If the anthrax scare were to spread from the US across the globe, cash-strapped governments would find dozens of suppliers in India willing to sell the costly medicine needed to treat the disease at cut-rate prices.

Every Indian drugmaker worth the name turns out its copy of German giant Bayer's Cipro, the only US-approved treatment for anthrax. Demand for the drug surged in the US after a man died of the disease, raising fears of possible biological warfare.

Bayer said on Wednesday it would increase production by 25% starting November 1.

But consumers outside the West could also buy cheaper copycat versions from at least 78 Indian producers, like Ranbaxy Laboratories, who churn out large volumes of the drug at a fraction of international prices.

"In the event of an anthrax crisis, Indian companies could easily ramp up supplies to unregulated and less regulated markets like China, Russia, Brazil, the Middle East and Southeast Asia," said ABN AMRO analyst Giridhar Iyengar.

"Technically, they cannot sell in the United States until end-2003 when Bayer's patent expires."

Analysts say it is difficult to predict whether demand in the United States will outstrip Bayer's ability to supply the drug in the event of an anthrax emergency.

Two months' supply of 120 pills of Cipro 500 milligram costs as much as $693 in the United States. In contrast, Indian producers, like Cipla and US-listed Dr. Reddy's, sell the same amount for $20.

The Bombay-based Cipla shot into prominence in February by offering to supply AIDS drugs at less than $1 a day.

Indian drugmakers can make and sell their copies of Bayer's patented drug as Indian law protects only the processes by which drugs are made and not the drugs themselves.

In other words, Indian drugmakers can make their versions of Cipro without paying a license fee to Bayer as long as they use a different manufacturing process.

The local market is worth just $62.46 million because Indian prices are so low.

Therefore some drugmakers are lining up to get their generic Cipro into the United States, the world's biggest market for drugs, once Bayer's patent expires.

Dr. Reddy's already has tentative approvals from the US Food and Drug Administration for four dosages of the drug.

And Bayer could in 2 years be selling a form of the drug developed by India's Ranbaxy in place of the twice-a-day dosage form it now sells in global markets.

Ranbaxy licensed out a new once-a-day form of ciprofloxacin, the chemical ingredient, to Bayer in 1999.

Reuters Bombay, October 11, 2001