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Sehgal of Nestor Pharmaceuticals also propounds how risk-taking is futile for Indian as he states, “The R&D which are required, involves a lot of cost. There was never much point in Indian manufacturers spending too much on R&D of their own when their new product discoveries could not be patent protected. R&D spending should now be ratcheted up – significantly and rapidly.” Merrily though, Indian pharmaceutical giants have no worries about it at all, and yet stand to earn a mindblowing $200 billion by 2014. God sent mercies for an ailing sector, really! Then there’s Ranbaxy, which has perhaps made the biggest proactive move amongst all in its cadre by pre-planning the first launch of the generic version of Pfizer’s lucrative drug Lipitor.

The Daiichi Sankyo-owned company has scheduled the launch of the first version of Lipitor in November 2011. And this is where you need to raise that tip of your hat for the erstwhile CEO of Ranbaxy Malvinder Mohan Singh (MMS). Yes, he perhaps got the MMS clip long back, forecasted that an opportunistic situation would come to pass, and settled rows with Big Pharmas long before he was ousted from Ranbaxy. While speaking to 4Ps B&M, a market analyst (who tracks a competitor firm and requests anonymity) declared, “Many shareholders thought they got the better of bad luck by getting the better of Singh, but honestly speaking his agreement with Pfizer has the potential of delivering $2 billion in revenues and his deal with the UK-based doc, AstraZeneca, for the Nexium drug can ring home $1.4 billion in revenues for Ranbaxy. Who can embody such vision now? They gave up the long term for the short term!” But who really cares; Daiichi saw it when Ranbaxy’s shareholders couldn’t – it saw a strong generics player, a great presence of Ranbaxy in third world nations and a super low-cost producer of drugs! But who cares?

Then there are also other players like the Indian subsidiary of the €9.3-billion Dutch pharma company, DSM, which has taken pro-active measures to forge new tie-ups with quite a number of global pharma majors for supplying atorvastatin (which is the basic compound that is used to manufacture Lipitor). Worthy of mention, realising the future need for generic drug manufacturing, the company had already entered into a manufacturing agreement with India-based Arch Pharma in 2007. Today, astrovastatin is rolled out of Arch’s plant!

Another point to note for the Indian giants, if they are to really capitalise on making money from the generic models of the off-patent drugs is that they should focus on other markets besides India. Essentially, the five biggest markets for off-patent drugs by 2014 are Japan, Italy, France, Australia, US and Germany. Therefore, it is not just critical to make the most of this opportunity in the country, but also to ensure that geographical diversification and international tie-ups play their part in cracking this drug deal!

But will players like Sun Pharma stop at just making money from these “lost IPR” opportunities? Well, not really as Baldota states, “Investing in R&D and coming out with new formulae that can be filed for patents, or maybe even move beyond just generic drugs, depending on the strategic focus, both can be attractive opportunities...” On the optimistic side, Sehgal of Nestor Pharmaceuticals thumps, “The pharma companies should certainly explore opportunities beyond generics with foreign investors eagerly eyeing up India’s wealth of human resource and its massive domestic market…” Fortune favours the ‘proactive’ brave, isn’t it?

Finally I have an antidote to the popular saying ‘Health is Wealth’… for now folks, for the Indian pharma gang members, the drug deal code is - ‘Wealth is Health’; yeah!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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