From-Thieves-to-Golden-GeeseA couple of years ago, the CEO of a leading European multinational drugmaker had notoriously called Indian pharmaceutical companies 'thieves', for making copycat versions of innovator drugs.

But today, these 'thieves' have transformed into geese, who are busy laying golden eggs — generics, which cost 40-80% less than innovator drugs, and which are currently revolutionising the healthcare and pharmaceutical market worldwide.

The reasons for this makeover are manifold.

Figures by the world's largest drugmaker Pfizer state the global generic drugs market will shoot to over $500 billion in the next five years, from the current $270 billion.

Moreover, the US ($48 billion generic market) and Japan ($3 billion generic market), among the largest markets for pharma companies, are increasingly going the generic way, with their governments stressing on low-cost medications to reach out to ageing populations.
 
Third, a slew of patent expiries are staring Big Pharma in the eye.
According to data from securities house First Global, drugs worth approximately $44 billion will go off patent in 2010, including leading ones like Pfizer's Lipitor (a cholesterol drug whose annual sales had peaked at $13 billion), Merck's Cozaar (for blood pressure), Wyeth's Protonix (for lessening stomach acid) in the US, and UCB Pharma's Keppra (epilepsy) in Europe.
 
Furthermore, the novel drug pipelines of MNCs are fast tapering out. According to estimates by professional services firm PricewaterhouseCoopers (PwC), in 2007, only eight of the 27 new therapies that were launched globally were the first of their kind, the rest being 'me-too' treatments, with at least three predecessors.

All these factors are like manna from heaven for Indian companies who are being wooed by Big Pharma like never before.

Drug industry experts say Big Pharma is trying out various ways of neutralising the risks arising out of patent expiries by penetrating into generics as much as possible.

"It's basically a change in mind-set that we are witnessing. From relatively untouchables, we are emerging as clear favourites in a battle for cutting down healthcare costs," says a senior director of a drugmaker based in the South.

According to a senior industry analyst, the buyout of Ranbaxy Labs by Daiichi Sankyo for $4 billion last June had a lot to do with the Japanese drugmaker getting a tailor-made casket of low-cost generics.

This was followed by Pfizer and GSK in 2009 partnering Hyderabad-based Aurobindo Pharma and Dr Reddys Labs, respectively, to market their generics in different geographies.

Industry sources say this sort of licensing and marketing alliance would have been a nightmarish thought some years ago. "But today, Big Pharma has no option but to cash in on the manufacturing potential of Indian companies and leverage that to penetrate into newer territories," one official said.

DG Shah, secretary-general of the Indian Pharmaceutical Alliance, said there is realisation among MNCs that future growth would come from emerging markets like India: "As they don't have the basket of products for emerging markets (read generics), they are looking for opportunities to form alliances with Indian companies to source low-cost drugs."