 "Kiran Mazumdar-Shaw")
For Biocon, India's largest biopharma firm, the Japanese approval for its Glargine has given it the confidence that its focus on biosimilars is working. This year, it plans to make four filings in the US and Europe, the regulated market where it sees more business. “Once you start getting into these developed markets at much higher prices than generics, your business profitability increases and you get the comfort level that you are getting payback,” Kiran Mazumdar-Shaw, chairman and managing director of Biocon, tells Raghu Krishnan. Excerpts:
What is the opportunity with the four biosimilar filings of Biocon this year?
We are front-runners in the biosimilar race. If the market is not crowded, the kind of share you can take and the opportunity in pricing you enjoy will be rewarding. For the four biosimilars - Glargine, Trastuzumab, Pegfilgrastim and Adalimumab - the market opportunity is $35 billion.
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Biocon, through foresight actually chose the insulin analog space. Everybody took to antibody and nobody realised the insulin analog opportunity. Biocon is in a unique position; we’re perhaps the only company with a comprehensive range in its basket.
In Glargine, we got approval in Japan, while Eli Lilly has approval in US, EU. The credibility with Biocon getting approval in Japan gets us the confidence that we can get US ad EU before long. Eli Lilly has biosimilar insulin glargine approval in Japan; Merck and Boehringer Ingelheim are also working on insulin glargine. It is nice to be on the top, because the others are all multinational companies and not generic companies. These firms are actually developing the glargine insulin for completing the portfolio.
Do you think investors are convinced of your business model?
For a long time, our stock was being crucified because they thought we would never be able to get into the so-called developed markets. They felt it would be a long time before biosimilars would be allowed in those markets. Suddenly, it happened and the flood gates are open now. Europe and the US are embracing biosimilars. Now that we are the first among the early entrants, it gives us confidence.
We are a differentiated story. Biosimilars are not generics. You have to got to do those development trials. There is a long gestation timeline involved and we are willing to wait. We have not taken debt or leverage the company and done anything that puts shareholders and the company to financial risk. For a long time, we were not appreciated. People would ask us why put so much money in R&D and that why can't we give bigger dividends. Look at Indian generic companies that have lower R&D. Now, things are changing after the Japanese approval.
It is not just being able to develop biosimilars, it is also having the scale to produce them. There again, we have huge advantages. Many of the biosimilar players might bring products to the market, but will you be able to get market share with a small capacity? Today, when we get into the market, we can be very aggressive in terms of seeking market share with all the others.
When will you be able to take the products in the market? In FY18?
It generally takes 12-18 months to review and get market approval in the US and Europe. But, what the Japanese approval (for Glargine) does is, it opens up many markets for us.
Right now, in markets such as Brazil, Russia and Turkey, they don't go by India data. They tell us, ‘when you file the European dossier, then come to us’. Now that we have the Japanese approval, immediately, these people are talking to us that we can approve yours. Already, our Mexican partners, Lab PiSA, have already got approval for Glargine in Mexico. We’re looking at Brazil and Latin America markets, which is very big for us.
Is partnership key for you to expand in developed markets?
Our partnership helps us. Mylan takes up all the costs. Mylan has been an aggressive generic player in Europe and the US. They will be able to get into the market in a very different way. They have a huge portfolio of products, and they would be able to handle it better than us.
Was it a right move to take up insulin?
Yes. Our own recombinant human insulin is marketed in about 50 countries. We’ve announced with Lab PiSA that we are entering the US market. We also know that insulin is an old product, Eli Lilly or Novo Nordisk are not promoting insulin in a big way because they’re promoting analog. They want to cannibalise insulins with analogs. We feel insulin is a good opportunity; even if it is an old product.
It will be interesting that we will be in the US market with Glargine before we are with insulin.
Are you also developing in-house molecules?
We have interesting new molecules. One is Insulin Tregopil, an oral insulin. Itolizumab anti-CD 6 is a very interesting drug. If it is an auto immune condition like rheumatoid arthritis, you prefer not to have any infusion. If you have to go to a hospital every time you take these, it is not a nice way of positioning the product. In India, we deliver it as an IV infusion for psoriasis. We believe if we have to take it global, it has to be subcutaneous (injection used to inject drug into the tissue layer between the skin and the muscle). We have developed a subcutaneous formulation and are having trials in Australia. If this happens, we can file an investigational new drug (IND) application in the US and start clinical trials.
In fusion antibodies, instead of giving one antibody after another and improving the outcome, we are actually targeting the cancer cell by allowing the killer cell to do the kill. It is a very interesting immunological step. Now, the data is very compelling in vitro and in vivo. Now, an IND is being developed, which will allow us to start clinical trials. It is a pipeline of products, it is a technology platform.
The other is SIRNA, which we have done with an Israeli company Quark Pharmaceuticals. The first of the programmes is already in phase III trials including in the US for ischemic optic neuropathy. We just got permission in India to do the same trial here as part of the global trial. There are many patients in India with this problem. This a revolutionary way to treat this unmet needs. These are diseases that have no cures right now. If this works, it is a great drug. It is a new technology. If it works well, then it’s a huge bonanza for us.
Global pharma firms say drug development costs billions of dollars...
They throw in the entire cost of the drug development, research & development, marketing and operating, and amortise the cost of drugs across the pipeline, even if one drug succeeds.
That is why it seems so high. If you actually take the direct costs of developing a successful drug, obviously the costs are not that high. It would be a few hundred million dollars not billion dollars . Today, you are looking at exacting science. The chances are that your drug development costs are coming down. Generally speaking, the big pharma is right about the billion-dollar costs, if you are developing a pipeline of multiple candidates, and one of them actually succeeds and others fail. Unnecessarily, the cost incurred in other candidates also is involved. With small molecules, you are never sure what works and what doesn’t. In biological, you are sure this is the way it works. Take Itolizumab, for instance. We know it works and the chances of failing is not very high.
It is only how you design your studies. If you don't know how to design your studies, then chances are you may not pass. And, you have to keep on spending money. It is like our oral insulin. We didn't design the study well the first time. When we did the study in India, we didn’t design it well and we got the placebo effect the first time.
Then, we had to repeat the phase-I studies. This time, hopefully we will learn from the mistakes of the past and benefit.
What are the challenges for growth?
The biggest challenges were in the past few years as we had to take up huge R&D costs. The gestation timeline to develop biosimilars is long. The moment the pipeline starts delivering, the risks start reducing. Once you start getting into these developed markets at much higher prices than generics, your business profitability increases and you get the comfort level that you are getting payback. The biggest challenges was in the past few years and we have been able to manage well. We had a risk-balance approach where our research services business Syngene help us tide over our expensive development phase. Another challenge has been the regulatory uncertainty over biosimilars.
How have you managed succession planning?
We have a plan. I have handed over the CEO and joint managing director’s baton to Arun Chandavarkar. I happen to be the chairman and managing director looking after the strategic function. Arun combines strategic and operations. We have growth verticals. We recently set up Biocon Biologics Enterprise as a separate company, which houses the biosimilars. We believe each of these growth engines could have strong leaders driving growth. That is the level of succession planning we have done. We have a great team of professional leaders, even after Arun and I step down.
