International Conference on "India R & D 2005 - A Knowledge hub of the Future"
November 7, 2005, New Delhi

Address by Mr Habil Khorakiwala, Vice President, FICCI

I feel humbled to be in the presence of Hon'ble Minister Shri Kapil Sibal, Dr R A Mashelkar and Mr William Cohen today with us. Each one of them highly distinguished.

The subject for today's Symposium - "The World's Knowledge Hub of the Future - India - R&D destination of the Future"

The world so far has recognized India as an important knowledge hub in the sectors of Technology, Pharmaceuticals and Biotechnology. I believe that this recognition will extend into many more areas also.

All my life I have been involved in pharmaceuticals. In the last 15 years I have also been involved in the health care sector and Biotechnology. I therefore believe that I could speak with some degree of insight and knowledge in these areas.

There is certain recognition for India as a knowledge society but it did not happen overnight. Therefore it is important to know the past, and understand the critical areas of the present and create a vision for the future.

The most important event in the pharmaceutical industry has been the Patent Act of 1970 which has transformed our industry to a supplier of low cost medicines first to India and now to the world. Let us look at some of the evidences:

Before 1970 the prices of medicines in India was similar to USA and Europe and in some cases it was higher. But today any medicine that is available in the US in US dollars, you can buy the same medicine in India in Rupees. This dramatic low cost has helped penetrate the availability of medicines and made it accessible to a large part of India and in these 30 odd years this accessability has moved up from 20% to more than 80% now. In fact nearly 99% medicines used in India are produced in India.

How did this happen? - The key Drivers:

• Large pool of Chemistry Scientists
  
• Competitive Environment
• Technocrat Entrepreneurs

This has resulted in transformation of Indian pharmaceutical industry and increase its share of Indian market from less than 20% in 1970 to today's 84%. Many developing countries have had similar situation, but none of them have transformed the pharmaceutical industry the way we have had in India.

This is basically because of the existence of a large number of scientists who leveraged their scientific skills to develop new chemistry technologies.

Today India produces 22% of the global generic market. In the last decade, after liberalization, Indian industry has focused on world market and brought about structural and fundamental changes, like Investing in Research and accessing Global Market.

Our research spend has been very negligible and it has moved up from 5% a few years ago to today's 15% amongst the leading Indian companies. Indian companies have filed over 500 patents in the last 5-7 years .There are many companies whose international business constitute more than 50% of turnover. In fact, India's export is 42% of total production in India and this was below 10% some 15 years ago.

Product Patent is now applicable in India from 2005. In fact all molecules discovered after 1995 are covered under the new Patent Regime. You will be surprised to know that Italy and Spain have accepted the new Product Patent regime only in late 80s and Switzerland and Canada accepted the product patent regime for the first time in 1983. So the world today is very different than it was even 20-25 years ago where process technology was patented and there was no product patent in many developed countries.

The advantage of Process Patent was in India and all other developing countries. It is only in India that we have been able to transform this Process technology with its knowledge with our scientists into a sustainable and long term advantage and this is one of the important proof that India can do it.

The issue is can India rise to this challenge and convert this so called threat into an opportunity?

1. In Pharmaceutical and many other Indian industries in India, many organizations have been led by professional technocrats. It is certainly so in Pharmaceuticals, Biotechnology and Health care. I believe it is also true to a very large extent in our entire engineering industry and also in IT and Technology industry. This provides a very interesting position for India where the leadership not only understands the business but also the financial dynamics to fully appreciate the science and technology changes. In fact there are examples where R & D Heads have led their organizations like Merck in the 80's by Mr Vagelos when it became the "Most Admired Company in Fortune 500". Similarly in India, Hindustan Lever had their R & D heads Dr Ganguly and Sushim Datta leading their companies with distinction.

2. India has a very unique advantage with a large number of Indian scientists, professionals etc working in US and Europe.

In fact in our Industry on in 5 Scientists in the US is of Indian origin. Our company has been able to attract at least 20 scientists to join our R & D facility which has more than 400 people and they provide current approach to research and also to our Research leadership. As India grows and progresses and integrates more with the global economy, one will see this rate of inflow increasing definitely in the Pharma, Biotechnology and healthcare sector and also in Engineering and many other areas.

3. There is global recognition now of the inherent strength of India in the knowledge society. This will accelerate the process of doing research in India. For example, companies like Pfizer, Novartis and Glaxo have started their Clinical Research Organisations in India and in the times to come, other companies will create very major research hubs in India in addition to US, Europe and Japan.

4. In health care sector, the innovative spirit of Indian doctors are setting new pace. Just to illustrate few examples.

• Some of the eye hospitals in India, Arvind Eye Hospital L V Prasad Eye Hospital and Shankar Netralaya do more innovative and more eye surgeries as an institution than in any other institutions anywhere in the world
• Escorts in Delhi itself does more cardiac and cardio-vascular surgeries than in any other institutions in the world
• In fact our own Wockhardt Hospital is one of the few hospitals anywhere in the world to do certain specialized cardiac surgeries - Awake Heart Surgery, where surgery was not at all possible. In the last 30 months our team under Dr Vivek Jawli in the hospital have done several such surgeries in inoperable situations and saved life.
• Dr Choubey of New Delhi holds the record for doing the maximum number of laparoscopic gall blader stone surgeries in the world.
• In our own hospitals, we have patients coming from US, Great Britain, Europe etc for cardiac and hip resurfacing surgeries. They are not coming for cost saving or medical tourism, but this is taking place because we are one of the best places comparable to other super speciality facilities in the developed world, where modern techniques are being used.

5. One sees an increasing trend of partnership between Indian Research organizations and global companies. In the entire value chain of drug discovery this trend has just been seen in the last few years and I believe this trend will continue to grow and will be accelerated at a faster pace.

6. India's 1 billion population offers a new advantage to any pharmaceutical and many other industries. It provides a large consumer base, it provides a large consumer base, it provides a large number of subjects for clinical trials and it also provides diversity and different profiles required for clinical assessment. This makes India a very interesting place to do Clinical Research, evaluate new medicines, medical equipments, instruments etc much faster, maker newer approach in these areas and also in the treatment available to the world much faster.

7. The oft repeated and well known advantages are the language and cost effectiveness, but in priorities I will not keep it on top of the agenda. Our innovation and other advantages far outstrip these two advantages.

A Word of Caution!

India has everything to make our society a knowledge society and an important place to do research. However, we have to improve the higher end of our education system significantly and create world class institutions in all major fields of science. We need to open up the education systems. Today it is highly restrictive and there is enormous Government intervention in education. It needs to be liberalized. This is absolutely essential for sustaining the growth of India in moving into a knowledge society and creating one of the research destination of the world.

There has been a recent observation by Janez Potocnik, European Commissioner for Science and Research - He said the way China is investing in R & D, it will overtake Europe in percentage of GDP spent on R & D by 2010. We must be aware of this dynamism taking place in China and we need to create an environment for research even more from what it exists today. The Government over the last decade has encouraged R & D in terms of offering certain tax benefits but I believe that we need far more comprehensive approach to create a positive approach for this environment. FICCI will be very happy to work with the Government and our other institutions as to how we can encourage education and research in the non-governmental sectors.