CHAPTERV
TECHNOLOGY ACQUISITION EXPERIENCE IN THE INDIAN
DRUG INDUSTRY: IMPLICATIONS OF THE WTO
In this chapter it is proposed to evaluate the major technology
efforts undertaken in the Indian pharmaceutical industry before the
WTO-TRIPS Agreement and the post-WTO situation. The pre-WTO period
includes data analysis from 1950-51 to 1991-92. The analysis covers
surveys of foreign collaboration agreements between Indian
pharmaceutical firms and foreign firms. It also evaluates the process of
indigenous technology generation and transfer conducted by various
national laboratories and public funded -research institutes. In the post-
WTO situation the analysis is mainly confmed to trends in R&D and
implications of WTO-TRIPS Agreement on the Indian pharmaceutical
Industry.
V.l PRE-WTO TECHNOLOGY ACQUISITION EXPERIENCE IN THE INDIAN PHARMACEUTICAL INDUSTRY
.. The emphasis on technology generation has been part and parcel
of the philosophy of self-reliance practiced in India, which was discussed
in detail in earlier chapters. The efforts to gear up indigenous
technological capabilities picked up momentum in the late 1970s, in
which the recommendations of Hathi Committee had played an
important role. Three major recommendations of HCR may be mentioned
here, which are very crucial.
(i) Providing incentives to those pharmaceutical firms which
undertake in-house R&D and progressively the same should
190
become statutory for some compulsory in-plant research
activity;
(ii) Assigning special role to public sector by reserving certain
'essential drugs' to be manufactured by that sector alone;
(iii) Mandatory production of essential · drugs, in certain
quantities, by all the pharmaceutical flrms, including the
foreign MN Cs.
The introduction of the concept of "essentiality in drugs" by the
Hathi Committee had resulted in the pursuit of "need-based" technology
in the Indian pharmaceutical industry. In line with this thinking the R &
D efforts in the national laboratories were geared up towards generation
of new technologies, and in case of the drug industry the process
technologies. The efforts of public funded research laboratories in
transferring technologies to the drug industry have been commendable. 1
This is responsible for all the other developments that had
materialized in the private sector drug flrms to work in collaboration with
public sector units and research laboratories to improve upon the
process development technologies. R&D, which is the most accepted
indicator of technological effort, was very low before 1975, not only in the
pharmaceutical industry but also in the Indian manufacturing industry
at large .•
There were some visible efforts _towards R&D spending by the
Indian drug flrms, with the boost it got through the HCR. Table V.1
provides data regarding R&D expenditure in Indian Pharmaceutical
Industry from 1976-77 to 1999-2000. The current R&D expenditure is
around Rs. 320 crores (2000), which is 2% of annual sales of the
industry. Certain new generation drug flrms like Ranbaxy, Cipla, Dr.
Reddy's Laboratories, Lupin Laboratories, Nicholas-Piramal have been
1 A.V.Rama Rao, Op.cit.
191
attempting to spend on R&D in the range of 3-5% of their annual sales
turnovers, in the last few years, i.e 1996 onwards.
TABLE V.l R&D EXPENDITURE IN INDIAN PHARMACEUTICAL INDUSTRY
Year R&D Expenditure (Rs. Crores} 1976-77 10.50 1978-79 12.00 1979-80 14.75 1981-82 29.30 1983-84 40.00 1985-86 48.00 1986-87 50.00 1993-94 125.00 1994-95 140.00 1995-96 160.00 1996-97 185.00 1997-98 220.00 1998-99 260.00
1999-2000 320.00
Source: OPPI, Annual Reports, (various), Organization of Pharmaceutical Producers of India, Mumbai, 2002.
The number of firms recognized by the Government of India with in
plant R&D facilities in the Indian pharmaceutical industry is around
139; the list is provided in Table V.2.
TABLE V.2
LIST OF RECOGNISED IN -HOUSE R & D UNITS IN THE PHARMACEUTICAL SECTOR S.No. Name of the Firm 1. Acharya Chemicals 2. Alembic Chemicals Works Company 3. Alkem Laboratories Ltd. 4. Alpha Drugs 5. Alved Biologicals Pvt. Ltd. 6. Ambalal Sarabhai Enterprises 7. American Remedies Ltd. 8. Amrutanjan Limted 9. Anglo French Drug Company 10. Armour Chemicals Ltd. 11. Asian Chemicals Ltd. 12. Associated laboratories Pvt. Ltd. 13. Astra IDL Ltd.
192
14. Atul Products Ltd. 15. BDH Pharmaceuticals 16. Bengal Immunity Ltd. 17. Biocon India Private Ltd. 18. Biogenics India 19. Biological E. Limited 20. Boehringer- Knoll Ltd. 21. Boots Company Ltd. 22. BYX Chemicals Pvt. Ltd. 23. Burroughs Wellcome (India) Ltd. 24. Cadila Laboratories Ltd. 25. Cheminor Drugs Ltd. 26. Cibatul Ltd. 27. Cipla Ltd. 28. Citurgia Biochemicals Ltd. 29. Concept Pharmaceuticals Ltd. 30. Cynamid India Ltd. 31. Dental Products of India Ltd. 32. Dey's Medical Stores (Mfg). 33. Divi's Research Centre 34. Dr. Reddy's Laboratories Ltd. 35. Duphar Interfran Ltd. 36. Earnest Healthcare Ltd. 37. East India Pharmaceutical 38. Elder Pharmaceuticals Ltd. 39. Enzo-chem Laboratiories Pvt. Ltd. 40. Eskayef Ltd. 41. E. Merck (India) Ltd. 42. FDC Ltd. 43. Franco-Indian Pharmaceuticals 44. Glaxo India Ltd. 45. Globe Organics Ltd. 46. Gufic Ltd. 4 7. Haffkine Bio-Pharmaceutical 48. Hindustan Antibiotics Ltd. 49. Hindus tan Ciba -Geigy Ltd. 50. Hiremath Chemicals Ltd. 51. Hi-Media Laboratories Pvt. Ltd. 52. Hoechst India Ltd. 53. Indian drugs & Pharmaceuticals Ltd. 54. Indian Herbs Research 55. Indo-Pharma Pharmaceutical 56. Infar (India) Ltd. 57. IPCA Laboratories Pvt. Ltd. 58. Jagson Pal Pharmaceuticals Ltd. 59. Jayant Vitamins Ltd.
193
60. Johnson & Johnson Ltd. 61. J. Mitra & Bros. Pvt. Ltd. 62. Kanpha Labs 63. Kerala State Drugs 64. Kandelwallaboratories 65. Kody Medical Electronics Ltd. 66. Kopran Ltd. 67. Korea (India) Ltd. 68. Lakrne Ltd. 69. Lanz Ltd. 70 Li Taka Pharmaceuticals Ltd. 71. Lupin Laboratories Ltd. 72. Lyka Labs Private Ltd. 73. Maharshi Ayurveda Products 74. Malladi Drugs & Pharmaceuticals 75. Max India Ltd. 76. Medlay Laboratiories Pvt. Ltd. 77. Mehta Pharmaceuticals Pvt. Ltd. 78. Meridian Pharmaceuticals 79. Merind Ltd. 80. Metroni Drugs Pvt. Ltd. 81. Miles India Ltd. 82. M.J. Institute of Research 83. Nandi Chemicals Pvt. Ltd. 84. Natco Fine Pharmaceuticals 85. National Avian Health Labs 86. Neuland Laboratories Ltd. 87. Nitson Laboratories Ltd. 88. Nivedita Chemicals Pvt. Ltd. 89. NR Jet Enterprises Ltd. 90. Oriental Chemicals works (P) Ltd. 91. Parke-Devis (India) Ltd. 92. Prnsem Drugs & Pharmaceuticals 93. Pflme Intemation Ltd. 94. pfizer Ltd. 95. Planned Pharma Pvt. Ltd. 96. Polypharma Pvt. Ltd. 97. Procter & Gamble India Ltd. 98. Rallis India Ltd. 99. Ranbaxy Laboratories Ltd. 100. Raptakos Brett & Co. Ltd. 101. RC Pharma Ltd. 102. Reckitt & Colman of India Ltd. 103. Rhone-Poulenc (India) Ltd. 104. Roche Products Ltd. 105. Roussel India Ltd.
194
106. SAF Yeast Company Ltd. 107. Sandoz (India) Ltd. 108. Sarabhai M chemicals Research 109. Searle (India) Ltd. 110. Sekhasaria Chemicals Pvt. Ltd. 111. Shasun Chemicals (Madras) Ltd. 112. Shree Dhootapaper Shwar Ltd. 113. Shrishma Fine Chemicals Ltd. 114. Siris Ltd. 115. Smith Strainstreet 116. SOL Pharmaceuticals Ltd. 117. South India Research Institute 118. Standard Organics Ltd. 119. Standard Pharmaceuticals Ltd. 120. Standard Research Centre ·121. Stangen I,uno Diagnostics 122. Stellar Chemical Labs Pvt. Ltd. 123. Sun Pharmaceutical Industries 124. Synbiotics Ltd. 125. S.D. Fine Chern Pvt. Ltd. 126. Tablets (India) Ltd. 127. Tamil Nadu Dadha Pharmaceuticals 128. Themis Chemicals Ltd. 129. T.T.K. Pharma Pvt. Ltd. 130. Unichem Laboratories Ltd. 131. Unique Chemicals (Div. of J.B.) 132. Unique Pharmaceuticals 133. Uni-Sankyo Ltd. 134. U.S. Vitamin (India) Ltd. 135. Wallance Pharmaceuticals Ltd. 136. W~der Ltd. 137. Wockchardt Ltd. 138. Wyeth Laboratories Ltd. 139. Zandu Pharmaceuticals Works
Source: Answer to Question No. 512, dated 12-8-1992, Lok Sabha Proceedings.
The data provided in the above table is until 1993. However, the
latest data suggest that, by 1998, there are 42 foreign afflliated MNCs,
104 Indian domestic firms and the remaining public sector frrms, which
possess in house R&D facilities recognized by the Government of India.
However, the major share of research contributions come from the public
funded research institutes. The most notable public funded research
195
institutes devoted to drug research are the Central Drug Research
Institute (CDRI), National Chemical Laboratories (NCL), Indian Institute
of Chemical Technology (IICT) and Indian Institute of Experimental
Medicine, located in different states of India.
Before the efforts of · the public funded research in the
pharmaceutical industry started bearing fruit, a variety of licensing and
technical agreements with various foreign flrms supplemented the efforts
undertaken by premiere research institutions, laboratories and so on.
V.2 FOREIGN COLLABORATIONS IN INDIAN PHARMACEUTICAL INDUSTRY 1950-1991
Data have been analysed2 for 255 foreign collaboration agreements
for the period between 1951 and 1986 and separately for 37 more
collaborations from 1987 to1991.
Some earlier studies, have examined foreign collaboration
agreements in the pharmaceuticai industry for the period 1956-65,
involving 76, and agairl for the period 1962-72 covering 28 agreements. 3
Our study extends the earlier study of K.K. Subramanian, in the context
of pharmaceutical industry. In the earlier study it was found that the
technology supplier stipulated stringent conditions involving a deflnite
period of exclusion from seeking technology from other sources, when
the supplier's agreement was in force. This forced flrms seeking
technology from multiple sources to some kind of a 'tie-up'. It is widely
2 Data pool is constructed from data obtained from various sources; The main sources for pre-WTO data are: Government of India, Ministry of Chemicals and fertilizers, Dept. of Chemicals and Petro Chemicals; NICDAP, Drugs and Pharmaceuticals: Industry Highlights, National Information Centre on Drugs and Pharmaceuticals, CDRI, Lucknow; Government of India, Lok Sabha Secretariat (Loksabha Proceedings); Indian Drug Manufactures Association IDMA Bulletin, Annual report (various); OPPI, Annual Report (various) Indian Drugs and Pharmaceutical Industry (Various), Eastern Pharmacist (various), Indian Drugs (various), Pharma News (various), SCRIP (various), Phanna Times (various), Chemical Week (various), Chemical Business (various) and several other sources which helped build the data pool. 3 K.K. Subramanian, Foreign Collaboration in Indian Industry, People Publishing House, New, 1975.
196
established fact in economic theory of technical change that the
stringency of contracts is measured by (a) the price of contract, (b) the
duration of contract, and (c) option to switchover from the contract
without penal clause. As we will show in this chapter that in the context
of Indian pharmaceutical industry and in the data set that we have
furnished it was clear that by all the three criteria Indian drug firms were
in an advantageous position. In fact the evidence for the post-WTO
period, fragile though, shows that at least technologies imported were not
on the basis of local relevance and need. We provide further evidence in
case of technology generation and acquisition that the major technologies
that were developed ·were basically in the public funded research
institutions and govemment laboratories. In addition the magnitude and
intensity of the technologies transferred from these laboratories and
institutions to the private sector, (which of course, does not include
MNCs) was much below the potential of those institutions and
laboratories.
However, it should be noted that during the 1970s, Indian firms
were not quite experienced in negotiating contracts, and the choices were
also restrictive. The position in the pharmaceutical industry was
somewhat better than in other industries, for two reasons. Most of the
contracts executed during the period 1950 and 1970 were technical and
the duration of contract was restricted to 2 to 3 years. This information
is provided in Table V.3.
The total number of collaborations involved was between 125
Indian domestic firms and 128 foreign firms from about 24 countries.
Out of total 255 the highest number of 57contracts were executed
between the US and Indian firms which works out to roughly 22 per
197
TABLE V.3
REPETITIVE COLLABORATIONS IN THERAPEUTIC CATEGORIES
!Product Category No. of Agreements %of Colla- Total with Remarks boration country
1 2 3 4 5 I. ANTIBIOTICS --
1. Tetracyclines 9 3.52 US(8) Italy(1) 12_. Streptomycin 2 0.78 US(2l
Public Same Sector
3. Penicillins 7 2.74 US(1)_l_ Same US{2)} UK{1)} taly(2)}
Japan(2) 4. Erythromycin 5 1.96% US(1) Same
taly(3) Swiss(1)
5. Chloramphenicol 6 2.35 fRG(1) Same ~taly(ll San1e ~taly{3) Swiss(1)
6. Doxycycline 2 0.78 taly(1) Portug_al( 1)
~. Ampicillins 2 0.78 Swiss(1) taly{1)
8. Cephalosporins 3 1.17 taly(2)} Public Swiss(1)} Sector
9. Dosulfin 1 0.39 Swiss Same 10. Rifampicin 7 2.74 France(1)
Swiss{1) ·-Bulgaria(2) S.Korea(1) tpoland{2)
11. Kenamycin/ Gentamyciil 3 1.17 ~apan(1)} !Public ~ungary{2) }
198
Sector 12. Gentamycin 0 0 13. Amoxicillin 1 0.39 S.Korea
48 (18.82) II. STEROIDS
1. Steroids (Broad band) 1 0.39 jUS(1) 2. Hyderabad Cortisonse 1 0.39 jUS(l) 3. Hydroxy Progesterone 1 0.39 FRG(1) Same 4. Prednisolone 0.78 Others(2)
2
5 (1.96) III. ANALGESICS/ ANTIPYRETICS
1. Salicylic Acid 2 0.78 tlJS(2) 2. Aspirin 7 2.74 tlJS(2)
rt.JK(l) tlJSSR(l) Sweden(l) ~apan(l) ~omania(l)
3. Acetyly Salicylic Acid 3 1.17 IFrance(l) ~omania(2)
4. Pentazoncine 2 0.78 tus(l) ~taly(l)
5. Ibuprofen 3 1.17 jUS(l) Same ~ UK(l)
Canada(1) 6. Pheyl Butazone & Oxy 3 1.17 taly(1) Same
Phenyl Butazone Swiss(2) 7. Xylocaine 1 0.39 Swiss(l) 8.Tanneril 1 0.39 Swiss(l) Same
IV. VITAMINS 1. Vitamine A 5 1.95 FRG(1) }
US(l) } FRG(l) } Same Hungary(!)} Swiss(1) }
~-Vitamin C 2 0.78 WRG(l) taly(l)
K3. Vitamin D 2 0.78 tlJK(l)
199
IN etherlads(l 4. Vitamin B12 4 1.56 Sweden(2)
lFRG(l) [talv(l)
5. Niacin & Niacinamide 0.39 Sweden( I) 1
14 (5.99) V. ANTI HISTAMINES
1. Phenyl Ephedrine & 2 0.78 tlJS(l) FRG(l) Same ~phedrine 2. Chlorpheniramine Maleate 1 0.39 Swiss( I) Same
3. Antihistaminic drug (BB) 1
0.39 Belgium( I) Same
4 (1.56) VI. SULPHA DRUGS
1. Sulpha Drugs (BB) 2 0.78 iUKfl) } Same Swiss(2)}
2. Sulpha Somidine 4 1.56 FRG(4) Same 3. Sulphamide - 1 0.39 FRG(l) 14. Sulphamethoxv Pvridazine 2 0.78 FRG(2) Same
9 (3.52) VII. ANTI ASTHMATICS
1. Aminophylline 1 0.39 WRG(l) Same Parent
12. Hydrozy Ethyl 1 0.39 WRG(l) rrheophylline 13. Pyperthadie HCL · 1 0.39 FRG(il j4. Theophylline 0.39 [FRG(l) Same
1
4 (1.56) VIII. ANTI TUBERCULARS
1. Pyrazinamide 1 0.39 ITtalv(l) 12. Morphazinamide 1 0.39 taly(l) 3. PAS & its salts 3 1.17 Sweden(!)
!Panama( I) 5 (1.96) Others fll-
IX. ANTI FUNGALS 1. Ecozonal Nitrate 2 0.39 lSwiss(il Same
200
Parent 2. Fungal Diastase 1 0.39 Japan(1) Sante 3. Aureomycin Sulphadiazine 0.39 US(1)
1
3 (1.17) X. CNS STIMULANTS
1. Caffeine 0.39 ~apan(1) 1 1 (0.39)
XI. DIURETICS 1. Diuretics (BBl 1 0.39 ~SJl) 2. Hygrotan 0.39 Swiss(1) Same
1 Parent
2 (0.78) XII. ANTI HYPERTENSIVES
1. Methyl Dopa 1 0.39 fRG(1) Same Parent
2. Methyl Dopa 0.39- [taly(1) 1
2 (0. 78) XIII. ORMONES, ENZYMES, SERA, AMINO ACIDS AND OTHER
BIOLOGICAL PRODUCTS 1. Liver extract 1 0.39 US(1) 2. Sera & Related Drugs 3 1.17 US(1) Same
FRG(2) Product t3. 15 Methyl Postaglaindin 1 0.39 US{1) 4. Pepsinfpeptoxjpancreatin 2 0.78 FRG(1)
Hungary(1) 5. Dextran 2 0.78 Swiss(l) Same
France{l) Parent 6. Haemasto-Heptive 1 0.39 France{l)
(Not in !operation)
7. Haepathere 1 0.39 IFrance(l) 8. Haemoglobin Syrup 1 0.39 Wrance(l) 9. L-Cystine Amino Acid 3 1.17 Pa:Ran(3l 10. Lnestrenol 1 0.39 !Netherlands
Ill) 11. Norgestrol & its tablets 2 0.78 1Hungary(2) 12. Enzymes Extracts 0.39 Others(1)
201
1
19 (7.45) XIV. MEDICAL & SURGICAL DEVICES AND DRUG SUPPLEMENTS
1. Gloves 1 0.39 ~S(1) 2. Infusion Set 3 1.17 ~S(1)
FRG(1) Same Swiss_(l) Parent
3. Plastic Blood donor set 2 0.78 ~S{2) 4. Artificial sweeteum 1 0.39 iUS(l) 5. Citex paste 1 0.39 IOK(l) 6. Hard Gelating Capsules 4 1.56 lliK(21
Canada(2) 7. LV. Fluids 1 0.39 i.FRG(1) 8. Flex Flax-PVC 1 0.39 Swiss(1) Sarne
Parent 19. Plaster of Paris Bandages 1 0.39 Swiss(1) 10. Hypothermic Needles 1 0.39 US(1) 11. Painfinishing System 0.39 Sweden(l)
1
17 {6.66) XV. VACCINES & IMMUNOLOGICALS
1. Immunological Vaccine 1 0.39 ~S(1) 2. Foot & Mouth Disease 2 0.78 ~K(1)
Vaccine ~S(l) 3. Triple Vaccine 1 0.39 IY ogoslavia( 11 Same 4. Tetanus Antitoxin 1 0.39 !Yugoslavia(lj Same 5. Diphtheria Antitoxin 1 0.39 !Yugoslavia( 1) Same 6. Sera & Related Products 0.39 ~K(1)
1
7 (2.73) XVI. ANTI ULCER
1. Cimetidine 0.39 taly(1) 1
1 (0.39) XVII. ANTI DIABETIC
1. Insulin 0.78 Netherlands Same 2 (1} product
2 (0.78)
202
XVIII. VASODILATOR 1. Vasodilator- BB 2 0.78 ~taly(1) Same
IN etherlands product If 1 l
XIX. TRANQUILLIZER 1. Tranquillizer Drug 1 0.39 ~elgium(1) Sarne
product --2. 1 Para-Hydroxyphenyl 0.39 Swiss(2)
plycine & its Salts 6 ~ungary_(2l IUS(1) iN etherlands
7 (2. 73) (1)
XX. PATENTED AND OTHER DRUGS 1. Cynomin 1 0.39 iUS(1) 2. Piadines Pytidines 1 0.39 ~S(1)
3. Formycin 1 0.39 UK(1) 14:_. Poldrine 1 0.39 UK(1) 5. Robapharm 1 0.39 UK(1) 6. Lovaphed 1 0.39 UK(1) 7. Dulcolax 1 0.39 FRG(1) 8. Saridon 1 0.39 Swiss(1) 9. Sintrol Tofranil 1 0.39 Swiss(1) Same
Parent 10. Tabufon 1 0.39 Swiss(1) Same
Parent 11. Pholophyllum 1 0.39 ~wiss(1) Same
Parent 12. Lamprone 1 0.39 ~wiss{1) Same
Parent 13. Stout Tonic 0.39 ~thers(1)
1
13 {5.09) poa. ANTI DYSENTERY DRUG 1. Dialoxaminde Furoate 0.39 UK(1) Same
1 Parent
1 (0.39) XXII. BULK DRUGS
1. Nalidixic Acid 1 0.39 IUS(1) 2. Phenylphrine Benzylate 1 0.39 t!l_Slll ~. Premidonne 1 0.39 IUK(l) Same
203
Parent f4. Propanolol 1 0.39 IUK(l) Same
Parent 5. Gamaglobin 1 0.39 . IUSSR(1) --6. Haptagluconate 1 0.39 ~taly(l)
7. Idopinic Acid 1 0.39 ~taly(1) --8. 6 APA 1 0.39 ~taly( 1) ~- Perchloroethy_lene 1 0.39 Swiss(l) 10. Methyl Pentothoate 1 0.39 Sweden(1) 11. Methyl Ethyl Pyridinzine 1 0.39 Sweden(l) 12. Glucose 1 0.39 Netherlands
1) 13. Trimethoxy-Benzaldehyde 0.39 ~ether lands
1 (1)
13 (5.09) XXIII. NON-CLSSIFIED DRUGS (Bulk & Intermediate)
1. Non-Classified 51 20 IUS(11) Same Pharmaceuticals IUS(3) Parent
IUK(12) IUK(4) ·-fRG(4) fRG(1) Swiss(S) Swiss(2) Sweden(2)
- Sweden(l) Japan(l) Sarne
, Parent Netherlands Srune 1) Parent
Belgium(2) Same Parent
!Bulgaria( 1) [Panama(l) Same
parent Others(l) ·-
Source: Author's field data and as mentioned in f.n.2 in this Chapter.
cent. The highest shares of individual contracts for the American firms
were by Pfizer and Lederle. The second highest was by the UK and Swiss
204
firms, with the number 35 representing approximately 14 percent. The
major share of contracts from Switzerland, went to the top firm of that
country namely Hoffman la Roche. The top UK firms, which had the
highest number of collaborations, were Glaxo and Burroughs Wellcome.
The other collaborations were FRG (30), Italy (27), Sweden (10), Japan
(10), Hungary (9), the Netherlands (8), France (6), Belgium (4), Bulgaria,
Yugoslavia, Canada and Romania (3) each, USSR, Panama, South Korea
and Poland (2) each, Portugal (1) and others (6). The firms from the
USSR were state controlled enterprises and from Italy were drug
consortia and therefore the number of firms is quite low. The number of
foreign collaboration agreements in Indian manufacturing industry
during 1950-92 amount to 14,199.
The percentage share of pharmaceutical collaborations as a
proportion of the total manufacturing industry works out to be less than
3 per cent (2. 72 percent to be precise) for the forty two year period
between1950 and 1992. Technology supply from top 5 countries
accounted for 90 percent of the total whereas the remaining 10 percent
was shared between 19 odd countries. The diversified sources of
technology supply indicate the selective approach followed by the
technology recipient, i.e. India. By the same token it could be argued
that the. dispersal of sources of technology supply is an indicator of the
relative bargaining strength of the Indian drug industry. In the initial
stages the Russian technology, especially in the synthetic drugs
manufacture has played a pivotal role m technological acquisition
capabilities of the Indian drug industry.
In Table V.3, the first column shows the drug product for which
the collaboration is sought. The second column shows the number of
collaborations sought for that product from various countries. The exact
percentage of the collaborations out of total number of collaborations is
given in the column four. The filth column represents collaborations by
name of the country. The last column shows whether the collaboration
205
is by the parent company to its subsidiary (denoted by 'Parent1 or if the
collaboration is repetitive in terms of product or firm by country of origin
(denoted by 'same').
Within the data set on foreign collaborations an examination of
distributional pattem of licensing firms is also undertaken. The
distributional pattem reveals that in the early stages of post
Independence era, there was marked dependence on UK (45.6%)
reflecting extension of the colonial past, followed by US (15.3%) and
Germany (14.9%). Table V.4 presents distributional patterns of
licensing. Overall experience in technology acquisition in the Indian
pharmaceutical Industry displays some amount of judicious selectivity in
choosing the technology suppliers.
As can be seen from Table V.4, the dispersal of technology supply
sources, as an indicator of relative bargaining strength of the Indian
pharmaceutical industry is well conceivable. In other words, the
stringent conditions, which led to captive tie-ups with technology
suppliers in other manufacturing industries, reported in Subrahmanain's
study, found to be not quite applicable in the case of the Indian
pharmaceutical industry. In fact, it could be argued plausibly that the
fair dispersal of sources of technology supply, ranging from former
Socialist Bloc countries, to Italian fmns, supplying requisite technology
in the manufacture of 'essential drugs', specifically to the public sector
units, had systematically augmented the domestic technological
endeavours, quite in keeping with the policy of self-reliance of the period.
There was a sudden spurt of foreign licensing contracts in 1980,
which continues thereafter until 1992 indicating that the policy of
liberalisation had its impact on the Indian pharmaceutical industry. The
reasons for this sudden spurt are not discernible to any plausible
explanations. The period in question was not marked either by any
therapeutic revolution~ or by any innovational drug products, which
warranted such a sudden spurt in technology seeking from abroad.
206
Indeed, if that were the case, the foreign drug-MNCs would have no
reason to advance newly innovated drug technologies on a priority basis.
On the contrary, a closer examination of our data clearly reveals that the
emphasis on need based essential drug technology was thrown out of
gear. The nature of collaboration agreements entered with the US drug
firms in 1980 (the highest number of agreements contracted in the whole
period of study) showed that, out of 23 agreements 19 were either non
essential drugs or were vitamin products. In fact in the post-1990s
period the US had emerged as a dominant player in the Indian
pharmaceutical industry.
The relative bargaining strength of the industry is always reflected
m the nature of collaboration, type of contractual obligations, and
options for out-sourcing technology supply. Available evidence up to
1972, pointed out by Subramanian, showed that the terms of reference
of the contract were weighted so heavily in favour of technology supplier,
that domestic firms were helpless, even in cases where foreign MNCs
circumvent the contractual clauses. However, when we exaniined the
terms of reference, and contractual obligations in 98 foreign
collaboration agreements in the Indian pharmaceutical industry during
1977-87, it was found that the terms appeared not too compelling.
207
Period us UK
1951- 13 (1) 8 (3) 60 (25.49) (15.68)
1961- 6 (3) 5 (4) 70 (14.28) (11.90)
1971- 2 (4) 4 (2) 79 (6.89) (13.79)
19803 23 (1) 18 (2) (28.39) (22.22)
1981- 10(1) Nil 86 (19.23
Grand4 54 (1) 35 (2) Total (21.17) (13.72)
TABLE V.4
DISTRIBUTIONAL PATERN OF LICENSING AGREEMENTS IN INDIAN •PHARMACEUTICAL INDUSTRY: 1951-1986
COUNTRY
Nether-SWISS FRG Italy Sweden Japan Hungary lands France Others
9 (2) 8 (3) 1 (7) Nil Nil 1 (7) 2 (6) 4 (5) 5 (4)
(17.64) (15.68) (1.96) (1.96) (3.92) (7.84) (9.8) 5 (4) 7 (2) 8 (1) 3 (5) 2 (6) Nil 2 (6) Nil
2 (6) (11.90) (16.66) (19.04) (7.14) (4.76) (4.76) (4.76)
2 (4) 3 (3) 9 (1) 3 (3) 2 (4) 2 (4) 1 (5) Nil
1 (5) (6.89) (10.34) (31.03) (10.34) (6.89) (6.89) (3.44) (3.44) 11 (3) 9 (4) 3 (7) 2 (8) 3 (7) 2 (8) 1 (9) Nil
4 (6) (13.58) (11.11) (3.70) (2.46) (3.70) (2.46) (1.23) (4.93)
8 (2) 3 (5) 6 (3) 2 (6) 3 (5) 4 (4) 2 (6) 2 (6) 6 (3) (15.38) (5.76) (11.53) (3.84) (5.76) (7.69) (3.84) (3.84) (11.53) 30 (3) 27(4) 10 (7) 10 (7) 10 (7) 9 (8) 8 (9) 6 (10) 18 (5)
(13.72) (11.76) (10.58) (3.92) (3.92) (3.52) (3.13) (2.35) (7.05)
1Pharma
2Former Licen-
Socialist Total sing as %of Total
Nil 51 3.76
(100.00) 2 (6) 42
1.41 (4.76) (100.00)
Nil 29 1.24 (100.00)
5 (5) 81 16.56
(6.17) (100.00) 6 (3) 52
1.35 (11.53) (100.00) 13 (6) 255 2.32 (5.09) (100.00)
Source: Data obtained by the author as explained in the text. Figures in ( ) brackets are percentages and in [ ] brackets are ranks of the countries in the period concerned.
1. Pharmaceutical licensing as a percentage of total licensing agreements in the Indian industry is obtained by taking total in each period.
2. Former socialist bloc countries include USSR, Czechoslovakia, Bulgaria, Yugoslavia, Poland and Romania, Rank is assigned to these countries and also to the column representing 'other's, since in the pharmaceutical industry these columns and significant.
3. As explained in the text. 4. Grand total represents all types of collaboration agreements in the pharmaceutical industry, which include technical, financial,
technical-financial and designs and drawings.
208
Table V.S below provides the details of nature of collaboration,
terms of reference of contractual agreement from 1977 to 1987.
TABLE V.S DRUGS AND PHARMACEUTICALS
FOREIGN COLLABORATION ( 1977 -1987)
Name of the Name of the Items of
Sl.No. Indian Year foreign Manufact Terms of collaboration
Company I appli cant
Collaborator ure
T.K. H./ Royalty
Desig %for
n Years & Equaity Duration Engg.
Export participation (Years) /Con obligati sulta on etc. ncy Fee
1. Boots (India) 1977 Boots Co. Ibuprofen Ltd., U.K.
Astra of Pharmace 2. IDL Chemicals 1978
Sweden utica! products
Welcome Foot and
4. Indian Dairy 1979 Foundation
Mouth Corp.
Ltd., U.K. disease Vaccine
Ininter and Ampicillin 5. Sh. C.I. Gandhi 1979 Proch em,
Italy Trihydrate
Standard M/s. Proter Erythromy 6. Pharmaceuticals 1979
Ltd. Milan, Italy cin
West Bengal Ph and Mitsui
7. Phytochemical 1980
Toatsu Aspirin Dev. Chemical,
Corporation Ltd. Tokyo Calcutta. Kerala~State
Tennaco 8. Drugs &
1980 Chemicals Salicylic Pharmaceuticals
U.S.A. Acid. Ltd. Kerala
Methyl Prostaglan
9. Albert David
1980 Upjohn Co., din F-2
Ltd., Calcutta. U.S.A. Alpha Thanprosi n etc. D-
Dr. Sanjay Upjohn Co. Phenylglyc 10. 1980 in & -do-Amin, Baroda U.S.A.
Chloride HCL
Boehringer- Boehringer Alpha
11. Knoll Ltd., 1980 Mannheim Methyl
Bombay West Dopa Germany
Sharda Homoeo Laboration Homoeopa
12. Pharmaceuticals 1980 thic Ltd. France
Medicines 13. Dr. Gadde S. 1980 Petrole Salicylic
209
Murthy New Chemicals Acid York Engr., Paris
Boehringer Knoll A.G. Theophylli ne Amino
14. Knoll Ltd., 1980 West Phylline Bombay germany etc.
Bracco Pharmace
Pharmed Pvt. Industrial uti cal
15. Ltd. Bombay 1980
Chemical, Formulatio ns of
Italy Bracco Mr. B. Dr. E.
16. Ramender 1981 Fresenius,
Intravenou Reddy Ltd., s Fluids Hvderabad·
F.D.R.
M.s Cadila General -
17. Labs.,
1981 Precision Rifampicin Switzerland
D. us$ 10
M/s Ininter Phenylglyc Ls: Per Kg.
Sh.C.I.Gandhi ine, P- US$ Of 18. Calcutta
1981 SA, Hydroxy 65,00 Product Switzerland phenyl- 0 for 5
!llvcine vears 5% Expon Obligati on: 10%
M/S IBIS Health M/s Sweet N LS: during
Cumberland US$ first two 19. Aids Ltd. 1982
Packing Low
35,00 years of Bombay
Corp., U.S.A. (Sweetner)
0 producti - on& 20% for "
the next 3 vears.
LS: US$
M/s Themis M/s, Unico, 65,00 20. Pharmaceuticals 1982 Paris, Pifampicin 0/- us
, Gujrat (France) (Sub. To taxes! LS:Ja
M/s Toyo 6Amino panes
21. M/ s, Max India
1982 Jozo Co. Ltd. Penicillani e yen
Ltd., New Delhi Japan cAcid 12.3 Millio n
M/s Bhandari All types of
Dolisos M/s L.P.H. Homeopat hie
22. Laboratories 1982 Dolises, Medicines
40%
Pvt., Ltd., New Paris, France and allied Delhi items etc.
M/s IndL Salicylic LS:
M/s Southem Acid Rs, 36 Medico Indl.
Export-Salicylates lakhs
23. Chemicals Ltd., 1982 import, State including net of
39%
New Delhi Company Aspirin (taxes
Romania etc. i Papin/Cys
M/s Bio- M/s, Bicon teine
24. chemizyme (I) 1982 Ltd. Cork Hydrochlo 40% Pvt. Ltd., Ireland
ride/Chon Bangalore drotin
Sulphate 25. M/s Win- 1982 M/sSterline: 1) LS: 40%
210
Medicare Pvt. Drug Inc. Nalidixic US$ Ltd., New Delhi USA Acid 2,00,0
2. 00 Gentazoci Lakhs n 3.Phenylep hrine 4.Benorgla te Caphalexi nand 7-Aminodesa cetoxy-Cephlao Sporanic Acid
LS: 1,20,0 00
Mfs Ininter (Sub.
Sh.C.I.Gandhi Taxes) 26.
Calcutta 1982 S.A. Chiasso,
US$ Switzerland
96,00 0) (net of taxes I
Mfs Salicylic
M/s International Acid,
LS:RS 27.
Intemational 1982 Business
Sodium 49,41 40% Drug Co. Ltd.,
Associates Salicylate Lakhs
Hyderabad Inc. USA. abd Aspirin
US$ M/sAmar Dye- Mfs Sterling Salicylic 1.25
28. Chern. Lab., 1982 Drug Inc., Acid and lakhs Bombay USA. Aspirin (sub. To
taxes) LS:US
M/s. Jukase M/s Capsule Empty $ 100% 29.
Ctili Capsule 1982
Technology hard 55,00 Export 40% Pvt. Ltd., Intemational gelatine 0 (net oriented Bombay Ltd., Canada capsules of
taxes I
Econazole LS:
M/s Ambalal Mfs. Cilag Nitrate &
SW.F Sarabhai R, 2
30. Enterprises Ltd., 1983 Chemie Ltd., its lakh
Bombay Switzerland Formulatio (net of n taxes)
M/s LS:US M/s IBIS Cumberland
Sodium 66,00
31 Health Aids 1983 Packing Saccharin
0 (net Ltd., Bombay Corpn. New of
York USA taxes) Mfs techno LS:US
32 Shri Arun K.
1983 Export Rifampicin $ 2.0
2.5% for Mittal New Delhi (Pharmachin 5 years
). Bulgaria lakhs
M/s LS: M/s Shrihma Industrial Salicylic Rs. 36
33. Fine Chemicals
1983 Export Acid and lakhs and Import Aspirin (net of Pharmaceuticals Company. Romania taxes)
M/s Themis M/s Dephenylg LS:US
34 Chern. Ltd. 1983 Medimpex, lycinefpar $ 1.0
Bombay Hungary a-Hydro- lakh Phenylglyc fnet of
211
in e. taxes} M/s Pefco M/s Ethoxy LS:
35. Foundry and
1983 Dynamit Methylene DM 5% for 5 Chemicals Ltd. Nobel, West Malonic 45 years Pune German_y Ester. lakhs
LS:
M/s Fouress us$ Mfs Dobfar, 1.75
36. Engg. (IndiaO 1983 SPA, Italy 6APA Iakhs Ltd. Bombay.
(net of taxe& LS"
Mfs us$
37. Mfs Curewell (I)
1983 Pharmachim Rifampicin 2.00
2.5% Ltd. Faridabad. Iakhs , Bulgaria.
(net of taxes(
Time
Mfs Sidmak M/s Sidmak release LS: Pharmace us$ 38. Lab. (I) Ltd. 1983 Lab. Inc., utica! 2.50 Valsad. USA. formulatio Iakhs.
\. ns
M/s Pefco M/s LS: us$ 10 per kg,
39. foundry & 1983
Secifarma D- us$ net Chemicals Ltd. SPA, Milan, Naproxen 1.06 exceedin Pun c. Italy Iakhs
g5% M/s AB
I) Salicylic a)AB Mfs Rajasthan Bofo Acid Bofors State Indl. rs
2) Aspirin Babel No be
40. Development &
I (Acetyl
SF 10% Chemat
Investment Che
Salicylic ure 10% Corpn. Ltd.,
matu Acid) b)
Jaipur 3) Sodium Swadfu r,
Salicylate nd 10% Sewd en
LS: Mfs Punjab US$ Sate Indl. Mfs Faster 16.00
41. Development 1984 Wheeler, Vitamin-C lakhs Corpn., Ltd., Italy (sub. Chandigarh. To
,, taxes} M/s War! d LS: Rs.
Shri P.K.N. Che L-Cystine 36.00 42. Panicker, 1984 mica and Amino lakhs
Madras Is Acid powder (sub. To Co. taxes) Japa n
LS:
M/s Chong us$
M/s Alembic 5.00 43. Chemicals 1984 KunDang
Rifampicin lakhs Works Co. Ltd. Corpn.,
(sub South Korea. to taxes}
L- LS:
Shri m. Shyam M/s World Cystimne
Japan
44. Prasad reddy 1984 Chern. Co, & Amino
ese
Mardas. Ltd. Tokyo Acid
yen (Japan).
powder 36.90 lak.'ls
212
I KH: SF 2.40 lakhs
Mfs I.V.F. Tech. M/s Ranbaxy Maschinerjbr Plaster of Ass.
L!.-.::J. Lab. Ltd. New 1984 ik Paris Fee Delhi Schaffaysen, Bandages SF
Switzerland 0.60 lakhs (sub. To taxes\ LS:
M/s us$ Mis Ranbaxy Fabbrica Pentozacin
2.25 3.5% for 46. La . Ltd. New 1984 Italian a lakhs
Delhi Sintetici, e
(sub. 5 years
I S.P.A., Italy To taxes\
i LS: I
I Mfs A:o:tra Amino
29.40
47. M/s Astra-IDL
1985 pharmaceuti
pencilliani lakhs
39%
I LTd., Bangalore, cals, cAcid
(sub. Sweden. To
taxes) 1. Geceon
M/s Uni-Richter Richter Ltd. D-
48. 1985 2. Medimpex N orgestrill 39.5%
I (P) Ltd. Bombay Trading Co., tablets Hungary
Shri J.J. M/s Baris 6-APA. D-LS: us$
49. Nerurkar, 1985 Entex, SA, Phenyl 3.00 Indore Spain. Glycine
lakhs
Phenylacet us$
M/s 75,00 50.
M/ s Max India 1985 Finchimica,
yl-7 Amino 0 (net 5 years
ltd.New Delhi Italy
Desacetox of
y Acid taxes\ LS:
Mfs Wolf Sterile DM
51. M/s M.B. & Co.,
1984 Brikmaier,
Surgical 2.00
Calcutta west lakhs Germany
Sutures (net of , taxes}
Pharmace uticals in LS:
M/s Mayer BIOVAIL times pound
52. Organic (P) Ltd. 1985 S.A., drug- Sterli 4% (sub
40% delivery of tax) -
Thane Switzerland ng system in one capsule lakh form
M/s Srinivas Mfs World 100 53. Cystine, 1985 Chemical Co. L-Cystine export
Hyderabad Japan oriented
M/s The east LS:
Mfs Hauba us$ 54. Coast Pesticides 1985 Inc., USA
Ibuprofen 33,00 3% 60%
Ltd., Madras 0 LS:
Doxycyclin US$
Mfs Sarabhai Mfs Havione 5 55. Chemicals Ltd. 1985 Lis bow
e & its lakhs
Baroda Portugal formulatio (sub. ns.
To taxes\
213
LS:
M/s Capsule US$
Mfs London Hard 1,50,0 56. Rubber Co. (l) 1985
technology Celatine 00
International Ltd., Madras Ltd. Canada
capsule (sub. To taxes\
Mfs
57. Shri P. Gupta,
1986 OCEANDEN TMB/PGC LS:25
5 years 40% Calcutta EBV. /HPG. Etc. Iakhs
Netherlands LS:US
Shri Dinesh $ 21
58. Narain Sharma, 1986 Mfs Proter of Rifampicin
lakhs Milan, Italy (sub.
Agra To taxes\
Sh. K. Mfs Ing. LS:
ramabrahman, Wolf
Sterile DM 59. Vishakhapatna
1986 Birkrnier, Sutures 2.5 west
m lakhs germany
Mjs LS:
Mfs Intertoch Dipyridam us$ 5% for 5
60. Rajyalakshmi 1986 research
ol& 84,00 years 60% Chemicals P.
Corpn., Phenothia 0 (net_ (sub. To
Ltd., Hyderabad zines. of taxes) U.S.A. taxes}
K.V. LS:US
Pharmaceuti Dipyridam $ 5% for 5
61. Sh. Samir K.
1986 cals ol & 84,00 years
60% Shah, Bombay lnternatioanl
Phenothai 0 (net (sub. To zines of taxes)
Inc., USA. taxes) LS;
CIECH US$
Mfs Hindustan Imports & 0.5
62. Antibiotics Ltd., 1986 Exports Ltd., Rifampicin millio
Pune Poland n (net of taxes} LS:
M/s SoL M/s general US$ Precision 9.50
63. Pharmaceutical 1986 LIECHTENS Rifampicin lakhs
10.6%
Ltd., f!yderabad TIEN (net of taxes\
Medicated LS:
Mfs Shrisma M/s Sprays us$ and 1,20,0
64. Fine Chern. Ltd., 1986 Mentholatu formulatio 00 40%
Bangalore m, U.K. nsand (net of creams taxes\
KH:
Mfs Indian Recordati Phenlglyci us$ 4,14,
65 Organic
1986 Industry ne Base 285
Chemicals Ltd., Chemicals, for other (sub. Bombay Italy. items To
.. taxes\ LS: US$
Prof. Ram Gupta M/s Fermic Cephalexi 5
66. 1987 lakhs 60% Texas, USA Mexico n (sub.
To taxes\
67. The Himachal 1987 M/s Rifampicin LS:
214
Pradesh Ind. Pharmachin Kh us Dev. Engineering $9.50 Corporation SRL., Italy. lakhs Ltd., Shimla (sub.
To taxes} LS:
Shalimar Female SEK
68. Synthetics Pvt. 1987 M/s Dambi Hygiene 2.50 305 for
50% AB, Sweden lakhs 5 years
Ltd., Bhopal Padsm etc. (net of taxes} LS:
M/s KN M/s JBF Intertech Methyl US$ 3% for 5 69. Synthetics Ltd. 1987 Research Dopa Bulk 120 50%
Bombay Corpn. Drugs lakhs years
U.S.A. (net of taxes} LS:
M/s Vneland US$
70. M.s Indonex Pvt.
1987 Laboratories Poultry 1,75,0
20% Ltd., New Delhi
Ltd. USA. Vaccines 00
(net of taxes} LS: us$
M/s Armour M/s Steritic Sodium 32,10
71. Chern Pvt. Ltd., 1987 0 Bombay Italy. Ampicillin
(sub. To taxes} Expor t obliga
LS: US$ tion: Atleas
Shrishma Fine 15 lakhs & t 75%
Chern. & desinc etc.
for 10 72 1987 Paracetamol us$ 0.3 Pharmaceuticals lakhs
years Pvt. Ltd.
(sub. To ext en dable
taxes) for anoth er 5
-~ years LS:
Polytechna, Enzymes 6 Rs. 25 lakhs Royalty 73. HPMIDC 1987 Spofa, APA 7 (sub. 2%
Prague ADCA To taxes} LS:
M/s P.S.I.D.C. M/s Techno- Vitamin- 111 74.
Chandigarh 1987 export, C/ lakhs
USSR. Sorbitol (sub to tax} LS: US$ 60,00
Institute of Life saving 0 for
75. M/s Serum 1987 Immunology drugs impor
Institute Yugoslavia (Vaccines t of
etc.) desig nes of Drawi ngs
76. M/s Vinati 1987 M/s Hamari Ibuprofen LS: J. 3% on 10% amounting_
215
Enter Prises; Chemicals Yen internal to Rs. 241 lakhs Bombay Ltd. Japan 950 sales & in the total paid
lakhs 5% on to capital of Rs.
(net of exports 240 lakhs.
taxes) both subject to taxes --
Tetra 40% amounting Mfs Bee. Mfs Nobal Butyl
to Rs. 4 lakhs in 77. Chemicals 1987 Kemi total paid up
Bombay Sweden Ammoniu capital of Rs. 10 m Bromide lakhs
LS: Know-how
Mfs Lupin M/s nelson Cephalosp fee:
78. 1987 .US$ Labs., Bombay SPA, Italy orines
85,00 0 (net of taxes)
Equity M/s LS: Participation
79. Mfs S.S. Drugs
1987 Perpharma, Rifampicin
us$ byNRl (on Ltd., New Delhi A. G., 12 non-
Switzerland lakhs Repatriable basis) 5. 70%
us$ Mfs Gentamyci
3000, 80. H.A.L. 1987 Pharmachin, 000
Bulgaria n (net of
taxes\
LARK SPA, 7 ADCA,
81. Regent Chern. 1987 cefazolin Italy
ceohalexin Japan ese 8.65%
Protchem Union Bros. yen 100% amounting to
82. Industries, 1987 Industries, Amino 10 for ten
Rs. 22.50 lakhs
Madras. Japan Acids crores in the total paid
(sub. years up capital of Rs.
Of 260 lakhs.
taxes) us
Venkateswara $39,0
83. Hatcheries, 1987 Tri Bio-Labs. Marek's 0 Inc. USA Disease lakhs
Hyderabad (net of taxes)
Royalty us$ 42.00 per
Shrishma Fine Dr. Ing.
us$ tonne Export \ Chemicals & 2.00 (net of obligation 80% Mario Biazz i Paracetam
84. Pharmaceuti- 1987 Vevey ol Projects
lakhs taxes) for ten years, cals (Karnataka) (net of on extendable for
Ltd. Switzerland taxes) export another 5 years
for a period of six vears
(i) Fungal us$ a) 50% amounting to
Enzymes 50,00 Rs. 10 lakhs
85. Bio Chemizyme
1988 Biocon Ltd., ii) Natural 0 5% for 5 b) 25% NRl on
India Ltd. Ireland Colurs (sub. years non-repatrible iii) Natural To basis
Gums taxes) amounting to Rs. 51akhs.
216
Johnson & Needles 77,00
86. Johnson Ltd. Surgical 0 (net of
Bombay Setures taxes) US$
Biochefarm 1,50,0 87. IDPL 1988 SA Penicillin 00
Switzerland (net of taxes}_ US$
Lupin Labs., Verex Labs., Sustained 45,00
88. 1988 release 0 (net Bombay Inc. USA tabs. of
taxes) Royalt y5% on intern a! sales
Artificial &5% Export
Hermes 40% amounting Sweetners
on oblicatio to Rs. 40 lakhs 89.
Hermesetas of 1988
Sweetnee Sterile
export n 75% in the total paid Idnia Ltd. Ltd.,
Gen both
for 5 up capital of Rs.
I Switzerland
compound subje lOOlakhs cted
years
to taxes for a period of 5 years
US$ 0.25% 4.5 amounting
Alpha Drug Chemen D(J 5,14,5 subject toRs. 9.10 phenyl lakhs in the
90. India Ltd., 1988 Teone S.R.L. Glycine
00 to taxes total paid up Bombay Italy (net of for 5 capital of Rs. etc. taxes) years 190.90 lakhs
Specialise
Mr. F.N.C. d us$ Chemical
Menon Bombay, Kelsen Reactors
1,46,0 91. CfO Sharp & 1988 International
Pollution 00
Thannan, , USA Control
(net of Bombay
Equipmen taxes)
.. t ·> 20%
amounti ng to Rs. 200
us$ 17 lakhs in 92. M/s Astra- IDL Rifampicin lakhs (net the total
of taxes) paid up capital toRs. 1000 lakhs.
i) L.S. JYen: 360 lakhs
M/ s Alpha Drug Mfs Fuso, ii)
93. India Ltd. 1988 Chemicals 3,4,5 Basic
Chandigarh Ltd., Japan TMBA Engy:
J. Yen: 225 lakhs (net of
217
94.
95.
96.
97.
98.
.. taxes)
L.S.-F.E. -40%
Export amounting to
Female DM-
obligatio Rs. 70.40 lakhs M f s Shalimar J. Wriths & 75,00 NRI Synthetics 1988
Co. Hygienic 0 (net
n30% Participation Pads etc.
of for 5 40% amounting
taxes) years toRs. 40.40 lakhs.
L.S.-
M/s Ribben DM-
Mfs Cepham Ampicilin 75,00 100% F.E. 8.85% 1988 SPA, Milano, amounting to
Medical Leasing Italy
Sodium 0 (net E.O. Rs. 11.50 lakhs of taxes)
M/s Interted LS.
Rayalty 2.5 Mjs J.B.F.
1988 Rescord Methyl
lakhs :3%
Synthetics Corpn., Dopa (net of
E.O. U.S.A.
taxes} 100%
i) D- Alpha Phenylglyc
L.S. ie Base us$
Mfs Kavita M/s ii) D-5.00
Sales Corpn. 1988 Recordati, Alpha lakhs SPA, Italy Phenylglyc (net of
ine Hydrochlo
taxes)
ride Export
.. obligatio n 10% for ten
Accu-LS: years
Shri Dinesh K Shri W.F. Clone us$ Royalty:
Srivastava, New 1988 Mahonly, 2.50 3% on 1 0% amounting
pregnancy lakhs internal to Rs. 8 lakhs
Delhi. USA. detection (net of sales, kits
taxes) and5% on exports for 5 years
Source: As m Table V.4
It was also observed in our data that most the technology
transferred was through MNCs to their affiliates located in the country,
which accounted for roughly 40 percent. 14 percent was accounted by
non-affiliate foreign firms, 37 percent by the Indian firms belonging to
the organized sector. While the public sector accounted for 12 percent of
the technology acquired through foreign sources the remaining 7 percent
was the share of the small-scale units. However, when examined from.
the point of view of joint ventures in the pharmaceutical industry it was I
not very significant for the whole period. The joint ventures represented
as 'technical-financial' was only 14 percent of the total. Further, 10
218
percent were purely financial, whereas 76 percent represented purely
'technical' collaborations. This has an important bearing for the macro
policy considerations. Some empirical studies have even pointed out
that the beneficial spillover effects of endogenous technology transfer -.
through joint ventures is greater than through other forms of technology
transfer. In fact, this singular reason has been advanced strongly in
support of the need for greater FDI flows. 4 The present evidence from the
Indian pharmaceutical industry is good enough reason to reject such a
proposition that FDI backed joint ventures are greater source of assured
technology supply. The duration of contract of a foreign collaboration
agreement is in fact crucial in determining the alternative technological
choice, in case the technology recipient decides to switchover to another
supplier. In no single collaboration agreement that has been examined
in the data set the duration had not exceeded five years. This again is an
indication of the freedom of flexibility for the Indian drug firms in
choosing the technology of their choice.
V.3 TECHNOLOGY GENERATION IN THE PUBLIC FUNDED RESEARCH LABORATORIES
In 1984, the High technology Committee in the Ministry of
Petroleum and Chemicals had identified 95 bulk drugs, which required
sophisticated technology. We had worked out various therapeutic
categories to which these bulk drugs belonged. The details on high
technology bulk drugs are provided in Table V.6 and Table V.7. Out of
the 95 drugs listed in both the Tables V.6 and V. 7, it is shown that
technology was available locally for 25 drugs.
4 See for example, Henrik Braconier and Frederik Sjoholm, "National and International Spillovers from R&D: Comparing a Neoclassical and an Endogenous Growth Approach", Working Paper Series in Economics and Finance No. 211, December 1997, Sweden.
219
S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 43. 44. 45. 46.
TABLE V.6 LIST OF BULK DRUGS IDENTIFIED BY THE HIGH
TECHNOLOGY COMMITTEE Name Betamethasone* Vitamin A Palmitate Megastrol Acetate Methidilazine HCL Meclazine HCL Vitamin E Acetate Vitamin K Chloroquine phosphate* Resorten Substance (Chloroquinate) Diphenyl Hydantoin* Teramisole Halothane Tetmosol Phenothiazzine Crystalline Insulin Ibuprofen Dapsone Diethyl Carbamazine Citrate Digoxin Pyritmethadine Lynestrenol Ethyl Estradiol3-Methyl Ether (Mestranol) Methyl Testosterone Methane dionone (if produced from DHA Acetate)' Estradiol/Estradiol propionate Ethinyl Estradiol Testosterone j propionate jvalerinate Tetracycline HCL Chlorotetracycline Dimethyl Chlorotetracycline Trihexyphenidyl HCL Baralgan Ketone Tatanus Antitoxin FMD Vaccine Hemacoel Sterile Frusemide* Glybenclamide* Surgical Catagut Needled Absorbable Stature Metronidazole Vitamin B12 42. Dexamethasone Pure*
Testosterone Decanoate j Isocaproate j Phenyl Propionate Testosterone Undecylenate N androlone Decanoate /Phenyl Propionate* Allylestrenol and Ethylestrenol
220
47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95.
Ethisterone Desoxycorticosterone Phenyl propionate(Docat) Betamethasone Disodium phosphate* Human Chlorionic Gonadotrophin (HOG) Chloramphenicol* Tetracycline* Oxytetracycline* INH* PAS/Sodium PAS* Vitamin A Acetate Dihydro Emetin dihydrochloride Diazepam*. Chlorodiazepoxide* Calcium Gluconate Calcium Lactobionate Ferrous Gluconate Magnesium Gluconate Intestopan Substance Betamathasone Vale rate* Spiro lac Esanzymes (Fungal Diastase) Pyridin & Picolines (Drug intermediates) Hydrocortisone Acetate Hydrocortisone Prednisolone Prednisolone Acetate Prednisone Progesterone 17 -Hydroxy Progesterone Acetate 17-Hydroxy Progesterone Carbonate Dihydro Epi-androsteron Acetate (DHA, intermediate) Methyl Androstemediol (Intermediate) Vitamin E Succinate Testosterone and its salts Ethoheptaxine Cetrate Benzathine Pencillin G Mephetermine Sulfate PhenylButazone* Oxyphenyl Butazone* Chlorthalidone Carbomazepine HCL Imipramine Trimethoprim* Trimethoprim* Salbutamol* Vitamin K and K * Lorazepam* N orethisterone* Nor-Ethinolrolone *
Source : IDMA Bulletin, XV, No. 28, 1984. *Technology available indigenously.
221
TABLE V.7 BULK DRUGS INVOLVING HIGH TECHNOLOGY/
TECHNOLOGY AVAILABLE INDIGENOUSLY (INDIA) Antibiotics: 1. Chloramphenicol 2. Tetracycline 3. O:Ayrtetracycline
Sulpha Drugs Not identified as high technology drugs. Vitamins: 1. Vitamin B12 2. Vitamin K 3. Vitamin K3
Corticosteroids: 1. Betamethasone 2. Dexamethasone Pure 3. Norethisterone 4. Norethindrolone 5. Betamethasone Disodium Phosphate 6. Nandrolone Decanoate 7. Betamethasone Valerate
Anthelmintics: None Immunological Agents: Anti Diabetics: 1. Glybenclamide
Tranquilizers: 1. Diazepam 2. Chlordiazepoxide 3. Lorazepam
Diuretics: 1. Frusemide
Anti TB.Drugs: 1. INH 2. PAS and its salts
Analgesic/ Antipyretics: 1. Phenyl Butazone
Anti-malarials: 1. Chloroquin Phosphate
Anaesthetics: None Anti-Histamines: · None Anti-Dysentery Drugs : 1. Metronidazole 2. Trinidazole
Cardiovascular: None Anti-asthamatics:
None
222
1. Salbutamol
Anti Leprotics: 1. Dapsone (DDS)
Anti- Filarials: 1. Diethyl Carbamazine Citrate
Anti-bacterials: (other than anti-biotics and sulphonamides) 1. Trimethoprim
Source :Worked out by the author on the basis of the following: (a) Reoprt of the Ministerial committee, Ministry of Chemicals &
Fertilisers, 1984. (b) IDMA Bulletin, Vol. XV. No. 28. (c) Ministry of Chemicals and Petrochemicals, Annual Report, 1985-
1986, Govemment. of India.
The National Research Development Corporation (NRDC) has
enlisted 41 process technologies developed entirely in the public funded
research organizations or govemment laboratories. This information is
provided in Table V.8.
TABLE V.S LIST OF PHARMACEUTICAL PROCESS TECHNOLOGIES
DEVELOPED BY NATIONAL LABORATORIES
S.No. Name ofthe Research Process /Product Unit/Laboratory
Acetanilide National Chemical 1. Laboratory, Poona
Theophylline, 2. aminophylline, @ -do-..
~ Caffeine*
3. 70% sorbitol from dextrose -do-monohydrate*
4. Mannitol and 70% Sorbitol -do-from Cane sugar D - Glucosamine
5. Hydrochloride -do-C.P. (GAH)
6. L - Arabinose C.P. -do-
7. Vitamin B6* -do-
Ethyl-2 (p-chlorophenoxy) 8. 2-methyl propionate -do-
(chlofibrate)
9. 2-Amino-5- -do-Chlorobenzophenone,
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I
2-methylamine-5-chloro benzophenone*
10. Colchicine* -do-
11. Diazepam* -do-
N-N, Dimethyl biguanide hydrochloride
12. and phenethyl biguanide -do·· hydrochloride (DMBG-HCL and PEBG-HCL)*
13. Gluceryl Guaicolate * -do-
14. Phenacetin* -do-
15. Phenyl acetic acid* -do-
16. P-nitrophenol* -do-
17. Quinapyramine sulphate / -do-Chloride (vet. drug)
18. Vitamin C* -do-
19. Morphaline from -do-Diethanolfamine
20 Phenoxy acetic acid -do-
21. Calcium Gluconate* CECRI, Karaikudi@
P-aminophenol from 22. P-nitrophenol* -do-
23. P-nitrobenzoic acid* CECRI, Karaikudi@
~ P-aminophenol and 2, 4- -do-24.
diaminophenol*
25. Glyoxalic acid -do-
26. P-aminobenzoic acid -do-
Methaqualone & CECRI, Karaikudi and RRL,
27. Methaqualone Bhubaneswar @ Hydrochloride
28. Strychnine and brocine RRL, Bhubaneswar@ from nux vomica seeds
29. Xanthotoxin from RRL,Jammu@ Heralcium candican roots* Scopolamine hydrobromide
30. from -do-the seeds of Datura innoxiz and datura Metal
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31. Rutin 32. Active Principles of Senna
Hyoscine hydrobromide 33. from
Datura Stramonium 34. Berberine hydrocholoride*
35. Centimizone*
36. Pepsin* 37. Niacinamide
38. B-Hydroxy quinoline from Quinoline
39. human choronic gonadotropin
40. Heavy basic magnesium Carbonate Diagnostic reagent absorbant strips for testing
41. ketonic bodies in urine
Source: NRDC Process, Government of India. * Processes Licensed @ CSIR Laboratories
-do--do-
-do-
-do-CDRI, Lucknow@
-do--do-
-do-
ICMR, Bombay
CSMCRI, Bhavnagar@
DRDE, Gwalior
Out of 41 NRDC process technologies 20 were licensed and the
remaining utilized for want of licensing. An important measure of
indigenous technological capability in the Indian pharmaceutical
industry is the ability to manufacture drugs from the basic stage. An
examination of 34 bulk drugs produced from basic stages 1987 and 1992
revealed~ that 9 drugs were manufactured entirely with local technologies
developed by National laboratories.
Table V.9 shows the list of new drugs developed in various public
funded organizations. The above evidence has clearly brought out the
point that the contribution of public sector R&D, public funded research
institutes, universities and national laboratories to the Indian
pharmaceutical industry has been substantial.
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j
TABLE V.9
GENERATION OF NEW DRUGS FROM PUBLIC FUNDED ORGANIZATIONS
Drug Year of Discovery Therapeutic Use
Urea Stibamine + 1992 For Kala-Azar
Rauwolflz Preparation + 1930 Sedative J Hypotensive
Methaqualone + 1956 Hypnotic
Peruvoside + 1960 In Cardiac Insufficience
Hamycin + 1966 Topical Antifungal (fungal)
-
Centimizone * 1972 Anti-thyroid
Sintamil + 1976 Anti-D~ressant
Enfenamic Acid * 1980 Anti-inflamatory
Source: DST, Department of Science and Technology, Government of India (Compiled from department sources)
*From CSIR laboratories. +From Public Sector Units.
V.4 THE POST-WTO IMPLICATIONS FOR THE INDIAN PHARMACEUTICAL INDUSTRY
j
In the post-WTO scenario the Indian pharmaceutical industry is
undergoing a brisk process of cartelisation, which was, triggered off by
the foreign MNCs the world over, and is now practiced by the Indian
firms. 'The strategy is to acquire a bigger financial muscle through
mergers and acquisitions, which may eliminate the small-scale firms over
a period of time. In the absence of support from government, which is on
the decline from 1988 to 2001, there has been a consistent decline in the
bulk drug exports from the Indian pharmaceutical industry. The
Chemexcil Report for the year 1999-2000 shows that the growth in bulk
drug exports has fallen by 10-15 percent of the previous record of 23 per
cent. Due to international price competition that has become the
hallmark for the past-decade or so, and due to WTO clauses, India has
been importing certain drugs from countries like China at marginally
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cheaper prices, which were hitherto manufactured in the small-scale
sector. Temporarily it may appear profitable, but has serious implication
for a large number of small-scale units in the pharmaceutical industry
which may face closure in the long-run.s
In the post-WTO scenario a number of Indian drug firms, including
major players like, Ranbaxy, Cipla, Dr. Reddy's Labs are also working
out ways to devise altematives to new drug discovery, while also
increasing their R&D budgets for basic research substantially.
Currently many Indian drug firms have opted for Novel Drug
Delivery System (NDDS), which is considered as a cheaper alternative to
basic discovery. NDDS means developing friendly dosage forms of
various formulations with the ultimate aim of increasing their
convenience to patient by modifying the dosage form. The Indian firms
have adopted this strategy in the post-WTO scenario, using NDDS as a
means of maintaining their product revenues and prolonging the product
life cycle, in the sense of extending the life of a patent. In India at least
10-15 companies are reported to have made a succes·s in NDDS
discovery, though the future results are yet to be seen. At present
NDDS discovery is developed mainly in the therapeutic areas like
antibiotic, anti-infective, cardiovascular, respiratory and NSAIDS.
The implications. for the consumer are also going to be very drastic.
First, there would be an immediate increase of prices as has been argued
throughout the thesis. Second, for the consumer, the time lag between
the first introduced drug in the world market and in India is likely to be
longer in the post-2005 scene.
Intrinsically there is a distinction between original discoveries like
Penicillins, erythromycin, rifampicin, beta-blockers, ACE-inhibitors, Ca
Channel blockers etc., and Second and Third generation drugs. Some
5 30 Small sclae drug units manufacturing paracetamol were closed down in 2001 ,, and several others face closure due to cheaper imports from China. K. Santosh Nair, "Huge Imports Force Paracetamol Units' Closure", May 10, 2001, www.pharmabiz. com.
227
times the second and· third generation drugs have been more effective
than the first generation discoveries. Indian · pharmaceutical finns
should embark upon the strategies, which would synergise their efforts
through collaborative research with public funded research
organisations, universities and national laboratories. Simultaneously, an
international consortium of pooled R&D may be worked out with
countries like Brazil, China and Mexico, through natural cooperation and
exchange. However the success of these developments, if it happens
would depend on, among other things, a state controlled regulatory
mechanism rather than unbridled free-fare that is envisaged under the
WTO regime.
V.S SUMMARY
The emphasis on technology generation has been part and parcel
of the philosophy of self-reliance practiced in India. The efforts to gear
up indigenous technological capabilities picked up momentum in the late
1970s during which period the recommendations of the Hathi Committee
Report played a crucial role. The introduction of the concept of
'essentiality in drugs had resulted in the pursuit of 'need based'
technology in the Indian drug industry.
The R&D expenditure in the drug industry, which stood at Rs. 10.5
crores in 1976-77, had increased to Rs. 320 crores in 1999-2000. The
number of firms recognized by the government with in-plant R&D
facilities was around 139 in 1992. This number has gone up to 146 by
1998.
Data have been analysed for 255 foreign collaboration agreements
for the period between 1951 and 1986 and separately for 37 more
collaborations from 1987 to 1991. It was found that most of the
contracts executed during the period 1950 and 1970 were technical and
the duration of contracts was restricted to 2 to 3 years. The total
number of collaborations involved was between 125 domestic firms and·
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128 foreign firms from about 24 countries. Out of total 255 the highest
number of 57 contracts were executed between the US and Indian firms
which works out to roughly 22 per cent. The UK, Switzerland, FRG,
ITALY, Sweden, Japan, the Netherlands, France, Belgium, Bulgaria,
Yugoslavia, Canada, Romania, USSR, Panama, South Korea, Poland,
Portugal and others followed this. The percentage of pharmaceutical
collaborations as a proportion of the total manufacturing industry
worked out to be less than 3 percent for the forty-two year period
between 1950 and 1992.
The stringent conditional clauses observed in contractual
obligations for the Indian manufacturing industries in the study of
Subrahmanian, for the period until 1970, were not applicable to the
Indian pharmaceutical industry.
From 1992 onwards it was found that the process of acquisition
and generation of need based essential drug technologies was thrown out
of gear. The evidence in the data suggests that the largest number of
technologies imported after 1980 were for inessential drugs. The cn1cial
technology supplier for this category of drugs was the US. The overall
terms of reference in the contractual agreements, it was observed, that
Indian drug firms had the freedom to choose the technology of their
choice. ~Indian drug units were endowed with the high technology bulk
drug manufacture in the year 1984 itself. Further there is clear evidence
that 41 process technologies were developed entirely in the public funded
research organizations or govemment laboratories. The major drugs that
were discovered for various diseases ranged from anti-inflammatory,
anti-depression to anti-fungals and cardiologicals.
The post-WTO scenario is not quite assuring for the Indian drug
industry. Faced with the challenge from the giant MNCs, the Indian
firms are forced to follow the same path of cartelisation and
centralization to withstand the pressures. Despite adopting similar
methods these firms cannot match the financial strength of the foreign
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MNCs in any comparable manner. The improvised mechanism for drug
research and discovery followed at present by certain Indian firms, in the
aftermath of the WTO, namely the NDDS, also is an inadequate and
temporary ameliorative.
The possibility of shifting to second and third generation drug
discovery is one alternative that may be meaningful in the short-run. In
the long run, however, the integrative and coordinated efforts between
universities, public funded research organizations, govemment
laboratories and the indigenous firms shall be more meaningful.
230