While we are urged to look beyond the sticky issues, one cannot overlook the final impact of decisions on India’s IPR policy
Pharmaceutical industry observers were hoping for hints on how the intellectual property rights (IPR) issue will be resolved but the joint statement merely stated the obvious that current efforts will continue.
While health activists like Leena Menghaney, South Asia Manager of MSF’s Access Campaign had warned that “future access to essential medicines for millions of people will depend on the new Indian government’s decisions and the kind of patent and innovation system it endorses”, the NRI diaspora seems pitted against this stance.
Many lobby groups like the US India Political Action Committee (USINPAC), the Alliance for US Indian business (AUSIB) and many more have become the voice of the Indian-American community and see the recent growing US-India dialogue as the result of decades of networking on their part to represent the community’s interests.
USINPAC claims to be one of the largest political action committees in the US, representing more than three million NRIs and has pursued “track two level diplomacy” on issues relating to fair and free trade like the US allowing LNG exports to India as well as promoting the exchange of trade and technology in the defence sector especially defence IT and cyber security.
On the pharma IPR front, USINPAC’s chairman Sanjay Puri feels that there will need to be a compromise but he urges the (Indian) administration as well as Capitol Hill to look at the ‘bigger picture’ to this relationship. “There are certain things that India and Indian companies cannot do and we need to be sensitive towards that. This is a gradual process that we need to work on,” is his take.
The US traditionally lagged Europe as a pharma outbound destination for Indian pharma but this looks set to change, according to a recently released FICCI-EY report, which shows that India’s big pharma firms are investing heavily in the US as well. There have been five major deals in the two year period from October 2012 to December 2014. Piramal Enterprises already has 1000-odd employees in the US and has plans to acquire more companies. Sun Pharma did two acquisitions in this period but is looking at more suitable targets. If the US is welcoming India’s pharma companies, should we reciprocate? The important thing to note is that Indian pharma companies are playing by the rules of the US and not lobbying to change them.
As President Obama enters the ‘lame duck’ phase of his second term, the US-India dialogue is very much part of the legacy he hopes to leave behind. While climate change and nuclear power liability are clearly his top priority, can we hope that there will be progress on IPR as well? After all, affordable healthcare is very much at the heart of Obamacare and it will be ironic if his tenure forces a reversal of India’s patent policies in favour of monopolies.
Meanwhile, the Express Pharma Feb1-15, 2015 issue is a Biotech Special issues, where we profile three companies, Panacea Biotec, Fermenta Biotech Limited and Evolva Biotech) which may not always hog the headlines but are very good examples of many Indian biotechnology companies. (See Cover story section: pages 20-27).
This is one sector where almost every company has had to re-look their initial business model and morph into a new identity. As the biotech fraternity meets up this February at the two major industry shows, Bio Asia (Feb 2-4) and Bangalore India Bio (Feb 9-11), we hope that the discussions spark off renewed commitment and investment in this sector. Last year has seen tremendous IPO activity in biotech space in the US and industry observers are hoping India can grab a bit of the action this year.
The bellwether of Indian biotech, Biocon, is a benchmark for the industry and rightly so. It’s 3QFY15 results have been bitter sweet, with EBITDA hit due to increased investments in R&D as key molecules go into phase III trials and fixed overheads at Malaysia facility with no meaningful revenue contribution till FY17E. An analysis by Motilal Oswal estimates that this hit on profitability will continue as the company continues on its investment phase, possibly why it is looking to divest its 10-15 per cent stake in its research services subsidiary, Syngene, when it gets listed by the end of H1FY16. The high margin research services business exceeded growth expectations in 3QFY15 clocking 29 per cent of sales, growing at 20 per cent Y-o-Y versus an estimated 11 per cent growth. So valuations should be good and stake sale proceeds will most likely be invested back into the main business. The listing of Syngene too is an optimistic bet (as well as a test) that the ‘achhe din’ promise of PM Modi is more than just a catchy slogan.
Viveka Roychowdhury
Editor
viveka.r@expressindia.com