Asia Week: THE CLONING OF VIAGRA
The Week of July 3, 1998
It is easy enough to do - if you are in India
By Jonathan Sprague and Arjuna Ranawana / New Delhi
The Real Thing Where to get it
IN THE U.S., VIAGRA, THE ANTI-IMPOTENCE DRUG that has taken the world's bedrooms by storm, sells for less than $10 per pill. Only Thailand has approved local sales of the prescription medicine, so men in the rest of Asia are paying up to $80 apiece for illegal imports while waiting for their governments to grant their approval (see table, page 68). There is a black market in India too. But prospective customers there can expect a local version that promises to be as effective, but not as expensive, as the real thing. Orchid Chemicals and Pharmaceuticals of Madras and Cipla of Bombay have patented processes to make sildenafil citrate, Viagra's active ingredient. Both have won permission to export the compound in bulk and are waiting for the green light to sell Viagra clones in India.
America's Pfizer, which spent millions of dollars to develop the drug is, well, impotent to do much about the situation. "It is unfortunate that the systems here do not prohibit blatant copying," says S. Ramakrishna, vice-president for corporate affairs at Pfizer India. "Only once in a while does a completely new drug like Viagra come along, and because of its impact on the sociological sphere, it is going to be a bonanza for anyone who can copy this pill." Indian laws grant patents for the process of making a pharmaceutical product, not for the drug itself as in most other countries. So Indian
manufacturers study how the medicine is formulated, tweak the process to make it slightly different, and then apply for a patent.
Fortunes have been amassed since the laws were passed in 1970. Bombay-based Lupin Laboratories patented a process to manufacture the active ingredient in U.S.-invented tuberculosis drugs rifampicin and ethambitol. Now that the American licenses have lapsed, Lupin has captured 70% of the world market for TB medicines. Global giant Glaxo's ulcer remedy, ranitidine, has become one of the biggest selling medicines in history under the brand name Zantac. India's Ranbaxy sells it as Histac at half the price in most of the developing world. Antibiotics, particularly those with cephalexin, amoxycillin and ampicillin as active ingredients, have become an Indian forte. And Indian mass manufacturing of anti-bacterial sulfa drugs has forced American and European companies to stop making them because they cannot match Indian prices.
India's process-based patent laws infuriate Western pharmaceutical companies. (They apply only to pharmaceuticals and agricultural chemicals, not to computer software, music and other products, which enjoy U.S.-style copyright protection.) But the rules have helped India build a large local industry. Ramu Deora, president of the government-sponsored Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council, predicts India's pharmaceutical industry will become one of the world's biggest. He estimates annual growth at 15% every year. The cloned drugs are sold in India and in countries where product patents are not effective, such as in some African countries, most of Latin America, the nations of the former Soviet Union and the Middle-East. The turnover of the Indian drug industry now touches $2.7 billion. Exports account for more than a third.
The anti-impotence drug could join the lucrative list. "What we are doing is perfectly legal here in India," says Satish Srinivasan, head of marketing and regulatory affairs at Orchid Chemicals. The company specializes in cephalexin antibiotics and has a steady market in China, Latin America and West Asia. It earned $8 million on sales of $50 million last year, 95% from exports. But world prices of cephalexin have been dropping in the past eight months, squeezing margins and pressuring Orchid's share price. The announcement that it had copied Viagra proved potent - the company's stock price closed at 105.80 rupees June 19, up 58% from its lowest point in February. Mindful of Pfizer's firepower, Srinivasan says Orchid will be looking at countries where patent laws protect processes and not end-products.
It can make a lot money even in that circumscribed market. Orchid confirms that it has received export orders for about 40 tons of sildenafil citrate. India can generate huge volumes on its own. From pumpkin seeds to crushed pearls, Indian men have been using a wide variety of prescriptions for centuries to boost flagging male virility and egos. The testing period for Orchid's Viagra clone will likely last six months. After that, the government will make a decision on whether the drug is safe. For laboratories, the reverse-engineering of sildenafil citrate is relatively easy to do - the formula and
other data are in the public domain in the U.S. (check out www.viagra.com). Pfizer, which has not bothered to register Viagra in India, will not be selling the drug there any time soon.
Srinivasan says he understands why Pfizer is furious. "We agree that the larger percentage of [a company's] costs goes toward developing a drug and testing it in various trials," he says. But the argument in India is that the right of sick people in developing countries to cheap medicines outweighs the right of inventors in wealthy nations to turn a profit. New Delhi aimed to bring down prices of drugs by helping boost the capabilities of the indigenous industry. The problem is that since Indian companies make money simply by copying, that is all that many of them do. "This is not good for the country and the industry as a whole," says K.S. Neelakandan, a pharmaceuticals analyst and former employee of Pfizer India. "Our companies are not doing any original research." Foreigners also balk at bringing cash and know-how to India.
Some local companies are calling for change. Hyderabad-based Dr. Reddy's Laboratories has developed about 200 new drugs and won patents in the U.S. and Europe for many of them. Where it cannot afford development and testing, Reddy's has collaborated with foreign partners. It recently linked up with Novo Nordisk of Denmark in the final development of a diabetes drug - industry sources say the deal earned Reddy's a huge sum. A company spokesman, P.V. Venugopal, would only say: "We have shown that it is possible to make money with intellectual property." That will be the way to the future. As a member of the World Trade Organization, India has promised to amend its patent laws by 2005. "The writing is on the wall," says Shailendra Tewari, vice chairman of Delhi-based Ace Laboratories. "We have to change." But not before reaping riches from the world's love affair with Viagra.
THE REAL THING
In Asia, only Thailand has approved the use of Viagra, the anti-impotence drug that requires a doctor's prescription. Its American maker, Pfizer, has decided not to register the pill in India because of the country's unorthodox patent laws on pharmaceuticals. Laboratory testing and clinical trials are being conducted in other places to determine the drug's safety. Here are the likely dates for
governments to decide whether to allow the use of Viagra:
Hong Kong Early 1999
Japan 2001
Malaysia Late 1999
Philippines 1999
Singapore 1999
South Korea Late 1999
Taiwan Early 1999
Thailand Approved
Source: Asiaweek Research
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