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July 14, 2001
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Eli Lilly to begin sourcing bulk drugs from India

Leading US drug-maker Eli Lilly and Co will begin meeting some of its bulk drug needs from India by the end of 2001, the head of its Indian unit said on Friday.

"I am reasonably sure that it will happen in a small way this calendar year but it will be big in the next," Rajiv Gulati, managing director of Eli Lilly Ranbaxy Ltd, told reporters on the sidelines of a news conference.

Gulati declined to identify the drugs but said they belonged to the gastro-intestinal and tuberculosis segments whose production would be contracted to Indian companies.

"They are products which are going off patent and you are looking at reducing their cost of production," he added.

He did not say how much Eli Lilly would import from India but said one of the brands for which the bulk drug was being sourced had annual sales of $300 million.

Lilly was looking at production contracts with at least two Indian companies.

He said India's loose patent regime that allowed copying of products had restricted ELR's introduction of new drugs and investments in India.

But investments could increase significantly after India introduces product patents under a new regime in 2005.

Until then, ELR would concentrate on introducing high technology products that were difficult to copy.

Gulati said the parent company was also looking at contracting chemical research to Indian companies to exploit their strengths in developing manufacturing processes after being given the design for a molecule.

"The molecule design is there and you say I want a good manufacturing process. That is India's strength -- copying, that is developing its own process of manufacturing," he said.

Eli Lilly, US was talking directly to the Indian companies and expected to announce contracts in the next six to nine months.

ELR announced plans earlier this year to buy out local firm Ranbaxy Lab's 50 per cent stake in the firm. It expects to post revenues of Rs 1.12 billion in 2001, up from last year's Rs 900 million and net profits of about Rs 250 million.

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