As red tape grows, pharma research flees India

Editorial Comment | Business Standard | New Delhi | 8 September 2014

Piramal Enterprises, the Piramal group’s flagship company operating primarily in the healthcare sector, has decided to close its Mumbai drug research and development (R&D) unit, its largest in the country. With this, the list of Indian drug makers that have either downsized their R&D work or have moved it outside India has got longer. Ten years ago, India wanted to become the hub for drug research. Some scientists said they could discover and develop a new molecule for less than $100 million – a tenth of what it cost abroad then. Today, much of that enthusiasm seems to have dissipated. Piramal Enterprises Vice-chairperson Swati Piramal recently told Reuters that the group has “lost the India advantage”. The only option left, she said, was to invest in R&D abroad.

The trend has already begun. Indian companies that want to expand beyond generic medicine are investing in R&D capabilities abroad. Lupin is setting up two R&D units in the United States. Cipla has said that it will invest about Rs 1,000 crore in Britain to develop drugs for respiratory- and oncology-related diseases. Sun Pharma, India’s largest drug maker, in July bought Pharmalucence in the United States, which has sterile injectable capacity there, “supported by strong R&D capabilities”. Others like Dr Reddy’s Laboratories, too, are known to be looking at similar acquisitions overseas. Carrying out research abroad is expensive, yet Indian companies are choosing to do that because of the better ecosystem there.

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