvt. Ltd

JM Financial India Fund 7.24

Aug 2009 NovaLead Pharma Pvt. Ltd Kotak Private Equity Group 8

Jun 2009 Anjan Drugs Pvt. Ltd. Evolvence India Life Sciences Fund 5.2

Private Equity Presence in Indian Pharmaceutical Industry

Source: compiled from Khan (2011) www.dealcurry.com

Exit of PE from Pharma

Date PE Company Mode Buyer Size($ Mn)

Jul-09StanC PE Aurobindo Pharma Open Market Public 13.81

Jun-10Greater Pacific Capital Torrent Pharma Open Market Public 49.14

Dec-10Actis, Sequoia Paras Pharmaceuticals M&A Reckitt Benckiser 726

Dec-10Carlyle Asia Claris Lifesciences IPO Public NA

Oct-10BTS India Parabolic Drugs IPO Public NA

Source: http://www.dealcurry.com/20110225-Rx-Expiring-Patents-Attract-PE-Interest-in-Pharma-Companies.htm

Select contract manufacturing deals Indian company Multinational Product/comments

Lupin Laboratories Fujisawa Cefixime

Lupin Laboratories Cyanamid Intermediates

Lupin Laboratories Apotex Cefuroxime Axetil, Lisinopril (Bulk)

Nicholas Piramal Allergan Bulk and Formulations, APIs for levobunolol and brimonidine

Nicholas Piramal Advanced Medical Optics Eye Products

Nicholas Piramal Pfizer 10 year contract manufacture and supply of hospital products

Nicholas Piramal Pfizer Seven year contract for R&D services in the animals health division

Nicholas Piramal Astra Zeneca 5 year contract potentially $ 350 MM for supply of products as per acquisition of Morepeth Facility

Nicholas Piramal GSK MOU for drug intermediates; no fixed tenure

Wockhardt Ivax Nizatidine (anti- ulcerant)

Dishman Pharmaceuticals Solvay Pharmaceuticals 6 projects, including supply of starting material and intermediates for Eprosartan Mesylate

Dishman Pharma Astra Zeneca Intermediate for esomeprazole

Dishman Pharma Merck & Co Intermediate for losartan

Dishman Pharma GSK Three intermediates

GVK Wyeth $ 40 MM FTE contract

Hikal Degussa Manufacturing intermediates and API’s

Jubilant Eil Lilly 5 year contract for discovery of NCE in various therapeutic areas

IPCA Labs Merck Bulk Drugs

IPCA Labs Tillomed Atenelol

Orchid Apotex Cephalosporin and other injectables

Sun Pharma Eli Lilly CVS products, anti-infective drugs and insulin

Kopran Synpac Pharmaceuticals Penicillin- G Bulk Drug

Cadila Healthcare Altana Pharma Two intermediates for pantaprazole

Cadila Healthcare Boehringer Ingelheim Gastrointestinal and CVS Products

Zydus Cadila Eli Lilly Cardio vascular products

Biocon Bristol Myers Squibb Bulk Drugs

Source: Compiled from various sources

Increasing contract research deals

Companies in Contract Research (excluding Clinical Trials)

Nicholas Piramal

Aurigene (Dr. Reddy’s)

Syngene (Biocon)

GVK Biosciences

Jubilant Organosys

Divi’s Laboratories

Suven Lifesciences

Dr. Reddy’s Laboratories

Vimta Labs

Clinical TrialsClingene (Biocon)

Jubilant Clinsys (Jubilant Organosys)

WellQuest (Nicholas Piramal)

Synchron

Vimta Labs

Lambada

Siro Clinpharm

Relience Life Sciences

Asian Clinical Trials (Suven Life Sciences)

Source: IDMA (2007)

2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

200

400

600

800

1000

1200

12 22 3970

120

202

323

485

728

1020

CRO-Market size

Market size

Mill

ion

USD

Source: prepared from Government of India (2008), p.67 based on Zinnov Analysis

Out-Licensing Deals Indian firm Partner Molecule/Technology Deal value Year Development

phase

Ranbaxy Bayer Cipro(NDDS) $65Mn 1999 NA

Ranbaxy PPD Inc RBx 10558(Dyslipidemia)

$44 mn 2007 NA

Torrent Novartis Age breaker (Diabetic) $3mn 2001 development stage

Glenmark Forest(for N America)

Oglemilast(Asthma/COPD) $190mn 2004 Phase I

Glenmark Tejin (for Japan)

GRC 3886 (Asthma/COPD) $53mn 2005 Phase II

Glenmark Merck GRC3200 $247mn 2006 Phase II

Glenmark Eli Lilly GRC 6211 (osteoarthritis pain) $135mn 2007 Phase II

Lupin Cornerstone biopharma

Anti-infective (NDDS) $10.5mn 2007 NA

Lupin laboratories Servier

IP data on Perindopril $26.7mn 2007 NA

Select Cases of Out-licensing Deals between Indian and Foreign Companies

Source: compiled from IBEF Reports on Pharmaceuticals 2008, 2009,

Increasing import- dependence

• Importation of bulk drugs and formulations have gone up

• Bulk drugs – we have a trade deficit• Getting increasingly dependent on China for

bulk drugs

List of bulk drugs imported from China (APRIL 2011-JUNE 2011)Name of the bulk drug Indication Whether

part of essential drug list 2011

1 ACARBOSE IP To treat Type II diabetes No

2 AMOXICILLIN TRIHYDRATE AND CLAVULANATE POTASSIUM 4:1 IP

Anti-biotic Yes

3 CEFEPIME DIHYDROCHLORIDE STERILE IP,

Anti-biotic No

4 CEFIXIME IP antibiotic used to treat infections caused by bacteria such as pneumonia; bronchitis; gonorrhea; and ear, lung, throat, and urinary tract infections

Yes

5 CEFOPERAZONE SODIUM AND SULBACTAM SODIUM STERILE

 respiratory tract infections (upper and lower), urinary tract infections, skin and soft tissue infections, and bone and joint infections caused by susceptible organisms. It is also used to treat meningitis; peritonitis, cholecystitis, cholangitis, and other intra-abdominal infections; and pelvic inflammatory disease, endometritis, gonorrhoea, and other infections of the genital tract.

No

6 CEFOPERAZONE ACID NON STERILE IP

used for infections of the respiratory tract, skin, bones, joints, urogenital system, meningitis, and septicemia

No

7 CEFTRIAXONE SODIUM NON STERILE IP,

Antibiotic Yes

8 CEFUROXIME SODIUM STERILE IP

second-generation cephalosporin antibiotic Yes

9 CIMETIDINE IP treatment of heartburn and peptic ulcers. No

10 CITICOLINE SODIUM CP, Cerebrovascular disorders and head injury No

11 CLINDAMYCIN PHOSPHATE USP  to treat infections with anaerobic bacteria but can also be used to treat some protozoal diseases, such as malaria

Yes

12 DIPYRIDAMOLE USP Blood thinner (cardio vascular0 No

13 DOXYCYCLINE HYCLATE IP  to treat chronicprostatitis, sinusitis, syphilis, chlamydia, pelvic inflammatory disease

Yes

14 ENALAPRIL MALEATE IP Anti-hypertensive Yes

15 ENOXAPARIN SODIUM IP anticoagulant used to prevent and treat deep vein thrombosis or pulmonary embolism

16 ERYTHROMYCIN IP,  Anti-biotic respiratory tract infections Yes

17 FAROPENEM SODIUM JP Anti-biotic (sinusitis, pneumonia,bronchitis) No

18 FINASTERIDE IP  treatment of benign prostatic hyperplasia and hairloss No

19 GLICLAZIDE IP diabetes No

20 HEPARIN SODIUM IP Anticoagulant (Cardio pulmonary) Yes

21 HYDROCORTISONE IP to treat certain forms of arthritis; skin, blood, kidney, eye, thyroid, and intestinal disorders (e.g., colitis); severe allergies; and asthma. Hydrocortisone is also used to treat certain types of cancer.

Yes

22 ISOFLURANE PH.EUR

used for induction and maintenance of general anesthesia.  Yes

23 L-PROLINE, Dietary supplement No

24 INOSINE Dietary supplement No

25 MEROPENEM BUFFERED STERILE IP

broad spectrum injectable antibiotic used to treat a wide variety of infections, including meningitis and pneumonia

No

26 MIFEPRISTONE CP abortifacient  Yes

27 PACLITAXEL IP Cancer chemotherapy Yes

28 PARACETAMOL IP Anti-pyretic Yes

29 PREDNISOLONE ACETATE USP,

corticosteroid drug with predominant glucocorticoid and low mineralocorticoid activity, making it useful for the treatment of a wide range of inflammatory and auto-immune conditions

Yes

30 RANITDINE HYDROCHLORIDE IP

Antacid Yes

31 ROXITHROMYCIN IP  antibiotic. used to treat respiratory tract, urinary and soft tissue infections

No

32 TICARCILLIN SODIUM & POTASSIUM CLAVULANATE (30:1) POWDER

treatment of bacterial septicemia, skin and skin structure infections, lower respiratory tract infections, bone and joint infections, GU and gynecologic infections, and intra-abdominal infections caused by susceptible strains of bacteria.

No

Source: WWW.DEPARTMENTOFPHARMA.GOV.IN

Concluding Remarks• There is no enabling policy environment for domestic

industries• Pharma R&D is not oriented to the epidemiological

needs of the country• Government should invest more in health and

pharma research• Public sector research should be promoted• Unfettered movement of capital should be controlled• Should not allow brownfield investments• Bulk drug industry should be promoted.