Australia India Business

Biopharma Boom

Shikimura Suryanarayan, Director General, Association of Biotechnology Led Enterprises (ABLE), India

As India takes steps towards drug innovation, a range of partnership opportunities are opening up for Australian companies, writes ABLE’s Shrikumar Suryanarayan.

India has traditionally been a big player in the manufacture and supply of biopharmaceutical drugs. More recently, driven by tighter patent laws and a growing pharmaceutical market, the focus has started to shift to innovation and development. At this stage, however, the burgeoning industry does not have the capacity to make this transition on its own.
An unprecedented number of overseas companies are leveraging this capacity gap, seeking to combine their innovative product ideas with the low cost of development in India. Through this approach, medicines and vaccines that may never have reached the market, or taken many years to do so, will potentially come to fruition faster and more cheaply than ever before.

New patent laws

Indian biopharmaceuticals companies, such as the Serum Institute of India in Pune and Biocon in Bangalore, produce massive quantities of vaccines, insulin and other biopharma products. Yet virtually none of these products were discovered and developed in India. For many years India’s patent laws, which recognised processes but not products, allowed these companies to freely produce generic copies of patented drugs, provided they did not infringe upon the patent holder’s manufacturing process.
But all this has now changed. In 1995, India signed the General Agreement on Tariffs and Trade (GATT), paving the way for the introduction of patents that recognise both processes and products, and bringing the country into line with international standards. The new laws came into effect in 2005, following a 10-year transition period, at which point any generic versions of drugs that were patented after 1995 had to immediately be withdrawn from the market.
Since then, Indian companies and institutions have begun to invest in the development of new biopharmaceutical products – Mumbai-based fi rm Glenmark Pharmaceuticals is one that has successfully developed and licensed new drug molecules – but it is a slow, tedious and risky process to embark on alone. The number of product patents being fi led is going up but it will take several years before the level of research activity in this area compares with that in developed economies.

A growing market

At the same time, India’s booming economy and high annual growth rate (around 8% on average) has led to an emerging middle class with significant purchasing power. Changing lifestyles and a growing awareness of health is in turn creating an increased demand for healthcare. A 2008 Deloitte report conservatively estimates that India’s domestic pharmaceutical sales will reach US$16 billion in 2015, putting it among the top 10 pharmaceutical markets in the world.
In addition, creative deal structures between Indian companies and foreign partners are opening up overseas markets. Under such deals, some of the development costs are exchanged for potential market rights, so that the risks and rewards of drug development are shared between the partnering companies. US pharma giant Eli Lilly and India’s second-largest drug company, Nicholas Piramal India, entered into such an agreement in 2007.

Low-cost development

Part of what makes India such an attractive prospect for overseas pharmaceutical companies is the low cost of developing drugs. This can be traced to the lack of a national health insurance system in India. People have traditionally had to pay for their own medicines, which put pressure on drug manufacturers to come up with processes that were efficient and cost-effective. As a result, drug prices in India are among the lowest in the world.
India is also a preferred destination for conducting low-cost clinical trials. Not only is there a prevalence of English-speaking doctors trained in Western medicine but the country’s large population allows for greater availability and faster recruitment of clinical trial participants.

Unique skills base

India also offers a unique skills base thanks to its world-class drug manufacturing sector. One advantage of the country’s former patent laws was that Indian pharma companies were forced to become extremely innovative with their processes. This led to the creation of a large pool of highly skilled process chemists, who are now being targeted by foreign companies wanting to outsource their research and development (R&D). Bristol-Myers Squibb is one such company – the US biopharma corporation recently signed a major contract with Bangalore-based research firm Syngene International to establish an R&D unit that is set to house more than 400 chemists.
As well, the industry is benefiting from the mass of skilled emigrants who are choosing to return to India. Several years ago, as happened in the software arena, many Indians emigrated to Australia, the United States and Europe and achieved leadership positions in the pharmaceutical and biopharmaceutical industries. More recently, as the Indian economy has become more robust, many of these expats are moving home, attracted by a combination of opportunity and economic incentives. A number of the large Indian pharmaceutical companies have employed such returnees in senior management positions in their R&D divisions, which is injecting a wealth of experience into the system.

Partnership opportunities

As a result of these developments, a wide range of partnership opportunities have opened up for biopharmaceutical companies in countries such as Australia – particularly those which own their intellectual property but only have a limited budget for R&D. Not only will their money go a lot further in India but creative deal structures can reduce some of the risk and result in even more cost-effective ventures.
Partnership opportunities exist across the whole spectrum of the development process, from simple contract manufacturing to R&D to outright licensing. This makes it the ideal time for Australian companies to explore their options in India, with potentially huge benefi ts on both sides and for the world.

Shrikumar Suryanarayan is the Director General of the Association of Biotechnology Led Enterprises of India (ABLE), a non-profit industry organisation that works to promote interactions between Indian biotechnology companies and the international community. He is also an Adjunct Professor in the Department of Biotechnology at the Indian Institute of Technology Madras. Prior to this he was the President of Research and Development at Biocon and has more than 23 years of biotechnology industry experience.

Website: www.ableindia.org

Reprinted in full from the print edition of Australia India Business 2009.

Tags: ABLE, Association of Biotechnnology Led Enterprises, Shrikumar Suryanarayan