Indian drugmakers have a potent cure for the present ills dogging the industry: Research.
Often pulled up for spending too little on research and development (R&D), India’s biggest pharmaceutical companies now appear to match their global peers in investing for the future. The country’s five top drugmakers together spent a recordRs 8,025 crore in R&D in FY17, data from Bloomberg show.
The R&D expenses constitute 9% of the cumulative revenues of the companies: Research costs at their global generic peers, such as Teva, Mylan and Allergan, were similar in 2016. Indeed, the cumulative R&D spend of more than Rs 8,000 crore is higher than the profit earned by the largest pharma company in FY17, and also eclipses the total profit earned by the remaining four leading drug companies.
The total R&D expenditure for the top five Indian companies has increased six-fold since FY10, bring the expense-to-revenue ratio in kilter with those applicable to their global generic peers.
What are companies spending on? Besides building on the traditional generic product pipeline, companies are now investing in research on complex generics, specialty and differentiated products, and biosimilars. Their strong balance sheets allow the companies to make such investments on a sustainable basis.
“The first lever that you press when you want to change the business model is the R&D,” said Kamal Sharma, vice chairman, Lupin, in the company’s fourth-quarter earnings call. LupinBSE 1.90 % has 368 US ANDAs (abbreviated new drug application) filings, of which 154 are awaiting approvals: They have a total brand value of $76 billion. It has 45 US First-to-Files, out of which 11 are exclusive.
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