Business Today

The Pharma Barons

The post-Independence Indian pharma industry was really created by a generation of scientist-entrepreneurs who took advantage of the two changes made by the government in the 1970s.
twitter-logo Prosenjit Datta   Delhi     Print Edition: May 21, 2017
The Pharma Barons

The post-Independence Indian pharma industry was really created by a generation of scientist-entrepreneurs who took advantage of the two changes made by the government in the 1970s. The first was the new Patent Act that recognised only process patents of a drug.

Till then, India followed a patent law that was modelled on the patent laws of western countries and recognised both the product and process patent of a drug. Since all the original drugs were developed by global giants, they dominated the market as well. Even the bulk drug manufacturing in India was dominated by multinationals.

The Indian Patent Act, 1970 changed that. It recognised only process patents, and not product patents. This essentially meant that any company that could create the same drug following a different chemical process would be allowed to introduce it. A number of Indian chemists and researchers working in either Hindustan Antibiotics Ltd or Indian Drugs and Pharmaceuticals Ltd, the two public sector giants set up by the government in 1954 and 1961, respectively, decided to strike out on their own and started their own companies.


The other big change was the introduction of the Drug Price Control Order of 1970, which gave a big fillip to low-cost manufacturers of domestic origin compared to the higher cost multinational drug companies.

Many of the Indian pharma entrepreneurs started with either bulk drug manufacturing or developed new processes for creating prescription drugs originally developed by multinationals. Most of the scientists-entrepreneurs also wanted to develop their own new drugs, though most lacked the resources to do so.

By the time the Indian government switched back to follow a WTO complaint new patent law in 2005, which recognised product patents, most of these companies - Lupin, Wockhardt, Cipla etc. - had become established entities with strong-branded generic portfolios. Many of them tried to develop original drugs as well, but faltered at the clinical trial stages.

Today, several of the original entrepreneurs are ready to hand over the baton to the next generation. And the heirs are charting their own strategies. Some of them have made inroads into global markets, and have used well thought out acquisition strategies to find new growth avenues. Others have looked at new therapeutical lines to expand their portfolios and footprint in the market.

Our cover story this issue looks at the inheritors in six companies and the paths they are charting out.

With rural consumption beginning to pick up once again because of a better harvest following the good monsoon of last year, and also because of various government initiatives for rural areas, a number of companies have focused very sharply on growing their customers in rural areas. The initiatives they have taken include expanding distribution lines and creating special product sizes to appeal to this market. Our story on page 36 looks at the companies and their strategies.

This issue also contains the first part of our fintech sector report. Fintech was already growing with great speed when demonetisation and the government's efforts to promote digital payment gave an extra growth boost to the industry. Our sector report looks at both the opportunities as well as the roadblocks that need to be removed for fintech to come into its own.

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