GUNG-HO PHARMA R&D INVESTMENTS SURPASS $3B
Bio Spectrum|September 2021
While the pharmaceutical industry helped combat COVID-19, from R&D actions on potential treatment strategies to balancing the medicines supply chain in the time of crisis, it struggled to maintain the natural market flow. As a result, many pharma companies had to abort some of their ongoing R&D investment plans. However for FY20-21, the average R&D expenses constituted 7.2 per cent of the total revenues of the pharma companies, with Lupin, Alembic Pharma and Dr. Reddy’s spending more than others. The cumulative R&D expenditure of the leading 10 pharma companies has been around Rs 10,627 crore ($1.43 billion) in the previous fiscal. This figure eventually reaches an approximate amount of Rs 22,500 crore ($3.03 billion) after considering the cumulative expenditure by other small and medium players of the India pharma industry.

Globally, India ranks third in pharmaceutical production by volume and 14th by value. The country has an established pharmaceutical industry, with a strong network of 3,000 drug companies and approximately 10,500 manufacturing units. According to the Indian Economic Survey, 2021, the domestic market is expected to grow threefold in the next decade. India’s pharmaceutical market is estimated at $42 billion in 2021 and likely to reach $65 billion by 2024 and further expand to reach around $120-130 billion by 2030.

Over the last year, the Indian pharmaceutical industry played a crucial role in developing diagnostic tests and manufacturing therapeutic drugs for COVID-19 treatment. The pandemic has pushed India to expedite focus on pharma research and development (R&D) to become more independent. The aim of developing indigenous COVID-19 vaccines has boosted the country’s confidence towards indigenous research and development and this momentum is likely to continue.

The FY20-21 saw pharma companies like Sun Pharma, Dr. Reddy’s Labs, Cipla and Cadila Healthcare at the forefront in providing therapeutic drugs for treating patients afflicted with COVID-19 in India. In addition, the R&D team at Cipla and Cadila Healthcare worked towards developing indigenous diagnostic solutions to combat the raging disease.

Simultaneously, FY20-21 saw many leading pharma companies such as Aurobindo Pharma, Cadila Healthcare, Dr. Reddy’s invest heavily in R&D and manufacturing of different COVID-19 vaccine technologies, either in partnership with the government, with global counterparts or on their own.

While the pharmaceutical industry helped combat COVID-19, from R&D actions on potential treatment strategies to balancing the medicines supply chain in the time of crisis, it struggled to maintain the natural market flow. As a result, many pharma companies had to abort some of their ongoing R&D investment plans.

For FY20-21, the average R&D expenses constituted 7.2 per cent of the total revenues of the pharma companies, with Lupin, Alembic Pharma and Dr. Reddy’s spending more than others. The cumulative R&D expenditure of the leading 10 pharma companies has been around Rs 10,627 crore ($1.43 billion) in the previous fiscal. This figure eventually reaches an approximate amount of Rs 22,500 crore ($3.03 billion) after considering the cumulative expenditure by other small and medium players of the India pharma industry.

The efforts of the pharma industry have been further supplemented by the government’s announcement of the Production-Linked Incentive (PLI) scheme recently. To achieve self-reliance and minimise import dependency in the country’s essential bulk drugs, the Department of Pharmaceuticals has initiated a PLI scheme to promote domestic manufacturing by setting up greenfield plants with a cumulative outlay of Rs 6,940 crore from FY21 to FY30.

Although the average R&D expenditure of the pharma industry during FY 20-21 was considerably lower than the previous years, owing to the pandemic, an innovative streak has surely settled in within the industry. Notably, India is expected to unveil a new pharma R&D policy soon to incentivise scientists based on the monetisation of their innovations. According to the Global Innovation Index, India has moved up four places to 48 in the overall ranking across sectors in 2020.

Moreover, the government is willing to focus on industry-academia linkage to facilitate research in the development and the commercialisation of technologies while promoting research towards new drug discovery for a self-reliant India.

Let’s take a look at the R&D investment details of the top 10 pharma companies during FY20-21.

AUROBINDO PHARMA LIMITED

Hyderabad-based Aurobindo Pharma spent 6 per cent of its total revenue generated during FY20-21 for R&D, amounting to Rs 1510 crore. Driving up the R&D engine of the company, this is the highest ever R&D investment made by Aurobindo Pharma. The company has five R&D centres in Hyderabad with over 1,600 scientists and analysts; one R&D centre in Dayton, New Jersey, US with over 25 scientists and analysts; one R&D centre in Raleigh, North Carolina, US with over 40 scientists and analysts; and one R&D centre in Pearl River, New York, US with over 40 scientists and analysts. With core focus on oncology, ophthalmology and immunology, the company develops products for patients suffering from debilitating, painful and chronic rheumatology and dermatology diseases. Another area the company has initiated work on is immuno-oncology which ensures a strategic continuity of the products portfolio in a critical therapeutic segment.

Key Highlights of FY20-21

Received approval from the Government of India for setting up capacities for three fermentation-based products under the Production Linked Incentive (PLI) Scheme.

Completed the Phase II clinical trials for Pneumococcal Conjugate Vaccine (PCV)

Entered into license agreement with US-based Vaxxinity for peptide-based vaccine for COVID-19. Vaxxinity has also applied for Phase II/III clinical trials to be conducted in India.

Collaborated with the Council of Scientific and Industrial Research (CSIR) to develop multiple other vaccine candidates for COVID-19.

Acquired controlling stake in joint venture Eugia Pharma Specialities, making it wholly owned subsidiary.

Signed a definitive agreement with New Mountain Capital and its affiliate Jarrow Formulas to divest the ‘Natrol’ business.

In biosimilars, completed the Phase I trials for the lead molecule and initiated Phase III studies while clinical trials for three more molecules were also initiated.

Received final approval for 42 Abbreviated New Drug Applications (ANDAs) including 17 injectables and launched 53 products including 21 injectables.

Built a specialised characterisation centre with state-of-the-art equipment at Hyderabad research centre.

Completed the construction of an injectable facility in the US, which will be a dedicated unit to manufacture high-value and low-volume products.

We are now targeting products with higher complexity, making inroads into the specialty segment in the US and have firm plans to expand in the second largest pharma market (China). We are also reinforcing our prominence in the EU market and other key growth markets (Canada and South Africa) and Brazil. We see the injectables business as one of our key growth levers. We are setting up an injectables facility in Visakhapatnam for Europe and Growth Markets, which is expected to be ready for commercial production in the coming months. We are expanding capacities to further increase supplies to external parties. Moreover, we are strengthening our capabilities to develop and commercialise more complex APIs.- K. NITHYANANDA REDDY Vice Chairman, Aurobindo Pharma Limited

TORRENT PHARMACEUTICALS LTD.

Around 85 per cent of Torrent Pharma’s revenue is derived from four core markets, namely India, United States, Germany and Brazil. India continues to be the largest market, contributing to over 45 per cent of revenue. The underlying growth in our core markets of India, Brazil and Germany has been strong and continues to outperform the market. The growth in the US was impacted due to lack of new approvals, pending re-inspection of facilities by USFDA. Also, we are building a comprehensive pipeline for its liquids and oncology facilities. - SAMIR MEHTA Executive Chairman, Torrent Pharmaceuticals Limited

Ahmedabad-based Torrent Pharmaceuticals spent 6 per cent of its total revenue during the FY20-21, amounting to Rs 487 crore. The company’s state-of-the art R&D Centre at Bhat near Ahmedabad has one of the most advanced infrastructure for both basic and applied research to support all activities related to generic, new drug discovery, API process development, formulation development and value-added generics. Torrent’s Research Centre houses 700+ inquisitive minds that have identified potentially transformative therapy areas for the New Chemical Entities (NCE) and Novel Drug Delivery Systems (NDDS) pipeline as R&D priority areas. Besides cardiovascular, central nervous system, gastro-intestinal and women healthcare, the company also has significant presence in diabetology, pain management, gynaecology, oncology and antiinfective segments.

Key Highlights of FY20-21

Partnered with Eli Lilly and Company to manufacture and commercialise ‘Baricitinib’ (an emergency use approved drug given in combination with Remdesivir for COVID-19) in India.

Filed 12 Abbreviated New Drug Applications (ANDAs) with USFDA.

Started shifting the production of several drugs from the flagship Indrad facility to Dahej and Baddi units.

ALKEM LABORATORIES LIMITED

For FY20-21, Mumbai-based Alkem Laboratories invested 6 per cent of its total revenue into R&D, amounting to Rs 530 crore. Equipped with state-of-the-art infrastructure, all six R&D facilities of Alkem Labs have been accredited by international regulatory authorities. To further bioequivalence and bioavailability studies essential to prove the efficacy and effectiveness of dosage forms, the company has a clinical research facility comprising more than 100 beds. Through its subsidiary Enzene Biosciences, a biotech-focused R&D company based in Pune, the company has also made substantial investments in the biosimilars segment. Alkem is one of the prominent names in the acute therapy areas of anti-infective, gastro-intestinal, pain management and vitamins/ minerals/ nutrients products. Moreover, the company has been expanding its footprint in the chronic therapy areas of neurology, cardiac, anti-diabetes, and dermatology.

Key Highlights of FY20-21

Entered into a partnership with Tata Memorial Centre to set up a state-of-the-art cancer care facility in Muzaffarpur, Bihar and also to establish three mini cancer units in Buxar, Jehanabad and Bhagalpur.

Started new formulation manufacturing facility in Indore (awaiting US FDA approval) and biologic / biosimilar manufacturing facility in Pune.

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