Telangana greatest enabler of research in pharma, life sciences, startups, says KTR

HYDERABAD: Telangana Industries Minister K T Rama Rao has said that he’s an ardent supporter of research and development by universities and educational institutions.

“I have always been a big advocate of R&D and innovation. Universities around the world invest billions of dollars in research opportunities and grants. We don't have that type of luxury in India, therefore the least we can do when the private sector invests heavily in R&D is to concentrate on startups and Indian MNCs,” he said at a fireside chat with CEOs and head honchos of different institutions and industries at BioAsia conclave on Friday.

Below is the panel and their dialogue with Shereen Bhan of CNBC TV18 as moderator .

Here is the full conversation

• Chair: Mr. K.T. Rama Rao, Hon. Minister of IT, Industries and Commerce, Government of Telangana

• Mr. Satish Reddy, Chairman, Dr. Reddy’s Laboratories

• Mr. Nandini Piramal, Chairperson, Piramal Pharma

• Ms. Mahima Datla, Managing Director, Biological E Ltd.

• Mr. Glenn Saldanha, Chairman and MD, Glenmark Pharmaceuticals

• Mr. Hari S Bhartia, Founder and Co-Chairman, Jubilant Bhartia Group

• Moderator: Ms. Shereen Bhan, Managing Editor, CNBC-TV18

What will it take to create an enabling an environment for the Indian pharma sector to move from volume to value?

KTR: I want to hear from the captains of the industry on what they would like to se happen in the state and center and how a state like Telangana can do policy advocacy in terms of what the industry wants. I think my state’s perspective, Telangana is today a leading powerhouse in the world, not only in pharmaceuticals but also vaccines, biotech, medtech and healthtech. All of these areas, TS continues to be a dominant player. If we were to move from volume to value, the 3 key things are innovation, operating on scale, and IP protection and regulatory data framework from the government. These 3 pillars will make a huge difference.

As you look at it a potential engine for growth, what are the constraints today – capital, capability or confidence?

Satish Reddy: When it comes to innovation, Indian has proven that there definitely is capability. Capital is required, in the sense that what you need to create is an ecosystem. When you know that there is risk involved, there is an uncertainty for listed companies since we have to showcase returns. So in terms of how much risk we can take and the returns, its always something we keep calculating. That’s the large company perspective. For startups, VCs come in at a later stage, so who funds the earlier stages? This is where we ask the government to work on 2-3 fronts. Can you create a joint fund so that the VCs can come in? When it comes to funding institutions, what can be done further to support research? These gaps, if filled in, this will boost confidence and bring in necessary capital.

Can the government play a role here at Capital front? Why do you believe that VCs are more comfortable in investing billions of dollars on 10-minute deliveries but not on a sector like this?

KTR: I have been a huge champion on govt incentivizing research and development. When the private sector is investing heavy money in R&D, the least you can do is incentivize them to come up with more and more innovations whether you are a startup or an MNC.

How do we address the capital question which continues to be a constraint?

Hari S Bhartia: There are 2 ways to look at innovation – one is early. This kind of work is target discovery, this is done in academia. Where does academia get money? Through grants. In US systems, you have NIH and other govt agencies which give such grants. In India, while there are grants from the ministry of biotech, we still require the grant level to be increased. Secondly, when you have good early-stage research in academia, you will be introduced to industry through patents. The industry will pick them up for their early-stage research. Small molecules and monoclonal antibodies early-stage research, there is full capability in India. When you translate it into clinic, that’s when big bucks come in. 2 ways to build that up. First, take it to proof of concept and then partner and license with big pharma. Or you sell the product in the early stage. So the capital problem can only be solved by partnering with big pharma or selling it.

Take us through the Glenmark example of how you’ve been able to address it.

Glenn Saldanha: We have been working in innovation for 23 years so it’s been a long journey for us. We’ve had quite a lot of success, we have 7 licensing deals, got USD 300 million dollars by licensing our intellectual property, we spun out biologics company. While we still don’t have a drug in the market, we have several late-stage assets both in oncology and immunology. Innovation is a very long journey. While we’ve had successes in licensing, discovery, inventions, we do not have a drug in the market. We are hoping in the next decade, we will bring something out which is truly novel and world-class. I think the ecosystem of innovation is critical and I think India is today starting to build that ecosystem at government level.

Could this be the decade that is the inflection point in this journey?

Nandini Piramal: I think India needs to also take advantage of some of its natural assets like the skilled people. If you look at what China has done, they recruited people who worked outside to come back. Our people are some of the best in the world.

Mahima Datla: I want to offer a slightly different perspective because I think innovation is much more complex than what is commonly understood. There is a great intention to increase R&D spending and get it to 15%. If you look at the top 25 pharma companies in India, barring a few, the profitability is between 13 - 15% after they spend 5-6% in R&D spending. So how do we create the headspace to increase R&D spending? I don’t think investors and shareholders are ready to reward a model that is considered a high risk, long-gestation period. As an investor, you want to ensure that this well-performing stable pharma company is ensuring you better money than your money in the bank. Second in my mind, which is much more strategic, is the lack of a robust domestic market for normal products. This is a reflection of 2 things – the lack of health insurance coverage and a procurement mechanism that provides you an opportunity to make these novel therapeutics accessible.

The domestic market opportunity in India, where do you see it in the next 5 years?

Satish Reddy: Certainly, if you see the growth of the pharma industry in India, its been tremendous compared to where we were just few years ago. And the potential is on several folds. In terms of the lifestyle diseases, that is one wave of growth. Also in terms of the kinds of companies that operate in the market, that itself has undergone quite a change. The kind of products as well – biosimilars for example, that is a big area of growth and Indian companies have been prolific int terms of the launches that have come out.

When it comes to the healthcare infrastructure and also the digital interventions are happening in healthcare in terms of AI, telemedicine, e-pharmacy, there is a huge opportunity in how diagnostics and treatment is done. COVID has made health a prime issue in everyone’s life. The govt’s intervention was a catalyst which will make sure that health will be dealt in the country. All this puts us in a good position for a double-digit growth.

How do you see the domestic market evolving?

Hari S Bhartia: I see the market exploding because more and more people are getting insured. We are looking to bring innovative drugs in India at a very low cost. That will open up the market hugely. The Indian patient does not have access to highly innovative drugs which are super expensive. When the target is validated, and you have the drug you have the opportunity to bring up the follow-on drugs from the same target. These drugs can be brought to India, but the clinical trials are the constraint. These t rails take so much time. In US, you have a 30-day window. Within 60 days you get an approval. In India, it takes a lot of time. So one way to innovation is discovering drugs for India, and do the trials on Indian patients. That way you can bring down the price by 150th.

Is the regulatory revamp necessary?

Glenn Saldana: I think the government has to play an imp role in reimbursing expensive products coming out of India. That will create an ecosystem for innovative products. That will be a mega-change that is essential if you want to kick start the Indian innovation system. I think the govt is doing a lot through RLI and PLI schemes to promote innovation.

Nandini Piramal: I think reforming the public health system is important. With digitization of health records, you can have more continuity of care. Sometimes, as a patient you get thrown around by all the different doctors and hospitals. Having a linked-up acre will really help the patients.

Where do you believe the gaps lie as far as reimbursement is concerned?

Mahima Datla: We have been incredibly lucky in the vaccine industry because the value of immunization is well recognized. Majority of the pediatric vaccines are reimbursed or given freely by the government. And the govt policies have been extremely strong. There is a robust procure and access mechanism. The push incentives are also great mechanisms for growth.

Governments around the world are dealing with limited fiscal space, what do you believe is the viable road ahead for reimbursement and public-pvt partnerships?

KTR: We are still a third world country, and each of the democratically elected governments such as ours, we have to balance both welfare and development. So, coming to fiscal prudence, while you want to do a lot more, it becomes a challenge. We can incentivize anyone who is involved in high-risk capital. What governments can do here is create an enabling ecosystem. For example, the government of Telangana has partnered with the World Economic Forum to create the Center for Industrial Innovation. What will this do? This will bring multilateral collaborations, with an Indianized focus.

Where do you believe are the gaps that we need to fix to really make good on this opportunity?

Glen Saldana: I think India today is a powerhouse in the pharma industry. We have a lot of excellence developed in a big part of the value chain. There are many areas where we built a lot of capabilities. The pone missing piece is the pure innovation particularly on the biologics side. Lots of these high end technologies, we have a long way to go. These are some of the areas we need to plug to truly dominate at a global stage. I

Are partnerships going to be critical for India to move up the value chain?

Mahima Datla: I think it has been historically crucial to address the capital and risk issue, whether its in vaccines, therapeutics or biosimilars. They already exist and are increasing.

Nandini Piramal: I think the Indian industry needs to continue on quality. As a domestic industry as well, we need to improve our state level quality organizations. Globally, even as we are regulated by global regulators, we have to respond accordingly.

Central-State regulators coordination: How do we respond to this issue?

KTR: More and more decentralization is required. We have been in consultation with many international authorities and the national drug controllers as well. The way forward is patience, and you have to understand that there isn’t enough reward for Indian entrepreneurs to take big risks.

Things you are excited about

Mahima Datla: I am excited about R&D, where the opportunities on the MRNA platform continue to excite us both in the vaccines and therapeutics spaces. I think areas in the biosimilars space related to monoclonal antibodies excites us. Any support of the generics business, moving up the value chain, fermentation-based APIs, high potency intermediates, peptides based API’s are what interest us. We already are among the highest R&D spenders, with 15-16%. I don’t anticipate that going up.

Nandini: I am the most excited about digitization since as an industry we have been slow in digitizing.

Glen: In India, the prospects for India to be the pharmacy of the world, we are just in our infancy. I think in the next decade, the companies will continue to scale to the global platform. The next levers of growth will come from innovation.

Milestones anticipated in the decade for the pharma industry.

Hari: If we can innovate for the Indian patients, and finding a speedy regulatory mechanism, we are trying to build capacity for clinical trials. I think that is a huge opportunity.

Mahima Datla: I want to see access improved in our country for routine necessary drugs.

Nandini Piramal: Overall spending on health in the country should go up.

Glen Saldana: India should see something innovative for us to leave a mark on the global market

Satish: Across the spectrum of the pharma value chain, there is a fantastic opportunity for India in the services and biosimilars ecosystem.

KTR: Of course, I want this to be India’s decade, but I want Telangana to lead from the front. The Life Sciences ecosystem in Telangana to go from USD 80 Bn to USD 250 Bn by 2030.