Indian Pharmaceutical Innovation – Post TRIPS

From P20 to PR45: The Upswing in Indian Pharma’s Strides!

Two industries took India on a global stage: IT and pharmaceuticals. Both industries had interesting turning points.

At the turn of the millennium, the world was terrified of an approaching apocalypse called Y2K: a potential collapse of computer systems when the date of the millennium would change on the night of 31^st December 1999. It eventually turned out to be a boon for the Indian IT industry and talent. 

Another industry grappling with anxiety was the pharmaceutical sector. A new patent regime was on the horizon: 1^st January 2005 was to be a new beginning. The new regime meant that generic versions of innovator drugs – through both product and process patent – would be out of bounds for the Indian companies that were largely into generics. Doomsday predictions followed: “How will the Indian pharmaceutical industry survive? Multi-nationals will acquire and dominate the Indian pharmaceutical market as well.”, was a prime fear. 

It is the twentieth anniversary of the new patent act in January 2025. The post-patent (P20) era is a story of resilience, determination, and charting a course that set global ambitions, a story of finding opportunity in adversity. It is a story for case studies in business schools, in international studies, in global health efforts. The only aspect lacking is the narrative of success and achievements as the sector remains clouded in business risks and a sector that deals very closely with human lives. There is high emotional burden and higher stakeholder pressure and scrutiny.

To deal with the aftermath of the new patent regime, two approaches were touted as panacea for Indian pharmaceutical companies: international expansion and innovation. Surprisingly, a third element – Indian pharmaceutical market – which most thought would become difficult for Indian companies to survive, became a major strength. In twenty years, Indian companies are on an up-swing in all three:  international expansion, innovation and Indian pharmaceutical market.

A point of clarification here about two terms – Indian Pharmaceutical Market (IPM) and Indian Pharmaceutical industry. It is akin to the concept of Gross Domestic Product (GDP) and Gross National Product (GNP) in economics.  Indian Pharmaceutical Market (IPM) refers to the sale of medicines in the Indian domestic market. The major players in IPM are Sun, Abbott, Cipla, Mankind: usually the top 20 companies in the IPM and top 300 brands are considered a benchmark in the industry. The Indian Pharmaceutical Industry refers to the collective domestic and international business of pharmaceutical companies. The top pharma companies by total revenues are Sun, Aurobindo, Cipla, Hetero and so on.        

So, what were the major milestones for the Indian pharmaceutical industry in the last twenty years?

International Business

The title – world’s largest provider of – can be put to many a Pharma company from India. There are companies like Aurobindo, Gland, Strides that derive over 80% of their revenues from international business. Almost all top pharmaceutical companies of India – Sun, Cipla, Dr Reddy’s, Zydus, Lupin, Glenmark, have over 60% revenues coming from international business. These companies just happen to be listed on Indian bourses and have their manufacturing plants in India. 

Indian companies also acquired assets in international markets. Most notable acquisitions were Sun-Taro, Lupin-Gavis, Wockhardt–Negma, Dr. Reddy’s –Northstar and many more. The manufacturing footprint is spread across continents and so is the multicultural workforce.

The USA remains one of the biggest markets for Indian companies. But from the high of early 2000’s when every ANDA and DMF application was news (and para IV filing a bumper), it has become a tumultuous market due to price erosion. Indian companies are now focussing on value-added products. Speciality drugs are an emerging segment. 

Indian companies are now focussing on Europe, Middle East and other emerging markets. During the Covid pandemic, the world took note of Indian pharma’s contribution to the global access for affordable medicines and vaccines.

Indian Market 

Two big acquisitions – Ranbaxy and Piramal – in quick succession, by multinational companies, after the new patent regime, set off alarm. Indian companies too went for domestic acquisitions but with a twist – portfolio acquisitions. Alembic acquired Dabur’s non-oncology portfolio, and the trend continued with acquisitions like Torrent acquiring Unichem’s India business, Eris Lifesciences acquiring portfolios from Strides and Biocon Biologics amongst the many. 

IPM numbers keep changing on a monthly basis. The current top twenty in the IPM are an interesting mix. The top two – Sun and Abbott – reached there due to the acquisitions of Ranbaxy and Piramal respectively. Cipla has remained constant amongst the top five over the years. Mankind, again in the top five, is a young company started in the 1990’s that grew organically. With the recent acquisition of Bharat Serums, Mankind got a foothold in the vaccines segment. Companies like Torrent, Dr. Reddy’s improved their rankings in IPM through acquisitions. Among the top 20 is the youngest company in the peer group – Eris Lifesciences, and the oldest pharmaceutical company in India – Alembic, with an over 100-year history. A string of acquisitions propelled Eris, a firm started in 2007 and brought within a decade the largest IPO of the sector at that time in 2017. There are four multinational pharma companies that feature in the top 20 in IPM: Abbott, GSK, Sanofi and Pfizer.   

There is an IPR policy of 2016 in place. India witnessed a string of litigations and orders related to section 3d, 84 and 92 of the patent act that deal with issues related to patent extensions, evergreening and compulsory licensing. 

From confrontations between the innovators and the generic companies, there are now in-licensing agreements to jointly market products in the Indian market, thereby improving access for the Indian patients.   

Innovation & Research

Dr. Reddy’s and Glenmark were the trailblazers for New Drug Discovery. Both out-licensed their molecules to global companies, and earned up-front and milestone based revenues. Alembic developed a New Drug Delivery System for UCB. Sun Pharma has a dedicated research arm – SPARC. Dr. Reddy’s also experimented with launching a financing model – Perlecan. Lupin made a couple of out-licensing deals for its molecules.

Glenmark’s innovation arm IGI, is now focussing on Biologics, the future of medicine. ISB 2001, its lead molecule for a type of blood cancer has completed phase 1 trials. Wockhardt has a portfolio of six products in the anti-infection space, with QIDP and Fast Track designation from global health agencies for its molecules, which include dealing with humanities’ emerging challenge – antimicrobial resistance.  

Speciality drugs, an emerging segment, is witnessing increased participation from Indian companies. Sun pharma already has USD 1 billion revenue from the speciality portfolio. 

Biosimilars, the generic (similar) versions of biologic medicines, is a key focus area for Indian companies like Biocon, Zydus, Intas. 

In Covid vaccines, apart from Serum and Bharat Biotech, India also had indigenously developed vaccines from Zydus (DNA based) and Gennova, a subsidiary of Emcure with a mRNA vaccine.   

Some stakeholders wonder why Indian companies have not yet got an innovative product of their own. The answer is simple, yet complicated: it is 25 years since Indian companies entered the innovative research arena. They are competing with global companies with a research culture over decades, talent and resources. So, it is a learning curve for Indian companies that they would ace over a period of time.

The next twenty years will coincide closer to the centenary celebrations of India’s independence. An – or a basket of – innovative product(s) will be a gift from the sector to the nation. That truly will be the pharmacy and research (PR) hub for the world.