INDIA: THE BIOPHARMA RAJAH

In the above photograph we see my buddy Mr. R L K Agnihotri, VP, Biovel along with his family. Mr. Agnihotri (Agni or Raja to his friends) has had an interesting career starting as a lecturer after his M. Pharm. To sum up his career in one word - it is - ‘intrapreneur’! A very affectionate person, Agni shares his practical insights (given in italics below each topic) in the article below.

Mr. Agnihotri’s wife Ms. Sudha Agnihotri has been an able ‘ardhangini’ (this means loved companion and wife in Sanskrit). They live with their children ( boy - Shreyas & girl - Shravya) at Bangalore.

To begin with…

As per the Economic Times, dated 16.6.2007, on page no. 5, the Indian biotech industry has crossed the 2 billion dollar mark. The exact amount is 2.13 billion dollars in total revenues in FY2007 (April 2006 to March 2007). There was a 31% growth over FY06’s 1.6 billion dollar revenues (Rs. 6521 crores). Exports from this sunrise sector for the FY07 stood at 1.2 billion dollars (Rs. 4937 crores) showing a good growth of 47%.

The break up of the biotech performance (according to the Association of Biotechnology Led Enterprises, ie. ABLE):

Position no. 1: Serum Institute, Pune with revenues of Rs. 951 crores.
Position no. 2: Biocon, Bangalore with revenues of Rs. 823 crores.
Position no. 3: Panacea Biotec, New Delhi with revenues of Rs. 600 crores.

The no. 4 and 5 ranks are with biotech based agri companies:
Position no. 4: Rasi Seeds, Salem with revenues of Rs. 333 crores (sells mainly Bt cotton seeds).
Position no. 5: Nuziveedu Seeds, Hyderabad with revenues of Rs. 226 crores.

The next five players with revenues over Rs. 100 crores: Venkateshwara Hatcheries, Indian Immunologicals, Shanta Biotechnics, Mahyco and Bharat Serum.

The biopharma segment accounts for over two thirds of the biotech industry. The sales of this segment are Rs. 5,973 crores showing a growth of 27%. The bioservices sector registered 53% growth. Bioagri sector grew by 55%. The bioinformatics sector grew at 21% and bioindustrial sector grew at 5%.

Agnihotri

By giving credit to ABLE for these numbers, one should not forget Biospectrum a monthly biotech magazine that has put tremendous efforts to map the contours of this industry.

The figures look very attractive and can pull any entrepreneur; but closer you look the wiser you become to invest/ understand this industry! Biotechnology is very broad industry with its application in Healthcare, agri, plant, services, diagnostics…

The above list of Top 10 companies in Biotech industry comprises of so-called biotech, biopharma and bio agri companies. I feel the listing should be done as Top 10 Biopharma companies OR Top 10 Bio agri companies, as this will give focus on which segment of biotechnology industry is growing. Unfortunately the industry doesn’t have any other reliable data source apart from Biospectrum.
The next question-
Whom do we call a Biotech company? Whom do we call a Biopharma company?
Clarity has to set in. At present everybody is a biotech & biopharma company.

I was going through the recently released June issue (page 16) of Biospectrum under the survey & ranking methodology wherein it mentions: “The revenues considered for the analysis are biotech products sales and services figures. In several cases, where revenue figures were not available, estimates were arrived at talking to industry experts”. So where is the authenticity?

Also, the revenues of the top companies come from exports, which is around 65 %, why have the sales of biotech products not picked up in the domestic market? It’s a question to ponder on.
In India, after the Hepatitis –B vaccine you don’t find a biotech molecule which made a big wave.

I would like to stop at this juncture, and say we need to understand the reality of this industry rather than creating hype.

Biopharmaceuticals - defined

Biopharmaceuticals are therapeutic or preventative medicines that are derived from living cells, using recombinant DNA technology. Conventional pharmaceuticals are generally small molecules, whereas biopharmaceuticals are typically proteins, peptides, nucleic acids or inactivated viruses/bacteria. The distinct families of biopharmaceuticals include hormones and enzymes, cytokines and peptides (naturally occurring proteins that regulate or modify the growth of specific cells), vaccines, monoclonal antibodies, antisense drugs and cell therapies. The leading biopharma products are Epogen (Sales: $2.5 billion), Avastin (Sales: $1.1 billion), Humira ($1.4 billion), Remicade (Sales: $2.5 billion).

Agnihotri

With increase in target specific or treatment specific approach, Biopharmaceuticals are going to be the products of the future.

Peptides are ones in this patch and will grow as most of the leading companies internationally are working on different peptides with different delivery systems.

At the same time one should keep in mind that, biopharma / biotech products are capital intensive with a long gestation period, so the timeframe cycle, investment model, regulatory requirements, and IPR issues have to be clearly understood.

Biopharma’s impact on healthcare marketing

The working of biotech companies like Avestha Gengraine is writing the convergence of food, pharmaceuticals and clinical genomics. This is leading to a very powerful future of personalized medical care. The impact will be felt in terms of a revolutionary model of preventive healthcare.

As per WHO, the leading causes of death in high-income countries are:
No. 1 killer: Coronary heart disease
No. 2 killer: Stroke and other cerebrovascular diseases
No. 3 killer: Cancers of the respiratory system (trachea, bronchi and lungs)
No. 4 killer: Lower respiratory infections
No. 5 killer: COPD (Chronic Obstructive Pulmonary Disease)
No. 6 killer: Colon and rectal cancers
No. 7 killer: Alzheimer and other dementias
No. 8 killer: Diabetes mellitus
No. 9 killer: Breast cancer
No. 10 killer: Stomach cancer

Leading biopharma companies are stressing their R & D efforts on degenerative conditions, metabolic disorders, and infectious disease thereby matching the WHO data on the fatal disease trends.

Agnihotri

YES. Unlike in pharma sector most of the biopharma companies are pumping in at least 30 – 40 % of their revenues in R & D efforts to strengthen their pipeline. I feel the reason for matching the products on WHO data is for assured business, as WHO acts as procurement agency for underdeveloped countries (the above list is indicative for small income countries too).

Apart from this, there are a few Biotech companies in India who are working on vaccines for the diseases like Roto viral diarrhea & malaria, which are most prevalent in Asia.

Biopharma sector’s ‘food as medicine’ endeavors

Hippocrates had emphasized ages back: let food be thy medicine and medicine thy food. Ayurveda has emphasized on this aspect too. Biotech is now endeavoring to present this bygone wisdom in a modern avatar. Cutting edge biotech approaches are working to create medicinal plant based bioactive nutraceuticals (dietary substances) for degenerative diseases and morbid conditions like osteoporosis (based on genistein, diadzein and other soy or red clover isoflavones), arthritis (particularly degenerative osteoarthritis where in cartilage degeneration is arrested and reversed with help of bioactives like glucosamine and MSM (methyl sulfonyl methane)), management of diabetes and diabetic complications, and obesity (the current world-wide epidemic). Biopharma is thus fuelling the functional food industry.

Agnihotri

Nutraceuticals in the Indian context is mostly considered as dietary replacement therapy and still considered as high value products. This segment still lacks wide acceptance.

Prebiotics and probiotics

The application of useful bacteria in clinical practice particularly in case of diarrhea and antibiotic induced gastrointestinal imbalance in the gut-flora has opened up a new window of opportunity for biotech industries. Thus, biopharma companies are playing a major role in the wellness trend.

Agnihotri:

YES looking at the benefits they offer, prebiotics and probiotics play a major role in clinical practice, but unfortunately, pharma companies have played and promoted this product on price and irrational combinations.

Biopharma sector’s unique collaborative approaches

The biopharma sector being at a nascent stage, is witnessing a collaborative approach among companies. The companies are working through mutually beneficial relationships for creating value added products and services. For eg. Avesthagen has an ongoing collaborative approach with Cipla, Nestle, bioMérieux, France and other companies. Biocon has several R & D agreements with Indian and foreign companies.

Biovel is actively seeking to firm its presence through further collaborations.

Agnihotri:

As said above, the segment is capital intensive and has a long incubation period, to sustain this, one has to look into collaboration models. Its good that now, VC /PE are looking at funding at early stages of discovery.

Biovel is also looking into strategic alliances in Biotherapeutics.

Indian biopharma companies venturing in to cutting-edge R & D

Indian biopharma companies like Intas Biopharmaceuticals and Avesthagen are getting in to recombinant microorganisms, stem cell therapy, and transgenic animals (for harvesting recombinant proteins from lactating transgenic animals and for production of plasma factors for eg.: Factor 8 and 9 in case of haemophilia) for production of biopharmaceutical actives.

Agnihotri

There are many Indian Biopharma companies who are working on many important biotherapeutics / biosimilars and are also pumping in money into cutting edge R & D. Even DBT, TDB are also funding the R & D projects. It’s, however, still a long way.

On the regulatory front, the process needs to be fast and supportive. Thanks are due to Mr. Mashelkar for his effort in bringing out policy guidelines on recombinant products. Also, with the National Biotechnology policy in place and the GEAC, things should improve.

Biogenerics ahoy!

Erythropoeitin, vaccines (of attenuated or dead viruses) immunoglobulins and other monoclonal antibodies present a world-wide opportunity that are being encashed by Indian companies like Wockhardt, Bharat Biotech, Shantha Biotech, Serum Institute (the no. 1 Indian biopharma company) and Biocon.

Agnihotri: YES. Indian companies are gearing up to launch many more recombinant proteins apart from r-EPO, and are competitive with due advantage of cost effective resources.

From chemical based Pharma to chemical and biotech based Pharma

India is a leading global player in the chemical based Pharma industry. In fact, Cipla’s generics are mounting a challenge in the field of anti-AIDS medicines while Lupin is a leader API for anti TB medications. The Indian Govt. has traditionally played a major role in creating a bright future for the Pharma industry through policy interventions such as the Indian Patents Act, 1970 that provided the foundation to the Indian Pharma industry. In fact, the Indian government has just published a draft National Biotechnology Development Strategy in which it details plans to set up a National Biotechnology Regulatory Authority 'with separate divisions for transgenic crops, recombinant drugs and industrial products, transgenic food and feed, transgenic animals and aquaculture'. And India's fledgling biotech industry is expected to grow still further to reach a value of $5 billion in 2010, with biopharmaceuticals continuing to capture the lion's share of the growing market and the sector as a whole employing 1 million people by that time.

The development of the biopharma sector in India comes at a time when regulatory routes are opening up in Europe and the US for generic versions of biologic drugs, suggesting that Indian companies may attempt to achieve in the biopharmaceutical sector what they have accomplished in the market for supplying traditional active pharmaceutical ingredients (APIs).

Agnihotri

We are moving towards Chemical and Biotech based pharma, but still as said above our regulatory mechanisms need to be more supportive and speedy; also the IPR mechanisms needs to be more stronger.
Speedy regulatory clearance will help biotech start-ups and companies. Of course now, we now have the Recombinant committee, Genetic engineering committee etc. But it still this needs more streamlining.

India attracts MNCs

The 1 billion plus population of India, the technical resource personnel, the accommodative and English speaking culture of India and the innate attractiveness of India are attracting major biopharma MNCs. For eg., Pall Life Science has established a Center of Excellence at J P Nagar in Bangalore. This trend of internationalism in the biopharma field is fuelling an ecosystem for flourishing biopharma companies.

Certain facts and figures of the aggressive and innovative Indian Pharma industry attracting global attention: The biopharmaceutical industry throughout Asia is experiencing a major surge in activity. The Indian pharmaceutical industry is one of the world’s largest, ranking 4th in terms of volume. According to Opportunities in Indian Pharma Sector (July 2006), India holds US$ six billion of the $550 billion global pharmaceutical industry, an annual increase of 10 percent compared with the seven percent annual growth of the overall world market. The biotechnology market is also booming in India and is expected to continue on a fast pace with the support of the government through its comprehensive national biotechnology policy. Indian Biotechnology Market Outlook (February 2007) reports that the Indian biotechnology industry has grown 28.09 percent from 2005, and is likely to touch the US$ five billion mark by the end of 2010.

The world-wide biopharma boom is recent

In 1982, recombinant human insulin, the first biopharmaceutical product was launched, marking the arrival of the biopharmaceutical industry. Since then, there was no looking back. The biopharmaceutical market has been growing rapidly world over. Currently, over 130 biopharma products are being marketed around the world and this number includes more than a dozen blockbuster drugs. In fact, biopharmaceuticals are hailed as the future medicine, which will revolutionise the treatment of diseases for which no cure exists.

The present global biopharmaceutical market is valued at around $71 billion with a growth rate of about 16 percent. The current sales of biotechnology products worldwide are pegged at around $40 billion. It is also estimated that by 2010, the figure is likely to cross the $100 billion mark. The biopharmaceuticals’ pie can be classified on the basis of geographies; North America accounting to almost 60 percent of the revenue and R&D. Europe accounts for 20 percent and Japan takes up 10 percent of the pie.

There are more than a dozen biopharmaceuticals with US patents on the brink of expiry by end of 2006. It is estimated that biotech drug patents worth about $11.5 billion would be expired, creating a colossal market.

The worldwide demand for biopharmaceuticals is fuelling expansion of manufacturing plants in India along with contract research opportunities. The main product lines in high demand from the Indian biopharma sector are the vaccines, interferons, monoclonal antibodies, erythropoietin, enzymes and statin drugs.

Agnihotri

YES. It’s booming. India is going to be the Contract manufacturing/research hub of the world.

I would like to recall the words said by Dr. Prahalad, the marketing guru, in his speech during the award ceremony of the Economic Times, 2005 (Dr. Prahalad received the global Indian award, 2005). He said:

If India can integrate its intellectual component, IT component and manufacturing component, it can stand as the bench mark to its global players “
In days to come, you will witness blockbusters from Indian companies in the global market of biosimilars and delivery systems. JUST WATCH!

(THIS IS THE 35TH POST PUT ON WEDNESDAY THE 4TH OF JULY 2007 AT 7.30 PM FROM THE NEIGHBORHOOD CYBER CENTRE. I sincerely feel all the 35 posts are worth reading.).