Can Indian firms really get into the big league in new chemical entity (NCE) research?

Research and development is a different ball game. Unless you are looking at research into domestic diseases (ailments which are really socio- economically worth removing from theIndian environment), you are going to get sucked into doing R&D in diabetes, anti-cancer drugs which are already being done by the major international pharma companies. So do Indian firms want to compete with them? They (MNCs) may well be willing to license your products but currently the biggest theraupetic area for research is cancer. We've seen 200 new cancer drugs being announced for the first time this year. So if somebody says that they are going into R&D for prostatic cancer as Ranbaxy has done, all I can say is I hope you've got a good drug. But, the chances are that what you are doing here is very similar to what other people are doing elsewhere. And then you have to commercialise the drug for the market, where the norm is to spend $500 million. So I don't know if people are setting themselves realistic objectives.

Are you implying that Ranbaxy and Dr Reddy's Laboratories are doing R&D in areas that may not, after all, be worth the effort?

All research is a gamble and failure rates fromphase 1 to actual launch are rather high. Only one in every 10 compounds make it from phase one to actual launch. Thousands of compounds fail before they even get to phase 1. So, when you are in that kind of environment, you have to minimise your developmental costs to stand any chance of getting a drug, that will sell on the market. So, the best you can hope to do is license your product. If you are going to do your own development work, we are talking of very big bucks. But if you are going to license your product, there is not much money back.

What, in your opinion, are the possible clauses that the Indian government could incorporate in its patent laws to safeguard the interests of the domestic industry during the transition period?

There is one major issue, I suppose, you could consider. If people make discoveries which are of incredible value and if they are also very expensive, I would look at some kind of compulsory licensing provision. The pharmaceutical industry would hate me for sayingthat but at this moment India is an interesting market but not a big one for international companies. If India introduces patents, I'm not certain if it makes it that much more interesting because you still have got to ask people to pay money and that depends on how much you can spend.

With compulsory licensing, it may be easier or a company may more willing to negotiate on prices though no firm would want to go the compulsory licensing route. But, certainly a compulsory licensing proviso is a strong card in the government's hands.

Besides, if there are going to be shortages of highly effective advanced medicines, then it is necessary to make much better use of the medicines that are available. Therefore, there must be moves to institute all kinds of systems to limit the misuse of valuable drugs. There should be clearly defined antibiotic regimens, though I don't know the dimensions in India. Abuse of antibiotics creates resistance, reduces value etc.

Do you see the current spate of global mergersputting pressure on other healthcare giants. Which are the companies that could possibly follow suit?

Companies which start thinking of mergers are those like Astra with very big products like omeprazole set for patent expiry. And Astra did not seem to know how to preserve its revenues. Glaxo had anticipated the Zantac problem but is going through a tough time currently. However, new products are selling well. But companies that can't survive with their own R&D, and cannot make internal cost cutting and preserve reasonable revenue levels, will become merger targets like Astra and Hoechst Marion Roussel.

Do you see Glaxo revive talks with SmithKline for a mega merger?

Yes, Im sure it could but Smithkline chief Leschley is apparently standing in the way. If young Leschley wasn't there Sir Richard Sykes (Glaxo Wellcome chief) would make a bid. I don't know him well enough but I'm sure that it could be on the cards. He (Sir Sykes) would like to seal another big merger for Glaxo. And I know thatlast year he's been talking to a number of companies.