In a distinct shift of strategies, Indian pharma players are hiving off their R&D divisions into independent entities to de-risk their core generics business as well as to focus more on drug discovery. Foreign equities are also pouring into India's pharma space because they understand the risky nature of the R&D business well and are willing to wait for a long haul. However, this R&D gambit has its share of risks too, as the discovery of a blockbuster drug or a major discovery failure can rewrite the fortunes of a pharma player.

Two years after India entered the products patent regime, the year 2007 witnessed Indian pharma companies striving to shrug off the copycat image and focus more on innovation. Major pharma players have started spinning off their R&D and drug discovery wings into separate divisions to unlock better value for shareholders, de-risk their profitable generics business and give a push to basic research. Even foreign private equity players and venture capitalists have shown their keenness to partake in this transitional phase of the Indian pharmaceutical industry.

This symbolizes a fundamental transformation in the mindset of the pharma firms and marks the coming of age of an industry which was previously labeled as `copycat'. Dr. Reddy's Laboratories (DRL) and Sun Pharmaceuticals have been the trendsetters. Now, with Ranbaxy, Nicholas Piramal (NPIL) and Wockhardt publicizing the demerger plan, the drip looks all set to become a wave. And for the Indian pharma companies, which have developed a critical mass of over 50 New Chemical Entities (NCEs) and which aim to successfully commercialize these blockbuster drugs by 2010 onwards, time seems to be perfect for this R&D gambit. In fact, it requires a single success story like Lipitor (the cholesterol drug made by US pharma giant Pfizer is the world's best-selling drug), which can transform the fortunes of that particular drug company and even of the pharma industry of the country as a whole.

The Analyst Magazine, India's pharmaceutical Industry, Research and Development, R&D, Drug Discovery Companies, Dr. Reddy's Laboratories, DRL, Nicholas Piramal India Limited, NPIL, Generics Business, Sun Pharma Advanced Research Company, SPARC, Dilip Shanghvi, New Drug Discovery Research, De-Risking Strategies.