Thursday, September 4, 2014

Pharma R&D to start moving abroad?

Here's an interesting article describing how Indian pharma companies are starting to move their R&D operations abroad in a quest for bigger profits. There are a couple of reasons suggested for why companies are making the move:


  • Companies are switching focus from the embattled generics arena (See here, here and here) towards products that either serve a more niche area, or are harder to manufacture. People with the required expertise for this focus shift are harder to find in India in the absence of a robust R&D ecosystem. Some comments from the article:
          "Investing in research abroad is specific to companies that want to grow in certain areas for which the best talent and regulatory expertise is available abroad," said Shakti Chakraborty, group president at Lupin. 
"For Indian companies to set up R&D abroad is expensive, but it is necessary, because otherwise their ability to grow within the country is going to be limited," said Kavita Patel, a fellow in the Engelberg Center for Healthcare Reform at the Washington-based think tank Brookings Institution. 
Dhaval Patel, head of Novartis' European drug discovery unit, had this to say about India's research infrastructure:

"I visited India five or six years ago, looking to identify places for collaboration, to try to identify those hubs where such [research] activities occur. I travelled all over and came back more disappointed than excited."


  • Companies are moving into biosimilars manufacture, which require not just R&D but also a regulator well-versed in handling such products - the implication being that the Indian regulatory system is not.
  • It's easier to get clinical trials approved in, say, the US as compared to India. The potential for profits is high enough that companies are willing to test and market their products abroad first rather than wait for approval from the Indian authorities. The reform of clinical trial practices is an issue that has been debated for a while now, but concrete steps towards implementation are yet to be taken. (For a committee report on clinical trial reforms in India, see here).
  • Regulatory authorities in India are not stringent enough, causing Indian manufacturers to be hit with bans from the FDA and other foreign regulators. (I wrote an entire series of posts on India's main drug regulator, the CDSCO, starting here)

If this becomes a larger trend, it is worrisome news for Indian pharma. We will lose a chance to nurture home-grown expertise in these specialized research areas, further reducing the incentive for pharma companies to maintain R&D units in India. On the other hand, we cannot deny pharma companies their right to operate under prevailing market forces - they are for-profit organizations with a responsibility to their shareholders, and we can't dump the entire burden of building a research ecosystem on their shoulders either. It's a quandary for which there are no easy answers.

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