Mumbai, May 27: At a time when an increasing number of pharmaceutical companies are paying royalties/technical fees to their overseas parent, Mumbai-based Cipla is set to reverse the trend.Cipla director Amar Lulla told The Financial Express that his company had already received over Rs 1.5 crore as technical know-how fees from Canadian generics manufacturer Novopharm, Saudi formulations maker MCPC and Cipharm in the Ivory Coast, Africa.

MCPC is setting up a $50 million formulations project based essentially on Cipla's technology in the Middle East, while Novopharm and Cipharm was using Cipla know-how for their generics and tablet and suspension production respectively.Besides, the Rs 452 crore company will receive royalty from its Egyptian venture with Heliopharm and on a supply arrangement with US generics manufacturer, Geneva Pharma, now part of Swiss multinational, Novartis.

Cipla may also receive 5 per cent royalty from its $1.5 million joint venture in China, Aotuokang Cipla. Aotuokang Cipla (in which the Indian company holds a 55 per cent stake) will manufacture a range of antibiotics, life-saving infusions and anti-cancer drugs and is located in the Jinhua Economic Development Zone in central Zheijiang province. Lulla, however, said that receivables in the form of royalty would only be reflected in the 1998-99 balance sheet as some of the products covered under the venture were in the registration stage. Analysts here said, "considering Cipla's strengths in process development, it will have a distinct edge compared with other domestic players. Even when products are off patent, worldover there are not too many manufacturers like Cipla who have the expertise to handle complex manufacturing processes".

Cipla is also in talks with a multinational company to undertake developmental work in the area of formulations. "We are open to undertaking contract research work and are in talks with some multinationals. Given our technological strengths in formulations (in areas like control release and dispersable release formulations), this deal will involve a transfer of technical know-how ".

In 1995-96, Cipla's investment in R&D as a per cent of turnover was 2.8 per cent (or Rs 10.11 crore) and Lulla said that this would go up to 4-5 per cent over the next few years. The company has three government-recognised R&D centres which employs over 150 scientists.Cipla also plans to undertake joint development work in the area of biotechnology. "Cipla will invest approximately Rs 10 crore in its biotech venture with smaller overseas companies and focus areas include hepatitis, diagnostics and tropical diseases like malaria".

Meanwhile, Cipla has also concluded exclusive marketing alliances with Aljabal in Yemen, Vishal Enterprises in Myanmar and Omega Pharma in Iceland. "With more than four international marketing alliances in place, we expect exports to increase by 25 per cent," Lulla added.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.