India Must Focus On Biopharmaceuticals To Feed The Growth Engine: Kiran Mazumdar Shaw
The Indian pharmaceutical industry is searching for its next step to move up the value chain in the global pharma sphere, after leading the world in generics and vaccines, it is now time for India to transition into its next set of growth pathways. And one of the pathways that Kiran Mazumdar Shaw, Executive Chairperson, Biocon & Biocon Biologics believes could prove fruitful is by focusing on biopharmaceuticals, which she says sit quite higher on the global pharma value chain.
Mazumdar explained that India’s leadership in supplying generic drugs across the globe has driven the domestic pharma industry’s growth up to now and sales of generic drugs have led the Indian pharmaceutical industry to grow to the world's 3rd largest supplier by volume and 14th largest in terms of value.
“But to feed the growth engine of the pharma industry, which is of strategic as well as economic significance to the Indian economy, we need to focus on the next set of opportunities represented by biopharmaceuticals, specifically biologics and biosimilars,” Mazumdar stated.
She further enumerated that by focusing on these advanced, large molecule therapies, which are higher up the pharma value chain, can help India capture a significant value share of the global pharma market.
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In that case, what can be done to encourage investments in moving up the pharma value chain?
To capture the huge opportunity, India will have to act expeditiously and the government will have to play an enabling role by creating a suitable physical, financial, legislative and regulatory infrastructure. It is very important for India to build scale in bio-manufacturing to make biologics.
With 80 per cent of new drugs being approved globally being biologics, the expansion of manufacturing scale should not just aim at catering to the domestic market. Companies need to be able to tap global markets, for which India needs a strong policy that provides incentives for exports.
Research-linked incentives can provide the impetus to increase R&D investment, as well as build the much-needed linkages with academia for breakthrough research. India also needs to unleash the huge potential of its entrepreneurial energy by creating a virtuous cycle of invention and innovation that takes ideas to the market.
With the right policies and incentives, the Indian biopharmaceuticals industry can give the much-needed shot in the arm for India to emerge as the next destination for high quality biologics including biosimilars and next generation biotherapeutics, which will go a long way in positioning India as one of the world’s top three economies.
In the third quarter, Biocon’s R&D has been hiked by 144 per cent YoY, what are your thoughts on that? Are there any specific areas or products that Biocon is looking at?
We have always believed that R&D is an investment for us as it is crucial for driving future growth. The company's net R&D investments reached Rs 337 crore in Q3FY23 against Rs 138 crore in the corresponding quarter last year. The bulk of the R&D investments are in the Biosimilars business, where we continue to make good progress on our R&D pipeline. We completed patient recruitment for Phase I and Phase III global clinical trials for two of our biosimilars, Denosumab and Ustekinumab.
Pertuzumab, an oncology product, entered Phase I global clinical trials. We also filed regulatory applications for biosimilar Aflibercept in several global markets, including the EU, UK and Japan. Additionally, an interchangeability study was initiated for Adalimumab, which is expected to enable Biocon Biologics to maximize the commercial value of Hulio (Adalimumab), in the US Rs 280 crore.
The R&D investments by the Biosimilars business represent 19 per cent of Biocon Biologics revenues. We will see R&D investments normalize to around 12 per cent levels of sales, as we accrue full revenues from Viatris’ biosimilar businesses.
What do you think is the need for the R&D industry in India? Which areas do you think research needs to focus on? You have spoken about weighted tax deductions, tell us about its imperatives?
R&D is critical for any country’s future growth, for the health and wellness of its people. While we should continue to develop affordable yet high quality generic medicines, the focus should be on discovering novel drugs for critical and fatal diseases. The pharma industry should increase its investments on R&D, especially on innovative therapies that can address unmet medical needs.
India has identified ‘moonshot’ sectors in pharma such as vaccines, orphan drugs, biosimilars, and complex generics. It now needs to incentivize research, encourage industry academia collaboration, and attract global scientific talent to strengthen its R&D ecosystem.
Fiscal incentives, such as the tax credits, enhanced tax deductions and grants can spur the private sector to increase their investments in R&D to create valuable intellectual property (IP). The 200 per cent weighted tax deduction under Section 35 (2AB) on in-house R&D expenditure was available till March 31, 2020.
The dilution of this fiscal incentive has coincided with the sharp reduction in R&D spending by Indian pharma companies. In this context, it is important that the government restores the 200 per cent weighted tax deduction on R&D expenses, covering all expenditures pertaining to a product’s ‘lab to market’ journey, including patenting costs.
What are the future plans of Biocon? You have made one of the largest pharma acquisitions in 2022. How is that playing out for the company?
We are building Biocon into an innovative and trustworthy global brand. We are leveraging our scale and cost advantages to gain world leadership. We are creating a business with impeccable quality compliance, world-class ethics, and a robust corporate governance structure. We are harnessing digital and data analytics to get closer to patients, as well as reach a larger patient population. Each of our three business segments, generics, biosimilars and research services, is well positioned for future growth.
Biocon Biologics’ acquisition of the global biosimilars business of our long-term partner Viatris is a historic inflection point in our value creation journey. This is a game-changing event that catapults Biocon Biologics into the big league.
It provides Biocon Biologics with direct commercial capabilities and supporting infrastructure in the advanced markets and several emerging markets, bringing it closer to patients, customers, and payors. With this acquisition, Biocon Biologics emerges as a world leading biosimilars player with eight commercialized products.
