Twenty five years after he built a pharma empire from scratch,  with the dream to discover India’s first new drug, Anji Reddy says he wants his vision statement back. The 68-year-old veteran was speaking with a posse of journalists from across the country at the Hyderabad headquarters of Dr. Reddy’s Laboratories (DRL) on a December weekend. And when quizzed on what more he wants to achieve, a jovial Reddy said: “Change the company’s vision statement back to ‘a discovery-led company’.”

He said that partly in jest, but the quip brought a nervous smile on son and company managing director Satish Reddy, who along with his brother-in-law and CEO G.V. Prasad, has been a votary of a pragmatic future where high-risk, high-reward drug discovery would give way to a strategy hinged on steady returns.

Last year, the Rs 6,900-crore company quietly removed the line ‘discovery-led global pharmaceutical company’ from its grandiose vision statement, a bitter after-effect of its 16-year-long futile effort to bring a new drug into the market.

Reddy’s statement sums up the crossroad Indian pharma stands at today. Much like its rival, the Gurgaon-based Ranbaxy Laboratories, which started investing in research in mid-1990s, DRL has little to show for it now. DRL’s and Ranbaxy’s state is no different from that of India’s half a dozen premier pharma firms, whose market capitalisation rode high from the late 1990s right through mid-2000s as their pipeline of drugs moved from in vitro (test tube) and in vivo (animal) experiments to phase I or phase II of clinical trials (tests on humans). But somewhere along the road, they lost their way. A string of drugs failed. Others got abandoned.

Even in the face of this disappointment, not all of those in the running to discover a new drug have lost hope yet. But the wild optimism has died out. Mumbai-based Glenmark Pharmaceuticals, despite the recent setbacks, remains committed to new drug development. Other firms such as Piramal Healthcare and Lupin are also working on a host of programmes. Still, those are in early stages, and no one is risking his opinion on when a new ‘Made in India’ drug would eventually hit the market.

“NCEs (new chemical entities) have come and gone,” says Jesal Shah, head of research at JM Financial Institutional Securities. Discovery of a new drug could have propelled Indian pharma into a new league: the sales of US drug giant Pfizer’s top selling drug alone, Lipitor, are higher than the total sales of the world’s largest generic drug maker Teva Pharmaceutical Industries.

 

BITTER PILLS Five reasons why drug research has failed in India

Pharma companies have given up too fast: failure is the rule in drug discovery Lack of focus and strategy in research Lack of talent; few scientists have experience in new drug development US drug regulator FDA is clearing fewer drugs than before Lack of investment in research and development

So, just who pricked the Great Indian Pharma’s dream balloon? For one, the industry seems to have given up too fast. New drug discovery is fraught with risks and very low success rates. Inevitably, failure is part of the 8-12-year development process. In that, the Ranbaxy narrative runs parallel to that of DRL. Parvinder Singh, who headed Ranbaxy from 1982 to 1999, and later D.S. Brar from 1999 to 2004, shared Reddy’s ambition. But Parvinder’s elder son Malvinder, who took over as MD and CEO in 2006, proved more pragmatic. A former senior executive at Ranbaxy puts it bluntly: “Ranbaxy thought new drug R&D was a waste of money.”

With the acquisition of Ranbaxy by Daiichi Sankyo last year, nothing will be left of the Indian firm’s discovery team, says Ranbaxy CEO Atul Sobti. It will be aligned to that of the Japanese firm. Poor management of R&D and lack of focus may also explain why Indian drug companies have so far failed to bring out a new drug.

Promising Debuts
From a small industry dominated by foreign firms back in the early 1970s, the domestic drug sector has grown into a $20-billion global industry, flooding international markets with generic drugs and challenging Big Pharma’s patents.

Back in 1997, heads turned when DRL licensed out a new drug to Danish pharma major Novo Nordisk in a multi-million dollar deal. The drug code named DRF-2725 was being developed for the treatment of type 2 diabetes. Hopes were high that the industry could repeat the same kind of success in drug discovery.

By 2001, DRL had nine molecules in the pipeline, including two in late stages of clinical trials — a leading publication then called Reddy “the molecule millionaire”. About 280 of DRL’s scientists were dedicated to new drug discovery, including 20 sitting in a new office in Atlanta. In May 2001, DRL sealed a second out-licensing deal worth $55 million with Swiss drug major Novartis, for DRF-4158, a dual-acting insulin sensitiser.
Then in June 2002, Ranbaxy, in turn, licensed out RBx-2258, a new drug to treat benign prostatic hyperplasia, to Germany’s Schwarz Pharma. “There was a sense of excitement after signing the deal,” recalls Brar.

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