Indian pharma delegation arrives in Chicago as part of multi-city tour

Indian pharma delegation arrives in Chicago as part of multi-city tour

In 1966, film director Norman Jewison came out with the movie “The Russians Are Coming, the Russians are Coming” featuring Carl Reiner, Eva Marie Saint, Alan Arkin, Brian Keith, Jonathan Winters, Theodore Bikel and Tessie O’Shea.
Though this film was a comedy, you have to remember its timing in history: 1966 was in the middle of the Cold War. It was after the Bay of Pigs and the Cuban Missile crisis by a few years and a couple years after the JFK assassination. There was still a lot of U.S. fear about the Soviet Union and the nuclear arms race.
Trying to lighten some of the world tension at the time, Jewison presented a story about a Soviet submarine running aground off the coast of New England (supposedly Gloucester, Mass. even though it was filmed in Mendocino, Calif.). With the cast above, you can imagine that this would hardly be a serious movie.
The message? Two groups of people from opposing countries and culture began to relate to one other as people in need of help even though their countries were at war. In the end, the Gloucester people (after initially being frightened by the thought of a Russian invasion of the U.S.) befriended the Russians and helped free their submarine.
This week, we have the modern-day version of this scenario with the arrival of an Indian pharmaceutical trade delegation in Chicago as part of a multi-city tour. These days, India is more than just an emerging nuclear power.
The Indian economy threatens to overtake the U.S. economy during the next 20 to 30 years if it keeps growing at its current rate. While the Indian pharmaceutical and biotech market is still significantly smaller than the U.S., it’s also growing at a phenomenal growth rate as I profiled in a column back in December 2003.
The Indian pharmaceutical market is the world’s fourth largest by volume of drugs (8 percent of the global market) and thirteenth largest by value (less than 1 percent of the global market with 2003 estimated sales of $4.1 billion). The prices of medicine are among the lowest in the world.
Even with this situation, 70 percent of the Indian population doesn’t have access to drug therapy. Per-capita consumption of drugs in 2002 was only $3.33, according to the PharmaHandbook. Let’s take a look at some of the key Indian pharmaceutical players:

It’s interesting that only three foreign companies break through the top 10 companies in India and the Midwest’s own Abbott Labs is one of those companies. The top 10 companies represent a little more than a third of the Indian market. Strangely, world market leader Pfizer is not among them.
The top Indian companies – Cipla, Ranbaxy, Sun Pharma and Dr. Reddy’s – have all initiated their international strategies by establishing offices and operations in the U.S. Sun Pharma even has some Midwest roots as it has acquired a substantial equity chunk of Caraco Pharmaceuticals in Michigan.
Some key changes recently made by the Indian government have altered the dynamics of investing in India for pharmaceuticals companies:

  1. In 2002, the Indian government allowed for 100 percent direct foreign ownership.
  2. In January 2005, the Indian government implemented a 20-year product patent protection policy.
  3. Import duties on new drugs under development (clinical trials) have been eliminated.
  4. ICH good clinical practice regulations are now mandated.

The contract research organization (CRO) market in India is expected to grow substantially from a level of $70 million in 2004 to $200 million by 2008 as a result of the above changes. It doesn’t hurt that doing clinical trials in India is between 50 percent and 60 percent cheaper than in the U.S. Additionally, there is fertile ground for the study of chronic diseases:

  1. 34 million diabetics
  2. 30 million with cardiovascular disease
  3. 8 million epileptics
  4. 1.5 million with Alzheimer’s

Indian pharmaceutical company Dr. Reddy’s made news last year when it received FDA approval to sell a copy of Pfizer’s Norvasc (a several billion-dollar cardiovascular drug). This happened three years in advance of Pfizer’s patent approval expiring via the utilization of an FDA regulatory pathway.
This strategy shook up a lot of complacent U.S. pharmaceutical companies and was the pharmaceutical equivalent of the former Soviet Union landing a submarine off the coast of New England. The lesson from the movie? When people from two different cultures really get to know one other, tensions subside quickly as they relate to one other as people.
There is a unique opportunity for this to happen this week in Chicago as the Indian pharmaceutical trade mission rolls into town on Monday for a full-day event at the Hilton. The event is sponsored by the Illinois Department of Commerce and Economic Opportunity and the Office of Trade & Investment as well as the Federation of Indian Chambers of Commerce and Industrial Association (FICC).
In addition to a number of Indian government officials, representatives from Indian pharmaceuticals companies Ranbaxy Labs, Calyx, Torrent Pharma, Sami Labs and Alkem will be present. Additionally, given the growth of the CRO market in India, Quintiles India (the Indian subsidiary of the huge American CRO) will also participate along with Ernst & Young India.
Remember that Ernst & Young is probably the best company tracking biotech development around the world. Their perspective should be interesting.
There is no doubt in my mind that the American pharmaceutical and biotech companies need to pay attention to developments of their counterpart companies in both India and China as these will be the companies making the biggest competitive inroads over the next 20 to 30 years due to:

  1. Highly competitive cost structure
  2. Large home markets
  3. High numbers of science and engineering graduates in universities
  4. Creative, intelligent and dynamic people

The message in Jewison’s movie is really about relaxing tensions by meeting the ?enemy? face to face and seeing where common ground can be reached by two opposing sides. This trade mission is an excellent opportunity for Americans and Midwesterners to learn about the coming economic powers of the 21st century in a critical industry.
See you next week!

Michael S. Rosen is the chairman and CEO of Immune Cell Therapy, a new start-up out of the University of Illinois at Chicago developing cancer vaccines. Rosen is also a founder and board member at the Illinois Biotechnology Industry Organization (IBIO). He can be reached at

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