Reshaping India into a life sciences innovation hub

Despite being the third largest seller of medicines in the world, India has been able to produce only a handful of viable drug molecules.

Building the R&D ecosystem – a necessity for the pharmacy of the world

Over the last few decades, Indian pharma industry grew its expertise significantly in manufacturing and supplying quality generic drugs to address the growing need for affordable health care around the world. This helped the country earn the title of the pharmacy of the world. But, as the global innovator companies strive to change the treatment landscape with personalized medicines, the pressure is mounting on generics manufacturers in India to find a niche of their own with novel medicines in the tomorrow of therapeutics.

The journey of the Indian pharmaceutical industry to annual exports of ~US$19.1 billion and the top 20 Indian companies earning ~US$11 billion in revenues in India in FY19 can be attributed to various demand and supply-side factors.

Time is ripe to transition into an innovation hub

Indian pharma companies are now fighting battles on multiple fronts. Companies have witnessed significant price erosion of their generic drugs due to increased competition and channel consolidation in the US.

Moreover, with rising burden of diseases once considered intractable, the demand for precision medicine and other complex drugs have increased significantly, calling out the need for innovation in the Indian pharma industry. Biologics have thus become one of the fastest-growing classes of therapeutic compounds and are expected to account for more than a quarter of the global pharma market in 2020. These drugs have proven their potential to treat a wide range of conditions and have witnessed notable success rate in cancer and autoimmune diseases. While most the US and EU-based companies have been agile in speeding up the development of these drugs, Indian companies have relatively lagged behind.

While the country’s R&D intensity (the amount it invests in R&D as a percentage of sales) has been rising for several years and now stands at 6%, it is well short of the 20% typical of western pharmaceutical companies. The industry’s potential is being curtailed by a host of constraints, including the absence of an enabling ecosystem and limited collaboration between industry, academic institutions, incubators and the government.

Time is therefore ripe for Indian pharmaceuticals companies to look at novel drug development in a significant way.

Enabling an R&D ecosystem of change, innovation and growth

India needs an ecosystem built on the foundations of its distinctive capabilities in key areas of the value chain, such as manufacturing, product development and process innovation. Both public and private organizations in the life sciences sector in India would need to invest in the development of the skills, infrastructure and culture to transform the country into a life sciences innovation hub of the world. Fostering an innovation ecosystem or hub will require interventions across following four dimensions:

A.  Industry-academia collaboration is the need of the hour: This could happen only when the academia focuses on quality research aligned with the needs of the market.

B.  Private financing is the booster fund to push innovation: India can look up to some of the global biotech leaders for lessons to attract private sector funds in high-risk life sciences ventures. Europe could be an interesting example to follow in this case where novel financing providers and mechanisms are emerging to stimulate private funding for life sciences ventures. 

C.  Creating a no-strings-attached model for flourishing innovation: Building no-strings-attached business model for small and medium-sized companies working on complex science and creating an incubation environment to flourish innovation. At the same time, it is critical to let these companies be strings-free by not asking them to share confidential information, their intellectual property or provide rights.

D.  Government support is a strategic necessity: Government support is critical in building the start-up infrastructure, resource investment and other policy regulations to flourish innovation.

A collaborative ecosystem comprising private enterprises, government, investors, academic and research institutions, and individuals can be the potential solution to the problems faced by pharma R&D.

The road ahead

The way forward requires concerted efforts by all stakeholders working together towards a common goal of creating an innovative ecosystem. The world of academia, clinical hospitals, industry, funding institutions (PE/VC funds, central banking organization) and the government needs to converge and collaborate to unlock India’s capacity in science and innovation. Improving communication between industry stakeholders and Indian regulators would help to build a stronger platform for pharma while developing more certainty around drug costs, such as policies that provide a framework for pricing, would contribute to a steady regulatory environment.

Establishing trust between industry and academia over ownership of intellectual property, creating no-strings-attached model are some critical elements to successful relationships.