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the 2009 wharton india economic forum
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titled india the road ahead took place
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in philadelphia and brought together
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CEOs of leading indian companies
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investors heads of nonprofit
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organizations sports celebrities and
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bollywood stars to discuss where india
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is headed in an age of economic
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uncertainty Indian knowledge at Wharton
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brings you one-on-one conversations with
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these leaders thanks for joining us
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today could you tell us how the
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pharmaceutical industry in India has
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changed since the early 90s when there
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was the wave of liberalisation for
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corporations in general there well
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thanks Steve thanks for having me here
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well first of all I don't think the
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liberalisation has a direct impact on
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the pharmaceutical industry however I
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think there has been an indirect impact
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in the sense that a liberal addition has
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brought in you know greater economic
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prosperity and that has in turn driven
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demand for quality health care and so I
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think that's driven the growth in
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pharmaceutical industry if you like the
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second piece indirectly dishonest
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liberalisation has also created an
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interest in India in general that
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focused the attention on the R&D
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capabilities in India and therefore has
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attracted the attention of the you know
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the global inorder companies and tell us
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about that R&D capability are we talking
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about the clinical study capability is
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it the research capability the the the
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scientific knowledge that's available
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well it's actually all because if you if
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you if you really see the genetic
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development the generic industry really
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demonstrated a very significant
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chemistry capability but that was not
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the first point of contact because the
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first point of contact came from the
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fact that the global pharma companies
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needed to reduce costs of bringing a
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molecule to market and the largest piece
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in that is clinical R&D you have a large
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patient pool in India and which is also
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you know treatment knife so I think the
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first place where companies went in was
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pinnacle R&D
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then having understood the
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infrastructure the capabilities the
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country different companies have taken
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different route some have gone to
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chemistry some have gone to early
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discovery so the different routes that
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people have taken so there seems to be a
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big difference between what a foreign
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company wants to do within India and
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what the domestic companies want to do
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in terms of exporting generics or
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building a global business outside of
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India could you talk about that
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difference please yes you see I think up
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until 2005 we had a patent law which was
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different from the rest of the world we
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had a process patent law now everybody
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knew that post 2005 we would have a
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patent law which was like most other
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countries in the world which is product
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patent now that that necessitated that
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the Indian companies look for avenues
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for growth beyond you know what they're
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being the model they've been following
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earlier and I think as a result of that
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a lot of them went out and and expanded
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the generic business globally and so
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that's that's been the route three
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generic companies have taken could you
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just explain how that has changed in the
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patent law would drive Indian companies
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to to look beyond borders well I think
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up until 2005 Indian companies could
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could replicate or reverse-engineer a
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product which was on patterned elsewhere
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in the world and they would get a
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process patent for it so so it was not a
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product pattern through the process
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patent post 2005 it's a product pattern
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now therefore Indian companies cannot
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use that as a as a basis for growth and
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therefore they needed to look for other
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growth drivers global expanding the the
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the generic footprint globally was one
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such opportunity which companies have
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taken now as far as you know where the
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companies are concerned it's the reverse
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that they suddenly now begin to see
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India as a very attractive opportunity
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apart from the fact that you know the
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traditional markets are not growing as
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fast and therefore there is a general
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focus on emerging markets in health care
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within that India because now it's it's
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compliant with the international patent
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law has become very attractive so
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companies which which are not playing in
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the Indian market global companies are
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now sort of there is a rush to come back
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so India offers certain
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low-cost advantages when it comes to
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performing clinical trials for example
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what about outsourcing other kinds of
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R&D actually creating new molecules and
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that that kind of activity yet that
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activity is also picked up fairly
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substantially as I was mentioning the
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discussion up under 2005 the the model
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for growth of Indian companies was quite
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different now there are different
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compartments so actually post 2005 in
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the last four years itself we've seen a
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very substantial increase in the number
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of patterns being filed globally by
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Indian companies the amount of work that
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they are they're doing to bring the
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first Indian molecule to market how does
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your company fit into this picture
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because your company Glaxo has been in
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India much longer than most foreign
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pharmaceutical companies yes so I would
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imagine you have different strategies
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that you're pursuing from somebody
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others yeah that's true now I think
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we're seen almost like an Indian company
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so that so that's that's that's a plus
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in the Indian market the success of the
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Indian model has actually you know led
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our new CEO to try and replicate that in
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a flash of markets which is now called
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the emerging markets which he thinks is
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going to drive growth for GSK globally
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and really what what they're trying to
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do is to build a branded generics
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portfolio apart from our own pipeline in
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emerging markets because that's the kind
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of model which works and that and and
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that the inspiration for that has come
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from the success of GSK in India because
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GSK in India developed a business model
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which was India specific many many years
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ago so they moved manufacturing to India
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they therefore they could they could
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price the product appropriately and
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which is why they've been able to
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develop such a substantial footprint in
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the country and that's the model now
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they're trying to replicate this way
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what about some other activities for
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India's pharma companies for example
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apart from drugs going off patent in
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generics and the things we've just
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discussed what about personalized
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genomics based medicine biotech is is
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alchemy genomics but biotech certainly
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is one which I think some companies have
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pursued big time and there was a belief
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that once the guidelines for follow-on
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biologics become
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get into place both in Europe in the US
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then that would be a big opportunity
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some companies gone that true
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genomic-based Mets in there are some
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initial beginnings by people who've come
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back from from other parts of the world
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and have started operations in India but
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my guess is biotech will will develop
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faster than genomics based medicine
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what about prevention of sickness yeah
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well first of all I think we like the
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generic pharmaceutical industry I think
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India also now is beginning to show
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signs of a fairly well-developed vaccine
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industry so there are a number of local
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vaccine companies are doing extremely
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well when I were able to you know
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provide product to UNICEF and the other
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Gavi and the others
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so certainly I think I think the vaccine
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side there's fair degree of activity
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prevention of sickness generally I think
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requires dissemination of good practices
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good hygiene and all of which is work
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which is being done either by government
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agencies under the National Rural Health
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Mission or by NGOs advocating safe
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practices so I think there is work in
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that area on as well and I think that's
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getting demonstrated in the continued
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decline in some of our you know
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mortality rates and improvement in our
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health care statistics what kind of
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changes do you see in the regulatory
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structure going forward yeah I need any
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further big loose innings yeah I think
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yeah sure I think India so far has had a
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you know almost like a dichotomy as far
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as regulating sexuals and so in a state
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level regulate instruction then you had
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a national regulator section what is
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being envisaged is an FDA type of
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structure which will then encompass not
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just drug approval but also
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pharmacovigilance also you know
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monitoring of trials or all activities
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surrounded or associated with drug
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development and and launch of new
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products so I think in the next couple
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of years we are going to see that kind
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of a structure come into play and I
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think then we will have a regulatory
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system which is comparable to the best
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in the world India has had a lot of
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small manufacturers which will be facing
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some difficulties in meeting the new
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scrutiny that's that's going on in
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manufacturing in India
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do you have any plans to work with some
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of those small companies to help bring
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them along collaborate what what is your
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level of collaboration with any
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companies at this point yeah well about
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45 50 percent of our current product
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portfolio is outsourced to contact
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manufacturers so we're already working
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with you know fairly large numbers of
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not small but medium sized players whose
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manufacturing practices we've upgraded
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to meet with our standards of quality so
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I think we've been doing it not just now
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we've been doing for many years one of
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the key things that ending companies
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need to do to move to the next level of
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serving worldwide markets two or three
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key things well I think they're already
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serving worldwide markets I really don't
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think it's more in terms of doing key
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things I think it's more in the sense of
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now focusing on the right side of
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building area is focusing on the right
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opportunity so that they find these
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these you know international forests
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profitable enough to be sustainable
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there's big changes coming in the u.s.
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in healthcare we don't know what they
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are but we all know that they're coming
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how will that affect the export of say
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generics from India what are the
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opportunities there well I think the
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changes would largely be be governed by
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two things if I read the tea leaves one
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is that a the cost of healthcare is
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prohibitive in the US if it's very
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expensive so you know I want to maybe
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bring it down and secondly if you want
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to make it available to those who don't
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have access today and if those be the
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the considerations then I have no doubts
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that Indian genetic players will have a
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significant opportunity because of the
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cost of manufacture and the quality at
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which the cost of quality combinations
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that they're able to deliver does that
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mean you would be more interested in in
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perhaps taking over some smaller
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companies so that you increase your
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manufacturing base to be able to deliver
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more to the US no I think we being a
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global company we have our own subsidy
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in the u.s. serving the US market so I
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don't think I don't think that that is
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the intent or will be the intent but
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there is a stated intent of going into
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branded generics in the emerging markets
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and to the N and if that requires that
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we go and acquire you
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somebody who can do it for us then yes
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but other words not not as a source for
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manufacturing GSK products and sending
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them elsewhere no that's not the intent
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okay so in addition to changes in US
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healthcare system the other big thing
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that you're probably working with is the
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worldwide economic downturn now health
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care tends to be resistant to down
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translate they tend to not be as
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affected as much but can you speak to
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how your company is being affected in
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India and elsewhere by the worldwide
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downturn no I can talk about India so
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far in India not just our company the
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market we haven't seen any impact
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lastly the market were ten percent which
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is which is you know which is in line
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with what is expected I you know given
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the level of penetration of healthcare
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in India I I don't think that we may not
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see an acceleration of this growth rate
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but I would be surprised if the growth
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sort of drops below this are there
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specific disease categories or other
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categories where you see big
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opportunities opening up whether there's
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going to be more insurance money
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available or whether there's just a bush
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to to solve the problems with particular
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diseases it's well known that you know
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Indians are particularly susceptible to
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cardiovascular diseases and diabetes so
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these two are slated to become you know
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the biggest healthcare problem for India
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and then associate of diabetes you've
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got the other problems of end organ
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failure and lot of that so I think in
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that whole area we're going to some
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challenges and this is something it's
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not an opportunity but I think it's it's
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something which the government is
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working on and we need to work on to
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make sure that there's enough awareness
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about about Indians being susceptible to
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this and doing something about it and
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India has long been known as having an
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advantage when it comes to low cost and
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now everyone's concerned about the high
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cost of health care particularly in the
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US but it's it's becoming a big concern
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worldwide how can you leverage India's
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reputation as a low-cost producer to
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increase market share well first of all
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you know when you say India's low-cost
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is
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to the West I mean if you if you look at
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cost of health care in India in relation
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to India has been going up fairly
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substantially so so that's not good news
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for Indians but having said that I think
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the fact that there is economic growth
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the fact that the insurance is opening
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up health insurance opening up is
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resulting in a substantial increase in
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demand for quality health care so you're
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seeing a number of tertiary care
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hospitals over last year coming up now
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all of these can also provide services
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to - you know the itinerant medical care
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seeker so medical tourism is expected to
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grow fairly substantially over the next
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several years and I hope that the
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capacity build also happens concurrently
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so that that just doesn't mean that
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there's a cost arbitrage but the cost of
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health care for Indians goes up
