A recent breakthrough by Zydus Cadilla, a family-owned drugmaker with annual revenues of USD 1 bn, reflects a new focus for leading Indian pharmaceutical groups: original drug research.
For decades, India's large, homegrown pharmaceutical industry has been both admired and reviled for producing low-cost knock-offs of patented western medicines. The skill has made the south Asian country one of the world's biggest suppliers of generic drugs.
But a recent breakthrough by Zydus Cadilla, a family-owned drugmaker with annual revenues of USD 1 bn, reflects a new focus for leading Indian pharmaceutical groups: original drug research.
Zydus announced last month that Indian regulators had cleared it to start selling an innovative new diabetes drug - the first new chemical entity to reach the market having been discovered and developed entirely in India.
Lipaglyn, which controls high blood sugar and cholesterol with a single pill, will be launched in India in coming months, and Zydus is seeking regulatory clearance to sell it globally.
Indian drug industry executives say Lipaglyn, already patented in key markets, heralds a new era of original drug research among Indian companies that should result in more innovative new medicines from the country in coming years.
Pankaj Patel, Zydus chairman and managing director, says Lipaglyn is a potential "blockbuster" that could bring in more than 1bn in global revenues. But it will take three to five years - and more than USD 150m in additional clinical trial costs - to get the green light to introduce the medicine in the US and other tightly regulated western markets, he says.
"India has benefited for years from the research and development efforts in other countries," Patel, a trained pharmaceutical scientist who personally oversees Zydus' research and development programme, told the Financial Times in an interview. "Now it's time for India to give back."
Zydus' breakthrough comes at a difficult time for India's generic drugs industry.
In May, Ranbaxy, India's largest drugmaker by sales, agreed to pay $500m in civil and criminal penalties in the US after a company whistleblower revealed extensive data manipulation and violations of "good manufacturing practice" standards.
Though the violations occurred before Ranbaxy was bought out by Japan's Daiichi Sankyo in 2008 for USD 4.7 bn, the New Delhi-based company's admission to making material false statements has made life tougher for all Indian drugmakers.
Britain's drug regulator recently ordered Wockhardt, an Indian generics producer, to recall some of its medicines due to concerns about manufacturing practices at one of its factories. US regulators had in May halted imports from the same facility.
This can be placed.. after the the paragraph Though the violations occurred before Ranbaxy was bought ou, made life tougher for all Indian drug-makers.
"Our credibility is at stake now," says DG Shah, secretary-general of the Indian Pharmaceutical Alliance, the local industry body. "All drug regulators - from the US, EU or Australia - will be looking with a microscope when they come to inspect Indian companies. The next year or two will be critical, until they are reassured Ranbaxy was an isolated case and not happening generally."
Shah said he was optimistic the development of Lipaglyn, and the expected emergence over the next few years of new medicines from other Indian groups such as Glenmark Pharmaceuticals, Sun Pharma and Biocon, would help bolster the industry's image.
"People have been branding us as a copycat industry, and this is a departure from that," he said. "We are not just copycats, but we are transforming into creating original research products also."
Zydus began its search for original drugs in 2001 with the construction of a huge laboratory centre. Since then, it has spent some USD 450m on the quest for new medicines and has several in development, says Patel.
Zydus is not the only company pouring money into R&D. Other leading Indian generic drugmakers have been investing heavily as they seek to move up the industry value chain.
After discovering promising molecules in their own laboratories, some are partnering with major western pharmaceutical companies which can help with costs and global clinical trials.
Mumbai-based Glenmark, which spent 8.2 percent of its nearly USD 1bn in revenues last year on R&D, has licensing deals with the French pharmaceutical group Sanofi and Forest Laboratories of the US to develop three promising molecules, on which the Indian company holds the patents. Glenmark also has a research pipeline of four other drug candidates to treat problems such as asthma and pain.
Sun Pharma, which is also based in Mumbai and generated around USD 2bn in revenues in the last financial year, set up an R&D subsidiary in 2007 and now has a variety of new chemical entities and innovative drug delivery systems in development.
Biocon, based in Bangalore, has created a promising oral insulin candidate. Last year, it signed a deal with the US pharmaceutical company Bristol-Myers Squibb for further trials and development of the potential drug, which is considered the "holy grail" of diabetes treatment for its potential to replace insulin injections.
Many western drug companies - some of whom have had patents rejected, overturned or overridden in India in the past year - complain that India does not offer sufficient protection of intellectual property to provide incentive for drug research in the country.
But Mr Patel argues that India's patent law is fundamentally sound - and compliant with the World Trade Organisation requirements - though he admits infringement cases should be dealt with faster. "We need to strengthen ... enforcement so if tomorrow, someone is trying to infringe my IP, I can go to court and get a remedy quickly."