Professional Documents
Culture Documents
Reinventing An Industry
Reinventing An Industry
BUSINESS
Reinventing an industry
Two years after a radical change that brought India’s patent laws into
line with international trading rules, the country’s drug makers are
taking a new direction. Apoorva Mandavilli reports.
K
iran Mazumdar-Shaw is India’s molecule licensed from the Cuban Centre for
uncrowned queen of biotechnology. She Molecular Immunology.
started her company, Biocon, in a garage Other observers are more charitable,
in 1978 with just Rs10,000 (US$225) in work- however. “It’s a very big deal because they’ve
ing capital and has built it into the country’s developed the drug, and development is not
largest biotech company, with 1,800 employees something India is known for,” says Raghu
and revenues last year of $180 million. Cidambi, head of corporate intellectual prop-
Said to be the richest woman in India, erty for Dr Reddy’s Laboratories in Hyderabad,
Mazumdar-Shaw was in the spotlight last Sep- one of the nation’s largest pharmaceutical com-
tember when her Bangalore-based company panies. “I think it’s a very positive sign for the
launched the first new drug to be developed, industry as a whole.”
tested and taken through approval by an
Indian company. The drug, BIOMAb-EGFR, Looking outwards
is a monoclonal antibody for treating head and The larger Indian companies such as Dr
neck cancers. Reddy’s and Delhi-based Ranbaxy, India’s
This could be the harbinger of a brighter largest pharmaceutical company, are work-
and more innovative future for India’s drug ing hard to reinvent themselves in light of
industry, which until recently relied on sup- the TRIPS agreement. They are spending up
plying cheap ‘generic’ copies of drugs — many to 10% of revenues on research and develop-
of which were still under patent elsewhere. ment, acquiring companies abroad and forging Star turn: actor Shahrukh Khan (left) helps Biocon’s
That all changed in January 2005, when collaborations with foreign partners. Kiran Mazumdar-Shaw launch BIOMAb-EGFR.
India brought itself into compliance with the This small group of industry leaders sees
Trade-Related Aspects of Intellectual Prop- several factors working in their favour. Basic of the antimalarial drug artemisinin.
erty Rights (TRIPS) — international rules that drug research in India costs much less than it “With our purchasing power here, it equals
forbid the copying of patented drugs. does in the West, and the full cost of develop- about $400 million to $500 million,” says Bhat-
The transition has gone smoothly. “Compa- ing and approving a drug in India could be just nagar. However, the investment in research has
nies are playing by the rules,” says Frederick $100 million — compared with up to $1 billion squeezed Ranbaxy’s profit margins. Generics,
Abbott, a professor of inter- in the United States. India has Bhatnagar says, will always remain a part of
national law at Florida State “There’s nothing the largest number of US Food the business.
University who knows the we don’t have: and Drug Administration-
Indian drug industry well. knowledge, good approved drug manufacturing Trouble at home
Few of India’s estimated facilities of any nation outside Even there, Ranbaxy faces growing competi-
20,000 drug companies have people, infrastructure, the United States. Its univer- tion. Generic drugs are currently worth about
been driven out of business so experience.” sities churn out thousands $40 billion worldwide and with so many
far. But there’s little sign that — Pradip Bhatnagar of graduates — particularly best-selling drugs soon coming off patent,
many are ready to follow the chemists — each year, who that is expected to double. Multinational
trail blazed by Biocon and develop patented work for a fraction of Western salaries. generics producers such as Israeli company
products of their own. There are fewer than “There is a change now for the better,” says Teva Pharmaceutical Industries and Sandoz,
100 new compounds in various stages of devel- Pradip Bhatnagar, Ranbaxy’s vice-president for a German subsidiary of the pharmaceutical
opment in the entire Indian industry. Most drug discovery. “There’s nothing we don’t have giant Novartis, are expected to expand their
companies lack the resources to do their own — knowledge, good people, infrastructure, Indian operations. “Indian companies have an
research and instead are fighting for tiny pieces experience.” But he admits that genuine inno- advantage but it’s marginal because everyone
of the generics market. vation remains rare. “Although the scientists else is coming,” says Cidambi.
“Today every company has learned how to are there, the inquisitiveness that’s required for Research-based pharmaceutical companies
make generics and your business window is medicinal chemistry or drug discovery is not,” that had left India because of its lack of pat-
very small,” says Mazumdar-Shaw. “I think it’s Bhatnagar says. ent protection are also returning, often in alli-
very clear to all the pharma players that unless Ranbaxy is one of the world’s top 10 generics ance with local partners. American companies
they have an innovation strategy, the way ahead manufacturers, with 2006 sales of $1.2 billion. Bristol-Myers Squibb and Pfizer, as well as the
is not going to be easy.” Last year, the company spent about $85 million British firm AstraZeneca, have signed con-
Some of Biocon’s competitors like to point on research and development, including a col- tract-research deals with Biocon. UK-based
out that its much-trumpeted new drug isn’t laboration with Geneva-based Medicines for GlaxoSmithKline has entered into a broader
a genuine Indian original, based as it is on a Malaria Venture to develop a synthetic form alliance with Ranbaxy, and Novartis from
138
NATURE|Vol 445|11 January 2007 BUSINESS
IN BRIEF
FACTORY PLAN Plastics-based electronics hardware took a big step forward with
the announcement that electronics company Plastic Logic, based in Cambridge, UK,
has raised $100 million to build a production plant that will make control circuitry for
flexible, plastic displays. The company, founded in 2000 by University of Cambridge
D. SARKAR/AFP/GETTY IMAGES
physicists, says it will build the plant in Dresden, Germany, by the end of 2008. The
technology uses thin-film transistors made of semiconducting plastic substrates.
MARKET WATCH
CLEAN-ENERGY STOCKS
139