Mumbai: Indian pharmaceutical firms that do not have enough new drugs to launch in the domestic market and can no longer rip off drugs launched by multinational pharmaceutical companies, are increasingly looking to forge in-licensing arrangements with the latter to launch their products in India.
The arrangement varies from pure marketing relationships (including joint ventures) to more elaborate ones where the Indian company makes the product locally and shares a portion of the profit with the multinational firm.
Companies such as Ranbaxy Laboratories Ltd, Wockhardt Ltd, Cipla Ltd, Torrent Pharmaceuticals Ltd, Dr Reddy’s Laboratories Ltd, Nicholas Piramal India Ltd, Elder Pharmaceuticals Ltd and USV Ltd have already signed in-licensing agreements with foreign drug makers.
“In-licensing is going to be a very important strategy for all the Indian companies for at least 10 to 15 years now, to remain successful in the local market as it will still take a while for them to come out with their own patented products,” said Sujay Shetty, an associate director for pharma and life sciences at audit firm PricewaterhouseCoopers Pvt Ltd.
India moved to a product patent regime that was compliant with the World Trade Organization’s Trade Related Intellectual Patent Rights (TRIPs) law in January 2005. The move hurt a majority of India’s 15,000 drug makers who had, until then, followed a simple product-launch strategy. They would re-engineer the molecules (the potential chemical component that treat a disease) of successful drugs and launch their own versions, or generics, in the local market.
It didn’t matter that the companies that had launched the original drug, such as Pfizer Inc., GlaxoSmithKline Plc., Novartis AG, AstraZeneca Plc., Bayer Corp., and Hoffman La Roche, held the patents for them in most overseas markets.
Even large Indian pharmaceutical companies do not yet have the ability to launch a string of new products from their in-house R&D efforts. Shetty said that this explains why one strategy preferred by Indian companies is to make generics of off-patent drugs. Another strategy, he added, “is to in-license patented products from their foreign counterparts”.
In-licensing could be a lucrative option for companies. According to Raj Smartha, the CEO of Interlink Marketing, a pharma-marketing consultancy based in Mumbai, the market for new-generation drugs in India is around Rs4,500 crore to Rs5,000 crore a year. These drugs are currently under patent protection internationally, he added.
Companies such as Mumbai-based Elder Pharma Ltd entered the business early: the company now has around 30 in-licensing deals with a variety of multinational drug firms. It is currently negotiating with four European firms for similar deals. And on Monday, Wockhardt announced an in-licensing deal with Syrio Pharma SpA for a range of dermatology products. “We have always strived to introduce newer and better products for the benefit of Indian patients through these deals,” said Habil Khorakiwala, chairman, Wockhardt. And Cipla has lined up in-licensing deals with around four to five multinational firms for biotechnology products. Dr Reddy’s already has several in-licensing deals and while announcing one such with Eurodrug Laboratories, the company’s managing director Satish Reddy said that his firm was “fast emerging a partner of choice for several transnational firms.”
“The in-licensing strategy helps Indian companies to bring novel medications to the country at reasonable prices. Since these products are already approved for marketing in other countries, the regulatory procedures are also easier and faster here as they directly undergo a bio-equivalence study and a Phase-III (drug test in patients) trials,” says M. Venkateswarlu, drug controller general of India.
The bio-equivalence study is conducted to ensure that the medicine made out of the substance (chemical/protein) developed by the original inventor is similar in quality and therapeutic function to what is specified in the relevant data provided to the regulators.
“Almost all Indian drug makers, especially the ones with sales of more than Rs100 crore in the domestic market, will definitely opt for in-licensing routes to sustain their revenue as organic growth will be much slower in today’s scenario,” said Interlink’s Smartha.