United we stand
Soaring R&D investments and controlled drug prices. Where does this leave pharmaceutical companies? Having understood the need to strike a fine balance between investments and revenues, Indian pharmacos are collaborating with various government-backed institutions for partnerships in R&D and drug distribution. Nandini Patwardhan explains
Public-private partnership (PPP) is a system in which the government and one or more private companies partner to co-ordinate any venture that is funded and operated through their partnership. At times, the government may utilise tax revenues to fund the venture or may operate jointly with the private sector under a contract to fund the project and own the output.
|“PPP is also a part of the company’s social responsibility, and different companies allocate different resources based on individual projects”
– Ranjit Shahni CEO
“Simply put, a PPP programme is an agreement between a private corporation and a government agency to co-ordinate activities related to healthcare such as diagnosis, prevention and treatment of diseases, as well as strengthening national healthcare policies,” explains Ranjit Shahni, CEO, Novartis India. “Typically, PPP initiatives focus on diseases of the poor, such as HIV/AIDS, tuberculosis and malaria. PPP is also a part of the company’s social responsibility, and different companies allocate different resources based on individual projects,” he adds.
Why we need PPP?
With the DPCO monitoring the prices of various drugs (to make them affordable to the Indian population, much of which does not even have access to basic healthcare facilities and essential medicines), and the need for higher investments in R&D to come up with new molecules, public-private partnerships in pharma R&D seem to be the only way out, to strike a balance between investment and revenues.
|“PPP initiatives offer cost-effective solutions for indigenous health problems ”
– Dr Swaroop Kumar V S V President, Drug Discovery & Clinical Development
One of the factors that favour PPP initiatives is the cost. Dr Swaroop Kumar V S V, President, Drug Discovery & Clinical Development, Glenmark Pharmaceuticals opines, “PPP initiatives offer cost-effective solutions for indigenous health problems, which may not be otherwise commercially undertaken.” PPP initiatives also facilitate transfer of knowledge and help speed up drug discovery process.
“With India growing as a R&D hub for global pharmaceutical activity, PPP programmes also provide an opportunity to enhance scientific knowledge through exchange of information, as well as to share and utilise resources more efficiently,” he continues.
Another factor that cannot be ignored is the network of these publicly funded laboratories and their contribution to research. K Narayanasamy, CEO of Delhi-based The Centre for Genomic Applications (TCGA) states, “In the life science sector today, it is an established fact that public undertakings like national labs and government institutes are major contributors for a huge section of cutting-edge research breakthroughs due to their widespread networks and well-established infrastructure facilities.”
“So by entering into mutually feasible collaborations with these organisations, we are in a position to further empower our research activities and scale up our operations. By encouraging such PPP programs within India, we foresee an inflow of funds and the required expertise pertaining to critical aspects of research,” he adds.
The PPP model is not supposed to be capitalistic in nature. The aim of the projects undertaken under this initiative is to conduct research to treat unmet medical needs in India and other developing countries. In India, most of the PPP initiatives, especially in the pharmaceutical industry, are driven by the Ministry of Science and Technology and Council for Scientific & Industrial Research (CSIR). The selection and suggestion of projects is currently done by Central Drug Research Institute (CDRI), Lucknow.
“Presently, the Government owns the majority of the output generated by such projects given that the selection and execution of the projects involves participation of government agencies,” says Kumar. The nitty-gritty of a PPP initiative is worked upon by parties involved before the commencement of the project. The Intellectual Property (IP) generated is also often shared between the public and private developers by means of royalty through commercialisation. “Before commencing any project under a PPP, we distinctly demarcate our scope of work, deliverables and the ownership of the output amongst the involved parties and ourselves, across the table. This ensures a smooth execution of our projects, especially in case of a PPP,” explains Narayanasamy.
Until now, one can clearly pronounce the PPP model a success in India. The Department of Science and Technology (DST), Government of India, initiated PPP models in India by setting Drugs and Pharmaceuticals Research Programme (DPRP). Since the idea is to partner, many research institutions like CDRI, IICT, IISc, AIIMS and NIPER came in the net of the programme. It also received support from major pharma companies like Ranbaxy, Dr Reddy’s Laboratories, Dabur Pharma, Glenmark Pharmaceuticals and Lupin. Yet another successful initiative is New Millennium India Technology Leadership Initiative (NMITLI) by CSIR which has a total outlay of Rs 270 crore and has the strength of about 65 private partners.
Breaking the speed breakers
In spite of such success, industry experts opine that there are problems in the manner in which the PPP model is implemented in the country. For starters, the process of PPP is not mature enough, which leads to delays from both ends. At times, there can be a case of too many cooks spoiling the broth, if all the parties concerned try to pursue their own agenda. Feasibility studies should be conducted for evaluating and providing focus to proposed projects. “The number of research centres involved should not be more than three to five, per project, including public and private research organisations. The selection should be based on the expertise of the respective centre, in order to benefit the research programme,” states Kumar. To do away with such bottlenecks, it is very important for the programme co-ordination to be focused and to address possible hurdles in implementation through open discussion.
It is also very important to clarify roles of all the partners involved in the project, for smoother implementation. “For instance, our role as a private player in a PPP is solely of a facilitator, whose task is to bring critical research to the market and simultaneously leverage benefits such as infrastructure and promoting programmes in conjunction with the government,” declares Narayanasamy.
In addition to these, a CSIR document suggests strategies like:
- Facilitating knowledge as sweat equity
Many venture capital supported companies are aspiring to license IP from national laboratories or institutes for further development. These companies are willing to offer equity for the IP
Many venture capital supported companies are aspiring to license IP from national laboratories or institutes for further development. These companies, though not in a position to pay the licensing fee up front to secure the IP, are willing to offer equity for the IP. This model has worked successfully in UK, USA and Israel, and can be implemented in India too by amending the necessary tax laws.
- Developing a cadre of technoprenuers
Hundreds of academicians in the western world have become technoprenuers, thereby catalysing knowledge-driven industrial development. The prevailing provisions in our country, do not give freedom to a scientist to set up commercial entities, while in professional employment with universities or institutes. The Government may evolve facilitating provisions in the service rules in consultation with scientific departments and MHRD to make this possible.
- Sharing of R&D facilities
Indian industry needs world class facilities to support R&D. Government funding can be provided to create major national facilities (for example, regulatory toxicology facility, sector-specific sophisticated equipment facility) to be shared by a number of firms. National laboratories/institutes have several valuable assets, which are very useful to industry and could be shared.
- Mobility of scientists
The mobility of scientists from industry to academia or public R&D institutions and vice-versa is an essential component in seamless transfer of knowledge.
United we stand, divided we fall. This seems to be a maxim that is applicable to the Indian pharma industry. The PPP is indeed a very important tool towards making greater strides and de-risking research development. However, it is up to the government and the industry to leverage this model towards creating a niche in R&D in this global village.