Last Friday, Mumbai’s drug maker Lupin got Rs 10 crore from the central government to test novel medicines for psoriasis and migraine. This amount, offered as a soft loan over two years, did not impress the Street. Lupin’s shares fell slightly on the Bombay Stock Exchange that day. “It is a small sum,” says Harshad Arole, pharma analyst at ABN Amro Research. The Rs 1,606-crore Lupin spends Rs 150 crore a year on R&D. Besides, says Arole, these drugs will need to be tested in the developed world where the big bucks for novel medicines are to be made. But Rs 10 crore simply will not do. A phase three trial — the final phase where safety and efficacy is tested in hundreds of patients — in the West will cost up to $50 million-75 million (Rs 220 crore-330 crore).

But Lupin chairman Desh Bandhu Gupta wants this to be viewed in the context of Lupin’s spends on new drug research (a smaller Rs 30 crore to Rs 40 crore a year), and not the overall R&D budget. “Seen that way, it is something,” he says.
Lupin is not the only company to avail of the benefit. The department of science and technology (DST), which has loaned money to Lupin, has approval to dole out Rs 120 crore a year for pharma R&D. DST gets about 20 requests a year from all sorts of companies. In the past, India’s top drug maker Ranbaxy had also benefited from this 12-year-old programme. A DST bureaucrat says that proposals are evaluated on the basis of their scientific merit. “There is no need (for the innovator) to prove that they cannot fund it,” he says.

This begs a larger question. Does piecemeal government funding of R&D in well-off industry houses encourage innovation? According to Anil Gupta, executive chair of the DST-sponsored National Innovation Foundation that supports grassroot innovation, the impact of the government funding would be more if used to strengthen universities, which could partner with corporations. “A grant of that sum to a (university) laboratory could have served a lot more industries,” he says. Individual inventors could also benefit substantially, he adds.

Right now it appears as if nobody is happy. Industry lobbies like the Indian Pharmaceutical Alliance, of which Lupin too is a member, complain that government funding is paltry. Universities that have availed of DST funding under a different scheme say it is either insufficient or has strings attached. “We are expected to account for spending several years after the money is spent because that is how audits are done,” says a senior professor in one such university in Gujarat.

According to Gupta, Lupin will use the Indian study findings to generate interest from potential partners, who could bankroll drug development for western markets. If that happens, says ABN Amro’s Arole, it would be the “only upside” from this arrangement.