In a yet another instance of Big Pharma seeking an Indian partner for drug discovery, Merck has entered into a collaborative pact with Nicholas Piramal India Ltd (NPIL). The NJ-based firm handed over two cancer drug targets to NPIL in November, 2007. The Indian partner will screen the targets against an array of compounds drawn from its 40,000-strong natural product extract library for potential leads and develop them till establishing the proof-of-concept.

NPIL is entitled for milestone payments as much as $175 million per target and royalties on commercialization. Merck’s senior vice-president for worldwide licensing and external research Mervyn Turner stated that the alliance is in tandem with the company’s strategy to further its drug pipeline by engaging India’s rapidly expanding drug discovery competencies. Oncology is a focus area for NPIL, too. One of its anti-cancer agents, a cdk4 inhibitor, is currently under Phase II studies.

For Merck, this is the second of such deal with an Indian company. The other one — a drug discovery services firm Advinus Therapeutics in November 2006 for two metabolic targets — has already advanced to its first milestone.

The U.S. behemoth, which left India nearly two decades ago because of IP fears, is back again with heavy plans for cost cuts through outsourcing. Pfizer is also on the lookout for Indian manufacturers for APIs, oral solids and injectables and has plans to increase the volume of clinical trials being run in India.

Sharing Rewards and Risk

Eli Lilly is another U.S. company that entrusted a molecule with NPIL to conduct toxicology and early phase human studies. Lilly retains the option to buy the metabolic candidate back once it crosses crucial milestones. Lilly also works with Suven Life of Hyderabad on G-protein coupled receptors.

GlaxoSmithKline, Wyeth, Bristol-Myers Squibb, AstraZeneca and Forest Labs are among the top western drugmakers who that have come to India for core drug discovery functions. GSK recently expanded its 2003 multi-year preclinical study deal with Ranbaxy to include early phase human trials also for the chosen leads. South Indian contract service providers GVK Bio and Syngene — a research arm of the leading biotech company Biocon — serve Wyeth and BMS, respectively, through dedicated discovery labs. AstraZeneca has its own drug discovery and process development centers, but the Anglo-Swedish giant also banks on Syngene to source a fair amount of R&D work. Forest Labs inked a pact with Jubilant Biosys on small molecule drugs discovery, a month ago.

Like the Merck-NPIL pact, the deals forged between Lilly and NPIL or GSK and Ranbaxy go beyond the conventional fee-for-service paradigm. Here, the idea is to share the risks — highly precarious drug discovery process — along with the rewards. Firms like NPIL could prove themselves trustworthy partners even going for that extra mile safeguarding the sensitive data shared by their clientele. “Lilly offered us the choice of several compounds to work on,” recalled Dr. Swati Piramal, director, Strategic Alliances & Communications, NPIL. Fears about IP protection still lurk in the background, despite India’s post-2005 commitment to honor patents.

Competitive Edge

Western companies scurry to India chiefly to explore options for supporting their flagging pipelines. India is a known destination for high quality but cost-efficient chemistry skills. Besides, research service firms are increasingly integrating the biological component into their portfolio to become full-service, one-stop players. Efficient, less bureaucratic smaller players also help them save costs through shortened development timelines. Furthermore, it is also a question of how to make use of the Indian advantage for a competitive edge. Drug firms that don’t tap into the R&D capabilities of India or China will face a lot of heat from companies that do, argue observers.

Notwithstanding this, the overall R&D budget of the companies in India still hovers around 5% of their sales. Of this, discovery research gets only a fraction. This may make one wonder whether the essential spirit of an innovator’s psyche still eludes this traditional generics stronghold. But Indian drug makers seem to work their own way chasing the discovery golden goose. Of late, Ranbaxy, Sun Pharma and NPIL have spun off R&D operations into separate entities, as did Dr Reddy’s some years ago. This step is said to be a strategy to “de-risk” their main generics businesses from the vagaries of the billion-dollar drug development game.

Sixty-odd new chemical and biological entities are reportedly at various stages of discovery by a host of big, medium and small-time players. Dr Reddy’s outlicensed its diabetic molecule to Rheoscience of Denmark for late phase trials. Glenmark has signed two of its candidates to Forest and Eli Lilly. And if everything goes well, Dr Reddy’s balaglitazone — the first Indian anti-diabetic drug — will make its way to the market by 2011, hopes Dr Anji Reddy, chairman of the company.

S. Harachand is a pharmaceutical journalist based in Mumbai.