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Indian Scenario

With marketing license deals the Indian pharmaceutical sector in the last few months and more are in the offing, Indian companies are gearing up to strengthen their product basket without incurring expenses on research.
The international licensers, on their part, penetrate a new market piggy-backing the licensees' distribution network and get a fixed revenue share, while making no investment at all.

The big fish in pharma as well as the emerging midsize players - Ranbaxy Laboratories with seven deals leads the pack in the last six months, followed by Panacea, Torrent, Lupin, Hetero Drugs, Strides Arcolab and others have been of a signing frenzy to market generic versions of drugs in India as well as the developed markets of US and Canada. "In-licensing was always a big opportunity in the post-product patent regime, but it is only now that international pharma had begun striking a strategic relationship with Indian companies," said Sanjiv Kaul, managing director, Chrys Capital.

Analysts said this could just be the sign of things to come, with in licensing or "Contract sales' becoming the third plank of the outsourcing boom - "contract manufacturing" and "contract research" being the other ones. For now, this model was creating a win-win situation through which licensees like Ranbaxy, Lupin and Torrent could leverage their distribution network in the country and augment their product basket, while the innovators garnered the licence fee, Kaul added.

Licensing of drugs and their introduction in a new market entails a minimum risk as compared with adding of products through research. "It also keeps all intellectual property issues at bay", commented a sector expert who felt that such collaborations were signs of maturing of a patent regime that had ruled out reverse engineering as a way of expanding product basket.

"The purpose is to leverage strengths in finance, marketing or research expertise rather than hedging risk. We will be looking at three more such deals," said Rajesh Jain, joint managing director, Panacea Biotec.

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* Contributed by: -
Prof. (Dr.) R.P.Verma,
MASD (USA), MRES (London),
Ex. H.O.D & Dean,
Faculty of Commerce,
Ranchi University, Ranchi,
Dr. Arabinda Bhandari, MBA, Ph.D.
(Strategic Management)