Pharma M and As sounding death knell for low-cost drugs?It began in 2006, with the Hyderabad based Matrix Labs becoming a subsidiary of a US company. Then it was Ranbaxy Labs' turn to get sold to a Japanese major. Vaccine player Shantha Biotech followed suit in July this year by being bought over by a French company.

Now speculation is rife that Dr Reddy's Labs, Wockhardt, or even Piramal Healthcare, are ripe for being cherry-picked by multinational companies as their subsidiaries.

The spate of acquisitions and consolidation that is dotting the medicine market in the country is giving rise to fears that it could eventually lead to the dominance of MNCs and subsequently impact patent challenges and low-cost generics.

Indian companies, which have been actively pursuing pre-grant and post-grant oppositions against the patents of MNCs, would become less aggressive after being acquired by Big Pharma, and their focus would shift more towards the generic markets in the US and the EU from India, say healthcare and legal experts working in the area of access to medicines.

Says an intellectual property expert who worked with a drugmaker which was acquired by an MNC, "It is very important that patents are challenged as all of them don't conform to the Indian patenting criteria and we need strong domestic generic companies to do this. So, if big Indian players start getting sold, there won't be effective challenges to the patent applications."

According to Amit Sengupta, general secretary of All India People Science Network, Indian companies which become subsidiaries of MNCs will be left pushing innovator brands. "Our domestic companies originally thrived on making generic versions of drugs that were patented elsewhere. But after being bought out, companies will concentrate more on producing generics for the drugs going off-patent in developed markets."

Data from securities house First Global suggests that about $44 billion worth of drugs will go off-patent in 2010, including leading ones like Lipitor (for cholesterol), Cozaar (blood pressure), Protonix (for lessening stomach acid) in the US, and Keppra (epilepsy) in Europe.

Says a New Delhi based legal expert working in the area of access to medicines, "As subsidiaries of MNCs, companies would focus more on opportunities such as Lipitor and Cozaar rather than producing generics for diseases like malaria, TB, diarrhoea, etc, which still affect vast populations in India."

However, according to Sujay Shetty, associate director, PricewaterhouseCoopers (PwC), no company can ignore a market as huge as India, and as such cannot afford to ignore diseases widely prevalent here like kala azar, malaria, etc.

According to a senior industry official who has worked with companies such as Ranbaxy, Wockhardt, as well as some MNCs, Indian companies currently hold about 75% share in the domestic market, but that would decrease going forward. "The share of both Indian and MNC companies could become more or less equal in the next, say, ten years. This will be factored in through not only outright acquisitions, but also sourcing strategies, marketing alliances, etc."

However, some people in the pharma industry are of the opinion that fears of MNC domination in the domestic drug market are unfounded.

According to Navroz Mahudawala, associate director, health sciences practice, Ernst & Young, share of MNCs in India has actually decreased over the last two decades. "From about 40-45%, the MNC share is down to 20-25%. It is highly unlikely that in the near future, MNCs would substantially dominate the Indian market."