News: Is Indian pharma vulnerable in US?

(BS 18/02/2007) Mumbai - The search conducted by the US federal officials the New Jersey office of Ranbaxy Laboratories Ltd, India's largest pharmaceutical company by sales, has highlighted the perils faced by Indian drug makers in pursuit of their global dreams.

The accusations they have faced in the last few years range from infringement of patents to outright theft and overcharging on prices. In the process, Indian companies have incurred huge legal expenses. Ranbaxy alone has paid $55 million to its attorneys in the last two years.

The Indian companies are chasing the $60 billion global market for generic (off patent) medicines, which is expected to grow to $300 billion in five years. Almost half of this market is in the US and the United Kingdom.

With the new drug pipeline of pharmaceutical companies in these countries drying up, they are fighting hard to block the entry of cheaper products from India.

Companies like Ranbaxy and Dr Reddy's Laboratories are involved in expensive litigation to get 180-day exclusive marketing rights in the US for over two dozen drugs that are going off patent in the next few years.

And the battle is being fought at various fronts. In 2002, GlaxoSimithKline had initiated legal action against Ranbaxy and Israel's Teva Pharmaceuticals on their generic versions of the anti-depressant augmentin, alleging that they used stolen bacteria to manufacture the product.

Ranbaxy had also faced an inquiry in the UK in 2005, after which it was fined $8.8 million by National Health Service in UK as it felt the company had overpriced generic medicines.

If there is too much scrutiny in developed countries like the US or UK, it is lack of clarity in business rules and alleged favouritism towards domestic firms is the problem faced by several companies that set up manufacturing facilities in places like China. Drug major Aurobindo is a recent example of Indian companies winding up their Chinese operations.

In the developing world, especially African countries, it is either the lack of regulation or inadequate rules that hurt the most.

As reported recently, over a dozen small and medium scale pharmaceutical companies from India, who have apparently been wrongly black-listed by Nigerian drug authorities for alleged supply of unregistered drugs for over a year now, are finding their export business seriously affected.