New Delhi: Indian pharmaceutical companies could earn up to $224 million (around Rs985 crore), by diversifying into biological drugs according to Frost & Sullivan,a research firm.
The number specifically refers to the market for biological drugs that are going off patent. These drugs are derived from living organisms or cells, as opposed to most drugs that are derived from chemicals.
Several Indian companies, including Ranbaxy Laboratories, Cipla and Biocon, are rushing to develop biosimilars, as off-patent or copycat versions of biological drugs are called, that they can sell in Europe and in the US.
Generic or off-patent versions of ordinary drugs are often 90-95% less expensive than the originals. Biosimilars, or biogenerics as some refer to them, are not expected to face this problem because of their complex and expensive manufacturing process.
“Biogenerics present a huge opportunity as they are tough to manufacture and there will be fewer players in the fray. That alone will ensure that the price erosion is 20-25%,” said Mahesh Sawant, programme manager, biotech, Frost & Sullivan.
According to Sawant, the global biological drugs market would grow to $7billion by 2010 from the current $2billion. Of this, the opportunity for Indian companies would increase to between $112 million and $224 million. The range is wide, he added, because “a lot of drugs that are expected to go off patent could see an extension.”
Last week, Ranbaxy signed an agreement with Hyderabad-based Zenotech Laboratories to develop and market a biogeneric, fligrastim, a cancer drug. The patent of innovator Amgen Inc, the world’s largest biological drug maker expired in 2006. In a release issued at the time of signing the agreement, Malvinder Singh, managing director, Ranbaxy said the deal pooled his company’s knowledge of regulatory systems and marketing infrastructure with Zenotech’s expertise in manufacturing.
“Until it sets up its own facilities to make these drugs, alliances like these will help Ranbaxy,” said Nimish Mehta, assistant vice-president, Edelweiss Capital, an investment bank.
Wockhardt is looking for opportunities in biogenerics such as insulin and erythropoietin—a hormone that stimulates the production of red blood cells. For its part, Biocon is interested in insulin. Cipla has forged alliances with Bangalore’s Avestha Gengraine, Japan’s LTT Bio-Pharma and US firm Biogenerics and is talking to five biotechnology firms from Russia, China, and Cuba.
The biggest challenge these companies will face in tapping the European and US markets will be winning regulatory approval. It is harder for biogenerics to establish that the drugs have the same therapeutic effect as their patented counterparts.
Meanwhile, Indian biotech and pharma companies that do not have the resources to launch drugs in the European and US markets are looking for contract manufacturing opportunities.
“As many as five Indian companies are gearing up their facilities to be preferred back-end drug suppliers for the international majors,” said Samant, refusing to name the companies.