In India, the debate of branded drugs versus generics brings two companies to mind – Cipla and Ranbaxy – the former for many positive reasons, and the latter for a lot of the other.
Cipla shot to fame when Yusuf Hamied, its chairman, in the year 2000, offered a three-drug anti-retroviral combination for $800 a patient per year, compared to $12,000 by multi national corporations, to poor patients across the world. In the years that followed, Cipla provided poor African countries with anti-AIDS medicines at a fraction of the cost charged by MNCs and earned the former’s gratitude (and fame), and the latter’s ire.
Ranbaxy, another home-grown generics major, was sold in June 2008, to Daiichi Sankyo Co Ltd of Japan for $4.6 bn (Rs 19,720 crore). For Daiichi Sankyo with its strengths in patented drugs, and Ranbaxy with its might in generics, the union seemed perfect.
Till Daiichi realised they had been led up the garden path by Ranbaxy’s then owners, the Singh brothers (Malvinder Mohan and Shivinder Mohan). In 2013, Ranbaxy, which was then a part of Daiichi, had to cough up $500 mn in fines to the USFDA and the US Department of Justice for “falsifying” and “concealing and misrepresenting” data. This led the USFDA banning products manufactured at Ranbaxy’s units in Mohali, Paonta Sahib and Toansa (Punjab) and Dewas (MP), — from being exported to the US.
To cut a long story short, the Singh brothers were, in May 2016, asked by a court of arbitration in Singapore to pay damages worth ₹2,562 crore. A mighty fall for a giant company!
Drug MNCs spend billions of dollars to take a drug from concept to market (estimated at $2.6 bn on average for a drug). For this huge risk capital, they naturally seek adequate profit. A patent for a fresh drug runs up to 20 years in the US. When the drug comes out of the patent period, generic drug makers enter the market, selling it at a discount of up to 80 per cent. Though chemically equivalent, the generic drug is mandated to have the same active ingredient, safety, dosage, strength, quality and performance, among others. While a 10 per cent +/- range for blood concentration is allowed for generics, in most cases this is kept in the 3-4 per cent range. Thus, there is very little difference between the patented and the generic versions.
The USFDA conducts about 3,500 inspections worldwide at units manufacturing generics that are exported to the US. In the last few years, many units of various drug makers in India have fared badly in these inspections, drawing what is technically known as Form 483. In extreme cases, exports to the US from these units attracting censure are banned till the issues are set right. Such instances hurt the credibility of generic drug makers. On the other hand, this fear of data compromise is near-non-existent in the case of patented drug makers, which gives them great credibility with doctors and users.
“I would recommend only branded drugs to my patients. That makes me comfortable. Yes, they are priced high, but then all then good things in life come expensive,” says a leading Dr from a leading corporate Hospital.
Data compromise is a big hurdle in generic drugs ever being able to attract the quantum of faith that branded drugs enjoy. Though the USFDA is ever vigilant, players like Ranbaxy skewing the picture is a constant threat. Till this aspect is comprehensively addressed and sorted out, the sheer force of the strengths in favour of the inventor (branded drug maker) over the innovator (generic drug maker) tips the scales in favour of the former.