India's largest pharmaceutical company, Ranbaxy, will spin off its R&D arm next month


India’s largest pharmaceutical company, Ranbaxy, will spin off its R&D arm next month, a move that reinforces the shift towards novel drug design and development within the country’s drug industry. According to Ranbaxy chairman and managing director Malvinder Mohan Singh, the R&D unit will operate as a separate entity from 1 January 2008.  

Earlier this year, other Indian pharmaceutical businesses - including Dr Reddy’s Laboratories and Sun Pharmaceuticals Industries - spun off separate R&D operations, and Nicholas Piramal and Glenmark Pharmaceuticals have announced their intention to follow suit.  

’This shows their confidence in their innovative strength,’ Dilip Shah, director of the Indian Pharmaceutical Alliance, told Chemistry World. ’They also want to insulate their generic businesses from the impact of R&D spend.’  

But the newly-formed R&D companies are not going it alone. According to the UK-based pharmaceutical market analyst IMS Health, alliances between domestic and multinational companies should increase as Indian firms pursue more research. Shah explained that numerous contract research and manufacturing alliances between domestic and multinational companies, including Ranbaxy-GlaxoSmithKline and Dr. Reddy’s-Novartis, have provided the opportunity for Indian companies to ’learn while they earn’.  


India’s boom in generic drugs manufacturing was sparked by the 1970 Patent Act, which restricted pharmaceutical patents to manufacturing processes, rather than end products, and allowed Indian companies to sell copies of existing drugs. 

But when India joined the World Trade Organization (WTO) in 1995, it was given 10 years to bring its laws into line with the organisation’s international patent agreement, TRIPS (Trade-Related Aspects of Intellectual Property Rights). India has now re-introduced product patents to comply with the agreement, and in 2006 Roche were the first pharmaceutical company to patent a product under the new rules. Since then another Swiss pharmaceutical giant, Novartis, has questioned India’s patent law after it failed to secure a patent on its cancer drug Glivec (Chemistry World,  September 2007, p19). 

Although multinationals still see many opportunities for sales in India, domestic companies have captured over three-quarters of the market. According to an IMS report, their current strength will stop foreign companies taking back the sort of share they enjoyed 30 years ago. 

The focus on manufacturing rather than research means Indian drug companies still have smaller pipelines than global pharma companies. Yet Dr Reddy’s announced in August that its diabetes drug balaglitazone, developed with Danish company Rheoscience, has entered Phase III trials, while Sun Pharmaceuticals Industries’ anti-allergy drug (Sun 1334H) is in late stage Phase II.  

For now, generics are still the driving force for the Indian drugs market, although IMS reported that Indian companies were ’well placed to stake a major claim in the emerging market for biogenerics, which is forecast to expand rapidly as patents on a growing number of biotech-based brands approach expiry.’ 

But Shah thinks that the Indian pharmaceutical industry will deliver its first completely novel drug to market within three years. ’That will herald its entry into the big league,’ he said. ’And that is the day people will stop calling Indian drug companies "pirates" and "copycats".’ 

Victoria Gill