Indian pharmaceutical companies, which are gearing up to launch their own innovative drugs through new drug discovery and research, now want to licence out their molecules to other companies only in later stages of development.
Companies like Dr Reddy’s Labs, Nicholas Piramal and Sun Pharma, which have several new chemical entities (NCEs) under various stages of development, may take them to later stages before selling them off at a higher value. The move will also help them scout for partners and investors in the development stages, which will help them share the high cost of drug development. Drug development comprises two-thirds the costs of new drug discovery and research for pharma companies.
Dr Reddy?s Labs, which licenced out its molecule in 1998, learnt this the hard way. Its anti-diabetic molecule Ragaglitazar, which was outlicenced to Novo Nordisk in 1998, failed in human trials and had to be dropped in 2003.
Another of its drug, Balaglitazone, jointly developed with Rheoscience, has entered phase III human trials only now, although initially licenced out to Novo Nordisk in 1997.
Says Satish Reddy, MD and COO, ?There are various options in drug research and development. One is to licence out at early stages. We did that for Balaglitazone, and we have paid the price for that. Now we will look at licencing in the later stages.?
In 2004, Novo Nordisk returned Balaglitazone to Dr Reddy?s due to ?portfolio related reasons?.
Adds Reddy, ?We could have done several innovative deals, including co-development and venture funding, if the drug was in our hands. Unfortunately, it languished for all these years before it actually got into phase III.?
Nicholas Piramal, which recently hived off its discovery research into a separate company, has said that it will need a lot of external funding for its drug development. ?We have no plans to outlicence drugs at early stages, and this will add up to our development costs,? said Ajay Piramal, the company?s chairman.
Nicholas has an NCE pipeline of 13 molecules in various stages of development. Says Shivani Shukla, an analyst with Frost & Sullivan, ?If a company licences out a molecule at a later stage, it can be much more certain of the molecule?s success. Also, the more later the outlicencing deal, the better the valuation.?