DEVELOPMENT OF BIOPHARMACEUTICALS INDUSTRY IN INDIA

Dr. Bhaswat S. Chakraborty Sr. VP & Chair, R&D Core Committee

Cadila Pharmaceuticals Ltd.

Presented at Industrial Research in Development of Biopharmaceuticals, a DSIR Workshop, AMA

Centre, Ahmadabad, February 24, 2015

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CONTENTS Biotech world & Indian Biotech Pharmaceuticals

Some characteristics of Indian Biopharma Favorable environment for Global R&D labs set up in India

Why India Indian Labs & CROs MNC R&D Labs

Opportunities available – upcoming trends The patent cliff Biosimilars opportunity

Bottlenecks & Challenges Various issues Conclusions

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TOP 10 PRODUCTS BY SALES IN 2014

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  Rank  Product  Company  Technology WW sales($m) 

  1 Avastin  Roche  Monoclonal antibody   9,232

  2 Humira  Abbott +  Eisai  Monoclonal antibody   9,134

  3   Rituxan  Roche  Monoclonal antibody   7,815  

  4   Enbrel  Wyeth +  Amgen +  Takeda  Recombinant product   6,583  

  5   Lantus  Sanofi-Aventis  Recombinant product   6,386  

  6   Herceptin  Roche  Monoclonal antibody   5,796  

  7   Crestor  AstraZeneca  Small molecule chemistry   5,739  

  8   Spiriva  Boehringer Ingelheim  Small molecule chemistry   5,552  

  9   Remicade  SGP + J&J + Mitsubishi Tanabe 

Monoclonal antibody   5,220  

  10   Gleevec/Glivec  Novartis  Small molecule chemistry 

 5,136  

INDIAN BIOPHARMA MARKET

Pharmaceutical and health biotechnology is one of India’s fastest growing sectors

Biopharmaceuticals account for 64% of the Indian biotech industry

Valued at >4 Bn USD

Growing ~20-25% rate per annum

Consists of vaccines, bio-similars, therapeutics, diagnostics, regenerative medicines and medical technology

Vaccines and bio-similars constitute the largest component of the Indian bio-pharma segment 4

INDIA: A MAJOR SUPPLIER OF VACCINES TO UNICEF

Polio-free India one of the 'most impressive accomplishments' ever – Bill Gates, January 2015

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CHARACTERISTICS OF INDIAN BIOPHARMA INDUSTRY Growth in India is primarily export-driven

Export sales are rising at annual rate of 47% Domestic sales have risen only up to 6% per

Vaccines are the largest and fastest-growing sector Currently account for about 43% of India's total

biopharmaceutical sales Cf. 16% for diagnostics and 13% for therapeutics

Industry growth is concentrated in a small number of companies ~30 companies account for majority of sales Led by Biocon, Serum Institute, Zydus, Panacea Biotec... And India-based subsidiaries of MNCs 6

CHARACTERISTICS OF INDIAN BIOPHARMA INDUSTRY..

Indian companies manufacture wide range of biopharmaceuticals Iclude recombinant insulin, EPO, G-CSF, recombinant

hepatitis-B vaccine, streptokinase, interferon α-2b, rituximab, and anti-EGFR & anti –VEGF MAb products..

Indian biopharmaceutical R&D is increasing rapidly Since 2003, the R&D budgets of the top 10 Indian

pharmaceutical companies have more than doubled

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WHY INDIA The presence of a highly skilled, English speaking workforce of

over 8.5m qualified scientists coupled with a large network of investigators

A feeder system of 314 medical & a >1000 pharmacy colleges, with our 35,000 students graduating every year

Nearly 700,000 hospital beds and the largest number of USFDA approved facilities outside the US

Lower set-up costs Access to a large and genetically diverse patient pool with

comparatively lower treatment costs than US and Europe One of the fastest subject recruitment rates globally (c.3x-4x the

global average), with 40-50% lower screen failure and dropout rates compared to the global averages

Favorable government policy to continue to develop a favorable regulatory environment

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ADVANTAGE INDIA Cost advantage

Manufacturing capabilities

Enhancement of vaccine portfolios

Biosimilars

CROs & clinical trial expertise Recruitment efficiency

Regulatory efficiency

Reliable contract research and mfg.

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ALREADY EXISTING CAPABILITIES About 20 companies in India are already developing

bio-similars.

~25 recombinant therapeutics available in India and 15 of them are manufactured within the country.

~50 brands are commercialized in the country by leading companies such as Biocon, Shantha, Reliance Life Sciences, Wockhardt and Intas .. includes MNCs like Novo Nordisk, GSK, Eli Lilly ,,,

Approximately 72 recombinant drugs are currently undergoing different stages of clinical trials

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SOME SPECIFIC ADVANTAGES IN INDIA

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INDIAN CROS India has >70 active CROs engaged in BE & Clinical trials

Mostly Phase II-IV trials including stats & rep[ort writing, pre- and post approval services

Top Players Quintiles, PPD, Paraxel Siro Clinpharm, GVK Bio, Lamda Therapeutics, Inverika

Excellent reputation in protecting clients’ IPR (unlike many other countries)

Follow international standards in professionalism, accuracy, precision in output through regulatory and institutional bodies

Indian CROs are good in developing activity metrics market evolution, market analysis, develop relations with decision

makers to get comprehensive and reliable predictions etc.

Still highly cost attractive 12

INDIA’S SHARE OF GLOBAL CLINICAL TRIALS

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BA/BE STUDY COST COMPARISON

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OTHER RESEARCH COST COMPARISON

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MNCS BILATERAL R&D WITH INDIAN COS. Merck established discovery sourcing deals

with Advinus in 2006 for metabolic-disorder drugs with Nicholas Piramal in 2007 for oncology drugs with and Orchid in 2008 for antibacterial compounds

Eli Lilly has had similar agreements for collaborative approach across several therapeutic areas with Nicholas Piramal in 2007 with Suven Life Sciences in 2008 with and Zydus Cadila in 2009 with Jubilant in 2008

GlaxoSmithKline with Dr. Reddy’s for cardiovascular, diabetes, oncology, gastroenterology and pain management therapeutics 16

STRUCTURING RELATIONSHIPS FOR VALUE CREATION BY INDIAN COMPANIES

Build Nothing like it

Strategic acquisitions Acquisition of assets in a strategy to increase capabilities

and drive scale. Joint ventures

Accompanied by strategic stakes with nascent and sub-scale companies

Customer-supplier relationships To secure capacity, test delivery capabilities and consider

acquisition or joint venturing17

UPCOMING TRENDS: THE PATENT CLIFF

A major driver of Indian Biopharma Industry

Many companies are planning to diversify into biosimilars and get into joint ventures for mfg etc.

Indian biotech can offer all areas of strength especially in collaborative efforts Discovery, research and development, support

activities, marketing, and lobbying are other opportunities

The humanitarian value is huge

The returns are huge as well 18

EVOLUTION OF GLOBAL SALES OF TOP TEN BRANDED BIOLOGICS FROM 2004-11

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The 2012–2019 patent cliff is highlighted in yellow

PERIOD OF MARKET EXCLUSIVITY FOR THE TOP TEN SELLING BIOLOGICS

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Calo-Fern´andez B et al (2012) Pharmaceuticals 2012, 5, 1393-1408

A GENERAL STRATEGY DIAGRAM FOR A SUCCESSFUL ENTRANCE INTO BIOSIMILARS MARKET

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Calo-Fern´andez B et al (2012) Pharmaceuticals 2012, 5, 1393-1408

The requirement for key capabilities varies with the market maturity: from brand-driven in short term to price-driven in long term

Inserted subfigures are Pfizer’s biosimilar capabilities before the acquisition of Wyeth and the contributions of this deal

PFIZER’S BIOSIMILARCAPABILITIES AFTER ESTABLISHING THE STRATEGIC DEALS

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Konde V. (2009) Journal of Commercial Biotechnology Vol. 15, 3, 215–226

INDIAN BIOTECH COMPANIES

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Company Products/technologies/services in the market Business model

  Main sector  Advinus Theraputics, Bangalore and Pune

Metabolic disorders, inflammatory diseases, neglected diseases Hybrid

Avestha, Bangalore Agbiotech and transgenics, biosimilars Vertical

Bharat Biotech International, Hyderabad Recombinant drugs, cardiovascular diseases, vaccines Product

Bhat Bio-Tech India, Bangalore

Recombinant proteins, diagnostic markers Hybrid

Bharat Serums and Vaccines, Mumbai Plasma derivatives, monoclonals, hormones, serums.. Product

Biocon, Bangalore Industrial enzymes, recombinant protein therapeutic products and human growth hormone Vertical

Biological E., Hyderabad Diagnostics, combination vaccines, antitetanus and antisnake venom sera Vertical

Dr Reddy's Laboratories, Hyderabad

Infectious and parasitic diseases, oncology, immune disorders, endocrine, nutritional and metabolic diseases, ..

Vertical

Gennova Biopharmaceuticals, Pune Hi-tech molecules in nephrology, oncology and

cardiology segmentProduct

Indian Immunologicals, Hyderabad Pediatric and childhood vaccines, DNA-based vaccines,

animal- and human-health productsProduct

Indian biotechnology database (http://www.indianbiotech.com/in/db/index.php).

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UNDERSTANDING THE BIOTECH & LIFE SCIENCES BUSINESS MODEL

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MANUFACTURING PROCESS FOR BIOLOGICS

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GENERAL CHALLENGES & BOTTLENECKS IN INDIA Highly competitive environment with multiple small sized CROs Perceived data quality issues in the light of recent blacklisting of

certain principal investigators for fraudulent data With a positive of overall track record, this perception is likely

to diminish Decreasing quality of infrastructure, as the tier-one cities in India

become saturated with CROs There is a need to consider tier-two cities that remain

untapped and also offer a greater pool of treatment naïve patients

Regulatory challenges in gaining approval for clinical trials The Indian Government has initiated a multi-billion dollar

process to streamline the regulatory environment Excellence in human resources is still a challenge

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FINANCING FOR INDIAN BIOTECH Some banks help

e.g. Yes Bank: “is philosophically committed to support the growth of the Indian Biotechnology Sector (so far ~ $1 billion)”

But, in general, money for biotechnology is not easy to come by Don’t have many venture capital funds in this sector,

largely because it is knowledge intensive and because the regulatory pathway is not very clear to the common investor

Location helps Biotech in India is clustered in Bangalore and Hyderabad

(~39% of the total revenue) Like the San Francisco & Boston in US, they have some of

India’s best research institutions and universities

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LOOKING FORWARD: NATIONAL BIOTECH DEVELOPMENT STRATEGY

With DBT's budget to >$300 mn USD annually, this program is promoting following areas:

The establishment of more university-linked research centers, with facilities and teaching standards of international quality.

The rapid expansion of biotech-related PhD and postdoctoral programs.

Incentives for the repatriation of Indian-born scientists currently working abroad.

Support for academic laboratory and private biotech partnerships 31

CONCLUDING REMARKS Health/pharmaceutical biotechnology is one of India’s fastest

growing sectors India has innovative as well as biosimilar biotech capabilities Indian biotech companies are growing at ~20-25% rate per

annum Biologics patent cliff offers Indian companies a huge opportunity Capability-benchmarking is the key for any company planning to

generate value from the biologics patent cliff Entering biosimilars market is facilitated by acquiring or

developing R&D, manufacturing, supporting activities, marketing or lobbying

India has >70 active CROs engaged in BE & Clinical trials which are cost effective, professional, IPR-sensitive and offer high quality services

Steep competition among CROs, quality of data, financing, and excellence in human resources are major challenges

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THANK YOU VERY MUCH

Acknowledgement: Ms. Raji Nair

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