The man who battled big pharma

Published: March 29 2008 02:00 | Last updated: March 29 2008 02:00
Financial Times


On a hot morning in a dusty suburb of Mumbai, Rajiv, a man in his thirties, carries out the brief monthly transaction that keeps him alive. He passes through an unmarked door, up the stairs to the first floor of a crumbling clinic and waits, his head bowed. In a scene repeated by hundreds of thousands of patients from Argentina to Zimbabwe, he receives a box of Triomune, an HIV medicine that has helped turn a death sentence into a chronic disease.

On a wall of the clinic, operated by the charity Medecins sans Frontieres, a poster bears the words ''Patent on Aids drugs'' inside a circle struck out by a thick red line. The phrase ''lives before profit'' is written below. ''Medicine is our main expenditure,'' says Freya Raddi, the director. ''With cheaper drugs, we can use whatever money we have to help more patients.''

Cheap drugs are big business in India, as well as a source of fierce debate. Among the country's manufacturers of cut-price generic ''copies'' of other pharmaceuticals' products, Cipla, which makes Triomune, has caused the greatest controversy. Its owner, Yusuf Hamied, makes his products by circumventing other companies' patents, a tactic that has turned Cipla into the largest supplier of antiretroviral drugs in the world.

The last two decades of the 20th century saw a scientific revolution in the development of antiretroviral drugs for Aids. But it is commercial savvy like Hamied's that has translated these clinical advances into accessible treatment for HIV patients across the developing world.

To his supporters, Hamied has saved countless lives by making medicines affordable. But to his critics - above all the large western pharmaceuticals who first developed the drugs - he is a ''pirate'', an opportunist who has exploited others' intellectual property to swell his own profits. In the process, they say, he is undermining investment in future medicines, including the next generation of HIV therapies.

As the debate about generic copies gained momentum, India introduced tougher patent rules in 2005, and Hamied's fellow generic producers have aligned themselves with western rivals to defend patents. Their aim now is to develop and safeguard their own innovative medicines. These changes are a threat to Cipla's business model - and to the cheaper drugs that help keep clinics such as Raddi's going. Hamied says: ''I am not against patents, but India cannot afford them. I am against monopolies.''

Yusuf Hamied's father, Khwaja Abdul Hamied, had just completed his studies in chemistry in Allahabad, northern India, in 1921 when he responded to a call from Mahatma Gandhi to join him in an ashram. Inspired by the Indian independence movement, he continued his studies in Berlin before returning to Bombay with licences to sell typewriters, sewing machines and Okasa, a tonic for male impotence. The drug set the stage for his new company, Chemical Industrial and Pharmaceutical Laboratories, in 1935.

Four years later, at the outbreak of the second world war, Gandhi visited Cipla's headquarters. ''He told my father that the British were offering independence if India would support the war effort. He needed supplies,'' Hamied recalls. As demand for medicines from the Indian army surged, and supplies from European manufacturers collapsed, Cipla provided quinine to treat malaria, emetine injections for dysentery and nikethamide tablets for trauma.

Hamied senior died in 1972, 12 years after his son had joined the family business as a researcher. Today, Hamied junior runs the company, which has become among the largest in India, giving him a personal fortune estimated at $1.3bn. In a bustling downtown quarter of Mumbai, he looks defiant. White haired and relaxed in a blue shirt, he bounds into a conference room at Cipla's headquarters. The room looks more like a pharmacy, lined with glass cabinets stocked with hundreds of packets of pills and syrups, each bearing the Cipla brand name.

Most western pharmaceutical companies have displays of their products. But their high-priced, patent-protected medicines usually fit into a small case in the reception hall. Cipla is different. ''We have more products than any [drug] company in the world,'' Hamied says. ''More than a thousand for humans, and a hundred for animals. That's because they are, in inverted commas, 'copy products'.''

Among the medicines displayed in front of us are treatments for HIV, including Triomune. But there is also Hamied's Asthalin respiratory drug, and Silagra, his version of Viagra that sells in India for 5 per cent of the price of Pfizer's original. ''We have lots of fun with the names,'' he says mischievously.

Wherever big pharmaceutical companies' patented drugs have come to public attention, Cipla has been swift to follow. When the US demanded cheap treatments for anthrax in the aftermath of 9/11, Hamied proposed his own cut-price version of Bayer's Cipro, a powerful antibiotic. When human deaths from bird flu in Turkey sparked rich countries to stockpile Roche's antiviral drug Tamiflu, he offered his own far cheaper version, Antiflu.

In recent decades, the western drug industry has built its success on the back of the patent system. While academics with government funding have carried out the basic science behind most medical breakthroughs, companies have borne the costs of running expensive clinical trials to convert these discoveries into drugs tested for safety and efficacy in humans. In exchange, they have been granted exclusive rights through the patent system to make and sell the drugs that successfully pass regulatory scrutiny, recovering their costs by charging high prices for the remaining years of the patent. Only after its expiry can generic drug companies launch their own cut-price but chemically identical versions.

The system has worked reasonably well in the developed world, with national health systems and insurers picking up the price of patented medicines for most patients, allowing drug companies to reinvest the profits in future research. But it has run into difficulties in poor countries, where rising expectations for treatment clash with modest state support for health. Few individuals are able to pay for their own drugs.

Hamied argues that western drug companies should - at best in exchange for modest royalties - allow generic producers to compete by making their medicines available immediately at the lowest possible cost, giving access to many more patients who would not otherwise be able to buy them. But he stresses that he has abided by legislation, even where he disagrees with it. ''I don't break patents,'' he says. ''I live by the law of the land.''

Hamied is an unlikely pin-up for many of his cheerleaders in the developing world. Born in 1936 in Vilnius, Lithuania, he eschews any formal religious adherence, even though his father was a Muslim who knew the Koran by heart, and his mother Jewish. ''I believe in what's right and wrong,'' he says. Today, the money he makes from Cipla allows him to indulge a penchant for race horses and art collecting, and a peripatetic lifestyle split between luxurious homes in London, Marbella, Mauritius and Mumbai.

However much he divides the drug industry over his tactics, Hamied is recognised as a brilliant chemist. He shared his father's passion for the subject - completing a PhD at Cambridge - before returning to Bombay to join the family business. Denis Broun, who once worked with Hamied and now runs the UN Aids programme office in Delhi, says: ''He has the most incredible passion for chemistry, and he's a genius at reverse engineering,'' referring to the process of analysing other companies' patented medicines and working out ways to reproduce them more efficiently. ''He has an outstanding memory, and knows the price of the raw materials of any product.''

But when Hamied returned to India, he found that there was not much scope to apply his talents. ''When I came back in 1960, it hit me. I saw that every avenue was closed,'' he recalls. A restrictive patent law introduced by the British in 1911 held back local drug production. Imported medicines were often sold at higher prices in India than Europe. When Hamied lobbied the local representatives of the western drug companies for permission to make their products, ''they all said go to hell''.

The following year, Hamied helped form the Indian Drug Manufacturers' Association with the aim of weakening the patent regime to help local producers. The breakthrough came a decade later, when its members presented their case to Indira Gandhi, the prime minister. At the time, ICI's cardiac drug, Propranolol, was inaccessible to Indians. ''We said to her that this drug is life-saving, and why should millions be deprived of it just because the patent holder doesn't like the colour of our skin? She passed the bill within a week.''

India's patent law came into force in 1972. It signalled the start of a golden era for the country's generic companies, and above all for Cipla. While the new legislation protected ''process'' patents - covering the specific way a medicine was manufactured - it denied the more usual ''product'' patents on the drugs themselves. The stranglehold of multinational pharmaceutical companies in India was broken.

At his office, Hamied grabs a pile of chemistry journals for bedtime reading and ushers me out. He waves away his driver, gets into his BMW, and eases out into the Mumbai traffic, where mastery of the horn and rapid swerving are king. Just such unorthodox manoeuvring was necessary in Hamied's biggest battle: the launch of cheap antiretroviral medicines. At the start of the 1990s, the Indian Council on Medical Research asked him if he could make a version of Glaxo Wellcome's AZT, the first Aids medicine. Within two years, it was on sale at one-fifth of the western price. But even then few Indians could afford it, and, to his anger, the authorities said their budget would be spent on prevention. ''I lost my shirt, and closed down manufacturing,'' he says.

But within a few years, Hamied's interest in Aids treatments was rekindled. He read reports of far more effective drugs ''cocktails'' and was moved by the death of a friend from HIV in Uganda. Health activists in the US and Europe keen to expand treatment into the developing world approached him for help, and Triomune, launched in 2000, was the result.

Hamied reproduced the most important cocktail of three medicines - Stavudine, Lamivudine and Nevirapine - each to be taken twice a day. But he also innovated. He put the separate drugs, each made by a competing company, into a single ''fixed-dose combination'' tablet. Reducing the number of daily pills from six to two increased the chance that patients would take them as prescribed, boosting their chance of survival and reducing drug resistance.

With the Indian authorities still providing almost no funding for treatment, his second innovation was to offer cut-price Triomune to other countries with no patent protection, notably in Africa, where the impact of HIV was greatest. He offered to sell them to Medecins sans Frontieres clinics for $1 a day, less than one-thirtieth of the price of existing HIV medicines. ''The first six months were absolute hell, as big pharma tried to run us down,'' he says. Richard Sykes, head of Glaxo, denounced Hamied as a ''pirate'' and described the quality of Indian generic drugs as ''iffy''. Hamied fired back, saying that the company was a ''global serial killer'' for charging such high prices.

His actions helped trigger a revolution. Around the same time, political leaders called for substantial increases in funding. Litigation by the big drug companies to enforce their patents in South Africa collapsed and they began to offer bigger discounts on HIV medicines to poorer countries. ''Now the big boys have wised up. We have educated them,'' he says. Cipla continued to win orders, in the process helping create new international systems for drug procurement and regulation.

''We have provided a third-world solution for the whole world,'' says Hamied. ''It gives us tremendous satisfaction. Every year, I tell our shareholders they should be very happy they are contributing to a humanitarian cause.''

Hamied is helped in this cause by his family, who control 40 per cent of Cipla. And while Triomune offers lower margins than the company's other products, he concedes that it is profitable. With $110m sales to 500,000 patients in the developing world, HIV medicines have helped the company boost its profits and its reputation.

Ranjit Shahani shakes his head as he reflects on Hamied over dinner at Mumbai's elite Willingdon Sports Club, its musty colonial-era dining room populated more by retainers than customers. ''He's a great chemist. I just wish he'd used his scientific knowledge for fundamental research. He could have been equally if not more successful in the cause of innovation.''

As head of the Indian operations of Novartis, the Swiss pharmaceutical giant, Shahani has found himself on the other side of the courtroom to Hamied, in the first test case since India introduced tougher laws recognising product patents in 2005. Cipla was one of half a dozen generics companies that launched equivalents of Novartis's leukaemia drug, Glivec, at a fraction of the price. As the litigation continues, Hamied maintains that the version of the medicine on which Novartis sought protection represents only a modest ''incremental innovation'', outside the terms of the new patent law.

Shahani, like executives from other western pharmaceuticals, believes instead that Indian law should be still tougher, and that the old-style generic model represented by Cipla is coming to an end. ''Weak patents are not sustainable,'' he says. ''The solution to providing affordable drugs has to be via donation programmes, tiered pricing and partnerships. It can't be built on destroying patents. That destroys innovation and hope for the future.''

Shahani has gathered some unexpected allies. Malvinder Singh, who runs the pharmaceutical group Ranbaxy, compares Cipla with his company by saying: ''They are just two very different business models. Hamied has a good company doing very well. But his strength has been entirely because of weak intellectual property [protection]. We think you need to have patents. The focus for us is how to replicate our generics success on the innovative side.''

We are sitting in his recently completed marble-clad corporate headquarters, in Gurgaon, just outside Delhi. Ranbaxy - founded by Singh's father, a long-standing acquaintance of Hamied - has taken a different route in recent years, reaching compromises abroad, acquiring foreign companies wholesale and launching generic medicines in the US and Europe.

It has also forged alliances to try to develop innovative medicines with western companies, including GlaxoSmithKline. This summer, it will follow several of its Indian peers and spin off Ranbaxy Life Science Research, a subsidiary focused exclusively on new medicines. Like other Indian pharma companies with research interests, it now advocates tougher patent laws, which in a few years could protect its products from competition.

Meanwhile, Cipla has had a taste of its own medicine from HIV-treatment groups. Last August, the Aids Healthcare Foundation, a US-based charity with treatment centres in India, launched a campaign against the company, throwing its own corporate slogan ''none shall be denied'' back at it in newspaper advertisements. It criticised Cipla for proposing prices in India twice as high as in Africa for Viraday, its version of the latest HIV drugs cocktail, Atripla.

''Viraday would be our drug of choice, but it's too expensive,'' says Chinkholal Thangsing, head of the Foundation's regional office in Delhi. ''For the same price of one treatment, I'd rather treat five patients with something else. We always let the generics companies off, but they are taking advantage. Cipla has been blinded by all the kudos.''

Hamied has fought back, threatening legal action and retorting that the Foundation is funded by Gilead, the US pharmaceuticals company which markets Atripla and is attempting to defend its patents. As we share a final meal at Mumbai's exclusive Breach Candy Club, he expresses frustration that the Foundation, and others - from Medecins sans Frontieres to the Clinton Foundation - have taken advantage of him by seeking low-price quotes for high volumes of orders, and then buying far smaller volumes if any at all.

Hamied senses the pressure mounting on all sides. There is aggressive price competition from other generics companies, and he says Cipla's reputation as ''the bad boy'' means it cannot find foreign partners. He is pessimistic that his Indian peers can successfully diversify into developing new medicines, saying ''we won't exist in 20 years' time''.

As we nibble buttered lobster, he accuses his government of ''selective genocide'' for tightening the patent regime, which he believes will make drugs unaffordable in India again. ''Thirty years ago, there was a national spirit. That's missing today.''

Andrew Jack is the FT's pharmaceuticals correspondent.