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Does Global financial meltdown vindicate that “Globalization is not Americanization”?

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The economic might of the most powerful nation of the world, the United States of America, was humbled during the recent global financial crisis. Long term sustainability of the financial models and the policies, which the country has been practising for quite some time, raised more questions than answers. It raised serious doubt on the American model of the free market economy, which in not too distant past, the entire world, by and large, used to consider as the right foot steps to follow for economic progress of any nation.

‘State of the Union address 2010’ of President Obama:

Today while managing the newer type of economic crisis with the ‘pump priming’ strategy, bolstered with direct state interventions of various kind, the nightmare that has started haunting the US President is the possible emergence of China and India as the powerful economic super powers of the world, leaving the mighty US far behind. In fact, in his ‘State of the Union address 2010’, the US president shared this fear with his nation.

A new equation in the process of globalization:

Has this crisis ushered in the dawn of a new era with a new equation in globalization process? Has it not proved that regulated and calibrated reform measures by the financial institutions, like what is happening in India, are much less fragile than US model of open market free for all capitalism?

The European Union (EU) in general which Tony Blair, the former Prime Minister of the UK once clarified during the Iraq war, is not the ‘poodle’ of the US, has proved itself to be exactly so, even during this economic crisis. The financial catastrophe of the US creation has vindicated to the global community beyond doubt that it is not the western world in general and the US in particular which will hold the key of progress of the global economy in the years to come by.

The balance of the global economy is now tilting to the East:

The balance of the global economic power is now tilting from the West to the East… and that too, not very slowly. As someone said very aptly, “Globalization is not Americanization”. The global community seems to have realized this truth, by now.

The new emerging economic world order:

Emerging economies of the world came as a savior to address this global crisis. G20 and not the G8 countries, became more relevant in the new world order.

The Outlook of 2010 is no brighter and does not stimulate the business confidence with increasing debt and unemployment levels in both the US and the EU.

The new emerging economic world order will witness more financial regulations and stricter state interventions in future. Even in a country like the USA, which used to believe in free market economy, one now witnesses significant state interventions and protectionists’ mindset while dealing with existing business process outsourcing initiatives, especially to countries like India.

India is less impacted:

Compared to the developed world in the West, India has been relatively less impacted by the financial meltdown initiated in 2008, mainly because of the following reasons:

1. Domestic demand is the key factor for the growth story of India

2. Reliance on foreign currency savings is low

3. Robust regulatory measures on investments abroad by the Indian nationals

4. Regulatory control on speculative financial transactions

5. Robust financial policy measures to ensure financial stability of the nation

In this context, Mr. Montek Singh Ahluwalia, the Deputy Chairman of the Planning Commission said:

“The global financial turmoil will not have any significant impact on the country’s financial system as India is not exposed to the new and innovative financial instruments that triggered the meltdown. We have not been as exposed to these new and innovative instruments, which have been the source of financial distress internationally… So the direct impact on the Indian financial system is not going to be significant at all.”

Is American model of ‘free market economy’ a sustainable economic pathway?

This particular global financial crisis has raised the important question whether the American model of ‘free market economy’, which considers the market as the sole determinant of financial progress, is a sustainable economic pathway or not.

The elite G8 group of countries was not very concerned about the needs of the rest of the world:

The G8 group of countries comprising of seven of the world’s leading elite group of industrialized nations, France, Germany, Italy, Japan, UK, US, Canada and Russia, many believe, just represent the interest of the industrialized nations and not quite concerned with the needs of the rest of the world. Fast growing developing economies like India and China and Latin American and African countries do not have any representation in this elite world. It is not just a sheer coincidence that most of the G8 countries, if not all, have been badly impacted by the global economic downturn.

The G20 group of countries came as a savior:

In April 2009 the leaders of the G20 group of countries, which include India, in their London meet came to the rescue and pledged to bring the world economy out of recession. The pledges were as follows:

1. Help countries fight the economic crisis with U.S $1.1 trillion deal

2. Provide stimulus measures of a total of U.S $5 trillion to boost their own economies

3. Reach an agreement on shifting IMF voting power to under-represented countries.

4. Regulate hedge funds

5. Curb Tax havens

6. Bring restrictions on banking bonuses

Most of these pledges, except perhaps point 4, have since then either fully or partly been met. The global financial crisis has now been partly contained. However, the G8 group of countries is still struggling to fully grapple with this economic downturn.

Conclusion:

Despite all these, the overall economic growth of India is still quite encouraging with commensurate significant growth across almost all industries. At the very beginning of 2010, the government has started actively considering to prune its fiscal stimulus package extended to the industry, in a calibrated way.

India is marching ahead towards globalization process, albeit differently, realizing perhaps that “Globalization is not Americanization”.

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.

Quick implementation of the UNDILUTED ‘Central Drug Authority (CDA)’ Bill is essential for emerging India

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Many industry experts after having carefully evaluated the provisions of the original draft of the proposal of forming a CDA in the country commended and supported this praiseworthy initiative of the Government. This Bill also known as, “The Drugs & Cosmetics (Amendment) Bill No.LVII of 2007 to amend the Drugs & Cosmetics Act, 1940” was introduced in the ‘Rajya Sabha’ on August 21 2007 and was thereafter referred to ‘The Parliamentary Standing Committee of Health and Family Welfare’ for review. The Committee also has submitted its recommendations to the Government since quite some time. However, the fact still remains that the proposed CDA Bill has not seen the light of the day, as yet.

Mashelkar Committee Recommendation:

It is high time to consider the recommendations of Dr. R. A. Mashelkar Committee on the subject and make amendments in the Act to facilitate the creation of a Central Drugs Authority (CDA) and introduce centralized licensing for the manufacture for sale, export or distribution of drugs.

Seven reasons for the dire need of the CDA in India:

I firmly believe that the formation of the ‘Central Drugs Authority (CDA)’ will provide the following seven significant benefits to the Industry and also to the Government:

 1.    Achieving uniform interpretation of the provisions of the Drugs &  Cosmetics Act & Rules

 2.    Standardizing procedures and systems for drug control across the country

3.    Enabling coordinated nationwide action against spurious and substandard drugs

4.    Upholding uniform quality standards with respect to exports to foreign countries from anywhere in India

 5.    Implementing uniform enforcement action in case of banned and irrational drugs

 6.    Creating a pan-Indian approach to drug control and administration

7.    Evolving a single-window system for pharmaceutical manufacturing and research undertaken anywhere in the country.

Major countries have similar set up even within a federal system:

All major countries of the world have a strong federal drug control and administration system in place for the Pharmaceutical Industry. Like for example, despite strongly independent states within the federal structure of the U.S., the US – FDA is a unified and fully empowered federal government entity. 

Similarly, the coming together of many independent countries in Europe has led to the need for a pan-European drug control agency and that responsibility has been vested on the ‘European Medicine Agency (EMEA)’ which has overriding pan-European powers, that is within the European Union (EU).

Thus, a single Central Authority that administers and regulates both pharmaceutical manufacturing and pharmaceutical research is an absolute necessity in India’s bid to be a global hub for drug discovery.

The interim measure:

In my view, till CDA is formed, registration and marketing authorization for all new drugs and fixed-dose combinations should only be granted by Drugs Controller General of India (DCGI).  I would like to emphasize, it is essential that there a smooth transition takes place from the existing regulatory environment to the proposed CDA, carefully tightening all the loose knots in the process. All necessary infrastructures along with the required personnel must be in place so that all permissions are granted to applicants within stipulated time frame.

The watershed regulatory reform initiative should not go waste:

Thus the CDA Bill is considered to be a watershed regulatory reform initiative in the pharmaceuticals space of India. This reform, besides all others as discussed above, would have updated the legislation considering the advances the country has made, especially, in the last five decades in clinical research, treatment methods, and sophisticated diagnostic and medical devices.

Conclusion:

It now appears that the Government could revive the CDA Bill and reintroduce in the Parliament. It was to be introduced in its monsoon session. However, the plan did not fructify because of various political reasons.

Centralize drug licensing has also been highly opposed by the state drug authorities and some section of the industry. The stated position of these opponents to the CDA Bill highlights that the proposed centralized structure will not be able to deliver as the requisite infrastructure for the same is not in place, as yet.

All these developments bring out the apprehension that the proposal to centralize drug licensing as part of the proposed law, very unfortunately, may get quite diluted because of vested interests.

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.

To prevent ‘counterfeit medicines’ from reaching the patients is the nation’s public health responsibility: Are we still in a denial mode to even accept the existence of this public health menace?

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In November 7, 2009, Financial Express reported with a headline,”Generic drug companies see a bitter pill in counterfeit“, because some believe that it has an in-built intellectual property right connotation.
The dictionary definition:

The word ‘counterfeit’ may be defined as follows:

1. To make a copy of, usually with the intent to defraud

2. To carry on a deception; dissemble

4. To make fraudulent copies of something valuable

5. A fraudulent imitation.

What does Indian Drugs and Cosmetics Act say?

May be for this reason the Drugs and cosmetics Act of India has specified that manufacturing or selling of the following types of drugs are punishable offence:

Section 17: Misbranded drugs

Section 17-A: Adulterated drugs

Section 17-B: Spurious drugs

No one has asked, so far, that as misbranding could involve trademark and design, why should it fall under Drugs and Cosmetics Act?

This was done in the past by the law makers because they believed that any attempt to deliberately and fraudulently pass off any drug as something, which it really is not, could create a serious public health issue, leading to even death.

Be that as it may, the pharmaceutical industry all over the world sincerely believes that counterfeit drugs involve heinous crime against humanity.

Definition of counterfeit drugs should cover the all types of medicines, which are not genuine:

Definition of counterfeit drugs should, therefore, cover the entire gamut of medicines, which are not genuine. Such medicines could be a fraudulent version of patented, generic or even traditional medicines and have nothing to do with patents or patent infringements.

At the same time it sounds very reasonable that a medicine that is authorized for marketing by the regulatory authority of one country but not by another country, should not be regarded as counterfeit on this particular ground in the other country, if it is not made available fraudulently.

The recent survey on ‘spurious’ and ‘sub-standard’ drugs by the Government of India:

To assess the magnitude of the menace of counterfeit drugs, Financial Express dated November 12, 2009 reported that much hyped “world’s largest study on counterfeit drugs” conducted by the Ministry of Health of the Government of India with the help of the Drug Controller General of India’s office, has come to the following two key conclusions:

1. Only 0.0046% of the drugs in the market were spurious

2. Quantum of sub-standard drugs in India is just 0.001%

From this report, it appears that India, at this stage, has nothing to worry about this public health hazard!!!
It is indeed quite baffling to understand, why did the government keep ‘misbranded drugs’, as specified in the Drugs and Cosmetics Act of India, outside the purview of this study.

Be that as it may, it appears that this survey has raised more questions than what it had attempted to answer. Such questions are expected to be raised not only by the pharmaceutical industry of India, its stakeholders and the civil society at large, but by the global experts, as well.

The problem of counterfeit is more prevalent in countries where regulatory enforcement is weak:

The menace of counterfeit medicines is not restricted to the developing countries like, India. It is seen in the developed countries, as well, but at a much smaller scale. Thus it is generally believed that the issue of counterfeit drugs is more common in those countries, where the regulatory enforcement mechanism is weak.

A study done by IMPACT in 2006 indicates that in countries like, the USA, EU, Japan, Australia, Canada and New Zealand, the problem is less than 1%. On the other hand, in the developing nations like parts of Asia, Latin America and Africa more than 30% of the medicines are counterfeits.

The role of ‘The World health Organization (WHO):

To effectively root out this global menace, the leadership role of the WHO is extremely important. Across the world, patients’ need protection from the growing menace of counterfeit medicines. As a premier organization to address the needs of the global public health issues and especially for the developing world, the WHO needs to play a key and much more proactive role in this matter.

Conclusion:

All stakeholders of the pharmaceutical industry must be made aware more effectively, without further delay, of the health threats posed by counterfeit medicines. Authorities and organizations like the Drug Controller General of India (DCGI) and its regulatory and enforcement agencies, healthcare professionals, patients, all pharmaceutical manufacturers, drug distributors, wholesalers and retailers should collaborate to play a very active and meaningful role in curbing the counterfeit drugs from reaching the innocent patients.

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

Concerted action by all stakeholders on counterfeit medicines is the need of the hour.

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The concern of some section of the stakeholders that IPR is being extended to the definition of counterfeit medicines, in my view, is misplaced. As even in India, ‘misbranding’ though an integral part of IPR, is considered as a public health issue and is an offence under Section 17 of the Drugs and Cosmetics Acts, 1940.Currently, the magnitude of this problem is anybody’s guess. Earlier a study sponsored by the World Health Organization (WHO) and conducted by SEARPharm reported that only 0.3% drugs were spurious and 3% of drugs were counterfeits. To scientifically assess the magnitude of this problem the Drugs Controller General of India (DCGI) India, for the first time ever, has initiated a study with 61 popular brands from nine therapeutic categories for testing 24000 samples. The study is expected to cost Rs.50 million and is expected to be published, soon.However, on the above study, Pharmabiz dated August 26, 2009 has reported the following:

“The Union Health Ministry’s ambitious nationwide survey to get an authentic estimate of spurious drugs in the country found no significant amount of spurious drugs in the pharmaceutical market. Among the 24,000 samples collected by the government for the survey, only around 10 were found to be spurious, it is reliably learnt.”

India being a part of ‘International Medical Products Anti-Counterfeiting Taskforce’ (IMPACT), established under WHO in 2006, decided to work together to combat the growing menace of counterfeit medicines. The Drugs Controller General of India (DCGI) was reported to have several discussions with the convenor of the IMPACT to effectively address the issue.

A study done by IMPACT in 2006 indicates that in countries like, the USA, EU, Japan, Australia, Canada and New Zealand the problem is less than 1%. On the other hand, in the developing nations like parts of Asia, Latin America and Africa more than 30% of the medicines are counterfeits. In South East Asia, estimated prevalence of counterfeit Artesunate for malaria is 33-53%.

It appears that in all those countries where access to modern medicines is poor, incidences of counterfeit medicines, ranging from anti-malarial, anti-hypertensive, anti-tubercular, anti-retroviral to cardiovascular and other life saving and life style drugs, are higher.

Apprehensions from some section of the generic pharmaceutical industry that attempts are being made by the interested groups to bring generic drugs under the purview of counterfeit medicines, is unfounded. Why should there be any such threat at all, when the world is witnessing the global pharmaceutical companies scaling up their generic business operations?

Incidence like recent detention in transit of DRL shipment of the generic version of Losartan in the Netherlands or a consignment of Amoxicillin at the Frankfurt airport on the ground of patent infringement cannot be considered as attempts of MNCs to brand Indian generic pharmaceuticals as counterfeit medicines. These drugs violated valid patents held in those countries prompting the local authorities to enforce the law of the land by detaining those consignments. India also has been detaining similar consignments for Nepal whenever those transit consignments violated the intellectual property laws of India. It will, therefore, be not fair to expect Netherlands or Germany to follow a different set of rules for goods in transit, when Indian law itself defines ‘imports’ covering goods in ‘transit’. Thus Government of India should take up this issue on a bilateral platform with the European Union (EU) for a desirable resolution to the problem. Meanwhile, to ensure that pharmaceuticals exports from India do not get adversely affected, Indian pharmaceutical exporters should ensure, till such issues are bilaterally resolved, that their export consignments for third countries transit through non EU routes.

Further, the incidence of fake drugs seized recently with made in India label and originating from China is indeed a fraudulent and criminal action of some irresponsible people who bring disgrace to humanity. Such incidences must be strongly condemned and be taken up by the Government India with the Chinese authorities effectively, to stop recurrence of such criminal activities in future.

The sales of counterfeit medicines across the world as estimated by the ‘Centre for Medicine in Public Interest’ will reach US$75 billion by end of 2010. This is an increase of over 90% as compared to 2005. A report from the WHO’s Executive Board in its 124th session indicated that the detection of counterfeit medicines in 2007 had increased to more than 1,500. This reflects an increase of around 20% over 2006 and ten times more compared to year 2000.

WHO indicated that in 2005-06 the volume of counterfeit drug seizures included 2.7 million articles and the main countries where these articles originated from India: 31%, UAE: 31% and China: 20%.

Enough data are available to establish that counterfeit drugs are posing a growing menace to the humanity. All stakeholders should join hands to address this public health issue, leaving aside petty commercial interests, be it generic pharmaceutical companies or research based pharmaceutical companies, across the world and India is no exception. Otherwise, thugs and criminals who are involved in this illicit trade of manufacturing and distributing counterfeit medicines at the cost of the innocent patients, will keep remaing almost scot free, forever.

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

‘Prevention is better than cure’: Such a healthcare policy focus could effectively reduce the disease burden in India

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First National Health Policy was passed by the Parliament of India in 1983 and was last updated in 2002. How much of the policy intent has seen the light of the day is anybody’s guess.
Healthcare issues are not being effectively addressed:
Even after six decades of independence only one in three Indians has access to basic sanitation facility like toilets, exposing a large number of population to various types of ailments. World Health Organization (WHO) reports that around 9 lakh Indians die every year breathing polluted air and drinking contaminated water. Maternal mortality rate is the highest in India. Almost half of the children in our country are grossly underweight and this phenomenon is growing at a rate which is nearly double the rate of even Sub-Saharan Africa. One third of the world’s tuberculosis patients live in India. It is indeed an irony that even today India belongs to one of those four countries of the world where polio has not been successfully eradicated, as yet.

Increasing incidences of chronic ailments are exerting further pressure on the disease burden:

Along with diseases originating due to poor hygienic conditions and life style, new challenges are coming up with rapid emergence of non-infectious chronic diseases like, diabetic, cardiovascular and psychosomatic disorders.

Chronic diseases could soon become the most critical issue in the Indian healthcare system, if these are not prevented and successfully managed. It has been reported that population suffering from, for example, diabetes could generate health care costs which are almost double of those without this ailment.

All these factors together are leading to an abnormally high disease burden in the country where very unfortunately over 65% of the population are not having access to modern medicines, either due to lack of infrastructural facilities or the people just cannot afford the basic costs of healthcare.

Most of the diseases are preventable:

Many of these chronic ailments ascribe to common preventable risk factors. Poor hygienic conditions, unhealthy nutrition, lack of proper physical activity, alcohol and tobacco abuse are the major risk factors for these diseases. An integrated approach towards disease prevention, though challenging for the nation, is the need of the hour. It is a pity that our healthcare systems do not support this process. India as a whole carries an abysmally poor track record for a well thought out and structured healthcare promotion and disease prevention policies and strategies.

Indian healthcare system is highly skewed towards disease treatment rather than disease prevention:

Current healthcare systems of India, which offer access to modern medicines just to 35% of the population, are aimed mostly towards responding to urgent needs of patients.

Relieving symptoms of the disease with an expectation of curing the ailment are the basic pattern of healthcare in our country, wherever it is available and in whatever scales and proportion. Preventive health care is quite different from the above approach.

Australia has shown a way:

Australian National Health and Hospitals Reforms Commission report titled, “A healthier future for all Australians”, published in July 2009 recommends the establishment of an independent National Health Promotion and Prevention Agency, with a significant budget for creating a robust evidence base to find out what exactly works in prevention of a disease. Like for example , the report highlights “comparison of the relative efficacy of a medical intervention (gastric bypass), a pharmaceutical intervention (an anti-obesity drug), an allied health intervention (an exercise and diet program) and a population health intervention ( a community walking program) in reducing obesity.”

The report clearly articulates that just collecting evidence on prevention will not be enough; disease prevention should be put on the same footing as the treatment of the disease.

Are we listening?

The way forward in India:

As many diseases are preventable, every interaction with a healthcare professional should include advice and follow-up on the preventive measures. When with an integrated and systematic approach, patients will be provided with information and practices to reduce health risks, it is quite likely that they will then try to maintain a healthy and hygienic life style with regular exercise, drinking safe water, eating healthy food which they can afford, practicing safe sex, avoiding tobacco and alcohol abuse.

Such integrated and systematic preventive healthcare measures can significantly help reducing the disease burden of individuals and families, besides improving vastly the quality of life. To promote prevention in healthcare, the very basic requirement is the change in mindset of both the policy makers and the civil society. A collaborative or partnership approach involving all concerned to create mass awareness is absolutely essential to ensure commitment of the common man towards such an important healthcare initiative.

Important areas for action:

• Effective use of persuasive communication tools to establish that preventive health care can help avoiding expensive disease burden and improve quality of life

• Mass awareness and demonstration program to help creating a positive attitude and required skill sets in disease prevention activities within the community

• Motivate healthcare professionals to make prevention an integral part of every interaction with the patients

• Medical insurance and healthcare policies to offer adequate incentives for preventive healthcare through innovative means

What the government of India is doing towards preventive healthcare:

The Planning Commission of India reports as follows:

• Health education for primary and secondary prevention of Non Communicable Diseases (NCDs) through mobilization of community action

• Development of treatment protocols for education and training of physicians in the prevention and management of NCDs

• Research support for: Multi-sectoral population-based interventions to reduce risk factors

• Explanation of the role of nutrition and lifestyle-related factors

• The development of cost effective interventions at each level of care.

All these are very appreciable statements of intent. However, how much of these intents are getting translated into reality will be very difficult fathom by the common mortals.

Conclusions:

Most of the serious types of ailments of a vast majority of the population of India can be prevented and the disease related complications can be effectively avoided, if we all have a will to do that. Can we take a leaf out of the formation of “National Health Promotion and Prevention Agency” in Australia?

Healthcare costs of the nation and utilization of its scarce resource can be successfully optimized by properly focusing on disease prevention related activities. In my view, effective measures towards preventive healthcare can quite efficiently address many pressing healthcare issues of the nation.

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.

An image makeover is in progress in the global pharmaceutical industry.

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At the beginning of 2009, Andrew Witty, the young head honcho of Glaxo SmithKline (GSK) initiated a one CEO tirade to recognize the global poor as a stakeholder of the global pharmaceutical industry. The industry that has been much maligned over a period of time, despite its yeoman contribution to the mankind, for aiming its drug discovery and delivery more often at the rich patients and not at the sick poor of mostly the developing and underdeveloped nations of the world.
Walking the talk:
Witty perhaps wondered and questioned why the poor population must share disproportionately the disease burden of the world. As the saying goes, ‘the proof of the pudding is in the eating’. Witty walked the talk and announced:

1. GSK medicines will be available in the least developed countries (LDC) of the world at 25% of their price in the United Kingdom (U.K).

2. 20% of profits from these medicines will be re-invested for various projects in those countries.

3. GSK will put 800 potential drug patents in a ‘patent pool’ to find cures of neglected, mainly, tropical diseases.

4. Scientists will be able to share the Research Center of GSK located at Tres Cantos in Spain for this purpose.

Will other global pharmaceutical players join in?

Andrew Witty, it appears, nurtures a very keen and very real desire to change the public image of the global pharmaceutical industry through transformation of its decade long culture and setting some of these path breaking examples, which only bravehearts can follow. However, many still feel, “Improving the greedy and uncaring image of the pharmaceutical industry is indeed a tough call.”

It has been reported in the media, during his announcement for the ‘patent pool’, the GSK CEO, in fact threw a challenge to other global pharmaceutical players to join him. What resulted thereafter was a bit of an anti-climax though with a very lukewarm response from others and Andrew with a sense of perhaps despair commented, “It has caught them a bit by surprise because we didn’t go around talking to people at the time, and they’ve had to come up this curve from zero.”

The Guardian in a very recent article on Andrew Witty, quoted him in the same context of extending access to modern medicines to the poor of LDCs, “he’s encouraging Indian companies to knock off its on-patent meds for sale in poor countries, as long as they make quality products and asks GSK for a license, which it will give royalty-free.”

In the same article, The Gurdian wrote, “He’s calling on every foreign company that makes profits in Uganda to cut its prices there”. “I don’t just mean drug companies,” Witty told the newspaper -”everybody.”

It does not cost much:

The GSK CEO admits that he is not losing much on his price cuts in the least developed countries. Uganda market of GSK is very small with turnover of about £9 million a year. The total profit from the LDCs is less than £5 million. “Those sorts of sums are like the 1p coins people don’t trouble to pick up off the pavement for a company with revenue of £24bn and a stock market valuation of £60bn,” he commented.

Conclusion:

Despite not too many encouraging responses being forthcoming from others, it is indeed admirable that a top global pharma company head honcho is setting such tough goals for himself in particular and the industry in general. The question that flows from here, even reading all these:

Are you kidding Andrew Witty? Do you really mean all these? Or it is another smart global pharma CEO hankering for just cheap publicity?

Seeing you Andrew Witty, though long ago, in flesh and blood, my heart says, you are possibly not made of that stuff to befool the world on this pressing issue of the world, being at your wit’s end.

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.

Contract Research – a rapidly evolving business opportunity in India: Is the Pharmaceutical Industry making the best use of it?

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A quick perspective of the ‘new-era’ pharmaceutical R&D in India:
Since 1970 up until 2005, Indian pharmaceutical industry used to be considered as the industry of ‘reverse engineering’ and that too with an underlying disparaging tone… and also as the industry of ‘copycat’ medicines’.

However, it will be absolutely unfair on my part to comment that only domestic Indian pharmaceutical companies launched ‘copycat’ versions of patented products in India and no multinational companies (MNCs) resorted to this practice, during this period.

Long before Indian Product Patent regime was put in place, in January 1, 2005, around 1998/99 Dr. Reddy’s Laboratories (DRL) entered into a bilateral agreement with Novo Nordisk and Ranbaxy with Bayer of Germany to out-license two New Chemical Entities (NCEs) and a New Drug Delivery System (NDDS), respectively for further development.

Opened the new vistas of opportunities:

These research initiatives opened the new vistas of opportunities for the Indian pharmaceutical industry in terms of R&D, in the pharmaceutical science. The above new developments also brought in a sense of determination within the research oriented domestic pharmaceutical players to enter into the big ticket game of the global pharmaceutical industry called ‘product discovery research’.

The jubilation of the industry having demonstrated its initial capability of taking a leap into forthcoming new paradigm of that time, received a set back momentarily when Novo Nordisk terminated the development of both the NCEs of DRL, after a couple of years, because of scientific reasons. However, DRL continued to move on to its chosen path, undeterred by the initial set back.

Need to focus on R&D and create world class ‘Intellectual Properties’:

In a letter addressed to the shareholders of DRL in one of its recent annual reports, the founder and the chairman of the company Dr. Anji Reddy expressed his following vision:

“Excelling in the basic business operations will be necessary, but not sufficient. To maintain a long-term presence in the global pharmaceuticals markets and to grow profitably will require companies to be even more focused on R&D and creation of successful IPR’s [intellectual property rights].”

After India signed the World Trade Organization (WTO) agreement, Indian pharmaceutical companies were quick to make out that the ball game of doing pharmaceutical business in the new IPR regime will be quite different. Having pharmaceutical product patents will indeed be important in future, for the domestic R&D based pharmaceutical companies.

The Past versus Present R&D models in India:

Domestic research based pharmaceutical companies did realize in the early days that a radical shift in their focus from ‘process research’ to ‘product discovery research’ may not be prudent or practical either.

Some of these companies initiated step-wise approach from mid 90’s to meet the challenge of change, come year 2005. During the transition period of 10 years as given by the WTO to India from 1995 to 2005, some domestic companies wanted to make full use of their past R&D model.

The past model:

Before the product patent regime, Indian pharmaceutical companies used to manufacture and market generic equivalents of the patented drugs at a fraction of the price of the originators, with non-infringing process technology in the Indian domestic market and also for export to the other non-regulated markets. During the WTO transition period of 10 years, they increased the pace of utilization of this model and launched as many ‘copycat’ versions of the new products as possible to boost up their sales and profit.

The present model for regulated markets:

Following two strategies are followed:

1. Indian companies doing generic business in the regulated markets like the USA submit
“Abbreviated New Drug Application” (ANDA) to the drug regulator for approvals of drugs,
which will go off patent within the next few years, so that the generic products could be launched
immediately after patent expiry.

2. Many other companies follow the second avenue, simultaneously, which is though risky but very
remunerative. In this case, the generic market entry takes place by challenging the patents of the
innovators.

It is believed that this model is being used by the Indian pharmaceutical companies, primarily to raise financial resources to get more engaged in their drug discovery initiatives or to generate wherewithal for collaborative or contract research initiatives.

For short term business growth and to raise fund for discovery research, their non-infringing process research initiatives have been proved to be quite useful. These R&D based Indian pharmaceutical companies; seem to understand very well that discovery of NCEs/NMEs or getting involved in this process will ultimately be ‘the name of the game’ to fuel longer term business growth of their respective organizations.

Contract Research (CR) in India:

Contract research is another business model within the overall R&D space, where a significant part of the investments come from the collaborators. CR business model currently explore the following two key options:

Intellectual Property Rights (IPR) for the discovery will go to the global collabolator and the
Indian CR organization will get an upfront or milestone payments.

 Along with funding support to the CR organization, IPR is shared by both the companies
depending on the terms of agreement.

There could be many other terms/clauses in such CR agreements, which are not within the scope of this discussion.

Types of Contract Research (CR):

Frost & Sullivan in one of their studies on Indian R&D opportunities indicated following three models of contract research:

1. Joint research: Here two or more collaborators will work jointly

2. Collaborative research: In this type of research, scientists of different disciplines work together on a project e.g. Ranbaxy has recently entered into a collaborative research program with GlaxoSmithKline (GSK) or collaboration of Ranbaxy to develop an anti-malarial NCE Rbx 11160 with Medicines for Malaria Venture (MMV), Geneva.

3. Complete outsourcing: When an altogether different research organization is assigned a research project by another organization. Some Indian research based pharmaceutical companies have already got engaged in these types contract research activities. The market of contract research is expected to grow much faster in the near future.

India – an attractive contract research destination:

A global survey done by the Economist Intelligence Unit (EIU) couple of years ago on the preferred centres for overseas contract research, published as follows:

• 39% preference for China

• 28% preference for India

Attractiveness as preferred contract research center was based on the following criteria:

• A place where companies can tap into existing networks of scientific and technical expertise

• Has good links to academic research facilities

• Provides an environment where innovation is supported and easy to commercialize.

Many global pharmaceutical companies believe that China scores over India on the third point, as mentioned above.

Indian pharmaceutical companies have commenced targeting contract research opportunities:

Research based Indian pharmaceutical companies companies like, Piramal Healthcare, Ranbaxy, DRL, Zydus Cadilla, Glenmark etc are now actively targeting international companies for contract research in custom synthesis, medicinal chemistry and clinical studies.

A medium-sized pharma company Shasun Chemicals and Drugs has been reported to have defined its business as an “integrated research and manufacturing solutions provider”. Similarly Divi’s Laboratories, a pharmaceutical company of similar size has collaborated with global multinational companies for both custom synthesis and contract research projects.

Some international CROs, like Quintiles have its establishments in Ahmedabad, Bangalore and Mumbai with great expectations and a robust business model.

New contract research opportunities in Biopharmaceuticals:

Besides pure pharmaceutical companies, an emerging opportunity is seen within the biotech companies in India, which are mostly engaged in a contract model. Novartis has inked a three year deal with Synergene (Biocon) for various research projects primarily in the early stages of development in cardiovascular and oncology therapy areas.

Likewise, Reliance Life Sciences are involved in chemistry, biology and contract clinical research activities.

Another research process outsourcing company, Avesthagen is engaged in collaborative research in metabolics, proteomics, genomics and sequencing. The company shares the IPR with the collaborators.

Jubilant Biosys of India, which has already partnered in a drug development deal with Eli Lilly has recently entered into another research and development deal with AstraZeneca, estimated to be worth up to US$220 million. This research collaboration will be funded by AstraZeneca for five years and they will own the patent of any neuroscience molecule that will come out of this collaborative agreement.

Contract research – a lucrative business model:

A UBS Warburg study indicated that around 20% to 25% of R&D investments in the US go towards contract research. This percentage is expected to increase as the pressure to contain R&D expenses keeps mounting, especially in the US and EU.

Currently the cost of bringing an NCE/NME to market from its R&D stage is estimated to be around US$ 1.7 billion. Across the world efforts are being generated to bring down these mounting expenses towards R&D.

Many experts believe that cost of innovation in India will be almost half of what it will be in the US and EU. A report from Zinnov Management Consulting forecasts that towards outsourcing by the global pharmaceutical companies, India has the potential to earn about US$2.5 billion by 2012.

Conclusion:

Currently, within CR space India is globally considered as a more mature venue for chemistry related drug-discovery activities than China. However, in biotech space China is ahead of India. Probably, because of this reason, companies like, Divi’s Laboratories, Avesthagen, Ranbaxy, Synergene, Jubilant Biosys, Reliance Life Science, DRL, Zydus Cadilla, Glenmark and Piramal Healthcare could enter into long-term collaborative arrangements with Multinational Companies (MNC)to discover and develop New Chemical Entities (NCEs).

As I said earlier quoting Korn/Ferry that in the CR space China’s infrastructure is better than India, primarily due to firm commitment of the Chinese government to derive maximum benefits of the globalization process in the country.

Prudent policy reforms and other measures as expected from the new UPA Government will hopefully help bridging the gap between the Chinese and Indian pharmaceutical industry in the space of overall CR business including biotechnology, as Indian R&D based pharmaceutical companies will start realizing and encashing the potential of this important business model.

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.

Is the world now moving towards ‘Global Patent’ system?

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A brief background:
In June 19, 1970 an International patent law treaty was signed in Washington, initially with 18 contracting states. This treaty is called ‘The Patent Co-operation Treaty’ (PCT), which came into force on January 24, 1978 and was subsequently amended in 1979 and further modified in 1984 and 2001.In August, 1998 India joined the Patent Cooperation Treaty (PCT) by acceding to the Paris Convention on Intellectual Property. As on March 7, 2009, 141 states including all major industrialized countries, are signatories to the PCT.

PCT system, as we know, facilitates filing of patent applications under one roof with simpler procedure for search and examination of applications. This allows innovators of a PCT member country to obtain the effect of patent filings in any or all of the PCT countries.

The procedure currently followed by PCT is as follows:

“A single filing of an international application is made with a ‘Receiving Office’ (RO) in one language. It then results in a ‘search’ performed by an ‘International Searching Authority’ (ISA), accompanied by a written opinion regarding ‘patentability’ of the invention, which is the subject of application. This is optionally followed by a preliminary examination performed by an ‘International Preliminary Examination Authority’ (IPEA). Finally, the examination (if provided by national law) and grant procedures are handled by the relevant national and regional authorities.”

Currently the PCT does not lead to the grant of an ‘International Patent’.

WIPO recognizes Indian Patent Office as an ISA and IPEA:

Recently under PCT, ‘The World Intellectual Property Organization’ (WIPO) has recognized the Indian Patent Office (IPO) as an International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA).

Besides India, other countries which have this recognition are Austria, Australia, Canada, China, EU, Spain, Finland, Japan, Korea, Russia, Sweden and the USA.

This recognition will help India the following ways:

1. Through PCT route India will now receive international patent applications from WIPO for search and preliminary examinations. This will enable IPO to generate revenue in form of fees paid to ISA and IPEA.

2. This recognition would help the innovators of the country to avail patentability search, obtain IPER and written opinions much faster and at a cheaper rate.

Is the world now moving towards ‘Global Patent’ system?

Recently a document has been published by WIPO for the meeting of PCT working group scheduled at Geneva from May 4 to May 8, 2009. The outcome of the meeting is not known to me, as yet. This document includes a proposal from the United States Patent and Trade Mark Office (USPTO) for having a relook at the existing international patent system. This relook and discussion could translate into development of an entirely new Patent Cooperation Treaty (PCT), which perhaps would be termed as PCT II.

The key feature of the proposed PCT II is that all patent applications, which will successfully pass through scrutiny of both international/national processing system would automatically receive patent grants in all the member countries.

While discussing this process within the PCT working group, it is anticipated that following two key issues will crop up for an intense debate:

1. Harmonization
2. Sovereignty

However, many feel that an appropriate protocol system could be put in place to take care of both these concerns, where after release of an affirmative international patentability report, each member country will be given certain period of time to refuse the grant patent in that particular country, clearly specifying the reasons for the same.

In true sense it may not mean grant of a global patent, but definitely could be considered as a bold step towards that direction. PCT II, if sees the light of the day, is expected to create a much easier type of patent granting procedure.

To make it effective, existing PCT structure will need to undergo some significant changes. The new structure is expected to ensure a very high quality output. The member countries, who will work in tandem, should find the new procedures and systems much more user-friendly and at the same time efficient in ensuring comprehensive search between multiple offices that incorporate prior art submissions by the applicants and third parties.

However, if PCT II gets accepted in principle by all the member countries, a detail mechanism to effectively operate such a complex system to be worked out with great precision, ensuring full satisfaction to all concerned.

In India, this new development will certainly be examined with a ‘tooth comb’ and rightly so. It is expected that all pros and cons will be carefully examined by the country, getting fully involved in this international debate, before arriving at a final decision. On the face of it ‘PCT II’ appears to be a novel concept, which deserves due consideration by all the stakeholders and in no case to be summarily brushed aside following the shrill voices of some skeptics.

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.