The man behind drug out-licensing

Today, pharmaceutical companies in India earn decent revenues from licensing their original molecules to foreign drug majors. Since 2004, companies such as Glenmark Pharma earned about $210 million in cash through seven out-licensing deals.

It was Anji Reddy who, 16 years ago, pioneered the idea that research and development molecules could be commercialised before a drug launch. In 1997, Reddy created history by signing India's first drug out-licensing deal with Denmark's Novo Nordisk.

Reddy, who hailed from Guntur district of Andhra Pradesh, was a devotee of Lord Balaji; the molecule developed for the treatment of type 2 diabetes was named Balaglitazone. Though the molecule failed and was discontinued in October 2004, it gave the Indian pharmaceutical industry a new business model.

In 1998, Reddy out-licensed Ragaglitazar, another diabetes molecule, to Novo Nordisk. However, this was discontinued in early 2003. In 2001, Dr Reddy's Labs out-licensed a third molecule, DRF 4158 (a novel insulin sensitizer), to Novartis Pharma AG for $55 million. This, too, was discontinued after two years.

Indian pharmaceutical companies have since realised the potential of the out-licensing business ---through which molecules are out-licensed during the first or the second phases. Phase-III trial costs, which account for about 60 per cent of the total expenditure on drug trials, remain unaffordable for Indian companies.

Anji Reddy realised this and worked towards addressing it 16 years ago.