Pharma@75: More innovation hubs need to come up in the country, says Satish Reddy

The pandemic started in March, and since the lockdown was announced suddenly, it had set off the panic. It was quite harrowing. Quickly, a few industry leaders gathered through IPA. Two things were on our minds - to ensure the safety of our employees and supply of medicines without interruptions. These were our objectives, and because things were changing very quickly, we all decided it was important that every day at 10 ‘o clock, we get together on a call and discuss critical issues – policy, safety guidelines etc.

There was also information the Government wanted from us to ensure adequate inventory, especially of essential drugs required at the time – paracetamol, HCQ for a brief period, Remdesivir subsequently, key medicines for Covid-19 treatment.

There are four important developments post Independence. One of the defining moments for Indian pharma is the Indian Patents Act (1970). That paved the way for companies to make medicines available – that were not recognised under the Patent Act for the product, but you could make it through a different process. This helped pharmaceutical companies.

Dr Anji Reddy, my father and Founder-Chairman of our company, was working in a public sector enterprise. Because of this change in the Patent Law, he had entrepreneurial dreams. He made APIs (active pharmaceutical ingredients) using a different process and made them available at a lower price. Formulators with the benefit of this price could then price medicines more affordable for patients in this country.

Second is the landmark Drug policy (1978), and the price control order (1979). The policy set up the National Drug Authority and directed the sector to maximise the production of bulk drugs. It was to make the country self-reliant when it came to the import of bulk drugs. It encouraged the growth of the local industry.

Then came the Hatch-Waxman Act, 1984, which opened up the US market to generics. It streamlined the process of generic pharma approvals and provided this incentive, especially if there was patent litigation and you challenged the innovator for evergreening patents - you could get six month exclusivity. That was another defining event because if you see most of the large companies today, they sell to the US.

The fourth is India’s economic reforms. That completely changed the game and gave more freedom to Indian companies. The world was open to them, and they became highly competitive. Subsequently, the industry became a leader in the supply of generic medicines in most countries.

Then came the establishment of the WTO and the TRIPS agreement. India became part of this and brought back product patents, but with the crucial Section 3D (that did not allow for patents on minor modifications), besides granting compulsory license (that allows a company to make an innovator drug to meet a local health need).

The pandemic taught us to be resilient. The geopolitical conflict causes huge supply chain disruptions, a lot of uncertainties to deal with. About China, Dr Reddy’s began diversifying our supply chain just prior to the pandemic. So these issues were not felt much then.

But the geopolitical conflict caused a lot of angst for a company like us because in terms of pharmaceuticals from India, we’re the largest in Russia and Ukraine. Almost 800 plus people were employed in Russia, and close to 250 in Ukraine. When Ukraine was affected, we had to take care of the expats ensure a safe passage back to India and also extend help, especially to the people in Ukraine. Even now, it’s a tough situation in Ukraine.

In a general sense, the conflict has led to the rise in the oil price and logistics cost continues to remain high, factors leading to disruptions in the supply chain. There are uncertainties at different points, and companies have a business continuity plan to ensure the supply of medicines is not affected.

Indian companies have the capability in terms of being able to put the technology together. That is something they can work towards very, very quickly, especially in the older traditional vaccines.

But then, with newer mRNA vaccines, for example, that’s a capability which companies are beginning to build because this is the future. So a lot of development work is beginning to happen in India, which I think in the longer term it will hold good for all of us.

Well, there is no one against other, right? Both are important. If you see the history of the industry, at a very early stage, we were into exports and to developed markets. Take the US; between 600 to 700 FDA-inspected plants reside in India. That signifies the kind of quality standards developed in the country are at a very high level.

There will be challenges. All companies have gone through challenges from FDA-action. It is part of the game; it’s. not as though other companies in the US or overseas don’t face these issues. But it helps us get better and strengthen systems to ensure quality medicines.

The industry’s size is about $45 billion, but an IPA study projects an estimate of $130 billion by 2030 – which is possible, except that there’s a component that has to come into play, an innovation.

We expect to touch $ 400 billion by 2047, coinciding with 100 years of Indian independence. Here’s where we require the government.

Research is risky and has a long gestation period, so companies cannot do it alone. The cost of clinical trials is high. So our recommendations to the Government include regulatory reforms, among other things.

It requires enormous resources to discover drugs. Multinationals say it would take $ a billion plus to discover the molecule. This is something local companies can’t afford.

The Government should create an ecosystem which would encourage venture capitalists to invest early in drug development. Innovation hubs should come up in the country. There is Hyderabad and Bengaluru, but more such centres should come up. So small companies or those with good ideas, scientists wanting to start up need not be bogged down with additional administrative issues.

The key is to make the big leap in innovation; we need to move up the value chain. There are opportunities in contract development and manufacturing, biosimilars etc. We have a proven track record, but to get to the situation of taking a product to market, we still have a long way to go.