India's Biotech Industry Emerging As World Innovator, Collaborator, Competitor
India's health biotech firms are emerging as a major global player, with growing means and know-how to produce innovative as well as generic drugs and vaccines at costs small relative to those of giant Western firms, according to ground-breaking Canadian research published April 9.
The budding of an innovative Indian biotech sector holds major implications for the global industry and for improving both health and prosperity in the developing world.
"India is innovating its way out of poverty," says co-author Peter A. Singer, MD, of the McLaughlin-Rotman Centre for Global Health (University Health Network and University of Toronto). "With a massive and increasingly well-educated workforce, India is poised to revolutionize biotechnology just as it did the information technology industry.
"India's biotech sector is like a baby elephant - when it matures, it will occupy a lot of space. The biotech industry is globalizing rapidly and the impact of India's market entry and contribution to improving world health is potentially huge."
However, Singer and co-authors Abdallah S. Daar, MD, Sarah E. Frew, PhD, Monali Ray, Rahim Rezaie and Stephen M. Sammut, MBA, warn that the allure of world market profits may divert much needed Indian research attention away from treatments for specific developing country illnesses, unlikely to be created by Western-based firms. "India needs to take steps to avert this outcome," they say.
Published April 9 by Nature Biotechnology, the authors say their study of 21 home-grown firms sheds unprecedented public light on India's private sector biotech efforts and reports "a sector preparing not only for future growth but also, in some cases, for developing innovative products for global markets."
It is the first known "detailed, independent, publicly available research" revealing product development capabilities and strategies used by India's private firms to survive and grow amid developing country challenges.
It also recommends ways India and others in the developing world can help domestic biotech firms succeed.
The paper helps set the stage for a Toronto conference May 2-4 at which 20 to 30 North American biotech firms will convene with more than 25 similar firms from India, China, Brazil and Africa - thought to be the biggest-ever assembly of emerging market biotech companies. The goal: to encourage more biotech success and innovation in developing countries and North-South as well as South-South partnerships to address pressing global health problems.
Impacts on drug prices already felt
According to the paper: "The global market for ... generic biopharmaceuticals is expected to increase significantly in the next few years as several 'blockbuster' drugs lose patent protection. Indian companies appear well positioned to leverage their cost-effective manufacturing capabilities to corner some of this market share and compete on a global scale."
The paper says the 1997 launch of hepatitis B vaccine Shanvac-B, developed by Shantha Biotechnics of Hyperabad, helped cause a 30-fold domestic price reduction - from about $15 for a comparable imported product to roughly $0.50 - and credits Shantha's innovative, efficient manufacturing process and well as subsequent local competition.
Shantha today supplies nearly 40% of the UN Children's Fund's (UNICEF) global Hep-B vaccine supplies, distributed in Africa, Latin America and elsewhere. Says Dr. Singer: "Think about the impact on health of supplying all that vaccine to UNICEF at those prices."
Shantha also priced its recombinant interferon alpha (IFN-á) product Shanferon at about $6.50, undercutting the previous market price for a comparable imported drug by 75%.
The Serum Institute of India (Pune), meanwhile, has become the country's largest domestic vaccine supplier and exporter, its products reaching 138 countries. The company claims to be the world's largest measles vaccine manufacturer and, through UNICEF and the Pan American Health Organization, helps immunize half the world's children against several diseases.
Other examples of a surging Indian health biotech industry: New Delhi-based Panacea Biotec supplies oral polio vaccine to the Indian government and to UNICEF, while the Biocon firm of Bangalore developed a proprietary process for manufacturing human recombinant insulin.
Even before Biocon's product (Insugen) entered the domestic market, international competitors reduced the Indian price of their products by nearly 40%, the paper says. Biocon priced its product even lower still and says Insugen remains India's most affordable human recombinant insulin product.
"If the above trend continues, the cost of biopharmaceuticals produced by both domestic and overseas suppliers will continue to decrease as more domestic companies manufacture these products locally," according to the paper.
It says many Indian firms are scaling up to manufacture such drugs as insulin and interferon, their facilities "refurbished or built in accordance with the standards of international regulatory agencies, such as the US Food and Drug Administration (FDA), European Medicines Agency (EMEA) and the World Health Organization (WHO), to facilitate access to international markets not only for biogenerics but also novel protein products currently in their pipelines."
"Indian companies are likely to accelerate the development of products for sale in US and European markets, particularly the biogenerics for which they have developed significant manufacturing capacity," the paper says.
Indian firms are actively pursuing drugs to combat many medical problems, including tuberculosis, encephalitis, malaria, rotavirus, rabies, avian flu, Hepatitus-B, diabetes, cancer, heart disease, cholera, HIV-HCV, tetanus, meningitis, measles and anemia. Other strong areas of interest include combination tests for various medical conditions, as well as antivirals and nutriceuticals.
It adds that India's domestic firms increasingly need to offer salaries competitive with Western firms to retain talented personnel, potentially impacting the domestic labor pool and research strategies. This trends "may put further pressure on margins of domestic products, and may push companies to shift focus to higher-margin products and services for Western markets."
North-South collaborations
The paper says some Indian firms use services contracts with overseas firms to fund their operations, develop commercialization capabilities and access valuable international technology and expertise. Services provided include R&D, clinical trials and manufacturing. Bharat Biotech International, for example, is the first developing country firm to manufacture a foreign proprietary vaccine product. It is contracted by the U.S. Wyeth Company to produce its Haemophilis B (Hib) vaccine.
Multi-national corporations increasingly conduct clinical trials in India and rely on Indian contract research organizations to manage these trials. A Bangalore firm, Clinigene, is the first in India with a lab certified by the College of American Pathologists, conducting trials for Merck and Pfizer (USA), AstraZeneca (UK) and others.
Notes co-author Abdallah Daar, MD, of the McLaughlin-Rotman Centre for Global Health: "It will be vital to the industry that Indian companies expanding their capabilities in clinical trials management pay close attention not only to good clinical practice guidelines, but also to bioethical principles, to provide a high level of care and protect the rights of patients."
R&D alliances between Indian and Western companies have just begun and may be affected by assumptions - correct or incorrect - about the expertise and competence of workers at Indian firms, the paper says.
The paper notes too that major Western pharmaceutical firms, such as Novartis, have recently created their own research facilities in India.
Indian biotech at crossroads
Indian biotech is "at a crossroads," the authors say, and requires support to maintain it's original domestic public service orientation.
"It must not only address the significant health needs of its domestic population, but also position itself to take advantage of the often more profitable global marketplace. The country's health biotech companies operate in close proximity to the shocking disparities in health that plague our globe today. Although these firms are uniquely suited to address these needs, they require financial and political support before they will commit to doing so."
India's health system is being hit with a 'double burden' of communicable and non-communicable diseases, as basic care improves and the country's middle class grows, according to the paper.
In 2003, 5.1 million Indians had HIV/AIDS, over 3 million had tuberculosis and 1.8 million had malaria. Approximately 32 million Indians were diabetic in 2000, a number expected to reach 80 million by 2030.
The WHO predicts that by 2015 nearly twice as many deaths across all ages in India will be due to chronic diseases than the combined toll of communicable diseases, maternal and prenatal conditions, and nutritional deficiencies.
"Historically, Indian companies have been the principal providers of medicines and vaccines for the Indian population, enabled by domestic talent and patent laws that protected processes but not products," the paper says.
Revisions to India's intellectual property regime, effective Jan. 1, 2005, offering patent protection for products as well as processes, have encourged innovative domestic private sector research programs, the researchers found.
In general, Indian firms are at a relatively early stage in their innovative R&D programs and have "yet to produce a truly innovative health product with the stamp 'Made in India'," the authors say.
However, "it isn't a question of if but when drug product breakthroughs will start arriving from India," says co-author Sarah Frew.
She says many Indian biotech companies were founded with the purpose of addressing specific local health needs.
"These were often non-innovative products developed with an innovative process and several companies interviewed had success with this business model - both in terms of generating profits and in addressing local needs," she says.
"Global health authorities want to take advantage of the capabilities of these firms to develop products as well as the social responsibility mandate on which these firms were founded to encourage them to develop products for so-called 'neglected diseases.'
"We argue that yes, the capabilities are there, but if these companies are not provided political and financial commitments to develop products for these diseases, they too will redirect their focus to developed markets to stay alive."
The paper suggests India's government consider identifying a few priority disease areas and create a dedicated fund for commercialization of products related to them.
Barriers to development
Indian biotech executives cite acute risk-aversion among Indian bankers and investors as a barrier to innovation. Says one official: "Early-stage funding for a company that wants to do pure research and go to the market six or seven years later does not exist. There is no money for such a business plan."
Other barriers to growth identified:
* A poorly coordinated patchwork of Indian regulatory agencies and a slow, confusing approval process that delays health product commercialization;
* A lack of expertise among officials in dealing with biologicals;
* A shortage of advanced training programs and scarcity of qualified personnel;
* The high cost of distribution in rural areas;
* Little entrepreneurial ambition among Indian academics in the biotech sector (resident or returning Indian scientists founded only 4 of 21 firms surveyed).
The paper says the Indian government is ramping up funding and fiscal initiatives significantly to help grow its biotech sector. The Department of Biotechnology's budget quadrupled in six years, from about $30 to $120 million between 1999 and 2005. And the government has promised to nearly double its science budget - from 1.1% of gross domestic product in 2005 to 2% by 2007.
Fiscal incentives include relaxed price controls for drugs, removal of foreign ownership limits, subsidies on capital expenses and tax holidays for R&D spending.
Other lessons learned
Many start-up firms entered via vaccine markets for which significant local expertise existed and competition from abroad was limited.
Many resourcefully explored various financing opportunities from both domestic and international sources. Often they grew without surrendering much equity, adopting a hybrid business model whereby early revenues were reinvested to expand product and/or service portfolios and relying on project-specific financing from external governmental and nongovernmental agencies.
Successful firms also established and maintained collaborations and partnerships with public and private organizations in India and abroad, establishing global presence through joint ventures with foreign firms or by setting up their own subsidiaries abroad
Finally, several Indian firms are becoming more competitive by patenting products and technologies globally.
"Most people think only of information technologies as the driver behind India's economic emergence but a lot of innovative research is underway in biotech and other life sciences as well," says Dr. Daar. "This study documents for the first time what is happening at the individual biotech company level."
Recommendations for biotech development in India
* Harmonize the pharmaceutical regulatory system into one regulatory agency and ensure adequate training for regulatory personnel.
* Increase training programs in advanced biotech;
* Ensure translation of initiatives in the draft Biotech Strategy into policies that increase effective collaborations between public and private institutions and encourage academic scientists to pursue entrepreneurial ventures to commercialize research.
* Create a favorable and enabling financial environment for enterprise creation and private sector development, including support of early-stage research and product development.
* Identify national priorities for public health and use a targeted funding approach to ensure development of products and services that address local health needs.
* Improve public health infrastructure and/or give incentives to private firms to develop innovative distribution strategies.
