The Lilly ceo says his company is entering into “risk and reward sharing arrangements” with Indian drug makers that are rapidly converting from a generic model to one based on research and development, The Business Standard reports.

“I think it is the first time that Indian companies are getting access to drugs from large pharmaceutical companies and developing them on their own up to a certain stage,” Taurel tells the paper, noting that India would serve as a source for talent and research capabilities. If they get all the way to phase III, we will get involved in global trials and so forth. The adoption of the patent protection agreement for pharmaceuticals in India is a welcome development.” Such remarks are in contrast to the stance adopted by Novartis’ Dan Vasella, after losing a controversial patent case earlier this year.

Despite the setback to Novartis over the patent approval for its Gleevec cancer drug, Taurel tells the Standard that, “India sees in its best interest to move in the value chain that is more knowledge-based and has more intellectual protection. Yes, sometimes we get the impression that India moves one-and-half steps forward and one step backward. However, when compared with China, we are more encouraged by the judiciary system in India. We believe enforcement would improve from what we see today.”

India will serve Lilly on two important fronts - access to good minds and clinical trials. “We do around 40 percent of our IT work from India and the percentage will only increase. In the coming years, we would focus more on clinical trials for diabetes,” Taurel tells the paper.

“Lilly has entered into risk-sharing and reward-sharing agreements with several companies such as Nicholas Piramal India, Jubilant Biosys and Suven Pharmaceuticals. These agreements make available one or several of our compounds in a very early stage of development,” Taurel says. “Essentially, it would involve further development and would require eight to nine years for the drugs developed from compounds to hit the market.”

Under this arrangement, the companies with their own financial and human resources will have to bring forward compounds made available by Lilly. Eventually, if the drug makes it to the market after all regulatory approvals, Lilly would pay the companies a “royalty” on global sales. “We are seeing convergence of (Indian pharmaceutical) companies into a model that has been witnessed in the high-technology industry,” says Taurel.