R&D SPENDING BY PHARMA COS

A Pharmabiz study of R&D spending by 25 research based Indian pharmaceutical companies reveals that their research expenditure during 2015-16 went up by 24 per cent as compared to the previous year. These 25 companies spent a total amount of Rs 11,710 crore for R&D during 2015-16 as compared to Rs 9,439 crore in the previous year. And on an average these companies are spending more than 7 per cent of their net sales on R&D. In fact the average R&D spending of these companies stood at 7.8 per cent in 2015-16 as against 7.1 in the previous year. Among the 25 companies, Sun Pharma, the largest Indian pharmaceutical company, spent the highest amount of Rs.2,303 crore on research during the year. Dr Reddy’s Lab spent Rs.1,790 crore. Lupin’s R&D expenditure stands at Rs.1,732 crore which is almost 55 per cent more than what the company spent in the previous year. Cipla’s R&D spend increased by 22.7 per cent to Rs 1,035 crore during 2015-16 from Rs 844 crore. Alembic and Ajanta Pharma are the two companies which reported a 100 per cent increase in their R&D spend during 2015-16 over the previous year. R&D expenditure of some of the companies such as Ipca Labs, Piramal Healthcare, Venus Remedies, Unichem Labs and Panacea Biotec, however declined during 2015-16 for some unexplained reasons.

As in the case of Indian pharma companies, there has also been a steady rise in the R&D spend by the international companies as well during last year. The 15 top global pharma companies spent over 17 per cent of their net sales for R&D during 2015 according to a recent Pharmabiz study. Despite, such huge investments on R&D, neither international nor Indian companies could bring out any new drug into the market. It is quite evident that increasing expenditure in R&D by the Indian companies during the last few years was to grab a larger share of product approvals for generics from highly regulated markets of the US and Europe. These companies have been focusing on introducing patent expired products that are difficult to formulate and market in these highly regulated countries. Steady increase in the number of approvals for ANDAs the Indian companies are obtaining from the global regulatory authorities is on account of this rising expenditure on R&D. During the first nine months ended September 2016, Indian companies secured US FDA final approvals for 141 ANDAs out of 432 total approvals and tentative approvals for 56 ANDAs out of total of 116 tentative approvals. Such a trend can certainly push up the export of pharmaceutical products from India in the tough markets of the US and Europe. No other country is exporting quality and cheap generic products to these developed markets in such a big scale other than India. And the demand for low priced generics has been steadily rising over the years in these markets. But, totally neglecting new molecular research by international and Indian companies is not a good sign especially when world is witnessing emergence several new diseases and growing resistance to existing drugs. It should be socially binding on managements of pharmaceutical companies to keep a good part of their R&D expenditure for new drug research.

R and d spending, pharma cos