Tuesday, 6 November 2012

Nurturing Innovation That Makes A Difference

 By Kiran Mazumdar-Shaw, Nov 06, 2012

Kiran Mazumdar-Shaw, CMD, Biocon The economic challenges that confront us today – healthcare, education, development, and environment, among others – call for extraordinary measures. If we are to change things for the better, we need to innovate. In order to be viable and effective, innovation must have two key attributes: differentiation and affordability.

In the context of healthcare, the IP of a drug often detracts from its affordability. Drug innovation is usually an enormously expensive exercise – developing a new medicine can cost up to $800 million in the developed world. Reimbursement guidelines – not the need of the patient – decide the availability of a new drug in the market. Thus, even as the West leads the way, its dollar-denominated innovation has inherent limitations.

In a developing country like India, innovations enabling cheaper drugs and low-priced healthcare infrastructure can work wonders in patient care. Thus, as we try to bridge the chasm between medical advances and health inequities, India must harness the potential of innovation based on differentiation and affordability to maximise reach and impact. Only then can we ensure access to healthcare for all, at all times and in all places. This calls for innovation in discovering drugs, in developing therapeutics, and in delivering healthcare. Narayana Hrudayalaya and the Tata Nano – albeit in another industry – epitomise this union of affordability and differentiation.

Affordability and differentiation at Biocon
Biocon took this path to innovation because we realised that without affordability it would serve no purpose. Our products developed on this philosophy – from patented enzymes to generic statins, and from biosimilar insulins and monoclonal antibodies to patented novel molecules – are affordable and have changed the lives of thousands. At the same time, our innovation-led business strategy has provided us premium returns wherein we have leveraged our IP for market differentiation.

Innovation risk matrix
Our risk-balanced innovation matrix plays a critical role in our high-value-low-cost drug discovery and development endeavour. The matrix has enabled us to invest in research and development (R&D) and ascend the value curve even as we manage the cost of risk-taking. We start with a low investment in high-risk research which can offer breakthrough innovation in the form of therapies like bi-functional antibodies. At a lower level on the curve, we invest in what we call incremental innovation that has a high probability of success, such as generics. The third quadrant represents medium risk or evolutionary innovation; biosimilars are an example here. The final quadrant is the highest risk which includes our novel molecules such as oral insulin and T1h. This strategy has allowed us to develop a robust pipeline with novel and biosimilar programmes at various stages of development. Even as we achieve research objectives, our inherent cost-effectiveness and minimal risk exposure ensures affordability.

Need for an enabling ecosystem
India must similarly foster innovation that is differentiated and affordable if it wants to move up the value chain and assume global leadership. However, innovation is about applied creativity and India, traditionally, has imitated – not innovated. Even in the biotech sector, most companies operate in the low-risk services and generics space.

For innovation to make a difference we require an enabling ecosystem that incubates and nurtures the innovation process – from ideation and research to funding and development. Such an ecosystem must fulfill a range of requirements: It must provide funding, offer infrastructure support, ensure a facilitating regulatory set-up, and encourage and train talent.

Let us take a look at each of these aspects
Funding: Innovation requires capital – that is obvious. But where will this money come from? India requires a national innovation ecosystem that puts in place a financing cycle:

  1. Academia generates ideas in partnership with industry

  2. These are nurtured to proof of concept through Government-sponsored seed and incubation funding

  3. Proven ideas and discoveries are taken to market through business intervention backed by venture funding
This financing cycle can start rolling if we address the lack of access to capital markets. Science and technology-based start-ups – biopharma companies included – that do not have revenues are not eligible to apply for listing. Such start-ups are stuck in an eternal loop – venture capitalists won’t fund these companies since there is no exit to capital markets and capital markets are not available to such companies owing to listing regulations. To cultivate an investor-friendly environment that can fund innovation, India needs an ancillary stock exchange to help start-ups access new markets. Such an exchange can leverage upcoming technologies to drive entrepreneurship and catalyse growth.

Our dilapidated infrastructure needs to be upgraded with a sense of urgency if it is to support a strong and innovative industry. Biotechnology and other high-tech sectors need continuous and quality power and water supply and well-connected roads. The growth India has witnessed so far has been in spite of its infrastructure. Public-private Partnership (PPP) can be a viable and efficient model with which to improve the infrastructure, with the private and public sectors drawing on each other’s expertise.

While innovation-driven models can churn out products that are affordable and accessible, businesses require external support. India has multiple regulatory bodies leading to confusion over clearances. We need to act now to create enabling regulations and enhance recognition between international regulators. A streamlined regulatory environment that can approve products without delays – along with attractive tax incentives for R&D –could be the first step to encourage innovation. R&D is a critical success factor for knowledge-based industries like biotechnology and the government must enable international patenting and encourage investment.

We must encourage our scientific community to create and market intellectual property. Commercialising academic research is still not an accepted practice in our country. Academics need support to market their ideas but industry-academia connections remain lacking. With PPPs, research work can realise its true value through the market. The government must encourage our network of universities and research organisations to undertake collaborative programmes and share key findings among themselves.

With a large pool of world-class talent and resources, India is a fertile ground for entrepreneurs. They can transform our numerous challenges into opportunities by developing innovative products that can benefit millions and drive economic growth. What is missing is an ecosystem that catalysis the process of innovation. The potential can be realised only if the government and industry work together and draw up a roadmap to facilitate innovation that makes a difference.

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