Tag Archives: Biotech

Big Pharma Fails Avoiding Drug Price ‘Control’? Even In The US? Why?

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It ultimately happened – even in the United States, as the US President signed a bill on August 16, 2022 that aims to reduce healthcare costs, alongside fighting climate change, besides raising taxes on the rich. This new law was enacted, despite powerful lobbying and the vehement opposition of big pharma associations and that too in their home turf.

According to the Fierce Pharma report of the same day, since the current US President moved into the White House in 2020, the drug industry left no stone unturned battling to preserve pricing status-quo. It further added, the ‘pharmaceutical industry, including, PhRMA, its allies, and the nation’s largest pharmaceutical firms’ have spent more than $205 million in multi-media ads opposing ‘Medicare price negotiations’ and lobbying against efforts to lower drug prices for consumers.’

No wonder, when the bill was just introduced to the US lawmakers, big pharma’s disappointment on the bill was palpable. This gets well-captured in what the AbbVie CEO pointed out at that time. He said, ‘the legislation would force manufacturers to accept the government’s proposed price or face a harsh tax on their revenues from a given product.’ He also said: “So, it’s not a negotiation,” as stated in the bill. He further opined in his conference call: “We should just call it what it is. It’s price controls,’ which is what the lawmakers are ‘basically putting in place, if the language stays the same,’ the AbbVie chief added.

Capturing this new development in the United States, at least, in the recent past - Fierce Pharma in its August 08, 2022, issue commented: “The seemingly unstoppable pharma lobbying force has lost its charm. With the passage of a new bill, the U.S. Senate is opening the door to major drug pricing reform, leaving the drug industry licking its wounds.”

In the Eldorado of the global drug industry, this is indeed an unprecedented initiative to significantly reduce costs of many important drugs and reduce patients’ out of pocket expenses. Consequently, it has created so much of hullabaloo, across the world, for various reasons. In this article, I shall track this emerging scenario along with the message that it sends across the globe, and its possible impact on new drug innovation to meet unmet needs of patients. In India, one such area could be revisiting the price negotiation proposal for patented drugs, a government initiative that failed to take off earlier.

Would lowering prices stifle new drug innovation?

The apprehension, I reckon, that big pharma will continue to play with - price control will stifle new product innovation – adversely impacting patient interest. Notably, to many industry experts, this argument doesn’t just lack robustness, seems more a conjecture rather than the outcome of any peer- reviewed research study findings. On ewthe contrary, several highly credible and independent studies prove otherwise. Thus, let me put hereunder:

  • One – what big pharma directly and through their powerful industry associations or some financially sponsored studies are saying
  • And – what the top experts concluded from their independent analysis in this regard, as published in the globally acclaimed journals.

I leave it to my readers to evaluate the credibility of each to form their views.

Drug industry arguments supported by recent studies:

The findings of a study conducted recently, with the financial support of the Pharmaceutical Research and Manufacturers of America (PhRMA), the Biotechnology Innovation Organization (BIO), Amgen, Pfizer, Alexion, AbbVie, Genentech, and Bristol Myers Squibb, were released by PhRMA on November 23, 2021. The study was conducted by Vital Transformation. The key findings of this study highlighted: ‘Every 10% drop in the price of medicines in price-controlled EU markets was associated with a:

  • 14% decrease in total VC funding (10% early stage and 17% late stage)
  • 7% decrease in biotech patents
  • 9% decrease in biotech start-up funding relative to the US
  • An 8% increase in the delay of access to medicines.

It concluded: ‘Drug pricing controls implemented in the US would likely have an even greater impact on Biopharma KPIs given its global leadership in investment and innovation.’

Independent expert studies, published in highly reputed journals:

Around the same time as the above report, an independent study published in the Harvard Business Review (HBR) on October 01, 2021, found exactly the opposite. It categorically stated: ‘The U.S. can lower drug prices without sacrificing innovation.’

The paper summed up: ‘With Congress considering legislation to allow Medicare to use its bargaining power to negotiate lower drug prices, large pharmaceutical companies are once again waging a campaign that contends that doing so would seriously harm the development of breakthrough drugs. This is not true. Smaller companies now account for the lion’s share of such breakthroughs. The key to supporting drug innovation is to increase NIH funding of the efforts that give rise to these new companies, cut the costs, and accelerate the speed of clinical trials, and reform patent law.’

Drug pricing in the Indian context:

Prices of, especially, new drugs and the overall cost of healthcare are two major concerns – more in the developing countries like India. Responding to this need drug price control for pre-defined essential medicines are already in place in the country. More recent studies further vindicate the relevance of such regulation from the perspective of affordability of drugs for the poorer section of the society, and where out of pocket expenses are very high.

Let me quote one such paper, published on June 04, 2022, which received no outside financial support from this study, where the researchers concluded: ‘With induced demand and an inadequate competitive environment, the pharmaceutical industry fails to reduce prices. Supply-chain trade margins are very high. Hence, government intervention through price control of essential and life-saving drugs is a necessity in India.’

In this context, another question that is being raised – are there other alternatives to expand access to high-priced life-saving drugs at an affordable cost to all those who need those most? The most common alternative that floats, encourage more competition for those drugs as soon as they go off patent. Let me examine what’s big pharma players are doing in that area.

Does Big Pharma encourage increasing competition to reduce drug prices?

Another way to reduce the price of an expensive product is encouraging competition to enable market forces bring down the price. An interesting article on breaking the rule of drug pricing by pharma companies was published in the Forbes magazine on June 29, 2022. I also wrote on June 10, 2013: ‘To scale-up access to health care, especially for the marginalized population of any country, greater access to affordable generic drugs will always remain fundamental, besides improving healthcare infrastructure and its delivery mechanism.’

Thus, there should be a robust mechanism, across the world, to facilitate quick entry of cheaper generic equivalents immediately after patent expiry of the original molecule. Increasing attempts of blocking entry of generics surreptitiously by vested interests, leaves no other alternative, but price control. This is imperative, ‘as without the availability of newer generics, unmet medical needs of the most vulnerable section of the society cannot be met effectively by any country, as I wrote there.

Attempts to game the system to minimize competition continue unabated:

Even after my article, this red flag is being raised for quite some time. It will be evident from another Harvard Business Review article titled, ‘How Pharma Companies Game the System to Keep Drugs Expensive,’ published in the on April 06, 2017. Acknowledging: ‘Drug development is risky and expensive, thanks to the long testing and approval process,’ the author concluded from their study – ‘But, increasingly, makers of branded drugs are using a variety of tactics to extend their exclusive rights,’ enabling them to maintain high drug prices for much longer time.

More recently, the above Forbes article of June 10, 2022 also highlighted, ‘even the most generous patent protections come to an end and companies must face the potential for generic competition. That’s when major drug manufacturers shift tactics from influencing policy to crushing the competition.’ There are several legal and semi-legal approaches that big pharma players adapt to game the system and maintain pricing monopoly. Let’s recap it with just three of these examples:

- ‘Patent Thicket: Delaying entry of lower price off-patent molecule through a Patent Thicket. This involves creation of ‘a dense web of overlapping intellectual property rights that a generic pharma company must hack its way through in order to actually commercialize new technology of a drug molecule,’ even after the original patent expires. For example, AbbVie’s Humira, the world’s best-selling drug for a long time. I also discussed this issue in my blog over three years ago – on April 22, 2019.

- ‘Pay-for-delay deals’:  I discussed this issue in this blog on June 19, 2013. Moreover, the above Forbes article of June 29, 2022, also underscored this tactic. It explained that this is a deal in which drug companies agree not to compete for a set amount of time to maintain high prices of their brand-name drugs. The article, published in Bloomberg Law on February 20, 2020, captures it nicely.

- Authorized generics: As many would know, law permits six months of exclusivity to the first generic version of an off-patent new molecule coming into the market. Interestingly, just before patent expiry of an innovative drug, several drug makers roll out their own generics to stifle competition. Although, they keep different names for the generic versions, but pricing remains almost similar. Such a practice obliviously delays the entry of cheaper generics, at least by six months.

In this scenario, the new drug prices continue racing north. Something was to be surely done – for patients’ sake, as many believe, at least, where it all started – the US.

New drug prices are highest in 2022:

As reported by Reuters on August 16, 2022:

  • Eight of 13 drugs launched in 2022 priced over $200,000 per year
  • Median annual price for new U.S. drugs this year is $257,000
  • Some drugmakers disclose less information on pricing

Despite this, as reported on August 15, 2022: ‘The main U.S. drug lobby has said it will push back against the legislation, which includes policies that drug makers have opposed for decades.’

Conclusion:

The significance of the above development in the US healthcare scenario, was aptly summed-up by the US House Speaker, as she said: “If you are sitting at your kitchen table and wonder how you’re going to pay the bills – your health care bills, your prescription drug bills – this bill is for you.” For the first time in the US – the champion of champions of free-drug pricing market, will negotiate the drug price with their manufacturers to become patient -centric.

The reverberations of this difficult decision, especially on new drug prices, are expected to prompt the need for price negotiation or price control, primarily for expanding access to new drugs for a larger number of patients. This deserves to be a focus area for the Government, including India. Moreover, the August 18, 2022, media report also suggests that the top court of India may now encourage the Government to investigate, report and take remedial action on drug industry malpractices.

Finally, it’s worth noting that over a decade ago, international media widely reported -  ‘India considering price controls for patented drugs.’ Its objective was to address the aggressive new drug pricing trend in the country. Accordingly, the price negotiation proposal for patented drugs was notified by the Department of Pharmaceuticals (DoP) in 2007. The constituted Committee submitted a report, as well, on February 21, 2013. But it did not take off as on date. Many apprehend, this is due to intensive and ongoing lobbying by big pharma, just as what happened in the US. Nevertheless, the question that surfaces – will the above new drug law in the largest pharma market in the world encourage the DoP to revisit price negotiation for patented drugs - to make modern drugs affordable to a larger patient population in India – now?

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Physicians’ Increasing Digital Proficiency And Its Implication

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At a time, when an unexpected and unprecedented Covid-19 pandemic struck a catastrophic impact on human lives, livelihood, and the global economy the healthcare sector continued surging ahead. This is being fueled by exponential advances in medical science, and the pandemic-triggered explosion of digital technologies, data access, analytics – besides emergence of more informed and empowered consumers with new expectations and aspirations.

Echoing this, Deloitte’s paper - ‘2022 Global Health Care Outlook’ articulated: ‘The global health care sector continues to rise up to the new challenges presented by the ongoing pandemic, which continues to dominate health care systems’ attention and resources.’

No more than just a couple of years back, none could predict that a pandemic in these modern days, would have the power to initiate the unforeseen changes so quickly. This is especially applicable to – mostly tradition bound and slow to change – the pharmaceutical industry, even in India, which gets reflected in the growth of this sector. That too, amid sporadic disruptions in the operational areas of many companies.

As reported on December 29, 2021, Indian Pharma Industry registered a growth of 15% in 2021 led by growth of Covid-19 products, against a growth of 3% last year. The report emphasized that the challenges posed by the pandemic gave rise to new opportunities for the pharma sector to evolve quickly under changing circumstances.

Which is why, many players are being compelled to adapt newer digital processes and practices to survive and excel – while navigating through this uncharted frontier. These will call for growing investments for paving a high-tech digital pathway, primarily for an effective customer engagement, besides refinement of the product life cycle through digitization.

To give a sense of perspective on strategic implications of increasing digital proficiency of physicians, particularly in the context of an effective, patient-centric engagement by pharma companies, I shall focus on this development, in this article.

HCPs digital proficiency poses a fresh challenge – it’s real:

Increasing digital proficiency of HCPs during Covid-19 pandemic poses a fresh challenge to pharma marketers for several reasons. It’s so real, which will invite many fundamental strategic changes, as Covid-19 isn’t going anywhere, at least, anytime soon, contrary to what many people are expecting.

The emergence of Delta and Omicron like variants that infected a large number of fully vaccinated people, as well, is expected to continue. For example, as reported on January 27, 2022: ‘Just as the omicron surge starts to recede in parts of the U.S., scientists have their eye on another coronavirus variant spreading rapidly in parts of Asia and Europe.’

Increasing digital savviness of HCPs is now unstoppable. It is expected to keep rolling at faster a faster pace now than ever before. Endorsing this trend, an article published in the Pharmaceutical Executiveon January 20, 2022, made some interesting observations.

The author underscored that the trend of the digital shift of HCPs in their professional space, is an outcome of a catalytic effect of the pandemic. It poses a new challenge for the life sciences industry, requiring a complete revamp of the content strategy and customer engagement channels, for each specialty. It further said: ‘The wave of consumerism led by digital natives has impacted HCPs when it comes to engaging with content on various digital channels for personal consumption.’  

A recent research study vindicates the magnitude of the challenge:

A recently published Indegene study, revealed some thought-provoking areas in this space. The research surveyed 984 physicians from the United States, Europe, India, and China for this study. All participants have >10 years of experience and represent a broad spectrum of specialty areas. According to Indegene, the process of surveying HCPs had started since 2014, to identify how their digital habits manifest and how do they change. Some of the key findings of the study include:

  • More HCPs, in general, are increasingly adopting digital channels to consume content.
  • 77% of HCPs use digital channels primarily for personal learning and development.
  • 68% of HCPs prefer short webinars or webcasts over other virtual
    engagement channels, globally.
  • Only 47% of HCPs prefer receiving communication through the marketing e-mail channel, although, marketing emails are among the top 5 channels used by pharma companies to engage HCPs. 
  • 62% of HCPs are overwhelmed by product promotional content pushed by pharma companies on various digital channels.
  • 70% of HCPs said that pharma representatives do not understand their requirements completely. Further, 62% of HCPs said that the most significant area where pharma representatives can add value is, by understanding the needs of HCPs and sharing only relevant content with them to make the interactions more insightful. The one-size-fits-all approach will no longer work, and pharma companies will have to invest in greater personalization at scale and build better content development and operations capabilities.
  • Pharma to consider using digital channels to provide HCPs on demand access to reps and content.
  • Need to map and implement geographic variations in HCP preferences for content, channels, device, and time.

This evolving trend sends clear signals to pharma marketers that need for professional engagement with the HCPs has to be on their own terms in the new normal

‘Engaging HCPs on their own terms’ – the need of the new normal:

This emerging need also came out clearly in another recent Global Physician Specialty Survey by Medscape - with over 12,000 participants in key specialties across Europe, Latin America, Canada, Asia, and MENA.

It provided some actionable insights, highlighting online content consumption habits of HCPs across the globe, in the new normal. This study also found: ‘The pandemic has had an undeniable impact on the interactions between HCPs and the pharmaceutical industry, with the shift towards virtual engagement and online events likely to be long-lasting.’

Based on this finding, it flagged a critical issue. This is, while the consumption of online medical content is growing and traditional in-person meetings are still not completely back on the agenda, how can pharma players reimagine the way they reach their target audience? This is indeed a primary business requirement to maintain respective drug company’s share of voice and foster relationships with their key customers. The key takeaway from this study includes the following:

  • Being incredibly time poor even now, HCPs mostly prefer to engage with the pharma companies on their own terms.
  • Compared to traditional in-person interactions, most HCPs feel, digital engagement channels offer them greater flexibility that they desire.
  • Over half of the survey respondents rated their online consumption of digital content higher, or much higher now than before the pandemic.

Conclusion:

On the positive side, during a short span of the last couple of years, Covid-19 pandemic has also triggered unprecedented advances in various critical areas of medical science and related areas. These include, remote healthcare services, digital technologies, ease of access to required data by all, the application of sophisticated analytics and above all emergence of an increasing number of digitally empowered customers. Consequently, aided by greater disease awareness and the need for prevention, the ‘self-care’ space also witnessed exponential advances.

Besides, the pandemic has also offered a fresh opportunity to the pharma and biotech sectors – to leverage the break in the cloud for accelerating all-round innovation – charting new frontiers of the modern digital world to remodel their business models for a faster growth in a new paradigm. Although, pharma customers have remained mostly unchanged, their expectations, behavior, practices, and preferences have undergone a metamorphosis. Some of these changes may be stark, and more may be a bit nuanced. Marketers, need to map all the changes, which are specific to their organizations, to excel in the new paradigm.

That said and, as pointed out above, results of expert surveys and syndicated studies in this area, send a clear signal about the pandemic-triggered – increasing digital proficiency of HCPs, even in India. This trend needs to be leveraged for a thorough overhaul of pharma’s customer engagement models. This is a new ball game of the new normal – having a huge impact on the business performance of drug companies.

By: Tapan J. Ray  

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Adopt A Hybrid Business Model For Better Sales – Not A Large Field Force

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For aggressive business expansion or to attain greater market access, creating a large sales force has been the thumb rule in the pharma industry, since long. To meet the challenge of changing market dynamics, going for a thorough re-engineering of even a rattling sales and marketing machine, is still considered a risky proposition.

Many studies have captured the common reasons of such hesitations. For example, the McKinsey article titled, ‘Cutting sales costs, not revenues,’ finds that field force being a major growth engine for sales, since long, the thought of overhauling it fills senior executives with dread. Thus, to keep sales flowing, companies will make piecemeal ongoing repairs as long as they can – ‘no matter how patched up or spluttering that engine may be.’

Nevertheless, some compelling business reasons have now prompted several pharma players to accept the ground reality – fast-evolving over the last one and half decades. Many of them have realized that in today’s changing market dynamics, a leaner and smarter sales force (or field force or medical rep, or MR) will fetch the desired results than ‘flabby’ and larger ones.

In this article, I shall not discuss the obvious reasons of downsizing, such as to record profit under trying circumstances, or when per rep productivity keeps declining consistently, or during a change in the promoted product-mix, or a decision to reduce focus on volume intensive-low margin generic brands. But, what I shall discuss is, the reasons for an urgent need of creating a hybrid sales and marketing model, during this changing paradigm.  

It begins with accepting a change in the business environment: 

If the objective of sales force size reduction remains limited to cost-cutting for short-term improvement of the bottom-line, it could be grossly counterproductive, possibly with many unforeseen consequences. Field staff will continue to remain one of the key growth drivers in pharma and biotech business, but not the sole mechanism to increase brand prescriptions. Finding a well-integrated alternative model would begin with acceptance of a significant change in pharma business environment.

Undoubtedly, a perceptible change is noticeable today in pharma stakeholders’ mindset. This change is being further fueled by rapid increases in their usage of various digital platforms and networks. For example, many patients are trying to be reasonably informed of even various disease treatment options and the cost of each, much before they visit a doctor’s clinic or a hospital. The nature and quality of their interaction with health care providers, including doctors, are also changing. Patient-experience during a treatment process, and the value offerings that come with a pharma brand, will have increasing relevance to business performance – more than even before. Anything going against the patient-interest will possibly be shared with all, mostly in social media, which has a potential to precipitate serious consequences.

As this trend keeps going north, pharma market dynamics would change, commensurately, making pharma’s key business success factors significantly different with medical reps no longer being the sole prescription generators. A new hybrid – digitally empowered sales and marketing model is, therefore, the need of the hour. In this new ball game, as a growth driver, the role and size of the field staff will be quite different, where the senior management warrants a new vision for pharma business.

The situation warrants a new vision for pharma business:

In this changing situation, to generate more prescriptions from doctors by deploying a large field force, could prove akin to swimming against a strong tide. Whereas for achieving business success at this time, pharma players would require creating a well-oiled augmented value delivery system for enhanced customer experience, primarily for patients during their entire treatment process.

While creating this sleek and effective system, it would be necessary to cut unproductive or less productive flab in the frontline, with great precision. However, this process must be dovetailed with implementation of other communication and customer engagement platforms, mostly digital, to achieve the set objectives.

The new strategy being augmented value delivery to customers, the process would entail, besides innovative and modern tools, a different genre of field staff members, possessing some critical skill-sets. The goal of need-based field force downsizing complemented by new synchronous measures for operational synergy, must not only be clear to senior management, but also be explained to all concerned.

What would ‘augmented value delivery’ to customers lead to?

Another McKinsey article titled, ‘The few, the proud, the super-productive - how a smart field force can better drive sales,’ articulated: ‘Indeed, our perspective on the past five years is that leaders that used field reductions to actually rethink the commercial model – rather than taking a “blunt instrument” approach to cuts – are reaping rewards.’

As the current pharma sales and marketing models are undergoing a metamorphosis, globally – this transition phase throws several tough challenges – from defining new roles and capabilities for field staff to creative use of various interactive communication platforms.  As the McKinsey article underscores: ‘new capabilities need to be added even as we continue to use the tried and true current model, albeit with less success.  It further adds: ‘The inconvenient truth: we will have to sweat the current model and build the capabilities for the future in parallel. Those hoping for a ‘flip the switch’ transition, are likely to be disappointed.” With his, I reckon, will emerge a robust ‘augmented value delivery system’ for the business leading to:

  • Higher profitable sales through satisfied customers
  • Increase in sales per employee ratio
  • Containing/reducing sales and marketing spend as a percentage of total revenue.

Several initiatives to translate this concept into reality is now palpable, globally. A few examples may suffice to drive home this point.

Downsizing field force complemented by new measures for synergy pays:

Here also there are several research studies to bring home this point. One such is the paper titled, ‘Big pharma proves that oncology pays as workforces shrink,’ published in ’Vantage’ of Evaluate on July 23, 2018. The researchers touched upon this area while discussing the workforce productivity for Bristol-Myers Squibb (BMS). It found that a substantial shrinking of its workforce, alongside some other important measures, has given BMS a big boost in sales, with a dramatic impact on its overall performance. As the study indicated, even investors will find this fact hard to ignore. Let me hasten to add that ‘downsizing workforce’ mainly involved sales and R&D staff in this analysis.

The article further highlighted, during the period of 2007 to 20017, the management teams of some other pharma majors, as well, such as GlaxoSmithKline), AstraZeneca and Eli Lilly, either reduced their workforce significantly or kept flat. According to this study the changes in the workforce of these 4 companies are as follows:

Workforce Bristol-Myers Squibb GlaxoSmithKline AstraZeneca Eli Lilly
2007 42,000 103,483 67,400 40,600
2017 23,700 98,462 61,100 40,655

However, even in the year 10, all the four companies - Bristol-Myers Squibb, GlaxoSmithKline, AstraZeneca and Eli Lilly posted not just sales growth, bit all-round performance improvement, as may be seen by clicking on each.

Having deliberated on the impact of downsizing field force, let me now focus on powerful complementary measures for augmented value delivery to customers.

Today’s reality for pharma business in India can’t be wished away:

The EYstudy titled, ‘Reinventing pharma sales and marketing through digital in India,’ captures the current situation quite well. I am quoting below just a few of those:

  • Today’s tech-savvy physicians are relying far less on reps and more on digital devices for healthcare information. Only 11 percent of healthcare professionals in India prefer in-person visits from a company representative, according to a 2016 study by Health Link Dimensions. Likewise, many patients arming themselves with medical knowledge available online, gradually relying less on only physicians’ decision-making. Thus, the rules of engagement need to be redefined.
  • With a shift in focus toward more complex or specialty medicines, pharma companies continue to add new layers of MRs to increase geographic coverage. The increasing number of MRs and the number of brands under each of them have drastically reduced the time and quality of sales pitches – from being scientific to mere brand name reminders.
  • Physicians’ place at the center of the pharma ecosystem as almost the sole-decision makers, is very likely to become a thing of the past with the emergence of a broad array of customers with a new mindset.
  • New tech-based entrants providing information platforms, analytics, e-consultation services and access to medicine online are challenging pharma’s value creation story.

Enhancing customer experience needs a hybrid business model:

The new market dynamics, demands cutting-edge brand-value augmentation measures, enhancing customer-experience with some tangible benefits. These telltale signs can only be ignored at one’s own peril. Let me also illustrate this point with the findings from another research study.

According to 2015 Oncology Customer Experience Tracker of ZS, “Oncology companies can add USD 50 – USD 75 million in incremental sales for every USD 1 billion in current sales by delivering a better customer experience.”

This vindicates that creating a better customer experience should be the key goal of pharma’s augmented value delivery system – going much beyond the traditional communication of key product features and its clinical benefits. This new concept is fast emerging as the fulcrum – not just for creating a strong brand pull, but also enhancing the public image of the organization. And can be achieved with a right blend of:

  • ‘Must do’ mindset of top management,
  • Expertise in well-targeted – multi-channel content making,
  • Expertise on data-science and analytics to churn out the right information from a large pool of data,
  • Wherewithal for effectively using the right digital platforms, either directly to customers or through a leaner and digitally-skilled sales force having a ‘can do’ attitude, as the situation will demand.

Some companies are testing the water:

Conventional ways to improve Sales Force Effectiveness (SFE), especially with soft skills, besides, of course product knowledge, is not new to the pharma players. What they need to do is change the primary focus of increasing sales through delivering mostly the key intrinsic value of the brand, to increase profitable sales by delivering augmented brand value, leading to enhanced customer satisfaction.

This is a major shift from the traditional paradigm and would surely entail application of digital technology and data science. As I wrote before, many companies have started adopting this approach – mostly with one baby step at a time, right or wrong.

Observation and findings of an India specific study: 

Noting that ‘Indian pharma’s journey to a digital world has just begun,’ the same EYstudy, as quoted above, reported the following findings, among a few others:

  • Lack of a clear digital strategy/value proposition and change management are the two key barriers to embracing digital.
  • Whatever was being done manually earlier is now being done digitally. But we are not adding additional value. On the other hand, companies globally are now cautiously moving toward being digital practitioners.
  • Indian pharma majors will need to grow into integrated health care providers – offering both products and services, forging patient-centric partnerships and demonstrating value to a broad array of customer groups.

The good news is, some of the key observations of the study also include the following:

  • Some are using digital technology to capture untapped and unstructured data, to make their sales and marketing decision making process more agile and robust.
  • Powerful apps with dynamic, meaningful content and the right value proposition are gaining popularity.
  • Several players, while staying within the realms of regulatory boundaries, are enabling patients to actively manage their care. 

Conclusion:

As we look around, many drug companies, especially in India, continue to remain focused on the age-old transactional sales and marketing models, delivering the intrinsic brand values, irrespective of the changing pharma market dynamics, especially disregarding what today’s customers in the knowledge economy look for. Traditional training and incentivizing a large, and often flabby, sales force on product and rupee value territory-sales against the target, are the general ways to achieve these. The focus on achieving the internal sales targets, regardless of the processes being contentious or not.

Modern time warrants a different conversation altogether – creation of a unique customer experience – with augmented value delivery systems. Achieving this goal would entail astute applications of modern technology, complementing the reach and impact of the right-sized field staff efforts, and leading to improvement in ‘sales per employee ratio.’

Thus, I reckon, higher sales or the need for an expanded market access, may not necessarily entail a larger field force, but a new breed of leaner and especially skilled MR to deliver the needs of the changing healthcare landscape.

By: Tapan J. Ray     

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

How Creative Is Pharma Industry?

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“Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business,” said the management guru of all times – Peter Drucker, decades ago. He further added, “The aim of marketing is to know and understand the customer, so well the product or service fits him and sells itself.” What needs to be underscored in this visionary articulation of Drucker is, effective marketing should create such a strong pull for a product or service that renders hard selling less relevant.

The word ‘innovation’ is used frequently within the pharma industry, and more by the multi-national players on a specific context. The purpose is mainly to douse stakeholder concern on high prices of innovative drugs – building a narrative around expensive, complex and time-intensive drug innovation process. That said, just as creativity is necessary to discover new drugs, creative minds also help in effectively reducing the cost of innovation – creating more customers for the company.

Curiously, in this debate the other key business function – ‘marketing’, often takes a back seat, with its usage getting generally restricted to product features and benefits, including ‘freebies’ of various kinds. Neither is there any palpable effort to make the culture of ‘creativity’ and ‘innovation’ prevail across the organization, for overcoming several critical growth barriers that keep looming over all functional areas.

Is it happening because of a hubris, as it were, within the pharma and biotech industry? This article will try to figure out why this has been happening over decades and would also ponder whether the time is ripe for changing the charted path of the business model. For a clear understanding of all, let me start with the difference between creativity and innovation from the business perspective.

Creativity – a fundamental requirement in a business, is different from innovation:  

This was examined in the article titled, ‘The Importance of Creativity in Business,’ published by Northeastern University, Boston, Massachusetts, on November 09, 2017. It emphasized, although “creativity” and “innovation” are often used interchangeably, these are two separate concepts. “Creativity is different because it is a mechanism to being innovative. You can have great ideas, but not be innovative,” the paper underscored. It brought to the fore that ‘creativity’ – being the fundamental ingredient for being ‘innovative’, is essential in the highly competitive business environment. It fuels big ideas, challenges the employees’ way of thinking, and opens the door to new business opportunities.

The IBM study also confirms this fact:

The study titled, ‘‘Capitalizing on Complexity: Insights from the Global Chief Executive Officer Study,’ led by the IBM Institute for Business Value and IBM Strategy & Change, also confirmed the above fact. The study is the fourth edition of IBM’s biennial Global CEO Study series, involving more than 1,500 Chief Executive Officers from 60 countries and 33 industries worldwide.

The study reported, CEOs selected creativity as the most important leadership attribute and the number one factor for future business success. It added: ‘Creative leaders invite disruptive innovation, encourage others to drop outdated approaches and take balanced risks. They are open-minded and inventive in expanding their management and communication styles, particularly to engage with a new generation of employees, partners and customers.’ Importantly, ‘creativity’ ranked higher than rigor, management discipline, integrity or even vision, as each of these will require creativity. According to the study, successfully navigating through an increasing complex world of ‘accelerated industry transformation, growing volumes of data, rapidly evolving customer preferences, can be overcome by instilling ‘creativity’ throughout an organization.

‘Necessity is the mother of invention’ – does it apply to pharma, as well?  

In today’s complex business environment, pharma’s business challenges are spreading rapidly across many areas. Besides innovation of new drugs, following are four broad, but critical areas, where fostering of creativity, innovative thinking and invention of game changing ideas, across the organization, I reckon, can fetch a sustainable return, in a win-win way:

  • Intense ‘pricing pressure’ to make innovative drugs affordable for greater access to patients: Just as innovative ideas are of fundamental importance to develop new drugs; disruptive innovative ideas in this area, can help resolve this issue, effectively – not any incremental measure.
  • Declining corporate image and eroding public trust: Placing patients’ interest at the center of the business model, and then effective marketing of the same, can reverse this trend, with better business outcomes.
  • Lack of business transparency: Make business processes, including pricing, sales and marketing more transparent, by leveraging the power of data with modern technology.
  • Declining per dollar marketing productivity: Move away from the old and traditional business models to find a new pathway for success, using the process of simulation, on an ongoing basis.

While above are some of the pressing needs for steering the course of pharma and biotech industry, the business keeps charting the same patch, with a bit of tweaking, here or there. Thus, the good old saying – ‘necessity is the mother of invention,’ still doesn’t work in pharma.  The question, therefore, is why? We shall discuss it in just a bit. Before that, let me explore how creative the pharma industry, joining some critical dots.

How creative is pharma and biotech industry?

To explore this area, I shall try to touch upon the following two points:

  • Is there any perceptible financial impact on pharma sales revenue, net profit and gross operating margin, for not creatively resolving some critical growth barriers, as stated above?
  • Where does pharma and biotech industry stand in global ‘creativity ranking’?

For this purpose, when I look at the following four major areas, some interesting findings emerge:

  • Top 10 in sales revenue.
  • Top 10 in net profit
  • Average Gross and Operating Margin
  • Creativity ranking of some major pharma and biotech companies

Top 10 in sales revenue:

The overall sales revenue of the pharma/biotech companies remains healthy. On the face of it, there doesn’t seem to be any storm signal.  According to Market Research Reports, Inc. the top 10 companies on 2018 sales revenue, are as follows:

  1. Pfizer Inc.: USD 53.647 Billion
  2. Novartis AG: USD 51.90 Billion
  3. Roche Holding AG: USD 45.5896 Billion
  4. Johnson & Johnson: USD 40.734 Billion
  5. Sanofi S.A: USD 39.288 Billion
  6. Merck & Co., Inc.: USD 37.689 Billion
  7. AbbVie Inc.: USD 32.753 Billion
  8. Amgen: USD 23.7 Billion
  9. GSK: USD 22.968 Billion
  10. Bristol-Myers Squibb: USD 22.600 Billion 

Top 10 in net profit:

There isn’t any storm signal visible in this area, either, as it is seen in isolation. According to Statista, the 2018 ranking of the top 10 biotech and pharmaceutical companies worldwide, based on net income, as appeared in the Financial Times 2018 equity screener database, is as follows:

Rank

Company

Net income ($ Billion)

1.

Johnson & Johnson (USA)

15

2.

Novartis (Switzerland)

13.8

3.

Pfizer (USA)

11.9

4.

Roche (Switzerland)

10.5

5.

Amgen (USA)

8.5

6.

Gilead (USA)

7.7

7.

AbbVie USA)

6.8

8.

Novo Nordisk (Denmark)

6.0

9.

Bayer (Germany)

4.3

10.

Biogen (USA)

4.1

Let’s now look at the average gross and operating margin in the pharma and biotech industry.

Average Gross and operating Margin – still the best:  

This also looks healthy, as compared to others. According to the January 2018 study by New York University’s Stern School of Business, average gross margin of 481 biotech and 237 pharma and biotech companies was reported at 70.71 percent and 68.60 percent, respectively. And their operating margins were at 25.45 percent and 24.89 percent, severally – against 12.32 percent of all the 7209 companies surveyed.

Creativity ranking of some commonly known pharma and biotech companies:

Here there seems to be an issue. When I look at the 2018 Forbes list of ‘The World’s Most Innovative Companies,’ it will be challenging to find any of the above top names of the pharma and biotech companies within the Top 100 ranking. Just to illustrate the point, let me reproduce below some commonly known names of our industry:

Rank Company Country 12-month sales growth% Innovation Premium%
#7. Incyte USA 38.93 70.59
#14. Celltrion S. Korea 45.25 62.3
#16. Regeneron Pharmaceuticals USA 20.82 61.11
#17. Vertex Pharmaceuticals USA 46.2 60.93
#22. Alexion Pharmaceuticals USA 17.32 58.04
#82. Allergan Ireland 9.4 37.59

Some interesting possibilities:

The above data, points towards some interesting possibilities:

  • Because of its sales and profit margin remaining generally lucrative, the focus on innovation of most pharma and biotech companies, get restricted to new drug discovery and development processes.
  • Top management’s encouragement of creativity across all functions of the organization appears inadequate, to successfully navigate through the key growth barriers, to maintain future business sustainability.

But, some critical signals do indicate: ‘shape up or ship out’:

But the real picture isn’t as rosy. Analysis of some key trends does capture several critical storm signals for the industry According to the July 09, 2018 study of EY (Ernst and Young): ‘Margins of pharmaceutical companies are continuing to decline – the future lies in new ecosystems.’ It further indicated: Although the margins of the 21 largest pharmaceutical companies in the world are declining, the businesses ‘are still growing, thanks to blockbuster drugs and new active ingredients against cancer. 40 per cent of the active ingredients that are currently being developed worldwide are cancer drugs.’

The paper concluded, the future lies in designing completely new types of ecosystems and business models. With the aim of providing comprehensive support for healthcare customers, including patients. “Data-driven business models will permanently change the pharmaceutical industry,” the paper articulated. The study forecasted, ‘life Science startups will take over between 30 and 45 per cent of the market by 2030.’ Isn’t this a clear signal, especially for large and longtime pharma players to ‘shape up or ship out?’

Conclusion: 

Let me now revert to what Peter Drucker said on two basic functions of a business – Innovation and Marking. None can question pharma on its consistently bringing to market innovative drugs to effectively tackle many diseases, including complex and life-threatening ones. Given, that ongoing new drug development is the lifeblood of growth of pharma business. Nevertheless, that aspect of innovation is mostly perceived as an exclusive internal business value for most companies. The majority of stakeholders perceives the value of drug innovation as inclusive, when it is made accessible to a large population of patients at an affordable price, along with a decent Return on Investment (ROI) for the corporation. This expectation cannot be wished away. Instead, its core concept should drive the other basic function of business – marketing

This stage can be attained by building an innovative organization, fostering the culture and process of ‘creativity’ – across its functions. It is now a fundamental requirement for pharma and biotech companies. Beyond new product development, innovation immensely helps organizations navigating through strong headwinds to achieve its financial goals and objectives, in an inclusive manner. When IT – another knowledge industry, can reduce the cost of innovation through creative processes, across all functions, making its product and services affordable to a large population, e.g. Reliance Jio, why not Pharma? In that sense, I reckon, pharma and biotech companies are yet to become creative – in a holistic way.

By: Tapan J. Ray     

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Patient Services Aren’t Optional Any More For Pharma Business Excellence

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In the modern world of abundance of information through various sources and platforms, patients are increasingly looking for greater engagement in their healthcare decision-making process with the doctors, slowly but steadily, and in that process seeking better services from different service providers in this area, including the pharmaceutical companies.

This trend has now been well-captured, globally. Various research studies have conclusively established that greater patient’s engagement in health care contributes to improved health outcomes. The obvious question that surfaces in this context is what is this patient engagement?

Patient engagement:

It broadly means a process that realizes the importance of providing adequate knowledge, skills and related services to people effectively, making them understand various disease management and alternative treatment measures, and thereby facilitating them to be an integral part of their health care related interventions, for better health outcomes.

When patients, physicians, other related constituents, including the pharma companies share both the process and goal of disease management or treatment processes, a win-win situation evolves to everybody’s full satisfaction. This has immense commercial relevance too.

Deserves to be a part of the grand design:

In that sense, pharmaceutical companies, especially those operating in India, would need to roll up sleeves and pull up socks to play a greater role in delivering a better experience for patients through effective engagement and offering relevant high quality services. This exercise now deserves to be an integral part of a grand design and planning of any sales and marketing strategy. A recent survey by Accenture Consulting also concluded that patient services from pharma companies are most important to patients.

Key patient service providers:

Besides several others, especially the following two important constituents can play defining roles as patient service providers by directly engaging with patients, to achieve this objective:

  • Patient advocacy groups or organizations (PAO): These entities provide a special attention to patient care and protection of their rights, and engage them accordingly. Patient advocates of these groups are a liaison between patients and various healthcare providers to improve or maintain a high quality of health care for the former. Some global drug players also recognize that these groups possess a highly influential voice in the healthcare system.
  • Pharmaceutical, biotech or device companies: Some of these companies, mostly in the developed world have established strategic patient advocacy functions within their corporate structure to foster relationships with patients, their caregivers, and the disease-specific nonprofit advocacy groups usually support them. These interactions should ideally ensure that the voice of patients is understood across every function within the company, from R&D to commercialization, as articulated in a recent Whitepaper of BioNJ on this subject.

There is a need to strengthen this approach within the Indian pharma industry, as well, for the benefit of local patients, of course, by scrupulously avoiding any possible serious controversy, which I shall discuss below.

A recent study:

A 2016 report by Accenture concludes that patient services are no longer optional for pharma companies, as they are gradually becoming a cutting edge competitive driver. In a situation like this, the question isn’t whether they should really gear up to offer such services, the immediate need, instead, is to put their ears on the ground to carefully decide which ones would be most appropriate for the individual players, and how best to offer them.

For this study, Accenture surveyed more than 200 patient services executives, covering seven therapeutic areas: heart, lungs, brain, immune systems, bones, hormone/metabolism and cancer. The respondents agreed that much work and greater resources need to be invested in this area to gain a competitive edge in business.

This is further evident from the trend that around 84 percent of pharma companies in the United States plans to invest more in patient-centric services, such as adherence, remote monitoring and medication delivery – over the next 18 months, as the report highlights.

For marketing patient services alone to facilitate direct communications to patients, the digital platforms are most preferred with social media and web page usages being 51 percent and 49 percent, respectively.

A serious concern:

Providing various health related services useful to patients, by the PAOs or by pharma, biotech or device companies separately, without any form of financial relationship or influence of any kind to one another, would probably earn a great appreciation from all stakeholders.

Nevertheless, serious concerns are often expressed on the core intent of various pharma company’s generous funding to various patient advocacy organizations, including the eminent ones involved with patients suffering from cancer, HIV, Alzheimer’s, and other diseases. Several of them don’t even report such contributions, besides providing justifiable explanations on the objectives and actual use of such financial contributions.

If one wants to draw a simile, this is what exactly allegedly happening today, because of such type relationship, between pharma, biotech or device companies on the one hand, and doctors, many other health care providers, including retail chemists, on the other. In the Indian context, as well, it holds good. A paper from ‘CUTS International’, aptly drives home this point. Another September 17, 2016 article published in ‘The New York Times’, reiterates the same.

What’s wrong in funding PAOs?

Some may argue, what’s wrong with pharma industry’s funding the PAOs. On the face of it, there may not appear to be anything wrong either. However, scholarly articles still express serious concern on such practices, mainly for conflicts of interest. For example, a September 2013 article titled, “Patient Advocacy Organizations: Institutional Conflicts of Interest, Trust, and Trustworthiness”, published in The Journal of Law Medicine & Ethics unambiguously states as follows:

“Numerous studies have found that even established and respected researchers and physicians are influenced by drug company money and gifts, which can bias study conclusions and encourage increased prescribing of potentially harmful medications. There is no reason to believe that PAOs are any less susceptible to such influence. In fact, there is little oversight of relations between PAOs and their for-profit donors, which in itself increases the potential for undue influence. Similar concerns regarding the lack of oversight have been raised regarding the physician professional groups that develop clinical care guidelines.”

Why is it a potential conflict of interest?

Many construe such financial relationships as potential conflicts of interest, because pharma players appear to be more interested in earning maximum possible profit through high drug pricing, while PAOs advocate for highly efficacious, safer and more affordable medicines for all, besides some other interests and rights of patients. Moreover, some large constituents of patient advocacy groups aren’t even seen lending their voices to the concerted protests of other stakeholders, including the political leaders – irrespective of their affiliations, against the sharp increase in prices of many life-saving drugs, covering both patented and generic medicines.

Several studies on this concern: 

A March 02, 2017 report titled, “Conflicts of Interest for Patient-Advocacy Organizations”,

published in ‘The New England Journal of Medicine (NEJM)’, probably vindicates this point. This is mainly because, if pharma funding gets reciprocated through their remaining quiet, passive or even indirectly supporting any possible bias in the physicians prescribing decisions for high cost drugs – having other cheaper alternatives, that may not be in the best health and economic interest of many patients.

After examining and analyzing 104 large patient-advocacy organizations with an annual revenue of minimum USD 7.5 million, the researchers of the above study found that 83 percent of PAOs receive significant financial support from drug, device and biotechnology companies; and more interestingly, industry executives often serve on these groups’ governing boards.

Another article on this report commented though, that this study may have some limitations as the most organizations examined in this study did not provide exact figures for their reported donations, besides only 10 percent of patient-advocacy organizations revealed how they used the industry donations.

This NEJM study is not just one of its kind, another January 2017 report published in JAMA Internal Medicine, also concluded that there is a need to improve this conflict of interest issue of the patient advocacy groups or PAOs on their conflict of interest policies to help maintain public trust.

In conclusion:

Keeping aside altogether the contentious issue of funding PACs by the pharma, biotech or device companies, I would submit that it’s about time that the pharma industry in India realizes that patients have started perceiving themselves as consumers of health care. This perception is increasing by a manifold with improving access to not just the Internet, but consequent word of mouth sharing of such information with even those who do not have digital or health literacy.

The quest of many patients to ride the crest of this wave by gaining relevant information, especially through numerous digital platforms, besides word of mouth, is increasing. A lot more would eventually seek a wide range of relevant information on various disease treatment options and their effective management processes. Facilitated by this knowledge, many patients would opt only for those ones offering the best value within their respective economic means. Some enlightened individuals have already started expressing their preference to take part in the treatment and prescribing decision making process with the doctors. This visibly ascending trend is unstoppable now, as patients increasingly perceive themselves as consumers of health care.

Consequently, the pharma, biotech or device players in India would require to deeply understand the patients’ needs on the ground, not what they think those are, and treat patients as the key partner for business excellence – at least, as much as what they consider for other stakeholders, such as doctors and hospitals, if not even much more than that. Some companies are trying to make it happen through doctors, which don’t seem to be working as much as these should, according to another Accenture study.

Currently, several global pharma, biotech or device players claim that they follow ‘patient-centered’ approaches, and try to drive home this point through advocacy campaigns. However, many stakeholders don’t buy it any more. This is because such an approach must always lead to a win-win outcome. It, therefore, requires passing the acid test of conformance to the very definition of a ‘patient-centered’ approach, which requires establishing a partnership to ensure that all related decisions would respect patients’ wants, needs and preferences and solicit patients’ input on the education and support they need to make decisions.’

Thus, respective players in this arena need to shift gears fast, as the ball game is fast changing with its traditional version unlikely to yield the desired business results any longer. The name of the new version of this game is ‘direct engagement with patients’ to impart high quality of meaningful services in the therapy areas that the respective companies are in, by charting clear, innovative and well integrated strategies, and not just through single minded focus on sales and marketing. It’s important for all of us to realize that providing patient services aren’t optional any more for pharma business excellence.

By: Tapan J. Ray 

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Stem Cell Therapy in India: A Potential Game Changer in Disease Treatment

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Stem Cells (SC) offer an incredible potential to instill a new lease of life virtually to any organ of the human body, bringing them back to the pre-disease state through its own biological repair mechanism. Intensive research initiatives are on across the world to harness this unique possibility that will be able to successfully address a plethora of serious and chronic ailments for mankind. The good news is, the global scientific community is taking rapid strides in understanding the complex stem cell biology to give shape to a game changing medical treatment blue print for tomorrow.

Capturing one such pursuit, on February 21, 2017, well-reputed British news daily – ‘The Telegraph’, reported the outcome of a path-breaking medical study for freezing the progression of yet another complex and crippling ailment – Multiple Sclerosis (MS). This research followed a unique SC transplantation process. Intriguingly, both such diseases and the treatment are not generally much talked about, particularly in India. If done, it would increase public awareness and help many patients fetch greater benefits from the available and approved SC therapy in the country. Probably, considering the unfathomable scope of the body’s own repairing toolbox with SC, Prime Minister Narendra Modi reportedly called on Indian biologists to motivate school children for pursuing a career in stem cell research.

Let me now go back for a moment to Multiple Sclerosis (MS) as I am aware of this this disease condition rather closely. One of our close family friends who was a very senior official in one of the top multinational corporations of the world, had to give up his job prematurely being a victim to this serious illness. In that sense, this particular news item rekindles a new hope for many to look for a better quality of life while managing many other diseases of such kind, all over the world, including India.

‘The Telegraph’ reported: in so far, the largest long-term follow-up of SC transplantation treatment study of MS, which was spearheaded by Imperial College London, established that 46 per cent of patients who underwent this treatment did not suffer a worsening of their condition for five years. The treatment works by destroying the immune cells responsible for attacking the nervous system. This is indeed a very significant development in the space of medical research.

This new treatment, called autologous hematopoietic stem cell transplantation (AHSCT), was given to patients with advanced forms of MS who had failed to respond to other medications. However, the researchers noted that the nature of the treatment, which involves aggressive chemotherapy, carried “significant risks”.

It’s worth recapitulating here that MS is caused by the immune system malfunctioning and mistakenly attacking nerve cells in the brain and spinal cord, leading to problems with movement, vision, balance and speech. It’s a lifelong condition and often causes serious disability, with no cure still in sight. The disease is most commonly diagnosed in people in their 20s and 30s, although it can develop at any age.

A new hope with a game changing potential:

The above study of SC transplantation conducted by Imperial College London in MS, is just a recent example, among scores of major steps being taken in this frontier of medical science in preparation of a decisive battle against many more life-threatening and serious debilitating diseases.

No doubt that various treatments involving stem cells are generally considered a novel and rapidly advancing medical technology. However, in a small number of developed countries, such as the United States (US), a number medical procedures with stem cells are being practiced since around last three decades. Bone marrow transplant is the most widely used stem-cell therapy in this area, which was first performed in 1968.

According to California Institute for Regenerative Medicine (CIRM) and various other medical literature, SC treatment has the game changing potential for successful use to:

  • Replace neurons damaged by spinal cord injury, stroke, Alzheimer’s disease, Parkinson’s disease or other neurological problems
  • Produce insulin that could treat people with diabetes and heart muscle cells that could repair damage after a heart attack, or
  • Replace virtually any tissue or organ that is injured or diseased

Thus, stem cells offer limitless possibilities, such as tissue growth of vital organs like liver, pancreas. Today there are many diseases for which no effective treatment still exists, besides giving symptomatic relief, such as Multiple Sclerosis, Parkinson’s disease, Alzheimer’s, severe burn, spinal cord injury. There is a host of other diseases, including several chronic ailments, such as diabetes, heart ailments, rheumatoid arthritis, or some types of cancer, which can’t just be reversed, however, could be managed with a lifelong treatment. For most of these diseases, and several others involving tissue degeneration, SC therapy has the potential to be a huge life and a game changer. It may involve, besides patients, several industries, including pharmaceuticals and biotech sectors.

Major stem cell sources and some key milestones:

Medical scientists and researchers have conclusively established that stem cells are the master cells of any human body. These are undifferentiated cells of the same lineage, retaining the ability to divide throughout life and grow into any one of the body’s more than 200 cell types. Some of the major sources of stem cells in the human body are bone marrow, cord blood, embryonic cells, dental pulp and menstrual blood.

As captured by ‘ExploreStemCells’ of UK, some key events in stem cell research include:

  • 1978: Stem cells were discovered in human cord blood
  • 1981: First in vitro stem cell line developed from mice
  • 1988: Embryonic stem cell lines created from a hamster
  • 1995: First embryonic stem cell line derived from a primate
  • 1997: Cloned lamb from stem cells
  • 1997: Leukemia origin found as hematopoietic stem cell, indicating possible proof of cancer stem cells
  • 1998: University of Wisconsin isolated cells from the inner cell mass of early embryos and developed the first embryonic stem cell lines.
  • 1998: Johns Hopkins University derived germ cells from cells in foetal gonad tissue; pluripotent stem cell lines were developed from both sources.
  • 1999 and 2000: Scientists discovered that manipulating adult mouse tissues could produce different cell types. This meant that cells from bone marrow could produce nerve or liver cells and cells in the brain could also yield other cell types.

All these discoveries were exciting for rapid progress in the field of stem cell research, along with the promise of greater scientific control over stem cell differentiation and proliferation. Currently, many more research studies are underway in globally acclaimed institutions and other boutique laboratories exploring the possibility of wide scale use of SC therapy, even in the treatment of several chronic diseases, including diabetes and heart disorders.

A controversy:

The controversy related to SC research mainly involves Embryonic Stem Cells (ESC) and raises several difficult questions for a speedy resolution. As articulated by the ‘Genetic Science Learning Centre’ of the University of Utah, these are mainly:

  • Does life begin at fertilization, in the womb, or at birth?
  • Is a human embryo equivalent to a human child?
  • Does a human embryo have any rights?
  • Can destruction of a single embryo be justified to provide a cure for a countless number of patients?
  • Since ESC can grow indefinitely in a dish and can, in theory, still grow into a human being, is the embryo really destroyed?

However, in 2006 scientists learned how to stimulate a patient’s own cells to behave like embryonic stem cells. These cells are reducing the need for human embryos in research and revealing exciting new possibilities for stem cell therapies, according to this Centre.

Stem cell research in India:

India has pursued SC research since over a couple decades reasonably supported by the Government, especially the Department of Biotechnology (DBT), besides several remarkable initiatives from the private sector. Ethical guidelines in this regard are also in place, so also are the National Guidelines for Stem Cell Research in India. These guidelines are aimed at obtaining licenses from the Drug Controller General of India (DCGI).

Further, in a major move to regulate and oversee the activities by streamlining SC research in the country, the Government has also set up an Institutional Committee for Stem Cell Research and Therapy (IC-SCRT) and the National Apex Committee for Stem Cell Research and Therapy (NAC-SCRT). This necessitates the researchers on human stem cells, both institutions and the individuals, to be registered with NAC-SCRT through IC-SCRT. To ensure that the concerned companies and individuals follow the National Guidelines, these committees will review, approve and monitor each research project in this area. It now calls for even greater focus from all other stakeholders to help accelerate growth of this niche segment of medical science for patients’ benefits.

SC transplantations using umbilical cord blood and bone marrow for treating neurological, hematological, hepatic and cardiac disorders are being pursued by some well-known medical institutions, such as, AIIMS, PGI Chandigarh, CMC Vellore, AFMC Pune, Manipal Hospital Bangalore. For example, AIIMS, reportedly, undertook a major multi-center trial to look at the role of stem cells in repairing tissue damaged during acute heart attacks, where other treatment process, including a cardiac bypass surgery fails to adequately improve the heart function. Similarly, Shankar Netralaya in Chennai has successfully carried out limbal stem cell transplantations for restoring vision to several patients.

That said, this is a cost intensive area of research, which involves expensive equipment, reagents and other consumables. Moreover, ensuring continuous training for SC researchers and clinicians also poses a major problem. Greater international collaboration in this area, and increasing number of Public-Private-Partnership (PPP) could accelerate the progress of India in this hugely promising area of medical science, reaping a rich harvest for a large patient population of the country.

Stem cell banking:

SC banking is a fast-developing area in this field, especially designed for SC therapy. As not many patients are not currently as much aware or interested in SC therapy as they ought to, it may not appear as an immediate requirement for many. However, an encouraging trend is fast catching up, especially within some enlightened persons, to have in a bank a large reserve of their own or their baby’s stem cells that would be available for any medical emergencies or more effective treatment options, in the future.

It assumes increasing importance because, as we age, illness and the natural process of aging could reduce the number of stem cells available to regenerate organs, muscles and bone. At that time, while treating a serious illness or a grave injury, a person may have fewer adult stem cells that have the collective power to make an effective healing response to SC therapy.

In that context, SC banking provides a great opportunity to store, multiply and utilize a newborn’s or even an adult person’s younger and healthy stem cells for SC therapy during any medical emergency, such as a serious accident or a crippling illness, at a later stage in life.

There are broadly the following two types of SC banking facilities are now available in India:

A. Cord blood stem cell banking:

This is type of SC banking is the process of collecting, processing, cryogenically freezing and preserving the ‘Cord blood’ that remains in the vein of the umbilical cord and placenta at the time of birth, for potential future medical use during SC therapy. Stems cells extracted from the umbilical cord blood have been shown to be more advantageous than those extracted from other sources such as bone marrow. These banked stem cells are considered as a perfect match for the lifetime of the donor baby, and for other family members, as well. This is significant as there exists a greater chance for success in a stem cell transplant between siblings than with unrelated donors and recipients.

B. Adult stem cell banking:

Some state-of-the-art adult stem cell banking services are either already available or in the process of coming up in many places of the world, including India. As an individual’s fat (adipose tissue) is an important source of adult stem cells, with the application of a high precision medical technology of separating, multiplying, and storing adult adipose tissue-derived mesenchymal stem cells for autologous use by physicians, ‘Adult stem cells are stored in these banks.

The good news is, increasing awareness in this area has now started prompting many parents, and also some adults to bank or store their own SC and the baby’s cord blood rich with a specific types of stem cells, that can be utilized, at a later date, in a variety of SC therapy while treating many life-threatening and debilitating diseases, if required.

Types of stem cell therapy:

There are two major types of SC therapies, and both are available in India:

  • Autologous stem cell therapy: uses the adult patient’s own stem cells obtained from the blood, bone marrow.
  • Allogenic stem cell therapy: uses donated stem cells, but faces chances of donor stem cell rejection.

As articulated in the revised stem cell guidelines, stem cells can’t be offered to patients in India as ‘therapy’ unless these are proven effective and safe supported by unequivocal clinical trial data and approved by the DCGI. Otherwise, these can be used only in ‘clinical trials’ as will be approved by the DCGI. The only exception to this is the use of haematopoietic (blood forming) stem cells for treating blood disorders, which is considered as ‘a proven therapy,’ according to available reports.

The Market – Global and India:

September 14, 2015 issue of ‘The Pharma Letter’ stated based on a recent report that the global stem cells market was valued at US$ 26.23 billion in 2013, and is estimated to be worth US$ 119.52 by 2019, registering at a Compounded Annual Growth Rate (CAGR) of 24.2 percent. Whereas, in India, the stem cell market is expected to be around US$ 600 million by 2017. Another report, titled ‘India Stem Cells Market Forecast & Opportunities, 2020’ of ‘Pharmaion’, states that stem cells market in India is expected to grow at a CAGR of over 28 percent during 2015 – 2020.

In terms of services offered, stem cells market in India has been segmented into two main categories, namely SC banking, and SC research. The latter dominated the market in 2014, and is likely to continue its dominance through 2020. Adult stem cells accounted for the majority share in India’s SC market in 2014, as a lot of research being carried out using adult stem cells, besides growing adult stem cell banking and other associated applications in therapeutics.

The major growth drivers for SC market are: increasing patient awareness, an increase in the approval for clinical trials in stem cell research, growing demand for stem cell banking services,

Government support, rising investments in research, and ascending trend of development for regenerative treatment to meet unmet medical needs.

The first stem cell based product approval in India:

On May 30, 2016, a Press Release of ‘Stempeutics Research’ of Bengaluru announced that for the first time in India, DCGI has granted limited approval for manufacturing and marketing of its allogeneic cell therapy product named Stempeucel® for the treatment of Buerger’s Disease – a rare and severe disease condition affecting the blood vessels of the legs, which finally may require amputation. Stempeucel® treatment is designed to enhance the body’s limited capability to restore blood flow in ischemic tissue by reducing inflammation and improving neovascularization. The prevalence of Buerger’s Disease is estimated to be 1,000,000 in India and two per 10,000 persons in the EU and US, as the release stated. Stempeutics Research’ is a company of Manipal Education & Medical Group and a Joint Venture with Cipla Group.

Conclusion:

Research on stem cells, across the world, is taking rapid strides. It has already demonstrated its healing power in changing many human lives either by significantly stalling the progression of several serious ailments, such as Multiple Sclerosis (MS), or reversing the disease conditions, such as serious damage to the heart caused by massive myocardial infarction.

An increasing number of stem cell banks coupled with growing public and private investments in stem cell research, positive narratives are getting scripted for this space in India. With rapidly growing middle class population and comparatively less stringent rules and regulations, India is emerging as a perfect destination for many more global and local stem cell banking companies. Consequently, the stem cell market in the country is expected to witness robust growth in the coming years.

However, only future research on stem cells will be able to unravel whether an Alzheimer’s victim will get back the stolen memory; a cancer patient won’t have to mentally prepare to die of cancer anytime soon, besides spending a fortune towards cancer therapy; an insulin dependent diabetic will no longer require insulin; an individual with damaged heart won’t have to continue with lifelong medication, and it goes on and on.

Nevertheless, if it does… and God willing – it will, ‘Stem Cell Therapy’ would not just be a life changer for many patients, it will be a game changer too for several others, including the pharma, biotech companies and many more within the healthcare sector. If any skeptic still asks, will it really happen? My counter question, in response, will be: Why not?… Why the hell not?

By: Tapan J. Ray  

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

R&D: Is Indian Pharma Moving Up the Value Chain?

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It almost went unnoticed by many, when in the post product patent regime, Ranbaxy launched its first homegrown ‘New Drug’ of India, Synriam, on April 25, 2012, coinciding with the ‘World Malaria Day’. The drug is used in the treatment of plasmodium falciparum malaria affecting adult patients.  However, the company has also announced its plans to extend the benefits of Synriam to children in the malaria endemic zones of Asia and Africa.

The new drug is highly efficacious with a cure rate of over 95 percent offering advantages of “compliance and convenience” too. The full course of treatment is one tablet a day for three days costing less than US$ 2.0 to a patient.

Synriam was developed by Ranbaxy in collaboration with the Department of Science  and Technology of the Government of India. The project received support from the Indian Council of Medical Research (ICMR) and conforms to the recommendations of the World Health Organization (WHO). The R&D cost for this drug was reported to be around US$ 30 million. After its regulatory approval in India, Synriam is now being registered in many other countries of the world.

Close on the heels of the above launch, in June 2013 another pharmaceutical major of India, Zydus Cadilla announced that the company is ready for launch in India its first New Chemical Entity (NCE) for the treatment of diabetic dyslipidemia. The NCE called Lipaglyn has been discovered and developed in India and is getting ready for launch in the global markets too.

The key highlights of Lipaglyn are reportedly as follows:

  • The first Glitazar to be approved in the world.
  • The Drug Controller General of India (DCGI) has already approved the drug for launch in India.
  • Over 80% of all diabetic patients are estimated to be suffering from diabetic dyslipidemia. There are more than 350 million diabetics globally – so the people suffering from diabetic dyslipidemia could be around 300 million.

With 20 discovery research programs under various stages of clinical development, Zydus Cadilla reportedly invests over 7 percent of its turnover in R&D.  At the company’s state-of-the-art research facility, the Zydus Research Centre, over 400 research scientists are currently engaged in NCE research alone.

Prior to this in May 14, 2013, the Government of India’s Department of Biotechnology (DBT) and Indian vaccine company Bharat Biotech jointly announced positive results, having excellent safety and efficacy profile in Phase III clinical trials, of an indigenously developed rotavirus vaccine.

The vaccine name Rotavac is considered to be an important scientific breakthrough against rotavirus infections, the most severe and lethal cause of childhood diarrhea, responsible for approximately 100,000 deaths of small children in India each year.

Bharat Biotech has announced a price of US$ 1.00/dose for Rotavac. When approved by the Drug Controller General of India, Rotavac will be a more affordable alternative to the rotavirus vaccines currently available in the Indian market. 

It is indeed interesting to note, a number of local Indian companies have started investing in pharmaceutical R&D to move up the industry value chain and are making rapid strides in this direction.

Indian Pharma poised to move-up the value-chain:

Over the past decade or so, India has acquired capabilities and honed skills in several important areas of pharma R&D, like for example:

  • Cost effective process development
  • Custom synthesis
  • Physical and chemical characterization of molecules
  • Genomics
  • Bio-pharmaceutics
  • Toxicology studies
  • Execution of phase 2 and phase 3 studies

According to a paper titled, “The R&D Scenario in Indian Pharmaceutical Industry” published by Research and Information System for Developing Countries, over 50 NCEs/NMEs of the Indian Companies are currently at different stages of development, as follows:

Company Compounds Therapy Areas Status
Biocon 7 Oncology, Inflammation, Diabetes Pre-clinical, phase II, III
Wockhardt 2 Anti-infective Phase I, II
Piramal Healthcare 21 Oncology, Inflammation, Diabetes Lead selection, Pre-clinical, Phase I, II
Lupin 6 Migraine, TB, Psoriasis, Diabetes, Rheumatoid Arthritis Pre-clinical, Phase I, II, III
Torrent 1 Diabetic heart failure Phase I
Dr. Reddy’s Lab 6 Metabolic/Cardiovascular disorders, Psoriasis, migraine On going, Phase I, II
Glenmark 8 Metabolic/Cardiovascular /Respiratory/Inflammatory /Skin disorders, Anti-platelet, Adjunct to PCI/Acute Coronary Syndrome, Anti-diarrheal, Neuropathic Pain, Skin Disorders, Multiple Sclerosis, Ongoing, Pre-clinical, Phase I, II, III

R&D collaboration and partnership:

Some of these domestic companies are also entering into licensing agreements with the global players in the R&D space. Some examples are reportedly as follows:

  • Glenmark has inked licensing deals with Sanofi of France and Forest Laboratories of the United States to develop three of its own patented molecules.
  • Domestic drug major Biocon has signed an agreement with Bristol Myers Squibb (BMS) for new drug candidates.
  • Piramal Life Sciences too entered into two risk-reward sharing deals in 2007 with Merck and Eli Lilly, to enrich its research pipeline of drugs.
  • Jubilant Group partnered with Janssen Pharma of Belgium and AstraZeneca of the United Kingdom for pharma R&D in India, last year.

All these are just indicative collaborative R&D initiatives in the Indian pharmaceutical industry towards harnessing immense growth potential of this area for a win-win business outcome.

The critical mass:

An international study estimated that out of 10,000 molecules synthesized, only 20 reach the preclinical stage, 10 the clinical trials stage and ultimately only one gets regulatory approval for marketing. If one takes this estimate into consideration, the research pipeline of the Indian companies would require to have at least 20 molecules at the pre-clinical stage to be able to launch one innovative product in the market.

Though pharmaceutical R&D investments in India are increasing, still these are not good enough. The Annual Report for 2011-12 of the Department of Pharmaceuticals indicates that investments made by the domestic pharmaceutical companies in R&D registered an increase from 1.34 per cent of sales in 1995 to 4.5 percent in 2010. Similarly, the R&D expenditure for the MNCs in India has increased from 0.77 percent of their net sales in 1995 to 4.01 percent in 2010.

Thus, it is quite clear, both the domestic companies and the MNCs are not spending enough on R&D in India. As a result, at the individual company level, India is yet to garner the critical mass in this important area.

No major R&D investments in India by large MNCs:

According to a report, major foreign players with noteworthy commercial operations in India have spent either nothing or very small amount towards pharmaceutical R&D in the country. The report also mentions that Swiss multinational Novartis, which spent $ 9 billion on R&D in 2012 globally, does not do any R&D in India.

Analogue R&D strategy could throw greater challenges:

For adopting the analogue research strategy, by and large, the Indian pharma players appear to run the additional challenge of proving enhanced clinical efficacy over the known substance to pass the acid test of the Section 3(d) of the Patents Act of India.

Public sector R&D:

In addition to the private sector, research laboratories in the public sector under the Council for Scientific and Industrial Research (CSIR) like, Central Drug Research Institute (CDRI), Indian Institute of Chemical Technology (IICT) and National Chemical Laboratory (NCL) have also started contributing to the growth of the Indian pharmaceutical industry.

As McKinsey & company estimated, given adequate thrust, the R&D costs in India could be much lower, only 40 to 60 per cent of the costs incurred in the US. However, in reality R&D investments of the largest global pharma R&D spenders in India are still insignificant, although they have been expressing keenness for Foreign Direct Investments (FDI) mostly in the brownfield pharma sector.

Cost-arbitrage:

Based on available information, global pharma R&D spending is estimated to be over US$ 60 billion. Taking the cost arbitrage of India into account, the global R&D spend at Indian prices comes to around US$ 24 billion. To achieve even 5 percent of this total expenditure, India should have invested by now around US$ 1.2 billion on the pharmaceutical R&D alone. Unfortunately that has not been achieved just yet, as discussed above.

Areas of cost-arbitrage:

A survey done by the Boston Consulting Group (BCG) in 2011 with the senior executives from the American and European pharmaceutical companies, highlights the following areas of perceived R&D cost arbitrage in India:

Areas % Respondents
Low overall cost 73
Access to patient pool 70
Data management/Informatics 55
Infrastructure set up 52
Talent 48
Capabilities in new TA 15

That said, India should realize that the current cost arbitrage of the country is not sustainable on a longer-term basis. Thus, to ‘make hay while the sun shines’ and harness its competitive edge in this part of the world, the country should take proactive steps to attract both domestic as well as Foreign Direct Investments (FDI) in R&D with appropriate policy measures and fiscal incentives.

Simultaneously, aggressive capacity building initiatives in the R&D space, regulatory reforms based on the longer term need of the country and intensive scientific education and training would play critical role to establish India as an attractive global hub in this part of the world to discover and develop newer medicines for all.

Funding:

Accessing the world markets is the greatest opportunity in the entire process of globalization and the funds available abroad could play an important role to boost R&D in India. Inadequacy of funds in the Indian pharmaceutical R&D space is now one of the greatest concerns for the country.

The various ways of funding R&D could be considered as follows:

  • Self-financing Research: This is based on:
  1. “CSIR Model”: Recover research costs through commercialization/ collaboration with industries to fund research projects.
  2. “Dr Reddy’s Lab / Glenmark Model”: Recover research costs by selling lead compounds without taking through to development.
  • Overseas Funding:  By way of joint R&D ventures with overseas collaborators, seeking grants from overseas health foundations, earnings from contract research as also from clinical development and transfer of aborted leads and collaborative projects on ‘Orphan Drugs’.
  • Venture Capital & Equity Market:  This could be both via ‘Private Venture Capital Funds’ and ‘Special Government Institutions’.  If regulations permit, foreign venture funds may also wish to participate in such initiatives. Venture Capital and Equity Financing could emerge as important sources of finance once track record is demonstrated and ‘early wins’ are recorded.
  • Fiscal & Non-Fiscal Support: Should also be valuable in early stages of R&D, for which a variety of schemes are possible as follows:
  1. Customs Duty Concessions: For Imports of specialized equipment, e.g. high throughput screening equipment, equipment for combinatorial chemistry, special analytical tools, specialized pilot plants, etc.
  2. Income tax concessions (weighted tax deductibility): For both in-house and sponsored research programs.
  3. Soft loans: For financing approved R&D projects from the Government financial institutions / banks.
  4. Tax holidays: Deferrals, loans on earnings from R&D.
  5. Government funding: Government grants though available, tend to be small and typically targeted to government institutions or research bodies. There is very little government support for private sector R&D as on date.

All these schemes need to be simple and hassle free and the eligibility criteria must be stringent to prevent any possible misuse.

Patent infrastructure:

Overall Indian patent infrastructure needs to be strengthened, among others, in the following areas:

  • Enhancement of patent literacy both in legal and scientific communities, who must be taught how to read, write and file a probe.
  • Making available appropriate ‘Search Engines’ to Indian scientists to facilitate worldwide patent searches.
  • Creating world class Indian Patent Offices (IPOs) where the examination skills and resources will need considerable enhancement.
  • ‘Advisory Services’ on patents to Indian scientists to help filing patents in other countries could play an important role.

Creating R&D ecosystem:

  • Knowledge and learning need to be upgraded through the universities and specialist centers of learning within India.
  • Science and Technological achievements should be recognized and rewarded through financial grants and future funding should be linked to scientific achievements.
  • Indian scientists working abroad are now inclined to return to India or network with laboratories in India. This trend should be effectively leveraged.

Universities to play a critical role:

Most of Indian raw scientific talents go abroad to pursue higher studies.  International Schools of Science like Stanford or Rutgers should be encouraged to set up schools in India, just like Kellogg’s and Wharton who have set up Business Schools. It has, however, been reported that the Government of India is actively looking into this matter.

‘Open Innovation’ Model:

As the name suggest, ‘Open Innovation’ or the ‘Open Source Drug Discovery (OSDD)’ is an open source code model of discovering a New Chemical Entity (NCE) or a New Molecular Entity (NME). In this model all data generated related to the discovery research will be available in the open for collaborative inputs. In ‘Open Innovation’, the key component is the supportive pathway of its information network, which is driven by three key parameters of open development, open access and open source.

Council of Scientific and Industrial Research (CSIR) of India has adopted OSDD to discover more effective anti-tubercular medicines.

Insignificant R&D investment in Asia-Pacific Region:

Available data indicate that 85 percent of the medicines produced by the global pharmaceutical industry originate from North America, Europe, Japan and some from Latin America and the developed nations hold 97 percent of the total pharmaceutical patents worldwide.

MedTRACK reveals that just 15 percent of all new drug development is taking place in Asia-Pacific region, including China, despite the largest global growth potential of the region.

This situation is not expected to change significantly in the near future for obvious reasons. The head start that the western world and Japan enjoy in this space of the global pharmaceutical industry would continue to benefit those countries for some more time.

Some points to ponder:

  • It is essential to have balanced laws and policies, offering equitable advantage for innovation to all stakeholders, including patients.
  • Trade policy is another important ingredient, any imbalance of which can either reinforce or retard R&D efforts.
  • Empirical evidence across the globe has demonstrated that a well-balanced patent regime would encourage the inflow of technology, stimulate R&D, benefit both the national and the global pharmaceutical sectors and most importantly improve the healthcare system, in the long run.
  • The Government, academia, scientific fraternity and the pharmaceutical Industry need to get engaged in various relevant Public Private Partnership (PPP) arrangements for R&D to ensure wider access to newer and better medicines in the country, providing much needed stimulus to the public health interest of the nation.

Conclusion:

R&D initiatives, though very important for most of the industries, are the lifeblood for the pharmaceutical sector, across the globe, to meet the unmet needs of the patients. Thus, quite rightly, the pharmaceutical Industry is considered to be the ‘lifeline’ for any nation in the battle against diseases of all types.

While the common man expects newer and better medicines at affordable prices, the pharmaceutical industry has to battle with burgeoning R&D costs, high risks and increasingly long period of time to take a drug from the ‘mind to market’, mainly due to stringent regulatory requirements. There is an urgent need to strike a right balance between the two.

In this context, it is indeed a proud moment for India, when with the launch of its home grown new products, Synriam of Ranbaxy and Lipaglyn of Zydus Cadilla or Rotavac Vaccine of Bharat Biotech translate a common man’s dream of affordable new medicines into reality and set examples for others to emulate.

Thus, just within seven years from the beginning of the new product patent regime in India, stories like Synriam, Lipaglyn, Rotavac or the R&D pipeline of over 50 NCEs/NMEs prompt resurfacing the key unavoidable query yet again:

Has Indian pharma started catching-up with the process of new drug discovery, after decades of hibernation, to move up the industry ‘Value Chain’?

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Takes ‘Two to Tango’: Encashing Opportunities with Biologic drugs in India

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Despite current ‘Patent Cliff’ ongoing research on biologics is now at the forefront of the Global Pharmaceutical Industry.  The bottom-line impact of a successful new biologic molecule to treat intractable ailments like, cancer, blood disorders, Parkinson’s, Myasthenia Gravis, Multiple Sclerosis, Alzheimer’s diseases, will be huge.

Currently, faster growth of this segment as compared to conventional small molecules is primarily driven by novel technologies and highly targeted approaches, the final outcome of which is being more widely accepted by both physicians and patients.

Lesser generic competition makes it more attractive:

After patent expiry, innovators’ small molecule brands become extremely vulnerable to cut throat generic competition with as much as 90% price erosion.This is mainly because  these small molecules are relatively easy to replicate by many generic manufacturers and the process of getting their regulatory approval is also not as stringent as biosimilar drugs in most of the markets of the world.

On the other hand biologic drugs involve difficult, complex and expensive processes for development. Such resource intensive scientific expertise together with stringent regulatory requirements for obtaining marketing approval, especially in the developed markets of the world like, EU and USA, help creating a significant market entry barrier for many players. That is why even after patent expiry, biologics enjoy significant brand protection from generic competition for quite some time, in many cases.

It is for this reason brands like the following ones are expected to go relatively strong even for some more time, without any significant competition from biosimilar drugs in many of the major markets of the world:

Brand Company Launch date
Rituxan Roche/Biogen idec 1997
Herceptin Roche 1998
Remicade Centocor/J&J 1998
Enbrel Amgen/Pfizer 1998

Global Market:

In 2011 the turnover of Biologic drugs increased to over US$ 175 billion in the total market of US$ 847 billion. The sale of Biosimilar drugs outside USA exceeded US$ 1 billion.

Six biologic drugs featured in the top 10 best selling global brands in 2012 with Humira of AbbVie emerging as the highest-selling biologics during the year.  Roche remained the top company by sales for biologics with anticancer and monoclonal antibodies.

According to IMS Health, by 2015, sales of biosimilars are expected to reach between US$ 1.9 – 2.6 billion, an increase from US$ 378 million for the year to the first half of 2011.

Attractiveness:

The answer to the key question of why do so many companies want to enter into the biotech space of the business, in summary, could lie in the following:

  • Truly innovative small molecule discovery is becoming more and more challenging and expensive with the low hanging fruits already being plucked.
  • More predictable therapeutic activity of biologics with better safety profile.
  • Higher percentage of biologics have turned into blockbuster drugs in the recent past.
  • Market entry barrier for biosimilar drugs, after patent expiry of the original molecule, is much tougher than small molecule generics.
  • A diverse portfolio of both small and large molecules will reduce future business risks.

A 2012 report by PwC titled ‘From Vision to Decision: Pharma 2020’ states that “the next few years may look bleak for pharma, but we’re convinced that the following decade will bring a golden era of renewed productivity and prosperity.”

The document also points out that the global pharmaceutical industry is now focusing its R&D initiatives on biologics for the treatment of cancer and rare diseases. Nearly 30 percent of the 7,891 molecules currently in clinical testing cover cancer and autoimmune conditions.

Another emerging opportunity:

As stated above, unlike commonly used ‘small molecule’ drugs, ‘large molecule’ biologics are developed from living cells using very complex processes.

It is virtually impossible to replicate these protein substances, unlike the ‘small molecule’ drugs. One can at best develop a biologically similar molecule with the application of high degree of biotechnological expertise. These drugs are known as ‘Biosimilar Drugs’ and usually cost much less than the original ones.

Biosimilar drugs market is currently fast evolving across the world with varying degree of pace and stages of developments. The U.S currently holds the leadership status in the production of biologics, with around 45 percent of the total share. India’s share, now being at 7 percent is continuously increasing.

Biosimilar Monoclonal Antibodies (mAbs) in the Pipeline:

Company

Location

Biosimilar mAbs

Development Status
BioXpress

Switzerland

16

Preclinical
Gene Techno Science

Japan

6

Preclinical
Zydus Cadilla

India

5

Preclinical
PlantForm

Canada

3

Preclinical
BioCad

Russia

3

Preclinical
Celltrion

South Korea

2

Phase 3
LG Life Sciences

South Korea

2

Preclinical
Gedeon Richter

Hungary

2

Preclinical
Cerbios-Pharma

Switzerland

1

Preclinical
Hanwha Chemical

South Korea

1

Preclinical
PharmaPraxis

Brazil

1

Preclinical
Probiomed

Mexico

1

Phase 3
Samsung BioLogics

South Korea

1

Preclinical
Novartis

Switzerland

1

Phase 2
Teva

Israel

1

Phase 2
Zenotech

India

1

Phase 3
Spectrum

US

1

Preclinical
Biocon/Mylan

India/US

1

Preclinical

(Source: PharmaShare; as of September 10, 2011 from Citeline’s Pipeline database)

Future business potential with cost arbitrage of India:

In 2013, products like, Avonex of Biogen Idec, Humalog of Eli Lilly, Rebif of Merck KgaA, Nupugen of Amgen will go off-patent, paving the way of entry for lower priced biosimilar drugs. The sum total of revenue from all such drugs comes to over U.S$ 15 billion.

The report from the ‘Business Wire’ highlights that, ‘the manufacture and development of a biosimilar molecule requires an investment of about US$ 10 to 20 million in India, as compared to US$ 50 to 100 million in developed countries’, vindicates the emergence of another lucrative business opportunity for India for such drugs with significant cost arbitrage.

Government support in India:

In India, the government seems to have recognized that research on biotechnology has a vast commercial potential for products in human health, including biosimilars, diagnostics and immunobiologicals, among many others.

To give a fillip to the Biotech Industry in India the National Biotechnology Board was set up by the Government under the Ministry of Science and Technology way back in 1982. The Department of Biotechnology (DBT) came into existence in 1986. The DBT currently spends around US$ 300 million annually to develop biotech resources in the country and has been reportedly making reasonably good progress.

The DBT together with the Drug Controller General of India (DCGI) has now prepared ‘Regulatory Guidelines for Biosimilar Drugs’ in conformance to international quality and patient safety standards.

Currently, a number of both financial and non-financial incentives have been announced by the Central and the State Governments to encourage growth of the biotech industry in India, which include tax incentives, exemption from VAT and other fees, grants for biotech start-ups, financial assistance with patents, subsidies on investment from land to utilities and infrastructural support with the development of ten biotech parks through ‘Biotechnology Parks Society of India’.

A commendable DBT initiative:

Towards this direction, the Department of Biotechnology (DBT) of the Government of India has taken a commendable step to encourage the small and medium scale business outfits by setting-up ‘The Small Business Innovation Research Initiative (SBIRI)’. This scheme has been launched to boost ‘Public-Private-Partnership (PPP)’ projects in the country.

SBIRI supports ‘the high-risk pre-proof-of-concept research’ and ‘late stage development’ in small and medium size companies to get them involved in the development of biologics.

Some examples:

Examples of some among many of the PPP initiatives in the healthcare space under SBIRI are as follows:

No.

Company Name with Collaborator

Title of the Project Supported
1. IcubedG Ideas Private Limited, New Delhi Risk based Process Design for large scale Manufacturing of male injectable contraceptive
(Phase I)
2. Incozen Therapeutics Pvt. Ltd., Hyderabad Discovery and Development of Novel, Selective and Potent Dihydroorotate Dehydrogenase Inhibitors in Inflammatory Bowel diseases.
(Phase I)
3. Mediclone Biotech Private Limited, Chennai Commercial Production of Monoclonal Antibodies as an import substitute with special reference to Red Blood Cell Phenotyping (Phase II)
4. Orchid Chemicals & Pharmaceuticals Ltd., Chennai in collaboration with AU-KBC Research Center, Chennai Development and validation of a cell-tissue co-culture model for aiding liver specific studies and drug discovery applications. (Phase I)
5. Reliance Life Sciences Pvt. Ltd., Navi Mumbai An open label, multicenter, prospective clinical study to evaluate the safety and efficacy of tissue engineered R-STE-001 in patients with symptomatic cartilage defect of femoral condyle (Phase II)
6. USV Limited, Mumbai Development of a Vaccine capable for eliciting immunological memory for the prevention of Typhoid (Phase II)
7. Virchow Biotech Private Limited, Hyderabad Development of commercialization of a recombinant uricase for the prevention and treatment of tumor lysis syndrome associated with leukemia, lymphoma & solid tumor malignancies (Phase II)
8. Virchow Biotech Private Limited, Hyderabad Indigenous development of a recombinant Fuzeon for the treatment of AIDS (Phase II)
9. Zenotech Laboratories Limited., Hyderabad Development of humanized monoclonal antibodies against human epidermal growth factor receptor (Phase I)
10. Advanced Neuro-Science Allies Pvt. Ltd, Bangalore in collaboration with Vittal Mallya Scientific Research Foundation, Bangalore Pre-clinical studies of Human mesenchymal stem cells (MSCs) isolated and characterized from different sources in autoimmune disease, namely rheumatoid arthritis (RA) and type 1 diabetes (TIDM)(Phase I)
11. Avesthagen Ltd., Bangalore Hepatocyte-like cells generated from human embryonic stem cells (hESC) for hepatotoxicity screening of xenobiotics in the drug discovery process(Phase I)
12. Avesthagen Limited, Bangalore Scale-up and evaluation of high-value biosimilar product (Etanercept) aimed at providing cost-effective healthcare solutions to the emerging markets(Phase II)
13. Bharat Serum and Vaccines Limited, Mumbai Expression of recombinant proteins for development of synthetic pulmonary surfactant for Respiratory Distress Syndrome(Phase I)
14. Cadila Pharmaceuticals Ltd., Ahmedabad Development of Mycobacterium was an adjuvant for anti – rabies vaccine(Phase I)

Besides, Indian pharmaceutical majors like Dr. Reddy’s Laboratories (DRL), Reliance Life Science, Shantha Biotech, Ranbaxy, Biocon, Wockhardt and Glenmark have made good investments in biotech drugs manufacturing facilities keeping an eye on the emerging opportunities with Biosimilar drugs in the developed markets of the world.

Funding remains a critical issue:

That said, many industry experts do feel that R&D funding for the Biotech sector in the country is grossly inadequate. Currently, there are not many ‘Venture Capital’ funds for this sector and ‘Angel Investments’ almost being non-existent, Indian biotech companies are, by and large, dependent on Government funding.

Making India a global hub for biosimilar manufacturing:

However, with around 40 percent cost arbitrage, adequate government support and without compromising on the required stringent international regulatory standards, the domestic ‘biologic’ players should be able to establish India as one of the most preferred manufacturing destinations to meet the global requirements for particularly ‘biosimilar drugs’.

Experience in conforming to stringent US FDA manufacturing standards, having largest number of US FDA approved plants outside USA, India has already acquired a clear advantage in manufacturing high technology chemical based pharmaceutical products in India. Significant improvement in conformance to Good Clinical Practices (GCP) standards will offer additional advantages.

Conclusion:

With increasing support from the government and fueled by creative, scientific and technological inputs from various experts and entrepreneurs in the country, India has the potential to emerge as one of Asia’s best powerhouses in the field of biosimilars drugs by the end of this decade. It will take ‘two to tango’.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.