Andhra Pradesh: From bulk drugs to affordable medicines, vaccines

M. Somasekhar | Updated on April 28, 2013

In a span of three decades, Andhra Pradesh has seen the rise of more than a dozen big pharma and biotech firms. From being just a bulk drug manufacturing base, it is now a pharmaceutical and biotech hub.

“In Hyderabad, entrepreneurs are driven by a herd mentality. If there is one successful venture, a dozen will follow. The high number of bulk drug manufacturers in a way is just manifestation of such a trend”.

Habil Khorakiwala, Chairman of Wockhardt, made these remarks some time ago in the context of problems confronting the growth of the bulk drugs sector, faced with environmental issues, too many players, and problems in going up the value chain.

Hyderabad contributes to over 30 per cent of the country’s total bulk drug production. It was earlier 40 per cent. No wonder it is called the ‘Bulk Drug Capital’ of India.

Andhra Pradesh is home to 266 bulk drug manufacturing companies. Of these, 90 per cent are small and medium enterprises, around Hyderabad. Visakhapatnam is a recent destination, especially after the promotion of the Jawaharlal Nehru Ramky Pharma City. However, there is more than just the typical ‘follow a successful enterprise or entrepreneur’ streak among Andhra businessmen that has led to the impressive growth of the pharma sector in Hyderabad.

The public sector Indian Drugs and Pharmaceuticals Limited, the Regional Research Laboratory (now Indian Institute of Chemical Technology), with its focus on chemical sciences, and the various universities have all contributed to this special status for Hyderabad.

In three decades, Andhra Pradesh has seen the rise of pharma majors such as Dr Reddy’s Laboratories, Aurobindo Pharma, Hetero Drugs, Divi’s Laboratories, Matrix Labs (sold to Mylan Inc), Natco Pharma, Granules India Limited, Virchow Labs (the only manufacturer of sulfamethoxazole), Neuland Labs, SMS Pharma, Gland Pharma, Jupitor Biosciences, Lee Pharma, and Suven Lifesciences.

From just a bulk drug manufacturing base, the State has grown into a pharmaceutical and biotech hub.

Nurturing entrepreneurs

While IDPL provided the environment for spawning drug firms in Hyderabad, the credit for turning the State into a breeding ground for entrepreneurs should go to Standard Organics Ltd.

It was one of the first private sector companies to venture into making active pharmaceutical ingredients (APIs) for multinationals. From here emerged Kallam Anji Reddy, founder and builder of global brand Dr Reddy’s Laboratories.

In a way, Standard Organics in the early 1980s and Dr Reddy’s in the early 1990s became the springboards for more than two dozen entrepreneurs, who built up companies of significant size.

They manufacture APIs and generic drugs, have US Food and Drug Administration approved facilities, and have a global presence in regulated markets as well as developing ones.

Dr Reddy’s, Aurobindo, Hetero and Natco Pharma, along with companies from Mumbai, Ahmedabad and New Delhi, have post the 1970 Patent Amendment Act (that facilitated process patents), brought generic drugs to the market, forcing global giants to cut prices while bringing medicines within the reach of the public in India and developing world.

In cancer remedies, the efforts of companies such as Natco Pharma challenging patent rights of multinationals and offering cheaper alternatives are proving beneficial to both Indian pharma and poor patients.

In at least two areas, Hyderabad has emerged a big supplier. First, in producing anti-retrovirals. Hetero Drugs, Mylan and Aurobindo are key contributors of such drugs to the Clinton Foundation as well as international markets and have helped alleviate the suffering of AIDS patients. For bird flu remedies too, Hetero has been a major supplier, procured a licence from Roche. According to Government estimates, AP has registered pharma exports worth close to Rs 25,000 crore and the industry is growing at about 20 per cent.

Another unique position held by Hyderabad in the national healthcare and pharma sector is as a major vaccine developer and manufacturer. Shantha Biotech (now owned by Sanofi Pasteur), Bharat Biotech International, Biological E and Indian Immunologicals are the leading players.

Vaccine hub

Biological E, the first vaccine producer in the private sector in the South, is a major supplier of vaccines to the national immunisation programme.

It has developed a vaccine for Japanese Encephalitis. It has cut the prices for the pentavalent vaccine it supplies to the GAVI Alliance, which provides the vaccine to poor and developing countries.

The entire hepatitis B vaccine development was led by K.I. Varaprasad Reddy of Shantha and Krishna Ella of Bharat Biotech from Hyderabad in the mid-1990s. Then came the other over-half-a-dozen manufacturers, pushing down the price of this essential vaccine to around Rs 50 a shot in national programmes.

Advantage, tech & manpower

One of the key factors in the growth of the pharma, biotech and healthcare sectors in the State is the presence of research institutes and availability of skilled manpower. Two enabling facilities, in particular, have spurred growth — ICICI Knowledge Park and the Shapoorji Pallonji Biotech Park.

As Dr Reddy’s, Aurobindo, Natco Pharma, Suven LifeSciences and Zenotech Labs tried to move into drug discovery, and innovative research programmes, they were supported by the presence of research institutes and universities. The Indian Institute of Chemical Technology, a top research centre in chemistry and drugs, the Centre for Cellular and Molecular Biology (CCMB), the Centre for DNA Fingerprinting Technology (CDFT), University of Osmania, University of Hyderabad and Indian Institute of Life Sciences have all provided solid support in putting Hyderabad on the global pharma map.

In the recent past, research-driven companies such as AVRA Labs, set up by the former Director of IICT, A.V. Rama Rao, and engaged in contract research, are setting a new trend in the emergence of enterprises that have capability and expertise to do top-class work. Several contract research organisations (CROs) are now taking up outsourced opportunities from multinationals.

The US Pharmacopeia, one of the leading quality standards organisations for the pharma sector, has also set up facilities in the city, testifying, in a way, to the importance that Hyderabad has achieved in all aspects.

Published on April 28, 2013

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