India To Be A Biotech Hot Spot

The last 70 years have been transformational for the Indian biotech industry, mirroring the nation’s own rapidly advancing economy and rising global status. We have successfully leveraged recombinant DNA technology to deliver biopharmaceuticals, vaccines, genetically engineered crops and enzymes. In doing so, we have created a notable bio-economy valued at $35 billion. 

We have embraced cutting-edge technologies, built global scale manufacturing capacities, and benchmarked our systems and strategies to global best practices. Currently, India is among the top 12 biotechnology destinations in the world and ranks third in the Asia-Pacific region. While our immediate goal is to build a $100 billion bio-economy in India by 2025, in the next 30 years, India aspires to become a biotechnology hot spot reputed for its high-value, low-cost innovations in bio-therapeutics including personalised and precision medicine, advanced enzyme technologies, GM crops and bioinformatics.  

The success of India’s biotechnology industry can be traced to the pioneering spirit of entrepreneurs who leveraged a nascent technology and India’s cost-effective scientific talent pool to bring affordable innovations to the market. Its evolution over the decades mirrored the country’s growing confidence in life sciences. While the 1980s were the decade of enzymes, the next decade saw vaccines gaining prominence as a business segment. The emergence of genomics research companies in the 2000s was followed by Novel biologics and biosimilars making an impact from 2010 onwards.

I started Biocon as India’s first biotech enterprise in 1978 in a garage in Bengaluru to manufacture industrial enzymes for food and textile industries around the world. The initial years were tough as I encountered market scepticism, funding challenges, infrastructural hurdles, manpower issues and government apathy. I persevered because I believed biotechnology was the technology of the future with the potential to deliver transformational change.

By the mid-1980s, Biocon had evolved as the largest enzymes company of India pursuing an R&D-led biotech business. As few more biotechnology-based companies started coming up, it caught the attention of the government and, in 1986, the Department of Biotechnology (DBT) was established. I was privileged to be invited to be a part of the DBT’s Task Force, which helped articulate the regulatory framework for the industry. Recombinant technologies were at the fulcrum of regulations covering vaccines, genetically modified crops and biopharmaceuticals. 

Biocon’s stock market debut in 2004, as the first biotech company in India to go public, commanded a premium valuation. It led to the development of a biocluster in Bengaluru, attracting a number of large and small biotech companies. These included Strand Genomics, a bioinformatics company; Gangagen, a phage-based antibiotic company; Reametrix, a whole blood-based diagnostics instrumentation company; Syngene, which spearheaded research services; and Bio-IT companies like Genotypic Technology, BigTec and Molecular Connections. The cluster also spurred the growth of ancillary biotech companies. 

The disruptive power of Indian biotechnology innovation grabbed the attention of the world in the late 1990s when companies like Shantha Biotechnics, Bharat Biotech, and Serum Institute started producing and supplying vaccines at a fraction of the cost of western drug makers. Today, ‘1 in 3’ children globally are immunised with a ‘Made in India’ vaccine. 

Having built a strong base of indigenous R&D capabilities and excellent clinical trials and manufacturing infrastructure, the industry started developing biotech-based drugs or biologics. Taking the lead, Biocon introduced India’s indigenously developed recombinant human insulin using a proprietary fermentation technology in 2004 and, along with Wockhardt, was able to break the monopoly of innovators in insulins by offering indigenously manufactured affordable alternatives, thus enhancing access to this life-saving therapy. 

Over the years, Biocon has successfully launched two novel biologics and five biosimilar products aimed at cancer, diabetes and autoimmune diseases, making these advanced therapies available to a large patient population. Today, there are a select few companies such as Dr. Reddy’s Labs, Zydus Cadila, Intas Pharma, Reliance Life Sciences, Lupin, etc., which are active in the area of complex biologics/biosimilars. The biotechnology sector is evolving fast and it promises to transform healthcare, agriculture and environmental management, leading to the dawn of the ‘Biotechnology Age’. 

By 2030, the Indian bio-economy sector is expected to attain a size of $200 billion. I foresee the intelligent use of data to transform global health. India’s highly developed software skills offer a unique Bio-IT opportunity to mine, analyse and interpret data and create algorithms that can match therapies with the diagnosis. There is also considerable excitement over the promise of targeted genome editing technologies like CRISPR CAS9, which can potentially prevent several diseases, including some cancers, and prevent specific genetic anomalies from being passed on to future generations. 

I believe, by 2050, cancer will become manageable through advances in the field of immuno-oncology, which works by stimulating an immune response against malignant tumours, thus replacing the need for chemotherapy and radiotherapy. 

Biotechnology in agriculture and farming has the potential to address numerous challenges associated with food security in India. Just as the commercial cultivation of genetically modified cotton in India, starting 2002, helped convert the country from a net importer to a net exporter of cotton, selective propagation of genes that improve yields and are resistant to pests, flooding and drought, could make food cheaper, more nutritious and abundant. 

Bioremediation techniques, which offer a cheaper alternative to conventional cleaning technologies, can be used to address the impending global crisis in the area of water and energy. Application of technologies like the ones being developed by Sea6 Energy, will help harness the potential of the oceans to provide solutions in energy, agriculture and feed, thus helping restore the ecological balance.

This article originally appeared in September 2, 2017 issue of Business World Magazine.

CRISPR: A Game Changing Technology for a More Equitable Future

Image Credit: Mopic/Alamy Stock Photo

2016 was a landmark year for the biotechnology industry as it was for the first time that the revolutionary CRISPR-Cas9 gene-editing technique was used in humans. With more human trials involving CRISPR-Cas9 scheduled to be conducted, I believe 2017 will be the year when the technology’s potential to treat human diseases could receive strong clinical validation.

CRISPR-Cas9, which provides scientists with a breakthrough tool to alter or replace the DNA of nearly any living organism with unprecedented precision, is one of the most promising scientific discoveries of the past century. This is why there was considerable excitement in the biotech world when news broke that scientists in China had injected cells modified with CRISPR technology into a patient suffering from an aggressive form of lung cancer. 

In the China trial, scientists used CRISPR technology to edit out genes that were preventing the lung cancer patient’s immune cells from attacking malignant cells. These modified immune cells were then injected back into the patient to help fight back the disease. The trial was seeking to primarily establish the safety of using CRISPR-based genetic modification to fight cancer. Beyond cancer, CRISPR holds the promise of therapeutic applications in tackling hitherto incurable genetic disorders such as haemophilia, muscular dystrophy, sickle-cell anemia and cystic fibrosis, as well as chronic conditions like Type 2 diabetes and Alzheimer’s disease.

The fact that CRISPR has been able to capture the popular imagination is evident from the fact that the four scientists who pioneered the development of the CRISPR gene-editing system were named runners-up for TIME magazine’s 2016 Person of the Year! They lost out to Donald Trump.

Faster, Cheaper & More Efficient

What makes CRISPR such a breakthrough innovation is the fact that it makes gene editing faster, easier, efficient and cheaper than previously available technologies. In time, CRISPR can open the door to affordable therapies that offer the right treatment for the right patient at the right time with the aim of minimizing side effects and maximizing positive outcomes.

Recently, researchers at the Salk Institute demonstrated that CRISPR could be used to partially restore vision in genetically blind rats. The Salk technique represents the first time scientists have managed to insert a new gene into a precise DNA location in adult cells that no longer divide, such as those of the eye, brain, pancreas or heart, offering new possibilities for therapeutic applications in these cells, the study, published in the journal Nature, said.

The rising popularity of CRISPR technology mirrors today’s medical paradigm that is rapidly evolving from treating symptoms to understanding disease at a cellular and genetic level to deliver personalised diagnostics and therapies.

Scientists are even looking at the possibility of using CRISPR technology to grow human organs in animals for transplantation, thus effectively tackling the problem of human donor shortages.

Studies are also ongoing to use CRISPR to manipulate mosquito genes so that they can no longer spread killer diseases like malaria and dengue. Research is also being conducted into the ecological and agricultural applications of CRISPR technology – from helping protect endangered species to developing pest-resistant crops that would help cut down use of toxic pesticides.

Huge Investor Interest

The huge potential of CRISPR has expectedly generated immense investor interest. In 2016 alone, the US witnessed the market debuts of three biotech companies focused on CRISPR technology. Editas Medicine and Intellia Therapeutics raised over USD100 million each through their market offerings earlier this year, according to Bloomberg; while Crispr Therapeutics generated USD56 million through its IPO in October. In fact, companies working on CRISPR technology have raised over USD600 million since 2013 in venture capital and the public markets, researchers at Montana State University had estimated in 2015.

In the US, the first human clinical trials to study the safety of a CRISPR-based cancer treatment are expected to be initiated in 2017. Interestingly, the trials are being funded by The Parker Institute, a new philanthropy created by tech billionaire Sean Parker to battle cancer.

 
Ensuring Affordable Access

While investments are welcome, the international medical research community needs to be cognizant of the fact that this breakthrough technology is not hijacked by purely commercial interests. The rush to profit from new biomedical discoveries based on CRISPR should not lead to the creation of restrictive patent regimes and monopolistic markets. It should not end up as a model that seeks to sustain super-normal profits by discriminating against patients on the basis of nationality, race and economic status.

The focus should firmly be on using CRISPR to develop therapies that fulfil unmet medical needs while ensuring they are affordable and thus accessible. The needs of poor patients and overall public health should not be sacrificed in favour of developing non-essential treatments for rich patients.

The game-changing CRISPR technology should lead to new paradigm where those needing life-saving medicines get it, at all times and in all places. 

Kiran Mazumdar - Shaw
Dec 19, 2016

Innovation, not price control is the answer to affordable Bt cotton technology

Courtesy: TOI

The biggest threat to cotton farmers is the bollworm, because of its ability to cause extraordinary damage to crops and livelihoods. In the 1990s, pesticides were the only weapon farmers had against the bollworm. Half of all the pesticide consumption in India was accounted for by just one crop – cotton.

Pharma & Biotech Sector Must Get Its Due This Budget

Courtesy: The Hindu

Finance Minister Arun Jaitley has a challenging task at hand to present a Budget for FY17 that spurs India’s growth at a time when the economic scenario appears challenging, both externally and internally. The global economy is expected to slow down further in 2016 pulled down by weakness in major emerging economies like China, Brazil and Russia. These global trends as well as weak investment sentiments at home are likely to impact India's GDP for FY16 and growth prospects for FY17.

Mr Jaitley’s last two Budgets belied hopes of ‘Big Bang’ reforms. Instead, he opted a path of gradual reforms aimed at addressing both the corporate and social sectors. This time there are expectations that the Budget will provide more specifics on Prime Minister Modi’s ‘Make in India’ campaign. Given that biotechnology is one of the key sectors identified by the government as part of ‘Make in India,’ it is imperative that the upcoming Budget provides an enabling and facilitating framework for preparing the Indian biotech industry to meet its aspirational target of US$100 billion by 2025.

Towards A Healthier World in 2015

Exercise is Your Best Diet

2014 was a year of unprecedented financial activity for the biotech industry. Nearly 80 biotech IPOs were completed in the U.S. alone, raising a staggering $6 billion. Globally, over 125 life sciences companies completed IPOs raising over $10 billion. That makes 2014 one of the best years for biotech IPOs in over a decade and points to how investors are betting on the breakthrough potential of biotherapeutics.

Science and Technology Shape Economic Future

The new government will have to act swiftly in course correcting the stalled Indian economy. To begin with, they will have to focus on a number of regulatory reforms that will address the ease of doing business, reduce transaction costs and expedite approval timelines. The lack of rules and guidelines in taxation and business matters have deterred investment and introduced delays in project approvals. These measures alone can add a per cent or two to GDP growth through increased FDI and project implementation.
The new government will also have to bring greater investment into healthcare and education.  Private sector must have a role in these sectors. Other areas include power and natural resources, especially water. We are in urgent need of management of perennial sources of water where there is a staggering loss.

 A sector of strategic importance is science & technology.  We must step up investment in this area. Innovation is key to value-added growth. We have barely leveraged technology to address a number of grand challenges the country faces starting with e-governance. Aadhar has been sub-optimal in its application. This is a powerful platform that should have served as the basis for e-governance and e-healthcare, but unfortunately this has not happened. The next government has the opportunity to build on the 600 million Aadhar cards and create a unique e-delivery model. Science & technology have a crucial role to play in shaping economic future and the new government must enable innovation through scientific research and development. We must identify key areas in which to build world class scientific and technological excellence eg. genomics, nanoscience, synthetic biology, IT, space technology etc. The ban on clinical trials and GM crops must be lifted. To quote Narendra Modi, “I am all for technology.  We should not discard technology that helps farmers; we must have faith in science. We must put technology and science to use with regulations and add value to produce.”

Finally, it is time we put in place rules and regulations that are unambiguous and transparent and prevent any impediments that often arise due to ambiguity and opaque norms. We must now rely more on deemed and automatic approvals and not inordinately lengthy approval timelines that have denied us infrastructure project implementation which has perhaps knocked off 1-2% off GDP growth.

The Congress manifesto has made a plethora of promises to deliver 8% GDP growth most of which relate to regulatory and fiscal reforms. Let us hope the new government is effective in acting and not be wrapped up in mere rhetoric.

After all, the underlying economy is still strong and capable of delivering robust growth.

The original article appeared in The New Indian Express on the 30^th of March, 2014 and can be viewed here 

Adieu 'Annus Horribilis'

2013 was probably one of the worst years for the Indian economy, with inflation running unbridled and economic growth grinding down to a level below 5 per cent.

Unfortunately, the pharma sector also witnessed an unprecedented slowdown growing at a single digit in 2013 against an average growth of 12 per cent the previous year. The negative impact was further compounded with adverse policy decisions with respect to pricing, FDI, clinical trials and compulsory licensing in India. An overactive USFDA issuing notices to some of the leading Indian pharma companies tarnished the sector’s image. All this made 2013 an ‘Annus Horribilis’ for Indian pharma.

Business Not As Usual

"Yesterday once more” the old classic song of the seventies by The Carpenters, seems to best describe the situation in India today. Believe it or not, doing business in India now seems to be more challenging than it was when I started Biocon in 1978.

Let’s Set a Global Drug Quality Benchmark

  With Indian-made generics accounting for a US market share of over 25 per cent, it is not surprising that it is gaining significant mindshare of the Food and Drug Administration ( FDA). The spate of quality issues with leading Indian pharmaceutical companies in the past couple of years however should not be viewed in isolation. Big Pharma in the West, too, has been facing increasing flak from the FDA and other regulators over good manufacturing practice ( GMP) violations. High profile names like J& J, Genzyme (Sanofi), GSK, Sandoz, Watson, Teva and many others have encountered their share of quality problems and have been served with ‘warning letters’ from FDA.

Women at Work: Biocon Founder on Philanthropy, Sexism and Politics

In the first in a series of interviews with women who are leaders in their field in India, The Wall Street Journal’s India Real Time met Kiran Mazumdar-Shaw, the founder of biotechnology company Biocon Ltd. 532523.BY +0.16%, and one of India’s richest women.

Last month, Ms. Mazumdar-Shaw was named by Forbes as one of the most generous people in Asia.

The Role Of Biotechnology In Inclusive Economic Development

25th Intelligence Bureau Centenary Endowment Lecture delivered onSaturday, Dec 22, 2012 at New Delhi by

Kiran Mazumdar-Shaw
Chairman & Managing Director, Biocon Limited

Ranbaxy a wake-up call for Indian pharma

Kiran Mazumdar Shaw  May 24, 2013  http://www.business-standard.com/article/opinion/ranbaxy-a-wake-up-call-for-indian-pharma-113052401084_1.html

The industry must take strong collective action to protect the reputation it enjoys in global markets

Indian pharma companies need to be surefooted in their approach to quality

16 May, 2013, 04.56AM IST

By Kiran Mazumdar Shaw

The hefty fine that Ranbaxy Laboratories will pay as part of the drug safety settlement in the US threatens to seriously erode its reputation that can take years to regain.

Post Glivec, India needs to state its position on IP

19 Apr, 2013, 04.52AM IST,

India is now in the position of a thought leader on pharmaceutical patents.

But the country cannot afford to lose the moral high ground.

Weeks after the Supreme Court ruling on Novartis AG's cancer drug, Glivec, one thing is clear: India is now in the position of a thought leader on pharmaceutical patents. But the country cannot afford to lose the moral high ground.

My presentation at the CII meeting of Karnataka chapter on 14th March 2013

2013: Dawn of a New Bio-economy

2013, heralds the dawn of a new economic era that can aptly be called a “Bio-economy”. This new era will unleash the power of biotechnology to promote socio-economic progress by transforming agriculture, healthcare, energy and the environment, offering India the opportunity to emerge as a leading bio-economic power.

The Indian biotechnology sector grew 21.5% in 2011-12 in the midst of an economic slowdown. With focused strategic intent, this industry can chalk up a CAGR of 30% to cross $100 billion in revenues by 2025. Let me explain how.

Imbalance between the agriculture, manufacturing and services sectors has skewed India’s economy. For instance, 52% of the working population is employed in agriculture despite it contributing a mere 14% to the GDP. Clearly, the sectoral structure of India's growth has provided insufficient employment opportunities for the poor. With agricultural productivity low and manufacturing sub-optimal, the poor have failed to get the employment opportunities needed to participate in India’s growth story. We require well-balanced growth with the three sectors reinforcing each other. Indian Biotech sector as it stands today at  $ 7.5 Bn has the potential to generate growth and employment in each of these sectors whilst addressing the grave challenges we face in terms of food security, healthcare needs, energy scarcity and environmental degradation.

To realize this, we need a two-pronged strategy: 1. A policy roadmap that balances the contribution of the sectors and 2.  An enabling framework that promotes biotechnology.

Agriculture: This moribund sector is trapped in an endless loop of low productivity and farmer distress. Biotechnology can usher in a second Green Revolution, offering unprecedented opportunities to ensure food security along with the economic well-being of the farmer. Biotechnology can boost yields while optimizing the use of available resources. We need only look at how Bt-cotton has transformed the lives of the 6 million farmers engaged in cultivating Bt cotton. Productivity has nearly doubled and pesticide use has significantly reduced. Today Bt cotton accounts for 90% of the 11 million hectares under cotton cultivation with an annual output of 35.5 million bales (7.1 million tons) making India the world's second largest cotton producer, next only to China. From being a net importer, this has helped India emerge as a net exporter of cotton while strengthening its textile industry to generate increasing employment opportunities. Bio Agri at $ 4 Bn is the largest segment of Indian Biotechnology.

Action: Instead of making ad-hoc decisions under political compulsions, the government must articulate a clear bioagriculture policy that allows the use of safe GM technologies for increased yields and enhanced nutritional value.

Manufacturing: This sector is shackled by high capital costs and antiquated land and labour laws. India’s expertise in fermentation-based technologies gives us an edge as the world seeks to manufacture biopharmaceuticals, biofuels, and enzymes cost-efficiently. We have already proven our leadership in vaccines and attained global scale in generics and antibiotics. Indian Biopharma as the second largest segment at $2.5 Bn is fast gaining global recognition.

Action: If India is to reboot the sector and become the ‘Pharmacy of the World’, the government must create an enabling physical, financial, legislative, and regulatory infrastructure.

Services: Global pharma giants are reeling under high R&D costs and an impending loss of patent protection in the coming years. With its low-cost, world-class scientific talent, India can position itself as the ‘Laboratory of the World’ to develop groundbreaking drugs, vaccines and diagnostics through affordable innovation. Bioservices business in India has attained a critical mass at S$ 1Bn, and poised to exponentially grow from here.

Action: We require an innovation ecosystem that provides access to risk capital. We also need special listing norms for innovation-led biotech companies through a secondary stock exchange that allows access to capital markets.

Biotechnology can be a game changer and steer India on to a strong economic growth path that inherently provides opportunities to all strata of society.  However, implementing the right fiscal, regulatory and infrastructure policies is fundamental in order to ensure a Bio-economy for India that can deliver an age of inclusive growth.

Innovations to take centre stage

“2012 has witnessed a rapidly changing paradigm in healthcare which has bucked global trends of shift towards generics & biosimilars and the growing influence of emerging markets. The global Biopharma industry continued to pursue a strategy of co-development, in-licensing as well as M&As to address the issue of depleting new drug pipelines. In addition to contract manufacturing, new trends of joint commercialization also emerged particularly in Asia as large Pharma was compelled to address challenges of COGS especially in the emerging world where affordability was recognized as a key requirement for market competitiveness.  Growing popularity of generics to contain spiraling healthcare costs augurs well for the Indian pharma industry, however for domestic players the drug pricing policy changes introduced in 2012 are expected to impact the profitability of the Indian pharma.

Biocon during 2012, made significant progress across its businesses particularly in Biosimilars and Novel Molecules where we achieved significant milestones in the development pathway of both biosimilar Insulins, MAbs and Novel Molecules.

The year ahead, holds immense promise for the Indian Biotech sector which is at an inflection point. The industry has leveraged the entrepreneurial spirit to build a strong foundation which has enabled it to grow at a CAGR of 20% for over a decade. The next year will see innovation taking center stage, driving significant progress in the areas of biosimilars & diagnostics for affordable healthcare, integrated traditional medicine, biomedical informatics, bio-fuels for less dependence on petroleum, bioremediation for environmental recovery, enhanced agricultural productivity and improved nutritional attributes.

Biopharma and the healthcare sector is the largest component of the Indian Biotech industry and the most promising.  The coming year will see collaborative trends gaining momentum with more co-development and marketing partnerships – between multinationals and the Indian companies as they seek to accelerate their growth by leveraging emerging markets.  Indian Biopharma is expected to witness an uptrend as Emerging markets grow ahead of the developed markets with 75% of the worldwide growth coming out of these markets. The global generics opportunity estimated to grow twofold and be over $430 bn market by 2016 also augurs well for the Indian pharma. Similarly the Indian Biopharma industry has the potential to carve a significant part of the global biosimilars opportunity estimated to grow five - fold from $ 1 Bn today to $ 5 Bn by 2016. 

In line with these trends, we will see a surge in both Biomanufacturing and bioservices partnerships which will enable innovative solutions for the world coming out of India.  The increasing focus on genomics and proteomics in Pharmaceutical research augers well for Bioinformatics where India can position itself as a key hub of knowledge and expertise. With the excellent foundation, improved infrastructure, good quality talent and enabling regulatory environment, Biotech has the potential to be the next technology beacon for the nation.

As for Biocon we are truly committed to provide affordable high quality biopharmaceuticals for chronic diseases particularly Diabetes, Cancer & Auto Immune diseases. We are on track to bring our second Novel Molecule, Itolizumab, an anti CD6 monoclonal antibody, to the market in India next year.  For 2013, that will be the most significant achievement for Biocon and a great boon for Indian patients struggling to manage Psoriasis.  We will also continue to focus on expanding our Insulin market in several emerging markets in Asia, Middle East North Africa, LATAM and Eastern Europe.  ”   
-  Kiran Mazumdar Shaw- CMD, Biocon

India to see a surge in biomanufacturing partnerships in 2013

Outlook for 2013:

“The year ahead holds immense promise for the Indian Biotech sector which is at an inflection point. The industry has leveraged the entrepreneurial spirit to build a strong foundation which has enabled the industry to grow at a CAGR of 20% for over a decade, growing to a size of US$ 4 Bn in 2011.The next year will see innovation taking center stage, driving significant progress in the areas of biosimilars & diagnostics for affordable healthcare, integrated traditional medicine, biomedical informatics, bio-fuels for less dependence on petroleum, bioremediation for environmental recovery, enhanced agricultural productivity and improved nutritional attributes.

Biopharma and the healthcare sector is the largest component of the Indian Biotech industry and the most promising.   It has the potential to carve out a large portion of the global biosimilars opportunity estimated to assume a size of  $ 2.5 Bn by 2015. The coming year will see collaborative trends gaining momentum with more co-development and marketing partnerships – between multinationals and the Indian companies as they seek to accelerate their growth by leveraging emerging markets.

We will see a surge in both Biomanufacturing and bioservices partnerships which will enable innovative solutions for the world coming out of India.  The increasing focus on genomics and proteomics in Pharmaceutical research augers well for Bioinformatics where India can position itself as a key hub of knowledge and expertise. With the excellent foundation, improved infrastructure, good quality talent and enabling regulatory environment, Biotech has the potential to be the next technology beacon for the nation.

As for Biocon we are truly committed to provide affordable high quality biopharmaceuticals for chronic diseases particularly Diabetes, Cancer & Auto Immune diseases. We are on track to bring our second Novel Molecule,  Itolizumab,  an anti CD6 monoclonal antibody, to the market in India next year.  For 2013, that will be the most significant achievement for Biocon and a great boon for Indian patients struggling to manage Psoriasis.  We will also continue to focus on expanding our Insulin market in several emerging markets in Asia, Middle East North Africa, LATAM and Eastern Europe.  ”

Nurturing Innovation That Makes A Difference

 By Kiran Mazumdar-Shaw, Nov 06, 2012

Express Pharma

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.

Infrastructure:
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.

Regulations:
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.

Talent:
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.

Conclusion:
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.

Move to ban branded generic drugs imprudent

Kiran Mazumdar-Shaw, CMD, Biocon

In an article published recently, I welcomed India’s progress towards a Universal Health Policy that aims to ensure essential medicines for all through a generics-only state procurement regime. With robust IT supply chain systems and stringent quality control processes – as exemplified by Tamil Nadu – this can benefit millions of Indians often deprived of life-saving drugs owing to the high cost.

However, public health missions must not be confused with the open market.

The recent directive to impose a ban on branded generics is, to put it mildly, utterly ill-considered. While states can ensure quality in public health systems, regulation for drugs sold in the open market is derelict. On pharmacy shelves, jostling for space with established brands from respected companies are questionable products from zero-overhead marketers. Painting them all with the same generics brush will deprive the patient of the quality assured by reputed brands. 

Devaluing Indian Pharma

It is not just the health of patients that the government is putting at risk with this policy; it is also playing with the very life of the entire Indian pharmaceuticals sector. This US $20 billion industry has over 5000 small, medium and large manufacturers generating employment for hundreds of thousands of people. Growing at 17 percent per annum, we top the world in the export of generic drugs and rank third globally in pharmaceutical manufacturing by volume.

Driven primarily by branded generics, the pharmaceuticals sector has built enormous brand value that directly translates to its robust market capitalization. The BSE Healthcare (BSEHC) index of 17 leading companies outperformed the Sensex to touch Rs. 295,724 crore in market cap at the end of September 2012. This impressive sectoral performance is reflected in the high valuations buyers have willingly paid for companies such as Ranbaxy, Piramal Healthcare and Paras Pharma sold at 4, 9 and 8 times their annual sales, respectively. A ban on branded generics will not only bleed investor net worth but also destroy value for the pharmaceutical industry.

Despite margins under pressure owing to an uneven playing field in the face of imports, rising costs and competition, the Indian pharma sector has been forging ahead. Innovation-led R&D is increasingly driving the discovery of affordable breakthrough drugs for life-threatening diseases. A critical component of India’s struggling economy, this sector is now under threat from a government that should be nurturing it.

Deplorably, such attempts on branded generics will further impact margins, erode profitability and deplete the funds available for research. The cascading effect downstream will be that pipelines for newer and cheaper drugs dry up, denying patients access to better and more cost-effective medication.

Way Forward

While it is true that drug prices have risen in the recent past, it is also true that fierce competition in the market place has contained and even driven down drug prices. The recently-announced National List of Essential Medicines (NLEM) has 348 key drugs. With a weighted average price discovery mechanism, this list aims to cap the prices of the drugs that cover the major part of India’s disease burden.

I would like to sound a note of caution here. Of the 74 drugs covered earlier by the Drug Price Control Order (DPCO) only 47 are being produced. This highlights the danger of going overboard with price control. If a product ceases to be profitable, no business can sustain its supply. The pharma industry is no exception to the laws of business. Thus there is the grave danger of essential drugs disappearing from the market if it makes no economic sense for companies to produce them.

The move to generics in developed nations is being enabled by across-the-board quality assurance through effective regulatory implementation. Without such regulation, as is the case in India, any move to ban branded generics in the retail market is a dangerous gamble. It is fraught with the risks of sub-standard medicines flooding the market, value erosion of the pharma industry, impact on R&D for better and cheaper drugs, and an adverse effect on the Indian economy. Unless this ban is revoked, the unforgivable casualty will be the patients who will ultimately suffer.           

Postscript

Soon after I wrote this article, the government announced that while it will approve a drug under its generic name, companies can still market branded generics. If such a system is put in place, the pharma industry will need to undertake an entirely unnecessary process to register the branded generic after getting approval for the generic version. This is an exercise in futile duplication; there is no need to deviate from the present process that accords approval to both branded and unbranded generics at one go. The uncertainty generated by such declarations – including the possibility that this may be the first step toward a blanket ban as previously implied – and the needless bureaucracy they create are added bottlenecks for the pharma industry, further eroding its value.