Gift-horse deals in pharma?

For an industry which began the first decade of the millennium with a revenue growth close to 10 percent, only to end it with a growth rate of barely one percent, (IMS Health), the pharma industry is understandably casting around for new business models, markets and products. Our Management Cover focuses on the increased interest in cures for rare diseases as well as neglected tropical diseases (NTDs).

If Pfizer is sharing its library of chemical compounds with Drugs for Neglected Diseases initiative (DNDi) for cures against parasites that cause African trypanosomiasis (HAT), visceral leishmaniasis (VL)and Chagas Disease, GSK has opened its library to researchers working on malaria. Likewise, Eisai will collaborate with DNDi on clinical development of one of Eisai's molecules for Chagas disease, another NTD. These are only a few of the announced deals in the recent past.

Skeptics question the motives of one of the most profit making industries to get into such philanthropy-like research. Are these skeptics looking for faults in gift-horses? As the idiom goes, one should not look at gift-horse in the mouth, because you got them for free. But these are not the 'gifts' referred to in the idiom. Skeptics make the point that what attracts pharma companies to these molecules is a corporate branding which brings with it a different kind of return on investment.

But if this is what it takes to increase funds for R&D into these diseases, one has to be pragmatic and let market forces take their own course. And for India, NTDs could well be the one strategy to take it to another level. The Indian vaccine players are on the shopping list of global vaccine majors and sanofi aventis has already bought Shantha Biotech which will help it make cost effective vaccines. Industry observers expect similar deals between Indian pharma companies manufacturing key APIs for NTDs and these outsourcing deals could translate into decent revenues for these players.

Viveka Roychowdhury
viveka.r@expressindia.com