An R&D edge to the ‘world’s pharmacy’

Last week’s Union Budget had a hint of a suggestion on Government support for research initiatives in “sunrise” sectors, including pharmaceuticals.

For the pharmaceutical industry, which has showcased its manufacturing prowess to the world time and again, research offers the stepping stone to the next international trajectory. But unlike producing generics or branded formulations, research is a different ball game — capital-intensive and linked to unlimited risk.

In her budget address, Finance Minister Nirmala Sitharaman explained the government’s intent to unlock newer opportunities for the pharmaceutical sector by fuelling research and development (R&D). “Supportive policies, light-touch regulations, facilitative actions to build domestic capacities, and promotion of research and development will guide the government’s approach,” she said.

The FM’s statement was not isolated and follows a string of similar developments. Last October, the Department of Pharmaceuticals released a draft policy aimed at “catalysing research and development and innovation in the pharma- medtech sector in India”.

A month later, addressing the Indian Pharmaceutical Alliance’s global innovation conclave, Prime Minister Narendra Modi urged the industry to invest in becoming self-reliant in the production of key pharmaceutical raw materials.

Why innovate?

Known as a pharmacy to the world, India — thanks to its formidable pharmaceutical sector — has helped ease access to affordable drugs at home and abroad. Now, biopharmaceuticals is driving growth for global pharma with the emergence of biologics and biosimilars.

India’s draft policy pegs the global biosimilar opportunity at $70 billion by 2027. Till October 2020, about 100 biosimilars were approved in India, with over 40 others under clinical development.

Lincoln Pharmaceuticals, which holds patents for some drug delivery processes, sees innovation being driven by market needs. Its Director, Munjal Patel, says, “We innovate on drug delivery systems. Our R&D is constantly on how to make drug delivery convenient for the patients. But in doing so, there are certain costly aspects such as bio-equivalence study of drugs that take away a lot of resources. Such R&D would get a boost if there is some recognition or special treatment for taking it up.”

On the medical devices front, there are over 750 domestic manufacturers with an average investment of $2.3–2.7 million and turnover of $6.2-6.9 million, according to the policy draft. 

The sector is heterogenous, consisting of large multinationals as well as small and medium enterprises (SMEs), and growing. Take medical ventilators maker Max Ventilator, which sees an enormous opportunity for designed and made-in-India patient-care devices including ventilators. 

“We have enough talent in our country. But there is a lack of motivation to pursue R&D. It is good that the policymakers are addressing this. But this space will see growth only when companies are ready to invest and spend on R&D. Also, we need policies which encourage customers to prefer Indian products,” said Ashok Patel, founder of Max Ventilator. The medical devices sector faces the challenge of cheap imports, with about 90 per cent of India’s needs being imported from the US, Europe and China.

Challenges and enablers

The research draft addresses key challenges including an enabling regulatory framework and ecosystem that supports innovation and research, smoothening of processes for industry-academia linkages, and creation of infrastructure such as innovation hubs to foster R&D.

It points to fiscal support for innovation-focused companies, SMEs and start-ups. This includes tax exemptions and grant support, seed capital for start-ups in key emerging pharma and medical technologies, a special fund to promote medtech, a pharma-focused category-1 alternative investment fund, and equity funding as well as direct funding for late-stage clinical trials.

“Countries that have created such an ecosystem are reaping the market benefits and financial rewards of innovation,” said the draft policy, holding out the promise of good global and local outcomes from robust initiatives in research.