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Key business strategies of global pharmaceutical industry are undergoing a radical change, while in India we are still thinking within the box. Who cares about the global clue?

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One of the leading consulting companies, PricewaterhouseCoopers (PwC) in its report of June 2007 titled “Pharma 2020: The vision –Which path will you take?” postulated that the business model followed by the global pharmaceutical companies is, “economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets”.
R&D is failing to deliver:Datamonitor highlighted that drugs worth U.S$ 140 billion will go off patent by 2016. Thus the value turnover that will be lost because of number of drugs going off-patent will be almost impossible to replace by this time. Many analysts have been expressing concerns about gradual but steady decline in pharmaceutical R&D productivity since quite some time. During this period, most of the research based companies could afford only a small increase in their R&D budget, while marketing and other overhead expenditures registered a significant increase.

Single global process of Drug Regulatory approval…is possible…but is it probable?

PwC in the same report touched upon another interesting possibility within the R&D space of the global pharmaceutical industry. It indicated that the research based pharmaceutical companies will gradually switch over from, “Classic model of drug development that ends in regulatory approval to ‘live licenses’ that allow for narrow product launches followed by gradually expanding approvals as drugs are continuously tested.”

Most interestingly, the report also forecasted that by 2020, the drug regulators across the world will work together under a collaborative framework to arrive at uniform and single global process of drug regulatory approval. If it materializes, the process will indeed be path breaking in every sense.

Global pharmaceutical market will register significant growth:

Following this trend, the report highlighted, that the global pharmaceutical sales will touch U.S$ 1.3 trillion by 2020, almost double of what it is today. High growth of emerging markets and the aging global population are expected to be the key growth drivers.

During this period E7 countries like, Brazil, Russia, India, China, Mexico, Turkey and Indonesia are expected to contribute around 20% of Global Pharmaceutical turnover. Keeping pace with the economic progress, the disease pattern of these countries are also changing, from infectious diseases to non-infectious chronic illnesses, like diabetes, hypertension, just as we now observe in the developed world.

Together with this change, many predict that ‘greenhouse effect’ arising out of global warming process will have significant impact on health of the global population, resulting in large scale re-emergence of diseases like malaria and cholera together with various types of respiratory disorders.

Radical change is envisaged in pharmaceuticals marketing:

In April 2009, PwC came out with another interesting report titled, “Pharma 2020: Challenging business models, which path will you take?” on the future of the global pharmaceutical industry.

As the time progresses global pharmaceutical companies will need to understand the shift in ‘perceived value’ that is taking place within patients, medical profession and the community as a whole towards healthcare delivery. Just an innovative medicine will no longer be able to satisfy their ‘value expectations’. Pharmaceutical companies will have to offer a ‘bundle of benefits’, combining the innovative products with related health services, for which the market will not hesitate to pay a reasonable premium.

Thus in future, global pharmaceutical companies will need to collaborate with disease management specialists for a “holistic offering” to address an ailment rather than just treatment of the disease with medicines. Such “value added and innovative” marketing strategies will differentiate business success from failure, in 2020.

In the recent report PwC advocates that to be successful, in future, global pharmaceutical companies will need to change their ball game almost radically. The future strategy will focus on collaborative arrangements between various allied healthcare establishments and the pharmaceutical companies to offer a “holistic solution” to the patients in all disease areas.

That means, global manufacturer of an anti-diabetic drug will need to offer along with the innovative drug, counseling on diet regimen, suggesting exercise programs and their follow-up, reminders for regular and timely intake of medicines and many more. Who knows?

“Better late than never”:

In any case, to excel in business at a time when the global pharmaceutical business model is undergoing a fundamental shift; there is a need to keep on investing more towards R&D, which will continue to remain the ultimate growth engine of pharmaceutical business, the world over. At the same time, there will be a dire need to prune expenditure in innovative ways and that opens the door for global outsourcing of various business processes from most cost efficient countries having world class facilities.

Domestic pharmaceutical players, if start mustering all resources to avail these global opportunities, India can soon become a global hub for pharmaceuticals outsourcing, outracing China which is currently placed ahead of India, in this field. As the good old saying goes, I shall always wish, “better late than never”.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Recent appetite of Global Pharmaceutical Majors for Generic Pharmaceutical Business: can it pose a threat to pure generic players?

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Last year Lehman Brothers estimated that by 2012 over 25% of the global pharmaceutical market will face competition from generics. Higher demand of generics is mainly due to the following reasons:1. Increased number of patented drugs is going off-patent.2. Cost containment and pricing pressure, especially from the Government, in the developed markets of the world.

3. Increasing number of patents is being challenged, especially in the U.S courts, on the ground of “obviousness”.

“Obviousness” is becoming a key reason of patent challenges in the U.S:

In first quarter of the last year we read about the U.S trial court making void the key patent of Yasmin, the contraceptive drug of Bayer for ‘obviousness’. This incident had compelled Bayer to revise its profit forecast downwards, for 2008.

‘Obviousness’ is increasingly becoming one of the key reasons for challenging Patents in many countries of the world, including India. Financial Times reported recently that keeping protection to all patents intact, could eventually pose to be a key challenge for the R&D based global pharmaceutical companies. Many analysts feel that the issue of “obviousness” could indeed be a threat to many U.S pharmaceutical patents, especially those, which will be considered by the court just as a ‘tweaked-up’ version of existing drugs.

As reported by ‘Chemical Weekly’, March 2008, total 338 patent challenges were recorded globally in 2008. India ranks only next to USA with a share of 21% pharmaceutical patent challenges.

Global generic pharmaceutical market is growing at a faster pace:

Prescription market in the U.S grew by just 1.3% last year to U.S$291 billion. Key factors believed to be responsible for slower growth in the U.S market are as follows:

1. Higher prescriptions for less expensive generic medicines.

2. Lower sales of higher priced new products.

3. Economic downturn has made more patients to move to generics and large number of consumers to lose their health insurance.

Similarly in the United Kingdom (U.K) generics industry supplies 64% of medicines dispensed by the National Health Scheme (NHS), though they contribute just around 30% of NHS expenditure towards medicines.

Recent reports indicate that the generic global pharmaceutical market is expected to record a turnover of U.S$ 520 billion by 2012. This market size is too lucrative to ignore by any big global pharmaceutical player.

Based on sales turnover of 2007, Teva tops the list of global generic players with a turnover of U.S$ 9.1 billion, followed by Sandoz with U.S$ 5.8 billion and Mylan/Merck with U.S$ 4.6 billion.

From India, Ranbaxy registered a turnover of U.S$ 1.7 billion, Dr.Reddy’s U.S$ 1.4 billion, Cipla U.S$ 1 billion and Sun Pharma/Taro U.S$ 900 million, during that year.

48% of the total 422.6 million prescriptions written in Canada in 2007 were for generic medicines, which registered an annual growth of 14%, reports IMS Canada. Compared to this performance, branded products in Canada recorded a growth of meager 0.2%, during this period. As a consequence, generic Canadian pharmaceutical companies like Novopharm (Teva) and Apotex recorded impressive growth of 46.8% and 18.5%, respectively, in that period.

Despite such outstanding performance of generic pharmaceuticals, overall growth of prescription drugs in Canada was at just 6.3%, the lowest in the last ten year period.

President Obama’s Healthcare Policy will encourage generics and biosimilar drugs:

It is widely believed that the new U.S administration under President Barak Obama will try to encourage speedy introduction of generics into the U.S market.

So far as ‘Biosimilar’ drugs are concerned, in 2009 Obama administration is expected to work out the road map to facilitate the introduction of ‘Biosimilar dugs’ in the U.S market. Due to inherent characteristics that biological are ‘grown and not just manufactured’, biosimilar drugs are not expected to be replica of the original products.

To find out a solution to the heated debate, an answer has to be found out regarding the extent of clinical trials that the ‘biosimilar’ manufacturers will require to undertake to satisfy the U.S FDA that these drugs are as safe as the original ones. It is believed by some that the answer to this question lies in the approach that gives regulatory authority the flexibility in ‘what it demands that asks for more evidence than is now required for generic drugs, but something less than the kind of full-blown trials required for products new to the market.’

Global pharmaceutical majors are developing appetite for generics business:

Keeping a close vigil on these developments, as it were, even Pfizer, the largest pharmaceutical player of the world, has started curving out a niche for itself in the global market of fast growing generics, following the footsteps of other large global players like Novartis, GlaxoSmithKline, Sanofi-Aventis and Daiichi Sankyo.

Is Pfizer planning to follow the business model of Abbott and Johnson & Johnson (J&J)?

As reported by the Wall Street Journal (WSJ), Mr. Kindler the CEO of Pfizer very recently commented, “We are breaking the company down into smaller units so we aren’t dependent on any single product… I am a great admirer of J&J and Abbott’s business model.”

It appears what Mr. Kindler perhaps meant by this statement is that smaller business units, like Over the Trade Counter (OTC), Vaccines, Nutrition and Animal Health can be more ‘manoeuvrable and innovative’ for faster business growth. Acquisition of Wyeth could actually help Pfizer to implement this business model.

Coming back to generic business, the recent collaborative arrangement of Pfizer with Aurobindo Pharma in India vindicates Pfizer’s recent appetite on generic global pharmaceutical business. The company is already in this business with some of its off patent products. But now like others, Pfizer seems to be strategizing to reap a rich harvest from fast-growing generic pharmaceutical business through most probably its “Established Products” business division.

Could such business model of Global Pharmaceutical majors pose a threat to pure generic players in the business?

The entry of the global pharmaceutical majors into generic pharmaceutical business, in my view, could pose a serious threat to current generic players in the business, including those who are operating from India in the ‘regulated markets’ of the world, for the the following reasons:

1. Generic pharmaceutical business is usually a high volume, relatively low margin and highly competitive business. To survive in this business of cut-throat competition will require both financial and innovative marketing expertise, as well as financial and marketing muscle, where large global players are expected to easily score over others.

2. Product price of generics of the same or similar molecules being within a price band, prescribers and payors’ preference are expected to be in favour of large global pharmaceuticals, because of corporate brand image.

3. In future, the pharmaceutical marketing model, in my view, is expected to shift from ‘marketing of only medicines’ to ‘marketing of a bundle of medicines and services’. In the changed scenario global pharmaceutical majors are expected to have a distinct strategic advantage.

4. Global Pharmaceutical majors may also use this business model as a ‘preventive strategy’ to restrict market entry of number of players for an off-patent molecule and thereby effectively contain the extent of price erosion, as the brands will go off-patent.

It will, therefore, be quite interesting to watch, what happens in the global generic pharmaceutical business in the next five to ten years. I expect a significant consolidation taking place in this market, both global and local.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Healthcare services in India … growing disparity between urban and rural population – can ‘Telemedicine’ play a significant role?

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Healthcare Industry in India is currently valued at US$ 35 billion. This industry is expected to record a turnover of US$ 75 billion in 2012 and US$ 150 billion in 2017, reports Technopak Advisors in their report titled “India Healthcare Trends 2008”.Growing Middle Class Population – the key growth driver:This growth is not expected to come from rural India where over 70% of Indian population lives and a vast majority of them do not have ‘access to modern medicines‘. The key driver of growth of this sector will be growing 150 million strong middle class population with increasing health awareness. Out of this population, 50 million have a disposable income of US$ 4,380 – US$21, 890,, reports McKinsey. Technopak Advisors report recommends an immediate investment of US$ 82 billion to meet this growing demand.

Medical Tourism - another potential growth driver:

Another growth driver is expected to be ‘Medical Tourism’. With a slogan: ‘First World Treatment at Third World Prices’, Medical Tourism is expected to become a US$ 2 billion industry by 2012 from US$ 350 million in 2006, reports a study done by McKinsey and CII. In 2008-09, over 200,000 foreigners, mainly from Middle East and South Asian countries came for medical treatment in India. Hospitals in India are now trying to attract patients from Afro-Asian countries who spend around US$ 20 billion outside their respective countries, towards medical treatment. Thus, the current number of patients visiting India for medical tourism is expected to grow by around 25 percent during next few years.

Medical expertise and facilities – a sharp contrast between the urban and rural India:

India Brand Equity Foundation (IBEF) reports that over a period of last few years besides cost advantage, high success rate, especially in the following areas has been attracting the medical tourists towards India:

• Over 500,000 major surgeries and over a million other surgical procedures including cardio-thoracic, neurological and cancer surgeries have been performed by the Indian specialists, with success rates at par with international standards.

• The success rate of cardiac bypass in India is 98.7 per cent against 97.5 per cent in the U.S.

• India’s success in 110 bone marrow transplants is 80 per cent.

• The success rate in 6,000 renal transplants is 95 per cent.

• India has the 2nd highest number of qualified doctors in the world.

It is worth noting, the centre of excellence of all these outstanding statistical records are located mainly in the urban areas. In sharp contrast to these most of the rural populations are denied of basic healthcare facilities services. Despite being second highest growing economy in the world after China and having world class healthcare facilities available in the country, a vast majority of rural population is denied of basic healthcare services. Even in those places where primary healthcare establishments are available, poor maintenance, understaffing, non-availability of medicines and antic medical equipment, deny the basic and standard healthcare services to the local population.

India is still the home for world’s ‘largest number of poor people in a single country’, even after 61 years of Independence. A study indicates that in India around 260 million people live below the poverty line (BPL). Out of this number about 193 million people live in rural areas and about 67 million live in urban areas. Over 75% of these poor people live in rural India.

The point to note here, although over 700 million people live in rural India, only 193 million of them belong to BPL families. Therefore, even those who can afford proper medical treatment in rural areas, do not have access to modern healthcare facilities, due lack of healthcare infrastructure and services.

Quoting Oxford University of the United Kingdom (UK), The Economic Times (ET) dated February 2, 2009 reported that due to lack of basic healthcare facilities, around one million women and children die every year in India. This is, once again, mainly because 700 million people in rural India have no access to specialists. 80% of medical specialists live in urban areas. ‘India Knowledge, Wharton’ reported recently that India would require an investment of US$ 20 billion over next 5 years to address this problem.

National Health Policy 1983 promised healthcare services to all by 2000 – has it delivered?

The National Health Policy 1983 announced commitment of the Government of India to provide ‘health care services to all by year 2000′. Unfortunately, even today only 35% of Indian population have access to affordable modern medicines, despite an appreciable growth of this sector during last four decades.

Per capita expenditure towards healthcare in India is one of lowest among Asian countries outside South Asia. The expenditure of the Government for healthcare has progressively grown over the years though, healthcare expenditure as a percentage of total government spending has decreased considerably. Only silver lining is that the private sector spending towards healthcare is steadily increasing at a much higher pace.

Can ‘Telemedicine’ improve access to healthcare in rural India?

Would creation of a cost-effective ‘Telemedicine’ infrastructure in rural areas be able to address this problem? In my view, this area is worth exploring seriously and should be tried out by the Government with Public Private Partnership (PPP) model, initially with pilot projects.

‘Telemedicine’ has been defined as the use of electronic information and communication technologies to provide health care support to patients from distant locations. Thus ‘Telemedicine’ could be used to provide healthcare services where it does not exist at all and at the same will help to improve healthcare services considerably, where something already exists.

With the advancement in telecommunication and satellite communication technology in the recent years, the scope of creating and gradually expanding the ‘Telemedicine’ facilities in India indeed throw open a new avenue to improve ‘access to quality healthcare services’, in rural India.

Besides lack of basic primary healthcare services in rural areas where over 70% of Indian population live, 90% of secondary and tertiary healthcare facilities are also located in large cities and towns.

Thus, in addition to primary healthcare services, even secondary and tertiary healthcare needs of a large number of rural populations can be successfully met locally through consultations with the experts located in distant cities and towns without anyone having to travel to those far off cities and towns.

‘Telemedicine‘, therefore, could also offer solutions to the problem of expert medical assistance during serious or critical illness of people living in rural India. The role of ‘Telemedicine’ on healthcare services will be very meaningful under such circumstances.

‘Telemedicine’ services have already started in a smaller scale though, in Kerala, West Bengal and North-eastern states of India. It is slowly coming up in some other southern states, as well. What is required now is a concerted and integrated approach, spear-headed by the Government of India, taking all State Governments on board, with a robust policy initiative.

However, there are some key concerns with this initiative, as well. The most important of which is related to costs of such treatment for the rural households, besides other regulatory issues.

Appropriate regulatory and policy frameworks should be thoughtfully worked out to extend such innovative services to rural India, under PPP. If the concept of ‘Telemedicine’ can be made to work effectively in rural areas, leveraging world class expertise in information technology available within the country, India will emerge as a role model in the field of ‘Telemedicine’ for the developing nations of the world.

Moreover, over a period of time the ‘Telemedicine’ platform can also be effectively utilized for many other healthcare initiatives, like for example, disease prevention programs, medical/para medical staff training etc.

When ‘e-chaupal’ initiative of ITC for rural farmers of India could be so successful, why not ‘Telemedicine’ for rural patients of India?

The promise of “Healthcare services to all by year 2000” as enunciated in the National Health Policy, 1983 of the Government of India, could still be achievable, albeit late, by the next decade of this new millennium with ‘Telemedicine’.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

‘Jan Aushadhi’ – ‘Medicines for the common man’ project of DoP is a great idea – is it on course?

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In mid 2008 The Government of India created a new department, ‘The Department of Pharmaceuticals’ (DoP), under the Ministry of Chemicals and Fertilisers. The new department came out with its following vision statement:“To enable Indian pharmaceuticals industry to play a leading role in the global market and to ensure abundant availability, at reasonable prices within the country, of good quality pharmaceuticals of mass consumption.”‘Jan Aushadhi’ – ‘Medicines for the common man’:

In this article, I shall submit my point of view on the second part of the above vision statement, which articulated the responsibility of the department to ensure availability of affordable modern medicine for ‘mass consumption’.

When over 70% of Indian population lives in rural areas, one can quite easily assume that such medicines will be available adequately in rural areas of the country, as well. Obviously the question that follows this admirable vision statement is how?

To respond to this question one will try to address the following two basic strategic issues:

1. Create a workable and viable business model, which can be gradually developed over a period
of time to deliver the promise

2. Create a robust supply chain network to ensure easy access of these medicines to the common
man, located even in remote rural areas.

The first part of the strategic issue has been well addressed by the DoP, within a very short period, by creating ‘Jan Aushadhi’, the medicines for the masses. Importantly, the second point, which will determine the success of the project, has not been clearly articulated.

The objectives of the ‘Jan Aushadhi’ were stated as follows:

1. To promote awareness for cost effective quality generic medicines. (However, how exactly this will be done, is yet to be known.)

2. To make available unbranded affordable quality generic medicines through private public partnership (PPP). (I support this objective from procurement perspective. However, so far as the delivery of these medicines to the common man is concerned, I would argue below:why do we reinvent the wheel?)

3. To encourage doctors in the Government Hospitals to prescribe such cost effective quality
generic medicines. (This is again just a statement of intent without considering the critical issue of its implementation in the predominantly branded generic market, like India.)

4. To help patients save significantly towards medicine cost with ‘Jan Aushadhi’ outlets.

5. A national help line is believed to be able to increase awareness level of this initiative.

The statements of intent of the DoP also highlight that the State Governments, NGOs and Charitable bodies will be encouraged to set up such generic medicine shops. It also states that the existing outlets of the Government and NGOs may also be used for this cause.

This particular decision of DoP, as I stated before, appears to be an attempt to ‘re-invent the wheel’, as it were. I shall argue on this subject, very shortly.

An open ended launch plan with inadequate market penetration compared to set objectives:

DoP announced that this scheme will be launched gradually in all the districts of India in four phases. However, for some unknown reasons, besides phase one and two, the other two phases of the launch plan have been kept by the department, as open ended as it could be, despite the Government of India’s having all wherewithals to implement this scheme with a reasonable degree of preciseness.

The four phases were decided as follows:

1. Phase 1: Amritsar Civil Hospital in November 8, 2008

2. Phase 2: Few stores in Delhi, National Capital Region (NCR), district hospitals in Mohali,
Ludhiana, Bhatinda and Jalandhar by February 28, 2009

3. Phase 3: Other districts of Punjab and some other states to be covered during 2009 and
2010

4. Phase 4: Remaining districts of the country by 2010 and 2012

I am not surprised that with such vague launch plan and an open ended timeline, the Government seems to have faltered in Phase 2 itself, when it could not go beyond Amritsar and Shastri Bhavan, Delhi outlets, by February, 28, 2009.

Arguing for the need of a course correction:

Despite being a hardcore optimist, I now get a vague feeling that the ‘Jan Aushadhi’ scheme of the DoP may not ultimately be able to achieve its cherished goals and may remain just as another good intention of the Government of India, if a course correction is not made at this stage.

The key barrier to improve access to affordable quality generic medicine to the common man, in this particular case, is not conceptualization of a project. We all know that our Government is reasonably good at it, with a good number of brilliant minds working to give a shape to it. The main weakness to translate this laudable idea into reality, in my view, falls well within the general weakness of the Government in visualizing the key barriers to the project and at the same time missing out on some of the key drivers for the same.

In this case, there seems to be some flaw in the ‘ideation’ stage of the project, as well. This flaw lies with the plan of its delivery mechanism involving state government, NGOs and various other bodies.

If procurement of cost effective quality generic medicines is not an issue, then the DoP should carefully look within the Government system to ensure easy access of such medicines to the common man.

Two grossly underutilized Government controlled ‘mass delivery systems’:

The Government of India has two very unique product distribution and delivery systems within the country with deep penetration from metro cities to even far off rural areas. These two Government owned supply and delivery chains are as follows:

1. Public Distribution System (PDS) for food grains and other essential commodities (Ration shops).

2. Indian Post Offices

Like food grains, medicines are also essential items. Why then DoP not collaborate with PDS to ensure easy access of such medicines to the common man?

Similarly, when postal department are collaborating with various other agencies to sell and distribute many types of products in rural areas, why not DoP consider this alternative, as well?

In fact, I would strongly recommend usage of both PDS and Post Offices by the DoP for deeper penetration of such medicines especially for the benefit of those 650 million people of India who do not have any access to affordable modern medicines.

I am aware, the question of ‘in-efficiency’ of these systems may be raised by many in India. However, at the end of the day who is responsible to make these systems efficient? People responsible for managing a system or process are usually held accountable for its ‘efficiency’ or ‘inefficiency’.

We have many excellent minds in the DoP, I hope, they may wish to explore the possibility of effectively utilizing these two already available state controlled mass distribution systems to ensure success of the project “Jan Ausadhi” – “Medicines for the common man”.

It is worth noting that this project seems to have already started limping with its vague execution plan and a delivery system, the scaling up of which to ensure access to one billion population of our country could be a serious question mark.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Allegation of ‘Marketing Malpractices’ in the pharmaceutical Industry of India has assumed a huge proportion– who will ‘bell the cat’?

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Sometime back, in its January – March, 2004 issue, ‘Indian Journal of Medical Ethics’ (IJME)in context of marketing practices for ethical pharmaceutical products in India commented:“If the one who decides, does not pay and the one who pays, does not decide and if the one who decides is ‘paid’, will truth stand any chance?”Three year after, in 2007 the situation remained unchanged when IJME (April – June 2007 edition) once again reported:

“Misleading information, incentives, unethical trade practices were identified as methods to increase the prescription and sales of drugs. Medical Representatives provide incomplete medical information to influence prescribing practices; they also offer incentives including conference sponsorship. Doctors may also demand incentives, as when doctors’ associations threaten to boycott companies that do not comply with their demands for sponsorship.”

This situation is not limited to India alone. It has been reported from across the world. ‘The New England Journal of Medicine’, April 26, 2007 reported that virtually, all doctors in the US take freebies from drug companies, and a third take money for lecturing, and signing patients up for trials. The study conducted on 3167 physicians in six specialities (anaesthesiology, cardiology, family practice, general surgery, internal medicine and paediatrics) reported that 94% of the physicians had ‘some type of relationship with the pharmaceutical industry’, and 83% of these relationships involved receiving food at the workplace and 78% receiving free drug samples. 35% of the physicians received re-imbursement for cost associated with professional meetings or continuing medical education (CME). And the more influential a doctor was, the greater the likelihood that he or she would be benefiting from a drug company’s largess.

Even our own ‘The Times of India’ reported the following on December 15, 2008:

1. “The more drugs a doctor prescribes of a company, greater the chances of him or her winning a
car, a high-end fridge or TV set.”

2. “Also, drug companies dole out free trips with family to exotic destinations like Turkey or Kenya.”

3. “In the West, unethical marketing practices attract stiff penalties.”

4. “In India, there are only vague assurances of self-regulation by the drug industry and reliance on
doctors’ ethics.”

Such issues are not related only to physicians. ‘Scrip’ dated February 6, 2009 published an article titled: “marketing malpractices: an unnecessary burden to bear”. The article commented:

“Marketing practices that seem to be a throwback to a different age continue to haunt the industry. Over the past few months, some truly large sums have been used to resolve allegations in the US of marketing and promotional malpractice by various companies. These were usually involving the promotion of off-label uses for medicines. One can only hope that lessons have been learnt and the industry moves on.”

“As the sums involved in settling these cases of marketing malpractices have become progressively larger, and if companies do not become careful even now, such incidents will not only affect their reputation but financial performance too.”

Huge settlement sums involved in such ‘federal misdemeanour’ cases could act as a reasonably strong deterrent in the USA. However, in India, even the written complaints to the Drug Controller General of India (DCGI) about ‘off label’ promotion of drugs attracts no such punitive measure. Marketing malpractices in India seems to have now become a routine, as it were. All stakeholders, in principle, agree that it should stop. But in absence of any strong deterrent, like in the USA, will it remain just as another wishful thinking?

Both the Government and the industry talk about ‘self regulation’ to address this issue. This is indeed a very pragmatic thought. A part of the industry already has such a self regulation system in place. But the moot question that comes in everybody’s mind is it working, effectively?

To effectively address this issue should the entire pharmaceutical industry in India together not form a self regulatory body in line with “Consumer complaint council” of “The Advertising Standards Council of India”, as was created by the Fast Moving Consumer Goods (FMCG) industry? The decisions taken by the ‘pharma council’ against each complaint of marketing malpractice should be disseminated to all concerned, to make the system robust and transparent…and in that process it will act as a strong deterrent too.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Innovation, IPR and Indian Pharmaceutical Industry – a growth formula is brewing.

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Innovate or perish:Many of us expect that ‘tomorrow’ will be a ‘mega today’ and prefer to run our business more or less the same way, as what we are doing today. At the same time the global market keeps us sending, in very small measures though, but definite and continuous signals of change. As we move on, we realize that ‘tomorrow’ will not be a ‘mega today’, just as ‘today’ is not a ‘mega yesterday’. To meet such challenge of change squarely and realistically, we need to embrace a culture of ‘continuous innovation’.Therefore, the name of the game, while competing within the globalised economy is “continuous innovation”. An innovation, as we know, is more than a novel idea. It is, in fact, the process of translating the novel idea into reality.

Like other industries, the pharmaceutical industry in India will also have to innovate with cutting edge ideas, convert them to innovative and implementable business models, which in turn would help these companies to remain competitive in the market place. The innovation, which I am talking about, extends beyond Intellectual Property Rights (IPR).

While innovation is an absolute must to remain and grow the business, having patented products and marketing these brands effectively are desirable and not a ‘must do’ in the pharmaceutical industry of India.

Many would like to ‘stick to knitting’ and innovate:

Indian Pharmaceutical Industry is now an internationally acclaimed player in process development, contract research, manufacturing and domestic marketing skills. The Government of India created this environment for the industry through amendments of the Indian Patents Act 1970.

During post product patent regime in India, there is no dire need for the entire domestic industry to shift its focus from world class process development skills to new molecule development skill. On the contrary, the strengths acquired by the domestic industry in such skill sets should be further honed, to utilize benefits from opportunities that arise out of basic R&D processes. Some of these are collaborative activities with the multinational companies (MNCs) to create a win-win situation in areas like, contract research, clinical development, contract manufacturing and domestic marketing of in-licensed products.

The domestic pharmaceutical industry should therefore adopt strategies like manufacturing off patent products, like recent collaboration between Aurobindo Pharma and Pfizer, Jubilant Organosys with French company Guerbet, for distribution of its nuclear medicine products in Europe. ‘Financial Express’ dated March 13, 2009 reported “Eli Lily seeks partner for Indian TB initiatives.

Such opportunities will keep on coming, may be more frequently and more in number, especially when global innovator companies take more interest in the generic pharmaceutical business, like, Novartis, Daiichi Sankyo, GlaxoSmithKline, Sanofi Aventis etc.

To grab such opportunities, the strategy of ‘stick to the knitting’ with continuous innovation is expected to help the domestic pharmaceutical companies immensely.

IPR regime – emerging opportunities:

Discovery Research:

While above approach will help many small and medium sector enterprises, many large pharmaceutical companies and research boutiques in India are investing significantly to discover New Molecular Entities (NMEs). It has been reported that by 2011, at least two Indian pharmaceutical companies are planning to launch their NMEs.

Biotech Research:

Research in the field of Biotechnology is rapidly evolving, especially in the areas of diagnostics, vaccines, cellular and molecular biology. It is heartening to note that for doing stem cell research National Institute of Health, USA, identified Reliance Life Sciences in Mumbai and the National Institute of Biological sciences in Bangalore to receive state funding from the USA. Both these two organizations entered into contracts to supply embryonic stem cells to the US based researchers. Moreover, in the field of ‘Biometrics’ raw clinical data are now being transmitted to the specialists in India for their scientific evaluation.

It has been reported that in the developing countries of the world malaria afflicts about 300-500 million population and kills 1-3 million of them. Malaria also allows some fatal genetic illnesses, like sickle cell anaemia to thrive in the gene pool. Hence a vaccine developed for this disease through Indian biotech initiatives, would indeed be a great boon for the developing countries of the world.

Industry – Academia Collaboration:

In the Western countries, close collaboration exists between the industry and academic institutes in the field of Pharmaceutical Research. Such type of collaboration has now started developing in India too, where Council of Scientific and Industrial Research (CSIR) is playing major role.

An effective collaboration between the pharmaceutical industry and the academia will ensure productive use of research talents where both the parties will draw benefits. The research done by the CSIR, Indian Institute of Technology (IITs), Indian Institute of Science and various universities is expected to throw open new avenues of collaboration and partnership between industry and Academia.

Benefits of Technology Transfer and increased Foreign Direct Investment (FDI):

The new product patent regime is also expected to facilitate flow of technology and foreign direct investment in India with adequate patent enforcement mechanism being put in place. Inadequate patent and regulatory data protection are considered by the developed nations as the key barriers, which restrict the flow of both technology and foreign investments.

In these areas, India mainly competes with China and Brazil, besides other emerging markets. Degree of patent and regulatory data protection in each of these countries will eventually decide who will emerge as a winner in these fields.

The issue of ‘Access to New Innovative Patented Drugs’:

Innovative pharmaceutical products patented in India will facilitate access to the latest modern medicines to Indian population. Such medicines will help to meet the unmet needs of the ailing population. Many multinational companies like, Merck, GlaxoSmithKline (GSK) have already announced a differential pricing mechanism for such medicines in the developing countries.

Moreover, to improve access of such medicines to the common man, the Government of India should have robust plan to purchase these medicines, at a negotiated price, for supply to Government Healthcare Units

Improving ‘Access to affordable modern medicines’ – a challenge to the nation

There are three key elements to improve access to affordable medicines to a vast majority (650 million) of Indian population:

1. Healthcare infrastructure and delivery
2. Healthcare financing
3. Procurement price of these medicines at the Government Healthcare units

Price of patented products will not have any impact on existing medicines available in the market. However, the reality is, price regulation in some form will continue to play a key role in India. The long overdue new Drug Policy of India is now expected to come only after the new Government takes charge, post General Election of the country. The new policy is expected to articulate the details on this important subject both for patented and generic medicines, in India.

A determined and focused approach of the Government on the above three elements would effectively address the key healthcare issues of India.

Small Scale Enterprises in India – expecting large scale consolidation:

In India over 70% of the small-scale units, within the pharmaceutical industry, currently operate as contract manufacturers, either for the domestic or multinational companies. These small scale units with their low operating cost ,make the contract sourcing model an attractive proposition. Many of these small scale enterprises, are mostly catering to the export business in non-regulated markets.

The demand for high quality standard by the drug regulatory authorities of various countries is fast increasing. It is, therefore, essential for these units to make significant investments to qualify for such stringent quality requirements. Some units would be able to invest enough to meet such regulatory standards. However, the cost of production for those units, which will invest towards facility up gradation is expected to increase significantly, leading to fierce cut throat competition. In a situation like this, we can expect to witness a large scale consolidation process within the industry.

Intense competition from China – cannot be ignored:

Globalisation of the markets could lead to significant dumping of products in different countries. Such a situation may adversely affect the cash flow of business, making the domestic industry highly vulnerable. Currently, Indian manufacturers are facing intense competition from China, in Pharmaceutical Intermediates (PI) and Active Pharmaceutical Ingredient (API) segments. This is mainly because China has a much better economies of scale in manufacturing, which gives them a pricing edge over their Indian counterparts.

PI and he API manufacturers in the small scale enterprise segments of India have already been very adversely impacted, leading to closure of many units in various states like, Andhra Pradesh, Karnataka and Gujarat.

Conclusion:

The issue of a robust world class patent regime in India has sparked off an intense debate with a heavy dose of acrimony. The key areas of concern of various stakeholders are as follows:

1. General public: inadequate access of affordable modern medicine to the common man
2. Domestic generic industry: overall industry growth and to some extent its survival
3. The Government of India: combination of 1&2

After many years of tough resistance mainly from the domestic generic pharmaceutical industry, in January 1, 2005, India re-entered into the pharmaceutical product patent regime. In this article, I have tried to give a snapshot of this new regime, for a quick reading.

Despite tough competition from China and increased possibility of consolidation within small scale pharmaceutical units, overall emerging scenario in India is indeed encouraging. Imbibing innovation culture and with the opportunities available in the new IPR regime, Indian pharmaceutical industry, I believe, will be able to catapult itself to newer heights of global success.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

The stormy debate on wrongful grant of pharma product patents – a countdown of the news events, for a quick perspective.

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To give a quick perspective to this debate, I reckon, a countdown of five reported news events on the subject will be helpful. I start from February, 2009 and gradually go one year back, to February, 2008, to capture the key elements of this stormy debate. Finally, I move to ‘ground zero’ to explore the basic remedial measures to effectively address the issue.Event 5‘The Economic times’ (ET) dated February 24, 2009 reported an interesting news item titled, “Dichotomy between patent law and practice”. The timing of this article, with its various quotes, highlighting the following points, evokes interest:

1.“Indian patent authorities are virtually not following the spirit of the Sections 3(d) and 3(e)”.

2.“A large number of patents granted in India since 2005 pertain to products first patented in 1970s, 1980s, and 1990s, most of which were launched in Indian markets long before 2005, the year of introduction of product patenting in the country”.

3.“The patent applicants are not making adequate disclosures, making it difficult for potential challengers to file post-grant objections which the law provides for. Since the International Non-proprietary Name (INN) is not of the drug is often not given along with the Title of the Patent, it is cumbersome for anyone to trace the patent to the original PCT (Patent Cooperation Treaty) application and have an idea about how new it is”.

4.“Many law firms refuse to take briefs from Indian companies, because their multinational clients do not permit them to do so! The result— post-grant objection facility is not effectively used by Indian companies.”

Why are these observations interesting?

These observations are interesting because for point number 1 to 3, as stated above, following three recourses are available to all:

1. After publication of the patent applied for, in the patent journal, one can file a pre-grant opposition.

2. Assuming that someone has missed this opportunity, the provision for filing post grant opposition will still be there.

3. Assuming that both the opportunities have been missed due to some reasons and one could not understand the details of the patent applied for, during the patent granting process, the opportunity of going to a Court of law with a request to make such patents (which have violated section 3.d) invalid, will still exist.

It is indeed very difficult to understand why such measures are not being taken by the aggrieved parties, as specified in the law.

Point number four is even more difficult to understand. When lawyers are available to the domestic companies to defend alleged patent infringement, why then lawyers will not be available to them to take such objections to a court of law?

Event 4

Mint dated October 7, 2008 in its article titled; “Cozy deals and conflicting interest mark patent granting process” reported the following:

“There are even local and multinational corporates who ‘seek’ help of examiners and controllers to get their applications drafted, thereby ensuring a grant for a price”.

Event 3

‘The Economic Times’ dated July 1, 2008 reported in its article titled, “Cipla gets patent for Nexium, Fosamax modified versions” that Mumbai Patent office granted these two patents to Cipla in April, 2008 for new forms of two well known blockbuster drugs, Esomeprazole (Nexium of Astra Zeneca) and Alendronate (Fosamax of Merck). This news came as a big surprise because Cipla is well known for its continuous accusation to innovator companies for trying to extend ‘monopoly’ period by ever-greening patent through similar means. The report, therefore, raised a very valid question, whether Cipla has ‘walked the talk’ in India? It will be interesting to know on what basis Cipla managed to overcome the ‘efficacy’ barriers under section 3(d).

On this ET report, well known IPR expert Shamnad Basheer wrote the following in his blog dated July 6, 2008:

“Reading the ET piece, Nathan Evans of Finnegan Henderson, who’s a very astute commentator on the Indian patent scene and has written a couple of articles in this regard posed this question to me:

“This makes me wonder if the patent office in India will apply the laws less strictly to Indian pharmas than MNCs (kind of like they apply the patent laws more strictly for essential medicines)”

Shamnad Basheer concluded his comment on this subject with the following observations:

“How ought section 3(d) to be interpreted when our very own generic manufacturers are applying for supposedly “incremental” inventions?”

Event 2

According to Federation of Indian Chambers of Commerce (FICCI) report dated March 7, 2008, FICCI and the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry have joined hands to set up a working group to improve Intellectual Property regime in India.
It will be interesting to know the view of this joint working group between the Government and the Industries, in this matter. I have not read anywhere any comments of this important working group on such matter, so far.

Event 1

‘Thomson and Reuters patent focus report’ dated February, 2009 observed absence of clear guidelines (Manual of Patent Practice and Procedure) about some of the complex provisions of patent law, particularly section 3(d). The report indicated that there should be clarity on what would qualify as “enhanced efficacy” under section 3(d) so that it can help the patent examiners to clearly make out which patent applications would fall under section 3(d).

Ground Zero:

Let us now try to ponder, realize and fathom the core issue of this problem, which lies at the ‘Ground Zero’. Thus far we have been reading constant allegations about the functioning of Indian Patent Offices and even on their integrity and honesty.

In absence of a well drafted, long overdue, Patent Manual, all concerned, including patent examiners will have their own ways of looking into “enhanced efficacy”. In such a situation, I shall not be surprised if the Patent Examiners suffer from the dilemma as to what exactly will constitute “enhanced efficacy”.

Protracted debate with the stakeholders on the ‘draft patent manual’ appears to be over now. The last stakeholders’ meeting on this subject was concluded in Kolkata following Delhi, Mumbai and Bangalore, several months ago. However, the final Patent Manual is still not in place, which has been kept for public inspection since 2005.

To address this stormy debate, in my view, we need to:

1. Push for expeditious release and implementation of the Patent Manual (Manual of Patent Practice
and Procedure).

2. Let FICCI – DIPP working group work more effectively and cohesively for better functioning of the
new IPR (Intellectual Property Rights) regime.

3. Let ‘capacity building’ exercise at the Indian Patent office (IPO) continue with greater speed.

Mere accusation and constant bashing of the IPOs, as we now see around, may not yield much result. After having taken the above measures, if similar dissatisfaction in any quarter still remains, let law take its own course. Despite great apprehensions by some, as quoted above under point 1, never mind, enough lawyers will be available to fight such cases.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

The heated debate on WHO IMPACT definition of Counterfeit Drugs is now on a ‘pause’ – A time to evaluate the reasons for supporting and opposing it.

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The World Health Organisation (WHO), in December 2008, proposed the following new definition, as prepared by the International Medical Products Anti-Counterfeiting Taskforce (IMPACT):“A medical product is counterfeit when there is a false representation in relation to its identity and/or source. This applies to the product, its container or other packaging or labeling information. Counterfeiting can apply to both branded and generic products. Counterfeits may include products with correct ingredients/components, with wrong ingredients/components, without active ingredients, with incorrect amounts of active ingredients, or with fake packaging.”This definition, indeed, created a furor in India. The Ministry of Health of the Government of India initiated discussions, on this issue, with the stakeholders and by mid-January, 2009 a consensus was arrived at between the Drug Controller General of India (DCGI) and the generic industry on much debated definition of counterfeit drugs. It was reported that the Government had decided to place this definition before the World Health Organisation (WHO) in its next meeting on the subject. The consensus definition, after the above meeting, was reported as follows:

“A medical product (medicine, vaccine, diagnostics and medical implants/devices) is counterfeit when it is deliberately and fraudulently mislabelled with respect to its identity and/or source. Counterfeit can apply to components with wrong ingredients/components without active ingredients, with incorrect amounts of active ingredients, or with fake package”

In end-January 2009, although it was reported that under pressure from the developing countries like, India, WHO has dropped this new definition, it is very likely that the initiative is now just on a ‘pause’ mode.

Let us now try to explore the ‘Eye’ of this stormy debate and its relevance to India. The ‘eye’ of the storm lies mainly within the following 3 key concerns of the opponents of the definition:

1. False representation of identity and source applies not only to labeling but also to the ‘product,
its container or other packaging’
2. The new definition could include Intellectual Property Right (IPR) issues and as a cosequence of
which, Indian generics could run into the risk of being branded as counterfeit
3. Removal of the words ‘fraudulent and deliberate’ from the original definition and replacing them
with ‘false representation’ will shift the burden of proof

In India, the share of voice of those opposing this definition was undoubtedly much more than those who were supporting it. However, the rationale for supporting the definition, in Indian context, appears to be much stronger than opposing it.

While arguing on this point, I am of the view that most of the apprehensions expressed above have been abundantly clarified in the definitions of Misbranded drugs (section 17), and Spurious drugs (Section 17 B) of the Indian Drugs and Cosmetics Act, 1940.

Let us now have a quick look at the Section 17 and Section 17 B of the Drugs and Cosmetics Act to find out whether the WHO IMPACT definition is way off the definitions for Misbranded and Spurious drugs as indicated in the above Act.

“Section 17. Misbranded drugs – For the purposes of this Chapter, a drug shall be deemed to be misbranded –

(a) If it is so coloured, coated, powdered or polished that damage is concealed or if it is made to appear of better or greater therapeutic value than it really is; or

(b) If it is not labelled in the prescribed manner ; or

(c) If its label or container or anything accompanying the drug bears any statement, design or device which makes any false claim for the drug or which is false or misleading in any particular.”

Does Section 17 of the Drugs and Cosmetics Act, 1940 answer the ‘concern 1’ above?

“Section 17B. Spurious drugs – For the purposes of this Chapter, a drug shall be deemed to be spurious

(a) If it is manufactured under a name which belongs to another drug; or

(b) If it is an imitation of, or is a substitute for, another drug or resembles another drug in a manner likely to deceive or bears upon it or upon its label or container the name of another drug unless it is plainly and conspicuously marked so as to reveal its true character and its lack of identity with such other drug; or

(c) If the label or container bears the name of an individual or company purporting to be the manufacturer of the drug, which individual or company is fictitious or does not exist; or

(d) If it has been substituted wholly or in part by another drug or substance; or

(e) If it purports to be the product of a manufacturer of whom it is not truly a product.”

Does Section 17B of the Drugs and Cosmetics, 1940 Act answer the ‘concern 2′ above?

The ‘concern 3’ above deals with shifting the ‘burden of proof’ with replacement of the words ‘fraudulent and deliberate’ by ‘false representation’. Many legal experts opine that this change will only mean that “criminal intent (fraudulent and deliberate) shall be considered during the legal procedures for the purpose of sanctions.”

What could then possibly be the reasons for opposing the revised WHO IMPACT definition of Counterfeit Drugs in India, especially when we have similar definition in place in our own Drugs and cosmetics Act, 1940? Does it make sense for the Government to reinvent the wheel? Who knows?

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.