Drug makers spread wings abroad with new partners

Mumbai

No longer able to rely on selling copycats of drugs patented abroad, more Indian drug makers have begun setting up foreign partnerships to expand into overseas markets. Since new laws took effect in January, Indian generic-drug makers have completed at least a dozen deals with foreign partners who will sell their drugs, while three other deals involve Indian firms licensing new molecules or drug delivery systems. ‘‘The model is veering around partnerships across various segments, such as sharing of intellectual property, becoming vendors of first choice for developing generics and supplying bulk ingredients,’’ said Utkarsh Palnitkar, an analyst with Ernst & Young in Hyderabad.

‘‘Mitigation of risk is driving such partnerships,’’ he said. For more than three decades, Indian companies thrived with the protection of laws that allowed them to copy drugs under patent elsewhere. To meet World Trade Organisation obligations, India changed the law at the start of this year to disallow copying of drugs patented after 1995.

“Since India has adopted a product patent regime, revenue from copycat drugs will reduce after a few years, so it is better for Indian companies to derive revenue from other markets,’’ said Sanjay Ramdas Dongre, who manages a pharmaceutical and healthcare fund at Unit Trust of India (UTI), India’s largest mutual fund.

While larger players like Ranbaxy Laboratories, Dr Reddy’s Laboratories and Cipla have led the way, others are now turning to exports. Billions of dollars worth of drugs lose their patent protections over the next few years, luring Indian drug makers overseas to compete with their cheaper generic versions. Indian firms also need to keep expanding, and foreign markets offer the best opportunities.

India’s Cadila Healthcare, Strides Arcolab, Matrix Laboratories and Orchid Chemicals & Pharmaceuticals have partnered with firms such as Mayne Pharma, Actavis, Aspen Pharmacare, Alpharma Inc, Tyco International and Stada Pharmaceuticals. Pharma multinationals, which have had only limited success with new drug research, have learned they need to seek promising new drugs wherever they can find them.

‘‘There is pressure on them to cut costs to maintain profits and one way to reduce costs is to source from places where it can be cheaper,’’ UTI’s Dongre said. ‘‘Indian companies have US Food and Drug Administration (FDA) approved plants but do not have a front-end in the US, so collaboration will help them. It’s a win-win situation for both.’’

Besides, with 70-plus FDA-approved manufacturing facilities—the largest number outside the United States—India has chemistry skills and cheap labour, which multinationals can easily tap through partnerships. There’s a buzz in India’s drug discovery laboratories too. Four weeks ago, in a deal worth up to $53 million, Glenmark Pharmaceuticals licensed out a molecule it is developing to treat breathing disorders to Japan’s Teijin Pharma for further development and sale in Japan. A few months earlier, the company sold its North American rights for the molecule to Forest Labs Inc for up to $190 million.

Earlier this month, Lupin Ltd licensed out an oral once-a-day form of an anti-infective to Cornerstone BioPharma Inc for the United States in a deal worth up to $10.5 million. In these cases, the Indian firms are entitled to royalties, if the drugs make it tothe market, and both are looking at selling rights for other regions separately.

—Reuters