The Hindu Business Line : Out-licensing scorecard of drug cos causing concern

IS the glass half-empty or half-full seems to be the dilemma confronting analysts tracking the domestic drug industry, given recent the announcement from Germany's Schwarz Pharma that it had stopped further clinical development of a prostate drug, out-licensed to it by Ranbaxy.

With this development, the scorecard of the Indian drug industry on out-licensing stands at the halfway mark. "Three of six drug molecules given out to multinational drug companies for further development and commercialisation have gone bust before achieving their targets," an analyst said.

Before the recent Ranbaxy episode, two diabetes molecules out-licensed by Dr Reddy's Laboratories (DRL) to Denmark's Novo Nordisk have been discontinued. DRL's Ragaglitazar (DRF 2725) was licensed out to Novo Nordisk in 1998, but discontinued in early 2003. Similarly, another diabetes molecule Balaglitazone (DRF 2593) was outlicensed in 1997, but discontinued as recently as October 2004.

"The score-card is very distressing. It appears as if Indian companies are not prepared for the whole hog. The initial success and payments put the spot light on a domestic drug company, when it licenses out a prospective molecule to a deep-pocketed company. But the molecule should be able to run the marathon and not die in between," the analysts adds, rather critically.

But a drug industry representative points out that a 50 per cent failure rate may not be such a bad deal.

"It only shows how difficult it is to bring a new drug into the market. In fact out of the six out-licensed drugs, only one may reach commercialisation. But, India got onto such innovative research only in 1997 and in such a short time, six molecules have been out-licensed and many more are in the pipeline. The success or failure rate is not significantly different or higher than the rest of the world," he said.

Other drug molecules that have been out-licensed till-date include a diabetes molecule (DRF 4158) that DRL out-licensed to Swiss company Novartis in 2001. This year, Torrent Pharma out-licensed a heart disease related drug to Novartis for an estimated $3 million. And the out-licensing strategy received its biggest booster this year when Glenmark Pharma inked a deal for its asthma drug, with Forest Labs for $190 million.

Meanwhile, the product-pipeline has more hopefuls, point out analysts.

"There is a cancer molecule from Nicholas Piramal undergoing development and an anti-infective molecule from Wockhardt. Two more molecules are said to be in the pipeline from Torrent and one promising cancer molecule from Dabur Pharma," an analyst said, optimistically.