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Corporate Apr 2, 2013

Novartis judgment: Let’s make research a priority, rest will follow

By G Pramod Kumar

"End of R&D" said the main headline of the full page coverage of the "Novartis Saga" in a national newspaper on Tuesday.

In the report, multinational drug company Novartis said it wouldn't invest in R&D in India because the country doesn't have the ecosystem for innovation!

The company didn't hide the fact that the provocation for its statement was the Supreme Court judgment on Monday which rejected its petition for a patent for its blockbuster cancer drug Glivec.

However, what the newspaper report and Novartis didn't say was that the company is most unlikely to invest in India not because of the SC judgment, but because it already has a global R&D facility in Singapore. Do they need another one in the region? The Singapore facility was set up about six years ago.

Our generic manufacturers and the wealth of trained workforce can crack any drug, except those produced using biotechnology, in a few months of their availability

Our generic manufacturers and the wealth of trained workforce can crack any drug, except those produced using biotechnology, in a few months of their availability. Getty Images

The report also didn't say that all these years no MNC, except AstraZeneca, has made R&D investments in India. And certainly their miserable past record is not because of the judgment yesterday. They are simply not interested and their only interest in India is its market, particularly for their highly priced, patented drugs.

On the other hand, the AstraZeneca investment is not very big and is to develop drugs against a predominantly third world disease, namely TB. The main market is right here and hence it makes sense to make drugs here.

So what does one make of the Novartis threat?

It's just another bogey to browbeat poor Indians and the country's insincere politicians, market-bigots and lobbyists. The fact of the matter is that India is not a destination for research and development and pharmaceutical MNC investment. Sometimes, the turn-overs of the number one and two pharma companies in India don't even add up to the turnover of a single MNC drug.

Does it mean that nobody invests in the pharma sector in India?

No, our poor generic manufacturers do. In fact, they are the only ones who invest in India.

More over, the assumption that investment by the generic manufacturers are only for copying original and patented drugs is also wrong. Many of our generic manufacturers such as Reddys and Glenmark are trying to develop new molecules, but the technical and financial challenges are so daunting that they are insignificant compared to the MNCs.

The MNCs and their lobbyists propagate another research and development myth - prices versus development costs.

MNCs attribute their appetite for profits to development costs, but they don't tell us that a large portion of the research that they commercialise are public funded. For instance, about 60 percent of the research for Glivec itself came from the National Institute of Health (NIH) in America. The original research for many other drugs come from public institutions.

This is exactly where India fails.

It is not Novartis or any other MNC that is going to help with R&D in India, but our public institutions. Our academic and research institutions have to make research a priority and the government has to liberally fund them.

We have had a few successes in original research, particularly that matters to the Indian reality such as a vaccine for Hepatitis B. Similar efforts are happening across the country in our universities and small institutions, but they don't follow a coordinated plan and are terribly isolated. We have piloted our capability, but scaling up requires strengthening national institutions and networks, and public funding. It will also progressively build technical capacity and knowledge-base for future development.

Beyond research, the country also has to invest heavily on the complex processes of converting research knowledge into commercial products, including clinical trials and modern drug regulatory regimes. The ecosystem that India should aim for is this, and not what the MNCs want.

Besides the scale and complexity, there are other reasons why Indian companies do not invest in research and development.

Almost all of the branded generics by MNCs sold in India are produced in India and many of them are outsourced to Indian manufacturers. Some of these contracts are quite lucrative and some companies mostly depend on them for their survival.

Such outsourcing relationships and the fear of losing them also prevent them from investing in research or attempting generic copies. Indian companies also produce bulk quantities of patented drugs for MNCs and do not want to lose those contracts.

The Glivec example, and previously that of Nexavar, are tremendously encouraging for public health in India. Generics are our lifeline and our future, and hence the country should do everything to encourage manufacturers to rip and copy. As some believe, or are made to believe, it is not piracy, but the legal safeguard available to countries such as India.

About 90 percent of the drugs that we use in India are generics. And there are enough pre-1995 molecules (which are outside our patent regime) that can protect us from ill-health, including cancers and HIV. In the case of emergency, if the generics are not enough, the union government has the right to break patents using the modality of compulsory licensing (CL) allowed for by TRIPS as was done in the case Nexavar in March last.

Our generic manufacturers and the wealth of trained workforce can crack any drug, except those produced using biotechnology, in a few months of their availability. All efforts should be channelised towards supporting and strengthening them, even while imposing strict price control measures. The recent lowering of prices of some cancer drugs by CIPLA does indicates enormous price-flexibility even among generics.

As actor Amir Khan had advocated in his television show Satyamev Jayate, the country should rely on generics and not worry about non-existent MNC investments in R&D. The central government should promote the centralised procurement and distribution models of Tamil Nadu, Kerala and a few other states across India. The government-run institutions of both Tamil Nadu and Kerala completely rely on generics, except in rare cases where they are not available. The state governments should make it mandatory in private hospitals as well.

Bulk of India's health burden doesn't need patented medicines. In exceptional situations, we can even break them through compulsory licencing (CL). As Firstpost had reported in January, the government of India has begun steps to issue CL for three more cancer drugs - Trastuzumab, Dasatinib and Ixabepilone. Compared to Nexavar, the impact of this move is going to be unprecedented because Trastuzumab is a wonder drug against a certain type of breast-cancer that affects about 100,000 women in India.

The bottomline of the Glivec and recent experiences is simple - we should get our priorities right. The rest will fall in place.

by G Pramod Kumar

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