India poised for pharmaceutical boom

The bounty of the third-world, however, was the bane of first-world pharmaceutical companies. They were outraged by India's patent laws, which protected only the engineering process, not the product itself. In turn, they made India a pariah. At last bowing to this pressure, India fully joined the global patent standards last year.

To some, this risks undermining India's responsibility to health in developing countries. "These drugs will not be available at these prices," says Amar Lulla, a managing director of Cipla, suggesting they could be 30 to 50 times more expensive.

He acknowledges that his company loses some business opportunities under the new patent regime, but he demurs that "it is no issue at all to survive." To him, the question is: "How do you juxtapose the human right to health with intellectual property?"

From a purely economic standpoint, however, the change in the patent law has been clearer, and – in many respects – more positive. For one, foreign firms are no longer afraid to come here. In the past, they knew that their patents would not be respected, so they stayed away. Now, foreign pharmaceutical firms are entering the market to target India's growing middle class, and they are considering outsourcing some research, which could cut costs as much as 60 percent, by some estimates.

At the same time, Indian companies are venturing abroad both to buy and to sell. Earlier this year, Dr. Reddy's Laboratories bought German drugmaker Betapharm for $570 million, gaining better access to the European market. The hunger to compete abroad is also evident in the number of applications filed by Indian companies to sell their medicines abroad. Worldwide, 37 percent of the Drug Master Files submitted last year came from India, the largest share of any country.

"The Indian pharmaceutical industry is fast becoming an integral part of the global pharmaceutical market," writes Hitesh Gajaria, an industry analyst at KPMG consultants, in an e-mail. "India's inherent strengths, such as low development cost, skilled and efficient manpower, and easy availability of raw materials, give it a competitive cost advantage."

At this point, India's great strength is still generic drugs. But India's leading companies are now taking the unprecedented step of investing hundreds of millions of dollars into research and design to invent entirely new drugs. "We need to take that next step up," says Mr. Adige of Ranbaxy.

For his part, AIDS physician Thangsing is not convinced.

Sitting behind his desk at his New Delhi clinic, outfitted in a faded black sweatshirt, he does some quick math. Already, India has more people diagnosed with AIDS than any other country in the world, and the number is increasing. In five years, when forecasts suggest the needs will be dire, India's new patent laws will be preventing its pharmaceuticals from making generics from the most up-to-date treatments.

He worries: "That's when the trouble will come."

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