EXPENDITURE ON RESEARCH AND DEVELOPMENT

Drug companies are pouring funds into R&D both in India and abroad.
Ranbaxy, Cipla, Dr Reddy's Laboratories, Nicholas Piramal and Sun
Pharma's research and development expenses have increased from Rs 585
crore in FY04 to Rs 859 crore in FY05, a 47% increase in a single year.

Growth in R&D is where major differences emerge. GlaxoSmithKline and

Pfizer's R&D expenses have not increased much in FY04, though Merck's
has increased significantly. In contrast, Indian companies' R&D expenses
have increased anywhere between 40% and 90%.

Then again, not all companies are spending a similar share of sales on
research. While Dr Reddy's Laboratories' R&D expenses amounted to 14.7%
of its net sales in FY05, Nicholas Piramal and Cipla still spend less than 5%
of their net sales on research.
Page no.60-62, 69 191

The research and development work of Nicholas Piramal India Limited is

carried on through a number of production plants. The Chennai plant deals
with Halothane, to facilitate anesthetic effect in the patient for a temporary
period of time and is also engaged in the production of Monosulfiram. Their
plant at Hyderabad has won renown as a prominent API production center,
for which it has got the approval of USFDA. The Pitampur manufacturing
unit produces a wide variety of medicines in liquid, tablet as well as capsule
forms. The Pitampur plant is well equipped with the facility to provide
different types of coatings to the tablets; like sugar coating or film coating
and so on. The production plant at Digwal is used as a center for works
related to International formulations, whereas the production plant at Mahad
in Mumbai specializes in the manufacture of entirely liquid orals. They also
produce sterile Intravenous Infusions at their Mulund unit in the city of
Mumbai.

R&D
Both the Indian central and state governments have recognized R&D as an
important driver in the growth of their pharma businesses and conferred tax
deductions for expenses related to research and development. They have
granted other concessions as well, such as reduced interest rates for export
financing and a cut in the number of drugs under price control. Government
support is not the only thing in Indian pharma’s favor, though; companies
also have access to a highly-developed IT industry that can partner with
them in new molecule discovery.
Nicholas Piramal India Limited (NPIL) has a deep commitment to
healthcare, with a mission to “make a difference to the quality of life by
reducing the burden of disease through R&D.” In order to realize its
mission, NPIL has embarked upon on an ambitious program to discover and
develop new chemical entities (NCE's) and Novel Drug Delivery Systems
(NDDS) for the global market in select therapeutic areas including Cancer,
Inflammation, Diabetes/Metabolic Disorders, and Infectious Diseases.

The R&D effort is anchored out of NPIL’s brand-new research centre, the
Nicholas Piramal Research Centre in Goregaon, Mumbai. This is a state-of-
the-art, 300,000 square-foot R&D facility, which will be the largest
pharmaceutical research centre under one roof in India. It houses
laboratories for natural products, herbal products, medicinal - synthetic
chemistry, cheminformatics, cell-based screening assays, animal
pharmacology and molecular biology, process and scale-up chemistry and
pharmaceutical R&D (formulations based on conventional and novel drug
delivery systems).
The multicentric activities are spearheaded by Dr. Somesh Sharma, the
Chief Scientific Officer (CSO) of the company. All the functions undertake
independent as well as collaborative research projects in their respective
areas of expertise, and are guided by internal core teams with inputs from
external consultants – both national and international.

Nicholas Piramal Research Centre (NPRC) Inaugurated on November 18,

2004, by the President of India, His Excellency Dr. A. P. J. Abdul Kalam,
NPRC is of the same caliber as the R&D facilities found at top, multi-
national pharma companies. The Research Centre embodies a vision to
establish a world-class R&D program that would provide opportunities for
young scientists in India to work in a world-class R&D environment. The
labs are equipped with the best instrumentation and state-of-the-art
technology in the world. The interior of the building embodies unique
architecture with large open spaces interspersed with many pieces of the
finest in art, creating a workplace that it as much fun to be in as it is to work
in. The unique environment will foster teamwork, cross-functional
interactions and innovation.
Hoechst - R & D & Haemaccel Plant
We acquired Hoechst's R & d centre and Haemaccel plant located at
Mumbai, Mumbai for Rs. 320 million including the land, the building , the
research equipment, the research center, residential quaters for its personnel.
The R & D Centre was acquired on september 30, 1998 and the Heamccel
Plant was acquired on February 7, 2000.
From fiscal 2004, NPIL have increased its focus on R & D activities. The
costs have increased from Rs. 128.7 million in fiscal 2002 to Rs. 385.6
million for the first nine month of fiscal 2005. Its R & D costs have
increased primarily due to its programe which comprise new