We are dominating the generics industry

Dr Reddy's Laboratories Ltd founder-chairman Kallam Anji Reddy spoke in an interview about the evolution of the pharmaceutical industry and emerging trends as well drug discovery research and generic medicine. Edited excerpts: On evolution of the Indian pharma industry To start with, pharma was an industry based on innovation, drug discovery. When Big Pharma discovered drugs way back--I am talking about 25 years back--when someone started to make generics, they first said how you can equate a copycat to us, even though the patent has expired. When the government insisted that you have to have a criterion by which you can call it equal, then Big Pharma itself said there is what is called bio- equivalence.

If you establish the bio- equivalence of a generic drug, then you can allow them. One company, for example, several years ago made a bioequivalent version of a Pfizer drug, and then when the bio-equivalence was as good as or even better than Pfizer's, then they said it's not bio-equivalence alone.

Those were the days when I was actually doing my PhD in NCL (National Chemical Laboratory, Pune)--I am talking about 1965-66--so 35 years ago. There was a stinging editorial in an American pharmaceutical journal--what do you mean by not bio-equivalence alone; is it something special or is it something which cannot be scientifically proved? So they (Big Pharma) had no arguments.

That's how the generic industry was born--against all kind of odds. And then Indian industry became lucky. We had what was called an Indian Pa- tent Act, 1970, where Big Pharma cannot patent their products but they can only patent their processes. It's not that India alone had this kind of Act. There were similar things elsewhere. Canada had what is called an authorized generic. In the sense that you can produce a generic in Canada and pay a royalty--a royalty of not a fortune, they were paying 3% and getting away with it.

I can tell you an example where the Canadian generic company would buy APIs (active pharmaceutical ingredients)--bulk drugs-- from us at $50 a kg and all they do is formulate and after paying a royalty of 3%, they were realizing $9,000. So whom did they benefit?

Did they benefit Canadians?

No. Whereas look at the history of Indian pharmaceutical industry; they stood up. I said as early as 1985. this Act is made by the government not for us to make tonnes of money, but to provide affordable medicines--that's what we did.
What was $1.20 of amlodipine maleate (anti-hypertensive) I have personally priced at `1.20. Not that I can do everything at that scale, but it was possible for me. I passed on the benefit to the people of India. And in the process, the Canadian industry never tried to make APIs or bulk drugs.

We in India have honed our skills in producing bulk drugs. I can tell you an example. Ibuprofen (an anti-inflammatory drug)--it's a Boots (Co. Plc) innovation. They had their own process. I made a totally different process, which made a purer Ibuprofen than Boots. And somebody else... made for somebody else by a totally different process. You show me one country in the world where one drug is made by three different arocess.

We earned our dollars in a hard way; nobody gave us a feast or gave it on a plate. We worked hard and we have innovated; we have made things in a better way at a cheaper rate and gave it to the people of India.

So that is the reason why we are dominating. We are dominating in US generic industry, and in fact all over the world. This is an opportunity. If I have to say that the one reason why we have grown to now--I was very pleasantly surprised to see that the value of pharma production last year or the year before was `88,000 crore, from probably `8,000 crore 15-20 years ago. Which industry has grown like this?

We worked hard; we deserve the results that we are getting.
This is the story of generics. Now that is all over.

On drug discovery research We have to compete in the world. Realizing this ahead of everybody else, I started drug discovery in 1993, November...
With a kind of prayer on my lips, I just went and started. In fact, I even told my scientists that even if we don't succeed in discovering drugs, we will write nice articles to scientific journals. I put them in calm atmosphere. That helped the lab.

In three years flat, we not only discovered, we licensed in 1997 an anti-diabetic drug to the world leaders in diabetes, Novo Nordisk (AS), and the rest is history, even though we have gone through several difficulties... Otherwise how do you explain the first-in-class drug which we discovered for the first time, everything goes through--90% of the research and development goes through--and one fine morn- ing it's gone just because in long-term studies they found carcinogenicity. We had a piece of bad luck, but doesn't latter. I didn't give up.

We have revamped the whole thing in such a way that we actually can earn money... We can work for others and earn money in a different way. In a way that we are able to hone our skills again in drug discovery. Next month we are going to take a CETP drug (into phase-II clinical trials)... Merck (and Co. Inc.) had actually taken a lead. In that, for the first time in the history of pharmaceutical industry a drug was discovered which increases HDL (high- density lipoproteins, or good cholesterol) by 100%. We are not talking about animal stud- ies. Merck has done in 2,000 people. Its phase II is completed, established the safety. And then we are closely behind. We are entering phase 2. In phase-I, we have seen...our drug is a close follower to Merck.

We are there with a drug which is as good as Merck. In fact, this was a special phase-II (at Merck) because there was an increase in blood pressure with a Pfizer drug. Merck had spent literally $50-100 million to prove the safety. Followed along with the increase in good cholesterol, there is a fall of 53% of LDL (low-density lipo- proteins) bad cholesterol.

On periodic speculation about Dr Reddy's being a potential takeover target for Big Pharma This is my life... I mean, may be I have `100 crore in the bank, sitting comfortably. If that increases to `10,000 crore, what difference does it make to me. My son wouldn't allow me to buy even an aircraft (laughs). So it depends...for ex- ample, what do you want to do with the money? My passion is drug discovery. At this moment, nothing else gives me kicks other than this...

On status of balaglitazone to treat diabetes We are looking for a partner.
It's a good drug. Unfortunately I can't go on trumpeting my own drug. Somebody has to find the need and come for- ward. I would like to be flexible and strike a deal. In between we had spent more than $5 mil- lion on carcinogenicity studies; luckily it went through because I named it after god (Balaji).

The next generation of leader ship at Dr Reddy's In our company, it is so professionally managed that for example--Satish and Prasad, they both told me--that we have CEO (chief executive officer) material--at least six of them--in our company. We are not so hard-pressed as Info- sys (Technologies Ltd) or Tata Sons (Ltd) (laughs). We have people; they are capable. In the selection process itself, we haven't taken second best or any- thing. In every field, we have taken the best available. We never compromise.

But let me also tell you that the kind of risk that I have taken, they will not take. Their aim is to streamline the whole thing and grow in such a way that it is a darling of the stock market.

Whereas I always look at something which can change the picture in the field itself. After all, why is the pharma industry darling of several countries?

For example, in the US, the most profitable is the pharma industry. That is because it ena- bled them to live longer.

On the debate over foreign direct investment in drug companies and calls from some quarters for curbs on foreign acquisitions I think that is unwise, I would say. One should find one's own value. We are already given step-motherly treatment. What is this NPPA (National Pharmaceutical Pricing Authority) and drug price control? Some babu sitting in Delhi finds a tablet which is already priced at `1, he will make it 80 paise. Even if a rickshaw puller finds a drug priced less than `1, he will have doubts (over the quality of the drug). Why are we targeted like this?

On the progress of the tie up with GlaxoSmithKline Plc to mar ket Dr Reddy's brands in emerging markets It is moving... It is slow, a painful process because we have to register all these brands (in different geographies.)

(Source-:livemint.com)