Pharmaceuticals - Sector

Indian biotech sector to touch $5 bn by 2010

Posted by : day_trader

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Indian biotechnology sector is expected to become a five billion-dollar (around Rs 23,400 crore) industry by 2010, says a report.

"The Indian biotechnology sector has excellent potential and is expected to touch five billion-dollar mark by 2010," a report jointly prepared by industry chamber CII and consultancy firm KPMG said.

"India is ranked among the top 12 biotech destinations in the world and is the third biggest in Asia-Pacific in terms of the number of biotech companies," it added.

Investments in the segment are also growing at the rate of about 38 per cent for the last three years and have touched 560 million dollars in 2006-07.

Biopharma is one of the important segments of the Indian biotechnology sector and it constitutes about 70 per cent of the domestic biotech industry.

Of the total 325 biotechnology companies in India, more than 40 per cent are in the biopharma sector, the report said.

Availability of talent pool in the country is a big advantage for the Indian companies. The sector employs about 20,000 scientists, the report added.

The industry has received significant contribution from leading institutes such as All India Institutes of Medical Sciences (AIIMS) and Centre for cellular and molecular biology (CCMB).

The report pointed out that educational infrastructure need to be upgraded to facilitate further progress in the industry.

"India needs to invest in building a strong capability base in order to leverage large opportunities going forward. There are no shortcuts," report quoted Biocon CEO and MD Kiran Mazumdar Shaw as saying.
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informed boarders please reply

Posted by : GANGARAM

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there are few shares in pharma sectors which are at very low valuations. it is considerd a defensive sector. lets look at jupiter bioscience it has gone to 77 will its 52 week high wasabo 250 . it is low of last 3 yrs or so. it has got book value which is very high and given shares to institutions/fii a 147 rate . for promotors probably not given at 147 as there were some high court order, it was involved in sme ranbaxy deal for which ranbaxy has given upfront 20 percent money fro 15 percent stake at 147 value per share and 8 months are left for rest of payment . ....similarly what has happened to amar remedies which was according to anand rathi should have been 92 and is around 22 now .it has given public issue at 28 3or4 yrs back . and then shasun chemicals which came from high of 157 in 2007 to below 30 now. thanks...

Right Prescription

Posted by : Accolade

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Are PE (private equity) investors interested enough in ‘discovery research’? This is one of the questions that KPMG takes up in Pharma Summit 2008: India Pharma Inc – an Emerging Global Pharma Hub ( www.kpmg.com).

As pharma companies continue to explore private equity finance as an innovative funding model for their demerged entity rather than typically relying on revenues from the generics business, the unique risk-return profile of investments in NCE (new chemical entity) research is still being figured out by PE investors, the report notes. “Besides the huge risk involved and the timeline of 8-10 years to generate returns, PE investors may also have apprehensions about the experience of Indian players in this relatively new space and their ability to scale up their resources as their NCE portfolio gains scale.”

As a result, the willingness of the PE players to invest is a very company-specific decision. Which is why, says the report, a number of company-specific parameters (such as the company’s historic experience in new drug discovery, its current NCE pipelines and the development status along the value chain, target therapeutic indications and the market opportunity) become crucial.

“However, PE investors should take cues from the growing interest of multinationals in partnering with the Indian counterparts to take molecules through the discovery pipeline until the stage of commercialisation,” the publication suggests.

For the avid industry-watcher.
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Pharmaceuticals -Convergence or conflict?

Posted by : WarburgPincus

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ALLIANCES between conventional pharmaceutical companies and biotechnology firms are nothing new. Big Pharma, eager to refill its emptying drug pipelines, has in recent years looked hopefully to biotech’s upstarts. The drugs giants have pursued all sorts of tie-ups, from alliances to licensing deals to outright purchases of a few smallish companies. But mindful of the sharp cultural differences between the two sorts of firms, they have generally avoided big acquisitions.

Until now, that is. In recent weeks Roche, a Swiss pharmaceuticals giant, has made a surprise $44 billion bid for the 44% of Genentech, the world’s biggest biotech firm by stockmarket value, that it does not already own; and Bristol-Myers Squibb (BMS), an American drugs company, has offered $4.5 billion for the 83% of ImClone, an American biotech firm, that it does not already control. These attempts came on the heels of earlier deals in which AstraZeneca, a British drugs giant, bought MedImmune for $15.6 billion, and Takeda of Japan paid $8.8 billion for Millennium.

This frenzy of mergers has been a rare bright spot for investment bankers of late. By one estimate, America saw $60 billion in biotech deals in 2007 and Europe $34 billion. Roger Longman of Windhover, an industry consultancy, notes that the total value of biotech acquisitions by pharmaceutical companies has risen dramatically in the past couple of years.

What explains the spate of big deals? The familiar underlying problem is that Big Pharma is cash-rich but innovation-poor, so it has resorted to buying in bright ideas while it tries to overhaul its business model. Even so, the industry’s new push to acquire large and rather pricey biotech stars is surprising. And the deals seen so far are just the beginning, forecasts Steven Burrill, an industry expert who thinks “the biotech-product ‘land grab’ by Big Pharma” will soon reach “fever pitch”.

Corporate aphrodisiacs
One relatively new factor fuelling the frenzy is regulatory risk. After a series of safety scandals involving Merck’s Vioxx, GlaxoSmithKline’s Avandia and other problem pills, America’s Food and Drug Administration is now decidedly risk-averse. Gobbling up big biotech firms with proven drugs in the marketplace, rather than cheaper but more speculative start-ups, gets around the difficulties of winning regulatory approval for a new drug.

Another motivation may be the looming patent-expiry crisis confronting many big drugs companies. As big blockbusters such as Pfizer’s Lipitor go off patent, the industry is about to lose tens of billions of dollars in revenues to generics manufacturers. Biotech drugs provide something of a hedge against this coming calamity, for two reasons. First, they are much harder to copy, so generic equivalents (called “biosimilars”) will be slow in coming. Second, big countries including America do not yet have final regulations set up for approving those copycat drugs, thus bolstering the position of the biotech innovators.

The drugs giants also have piles of cash. Although they have shovelled billions of dollars back to shareholders, in the form of share buybacks and generous dividends, they have not succeeded in buying the love of Wall Street, which remains gloomy about the industry’s capacity to innovate and worries about possible price-controls on pills. So drugs firms may now have decided to redirect that money into giant acquisitions that could jump-start their innovation machines.

Finally, the weak dollar has made it cheaper for foreigners to take over American firms. Many of today’s acquirers are from outside America, but most of the targets are based in the traditional biotech clusters of California and Massachusetts.

Alas for Big Pharma, its courtship of biotech has not been met with open arms. As often happens in May-to-December romances, even a well-financed suitor can encounter resistance from the youthful object of desire. The bosses of both Genentech and ImClone have unceremoniously rejected the offers made by their partners. Some suggest that this is mere posturing, designed to fetch a higher sale price. But there is good reason to think that the fight put up by biotech bosses also has a powerful cultural dimension, too. Many detest Big Pharma, and are convinced that selling out to bureaucratic marketing machines will destroy the heart and soul of their smaller, more agile firms.

Consider Genentech, long viewed as the world’s most successful biotechnology firm. Its independent-minded boffins have flourished under the company’s famously laid-back approach to research and development. They developed Avastin, a breakthrough monoclonal antibody that already earns $4 billion a year as a cancer fighter, and is on track to become the world’s most lucrative drug by 2014. Roche has long recognised the value of that culture, and has wisely remained an arm’s length partner to avoid infecting Genentech with its corporate ways.

But the Swiss giant has suddenly changed tack. Why? Trials now under way may, it is said, show Avastin to be a useful treatment for earlier stages of colon cancer than the stages it targets today. If those results, which may emerge in the next few months, are indeed positive, then the drug could be worth many billions of dollars more in annual revenue. So Roche may be trying to grab Avastin on the cheap by swooping before those results come out.

The tussle over ImClone has been an altogether messier affair, thanks to Carl Icahn, a legendary corporate raider who owns a stake and is chairman of the firm. Its main product is Erbitux, a cancer drug jointly marketed with BMS that brings in $1.3 billion a year in sales. Rather than selling the entire company to BMS, Mr Icahn wants it split into two bits: one containing Erbitux and the other inheriting ImClone’s future drug-pipeline. He claims BMS used its insider knowledge about his proposal for a split (BMS has its own man on ImClone’s board) to make a pre-emptive bid, so it could buy the firm at a cheaper price. He says a break-up would enhance the firm’s total value. BMS rejects his allegations and insists ImClone would be most valuable if fully integrated into BMS—a notion that sends shivers down the spines of pharma-haters in the biotech camp.

To see how difficult it can be even for Mr Icahn to get his way, look to the saga at Biogen Idec, another American biotech firm in which the gadfly billionaire owns a stake. He is convinced that the firm would be much more valuable as part of a drugs giant rather than an independent firm. So he pushed it to find a buyer. Biogen Idec’s bosses resisted at first, but in the face of lawsuits, boardroom manoeuvring and acrimonious attacks they relented—or so it seemed. Biogen Idec put itself up for sale last year, but the recalcitrant management found clever ways to make the bidding process so onerous and unattractive that nobody made a bid for it.

So will Big Pharma’s land-grab succeed, heralding the long-awaited convergence of the two industries? Given how wealthy and desperate the drugs giants are, some deals are inevitable. But many biotech bosses will not give up without a fight
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Pharma co.s worried on USFDA

Posted by : Stockblogger

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The ‘conservative’ approach of US Food and Drug Administration in granting new drug approvals and quality norms can have a long-term impact on the drug industry, according to Mr G.V. Prasad, Vice-Chairman and Chief Executive Officer, Dr Reddy’s Laboratories Ltd.

“There has been a significant (about 50 per cent) reduction in the number of drug approvals by FDA this year compared to the same period last year along with a renewed focus on quality compliance. Earlier there were 40-50 approvals, which have come down to 20-25 approximately,” Mr Prasad told Business Line.

As India is a major exporter of generic drugs to US markets, the ‘conservatism’ may have an adverse impact in the long run, he said.

The industry needs to focus on meeting compliance norms and achieving manufacturing excellence in general. “Even though Dr Reddy’s has no issues with FDA and maintains high quality, we are still trying to achieve higher levels of manufacturing excellence,” he said.

The Hyderabad-based pharma major has hired a Japanese consultant for best manufacturing practices. “There is still a long way to go in this regard. We are trying to emulate some of the best practices adopted by auto companies in manufacturing,” Mr Prasad said.

According to Mr Venkat Jasti, CEO of Suven Life Sciences and Chairman, Pharmaceuticals Export Promotion Council (Pharmexcil), the decrease in approvals was due to the FDA’s heightened focus on efficacy.

“Now, they are not approving ‘me-too’ kind of drugs based on analogue research. With just intellectual property a company may now not be able to get approval for entirely similar generic drug. FDA is looking for things like betterment in terms usage (number of required dosage, for instance) and less side-effects,” he said.

According to industry figures, USFDA approved 132 Abbreviated New Drug Applications (ANDAs) from India in 2007, which formed 38 per cent of total approvals globally. Out of 656 Drug Master Files approved, 274 were from India.

Mr Bhaskara Narayana, Vice-President (Finance), Natco Pharm Ltd, however, has a different view. “I don’t see any new conservatism in FDA now. They have been like that from the beginning,” he said.
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