DRL chairman K Anji Reddy spoke to The Financial Express on a host of issues including the company's new anti-cancer drug and biotechnology thrust. Excerpts:

At what stage are the new molecules DRF 2593 and DRF 2725 (a blood glucose and dyslipidemia regulating compound)? Could shareholders expect any further milestone payments before the close of this fiscal?
DRF 2593 is licensed to Novo Nordisk and phase 1 trials are almost complete successfully. We will enter phase 2 in the second quarter of this year. In thecase of DRF 2725, which was licensed last year, we expect to enter phase 1 trials in the third quarter of 1999. In the remaining three months of the current fiscal, I don't expect any further milestone payment. These will be reflected in the next fiscal.

Analysts claim that milestones accruing to the Dr Reddy's group may well be around $100 million. Is this figure way off the mark?
Unfortunately, I cannot disclose the terms of the alliance. But it is no way near the figure of $100 million. I must add that we have received just three milestone payments aggregating around $6.25 million and there are up to eight milestones left. Besides, the monies are more as the product moves ahead and if the drug becomes successful, then we also have royalty inflows.

Any other new Dr Reddy's molecules likely to be licensed to Novo Nordisk this year?
It is quite likely to happen in this calendar year. But let me remind you that this is a very difficult area. We cannot, every now and then, bring out anew molecule. If you take the case of drug companies with R&D spends of $ two billion and more, even they come out with just two-three molecules each year. In our case we have been singularly successful, because we entered into an area-insulin sensitizers-which has become very important. When we entered this area there were 135 patents. Now we have filed 19 patents in the anti-diabetic segment and three have been granted. The most important thing is Dr Reddy's Research Foundation's capability to manoeuvre 135 patents and discover two molecules. We have the innovation levels of a Pfizer. But, of course, we are no Pfizer.

Is there any other big R&D project that DRL is pinning its hopes on?
Another key area that we are working on is cox 2 inhibitors. Recently, a research chapter of Searle discovered that compounds like aspirin which have both cox 1 and cox 2 activity spoils the intestinal lining leading to ulcer problems. After proving that this is purely because of cox 1, the entire effort was madeto discover compounds that are selectivity cox 2. This will lead to drugs which are very safe. Painkillers are used very regularly and it is now a fact that these compounds are known to be kind of prophylactic for cancer, that is if you take aspirin regularly you may possibly have less incidence of cancer. So this gives an entirely new dimension to painkillers and the market for these drugs will be worth several billion dollars. We we are confident that we will come out with our own cox 2, currently in early development stage.

So would DRL licence it's Cox2 like DRF 2593 or take it to the market unassisted?
We will definitely licence this product too. We have no intention to do our own development work (at least at this moment) and would wait until one drug goes into the market and we begin getting royalty payments.

What about your new anti-cancer drug (an analogue of the naturally occurring compotothecin). Have clinical trails commenced?
In the case of our anti-cancer drug, we havefiled an Investigational New Drug Application (INDA) in India. But since we have not been able to attract a licencing partner, we will do some minimum clinical trials in the US. In India, we are awaiting clearance from the Drugs Controller General of India and these trials would essentially be done with the assistance of the Tata Cancer Research Institute.

What about biotechnology-based vaccines? Wasn't DRL's hepatitis B vaccine to hit the market by March 1999?
We have already made the hepatitis-B vaccine in our pilot plant, though I must admit that we are not too proud of it given that there are already three companies in this area. But India will emerge a strong player in the area of biotechnology especially for production of known drugs. I expect to see a similar revolution in the area of biotechnology in India as witnessed in the area of bulk drugs. But the real impetus of biotechnology in the future is based on areas like the receptor-based technology. In our own insulin sensitiser, theyact by activating a PPA Receptor and interestingly when we synthesised this compound, for quite some time there was no way of explaining how it acts. But half way through our synthesis, we came to know that a team of scientists in Chicago had discovered this receptor and the fact that the compounds which activate this receptor will also reduce blood sugar. Interestingly, this brilliant research paper is authored by six scientists (of which four are Indians). And the team is led by PJ Reddy..... another Reddy!