The drug lords

“I knew I would have the opportunity to grow here," says the 59-year-old. “And, to be frank, the pay was not bad." Arora is now Ranbaxy’s R&D president.

Bhatnagar is the shadow to Arora’s light. He is quiet, reflective, also the product of American education and career. And he, too, knows the value of a calculated risk. At 53, after working for nearly two decades, he went back to college to get an MBA. That was in 2004.

Also Read | More articles in the series

The following year, Bhatnagar left the US—where he had lived for 24 years—and came to Ranbaxy to become vice-president of its New Drug Discovery Research wing. Arora and Bhatnagar guide new drug discovery at the 49-year-old Ranbaxy Laboratories Ltd.

New milestone: Scientists working on malaria medicines at a Ranbaxy lab in Gurgaon. This year, Ranbaxy plans to release Arterolane, the first Indian-made malaria drug to be sold all over the world. Ronjoy Gogoi /Hindustan Times

In late 2010 Ranbaxy plans to release Arterolane, the first Indian-made malaria drug to be sold all over the world. Three Arterolane tablets, taken over three days, will cure malaria. Thanks to a deal with the Indian government, Ranbaxy will sell the tablets for $1 each.

But the drug isn’t just unusual for what it does. After all, there is an existing malaria therapy, Coartem, manufactured by Switzerland-based Novartis AG.

The makers are hoping that Arterolane will represent something more. If Ranbaxy releases it in time, Arterolane will be the first new molecule to be developed and tested on Indian soil but sold all over the world. Indian pharma firms have been chasing that milestone for 10 years.

In India, cheap generics dominate a market worth Rs55,454 crore, according to government figures. But the Indian market is poised for change, as disease rates and income levels rise. The domestic drug market will grow to $20 billion by 2015, and 8-10% of the products on sale will be branded, original medication, according to a study by Ernst and Young and the Federation of Indian Chambers of Commerce and Industry.

“The margins are fantastic if you have an innovative product that actually works," says Vinay Pinto, executive director of Mumbai-based Wallace Pharmaceuticals Pvt. Ltd. “That’s why a lot of the big players, like Glenmark and Reddy’s, have products that are nearing Stage 3." So far, none of these products has been launched, partly due to financing troubles. Between 2008 and 2009, several Indian pharma firms spun off their research divisions, in the hope of attracting alternative sources of funding. Ranbaxy was prepared to do the same. “Ranbaxy will always be generics-focused," says Bhatnagar. “That will never change."

But in 2008, the Japanese drug giant Daiichi Sankyo Co. Ltd acquired a majority stake in Ranbaxy. Daiichi already has its own NCE (new chemical entity) programmes in Japan.

Under Daiichi, Ranbaxy could easily survive without releasing Arterolane. There’s a huge global market for generics, especially in Africa and South America where patent restrictions are more loosely enforced.

And since Ranbaxy is no longer an Indian company, which makes it harder to attract government grants for new drug development, it’s up to Bhatnagar and Arora to prove that Ranbaxy is serious about Arterolane, and that new drug development is worth the risk.

Arterolane began its life five years ago at a college in the US. Scientists at the University of Nebraska Medical Center found that OZ277, one of more than 250 molecules that they had studied, could help cure malaria in mice.

Usually, major pharmaceutical firms buy the rights to promising compounds such as OZ277. But malaria is a disease of the developing world. India and South-East Asia account for 4% of all deaths; Africa for 91%. A majority of these fatalities are children.

“You don’t see Western nations developing drugs for some of these diseases because they don’t have them," says Hans Rosling, a professor of international health at the Karolinska Institute, one of the largest medical colleges in Europe.

The market is estimated at between $400 million and $500 million, much less than the projected cost of development. The rights to OZ277 ended up with Medicines for Malaria Venture (MMV), a Swiss non-profit. At the time, OZ277 had only been tested in animals. MMV brought their fragile cargo to Ranbaxy, knowing that they were asking the company to take a big risk.

“We wanted to go with a partner based in a disease endemic country," says Jorg Moehrle, director of clinical development at MMV. “Ranbaxy was the best company we talked to."

Bhatnagar’s new research and development team was eager to prove their new research abilities in a partnership, where they could split the risks. “We wanted to have partners throughout the process," says Arora.

Representatives from MMV began to make regular trips to the research towers in Gurgaon, where they helped refine the testing and production standards in Ranbaxy’s labs.

As recently as late 2009, Ranbaxy had drawn criticism from international regulatory bodies over manufacturing processes at some of its Indian and US labs.

“We wanted this product to meet international regulations so it would get approval from the World Health Organization (WHO)," says Moehrle. With WHO approval, Ranbaxy could sell the drug all over the developing world, not just in India.

But during the first tests, the molecule failed. On the advice of their medical board, MMV decided to walk away. Ranbaxy didn’t.

“Malaria is a poor man’s disease, so we felt we had some responsibility to follow this through," says Arora.

They continued to test the drug, this time in combination with another compound. Based on these results, Ranbaxy picked up funding from the Indian government’s Department of Science and Technology, which agreed to cover part of the trial costs at home.

With the government’s aid in hand, Ranbaxy moved into Phase 3 of clinical testing, the last stage of tests before a medicine reaches the public. The combination drug showed much better results. MMV rejoined Ranbaxy, hoping to help them in their efforts to market the drug outside India. The final clinical tests will finish in mid-2010, and the product will hit pharmacies by the end of this year.

Because Ranbaxy developed the drug in India, where patient and doctor costs are significantly lower than in the US, the development cost around $100 million. India now has the talent to create groundbreaking therapies. “Scientists here feel like they have something to prove," says Bhatnagar. “The potential is enormous."

In the 1990s, Ranbaxy had to recruit from abroad. That’s no longer the case, says Arora.

“In India, the smartest students study chemistry and physics," says Rosling, the professor of international health. “You’re going to start seeing a lot more developing countries producing innovative drugs."

Hundreds of pharma R&D clusters have come up in India over the past few years. Ranbaxy’s hospital-sterile lab is one of them.

“I’ve always been passionate about this career," says 40-year-old Ashwani Kumar Verma, an associate director at Ranbaxy. Kumar oversees Ranbaxy’s delicate drug manufacturing and analysis equipment.

Like many scientists, Verma once had the opportunity to go abroad, where research funding and facilities are better. He didn’t take it. “Nowadays, I have no regrets," he says.

YES WE CAN

Ranbaxy

Started operations: 1962

Made in India: Over 200 generic drugs, including antibiotics, cholesterol medication and a rabies vaccine

New drugs produced entirely in India: None, yet

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