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| Saldanha hits paydirt with a risky strategy |
| PB Jayakumar / Mumbai Dec 09, 2010, 00:02 IST |
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After several failed attempts, Glenmark is close to being India's first pharmaceutical company to develop a new chemical entity.
 When Glen Saldanha took over the reins of Glenmark Pharmaceuticals in 2001, it was a 23-year-old me-too drug manufacturer with some common formulations in the domestic and non-regulated markets. Then, its turnover was less than Rs 200 crore. This year, he expects the company to post revenues of Rs 3,000 crore.
Like the thrice-a-week badminton player that he is, Saldanha has proved a nimble-footed player off-court as well. A pharmacy graduate and an MBA from New York University, his smashes are the result of taking risks, banking on his experience in the US with multinational drug major Eli Lily and professional services firm PricewaterhouseCoopers.
The path he chose was to invest in new drug discovery and chemistry: Generate profits from the generics business and invest in new drug research, a business model none of his Indian peers dared to adopt. Before him, there were no other successful models to follow for a small company like Glenmark. Globally, Novartis (and generic arm Sandoz) is the only multinational company that operates both in the new drug and generics business on a large scale.
New drug trail
After ten years, Saldanha is close to making history as owner of India’s first new chemical entity (NCE). Glenmark’s NCE candidate, Crofelemer, a first-of-its-kind drug for HIV-associated diarrhea, has passed the final phase of clinical trials and will hit the market in two years. Glenmark will launch the drug in some 140 countries in the next two years and will make its active ingredient.
Glenmark in-licensed the molecule from Napo Pharmaceuticals of the US five years ago. The basic agent was extracted from the bark latex of a South American tree called croton lecheri and was initially developed by Napo. Crofelemer had reached the final stage of Phase-III clinical trials in 2006. Later, Napo and Glenmark roped in Salix Pharmaceuticals of the US as a partner for development. Salix will market the drug in the US and Europe.
| TESTING TIME |
| * NCE candidate Crofelemer, a first-of-its-kind drug for HIV-associated diarrhea, will hit the market in two years |
| * Lead molecule Ogemilast for asthma and chronic obstructive pulmonary disease, died prematurely this year |
| * GRC 6211 for osteoarthritis, dental and neuropathic pain and licensed to Eli Lilly, also failed midway 2 years ago |
| * Two years ago, Glenmark divided its business, moved its generics under a different subsidiary, Glenmark Generics |
| * Generics has grown by over 26 per cent and the group is likely to post revenues of Rs 3,000 crore this year |
The drug is estimated to have a global potential of $300-400 million a year, say industry analyst reports. “I will not project a figure, since we do not know the potential of this molecule. We are also conducting trials for pediatric diarrhea and few other indications. Our books will start reflecting revenues from Crofelemer only from 2013,” says Saldanha.
His success comes at a time when pioneers of NCE research in India like Ranbaxy Laboratories and Dr Reddy’s Laboratories have put many of their programmes on the back burner, after aggressively pursuing them for over a decade.
An NCE is a molecule developed by an innovator company in the early drug discovery stage, which after undergoing clinical trials could translate into a drug. Thousands of compounds have to be screened to identify and develop a molecule and the chances of failure are high even at a late stage. Development of an NCE requires 10-15 years and may cost over $1 billion. Indian generics companies are minnows compared to the financial muscle of global multinationals and therefore they follow the partnership and out-licensing model to take the drug to market. “New drug research is very risky and management should be willing to invest on a long -term basis, knowing the risks involved,” says Saldanha.
Setbacks
Saldanha faced several setbacks in the last ten years of rollercoaster growth at Glenmark. Lead molecule Ogemilast for asthma and chronic obstructive pulmonary disease, died prematurely in the second phase of development this year. That drug candidate was mainly instrumental in driving Glenmark’s stock, since it was out-licensed to Forest Laboratories in 2004.
Its second molecule under development, GRC 8200 (Melogliptan), for Type-II diabetes, was out-licensed to Merck, but the company returned the molecule last year due to changes in its drug development plans. Another molecule, GRC 6211 for osteoarthritis, dental pain and neuropathic pain and licensed to Eli Lilly, also failed midway two years ago.
Glenmark, which struck drug development deals that gave it upfront earnings and milestone payments every year since 2004, could not repeat it in 2008 or 2009. The company is struggling to again outlicence Melogliptan. Its stock fell sharply to less than Rs 200 a share during the beginning of the year, but has now recovered to a 52-week high of close to Rs 390 a share. Its debt level is now at around Rs 1,500 crore. “It is a difficult period. Multinational companies are cutting down expenditure on R&D and we are waiting for the right opportunity for new deals,” says Saldanha.
The company now has seven molecules in development, including three biologics, or drugs of biotech origin. Glenmark aims to strike at least one deal every year going forward, says Saldanha. The company has invested heavily in four R&D facilities in India and Switzerland, employing close to 600 scientists.
Generics
Two years ago, Glenmark divided its business in two, to keep its generics under a different subsidiary, Glenmark Generics. The business has grown by over 26 per cent for the Rs 2,500-crore turnover Glenmark. It is likely to post revenues of Rs 3,000 crore this year.
Glenmark Generics has first to challenge patent opportunities in the case of about six drugs which are going off-patent before 2015 in the US. This will help Glenmark Generics gain an exclusive sales opportunity for six months upon patent expiry. About 60 products are already in the market and another 40 are pending approval. “We will keep on challenging patents of 10-15 drugs every year in speciality areas like dermatology, oral contraceptives and oncology in the coming years,” says Saldanha.
The company is looking at similar growth in other markets like Europe and emerging economies in Latin America. “We have created adequate front-ends in most markets. You will not hear acquisition news from us in the near future” adds Saldanha. The company has also suspended its plan of an initial public offering from Glenmark Generics.
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