×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

Dr Reddy’s poised to gain from new drug

Dr Reddy’s poised to gain from new drug
Comment E-mail Print Share
First Published: Wed, Jan 06 2010. 12 03 AM IST

Updated: Wed, Jan 06 2010. 12 03 AM IST
Dr Reddy’s Laboratories Ltd’s initial success with anti-diabetic drug balaglitazone is a salve on the wounds of investors who hoped for a big research breakthrough from the big Indian pharma firms.
Over the years, investors in pharmaceutical firms have slowly lowered expectations that a large drug maker will introduce a new medicine in the market. While Indian companies’ research skills may be excellent, the sheer amount of resources and the low probability of a drug making it to the market are the key reasons for this. Companies, too, have sensed this disenchantment among investors and devised various ways to ring fence their main business from the volatility inherent in discovering a new drug.
That’s why Dr Reddy’s announcement that balaglitazone, a new drug it is hoping to launch, cleared the first leg of phase 3 trials is so important. Balaglitazone is a drug targeted at Type 2 diabetes patients and is in a class of drugs that are known as PPAR-gamma agonists.
Pioglitazone (brand name Actos) is one of the major drugs in this market, sold by Japan’s Takeda Pharmaceutical Co. Ltd, with revenues of 387 billion yen (about Rs19,000 crore) in fiscal 2009. The drug will lose patent protection in the US in 2011. The segment has high potential but it is premature to estimate the potential size that balaglitazone may reach.
The announcement caused Dr Reddy’s share price to jump by 3% on the Bombay Stock Exchange, as investors smelt a payoff in the waiting from this project. The drug has crossed only an initial phase involving clinical trials conducted on 409 patients, and more trials are needed. There is a possibility of the drug failing in these, and hence, caution is warranted. But the good news is that the drug has come this far, a first among large Indian pharma companies.
The future developments from this level become a little hazy. Balaglitazone is being jointly developed by Dr Reddy’s and Rheoscience, in a partnership that will see both companies get marketing rights in certain regions. They plan to present the results from the initial trial to the regulators in the developed markets. Based on the feedback they get, they will take further action.
There is one more element that will come into play. Future phase 3 clinical trials may involve much larger number of patients, which will mean higher costs. These can be quite significant and the risks are also higher. An option will be to bring one or more firms on board to share the risks and benefits from this stage onwards.
The uncertainty continues; the difference is that now the odds just tilted a bit towards Dr Reddy’s.
Comment E-mail Print Share
First Published: Wed, Jan 06 2010. 12 03 AM IST