Tips For Success In the Indian Biosimilar Market
A conversation with Subir Basak, management consultant and executive advisor
Although the biosimilar space is still growing and evolving in the U.S., it is comparatively well-established in India. According to the Generics and Biosimilars Initiative (GaBI), the first “similar biologic” was approved and marketed in India in 2000 — some 15 years before the U.S. approved its first biosimilar. India also has a much more mature biosimilar manufacturing ecosystem and regulatory environment than most other parts of the world. As such, the country can provide valuable lessons about what it takes to establish a thriving biosimilar market in terms of accessibility, competition, regulatory strategy, and other facets.
For a deeper dive into the Indian biosimilar space, Biosimilar Development posed a series of questions to two industry experts. In the first Q&A, we heard from Amy Duval, senior director of biosimilars at Decision Resources Group (DRG). In the second, management consultant and executive advisor Subir Basak explained the evolution of the Indian biosimilar market and shared some best practices biosimilar developers can apply when entering other emerging markets. Finally, in this installment, Basak discusses some of the challenges in raising funds to develop and commercialize biosimilars in India, provides advice to biosimilar companies looking to enter the market, and shares his vision of the future for biosimilars in India.
What are some of the biggest challenges in fundraising for biosimilar development and commercialization in India? What should companies do to best address these challenges?
Subir Basak: The biggest challenges in fundraising in India are related to risk appetite and willingness to invest for the longer period. Some investors have taken a short-term approach, investing small amounts and expecting huge returns within a fairly short-term horizon of two to three years. This is not realistic for biotech. For example, an Indian company invested $5 million in a U.S. biotech acquisition, and management did not make any substantial investments in terms of technology or expertise. Three years later, the company is facing technology obsolescence and significant financial losses.
In addition, an emerging market like India has several great investment opportunities, all of which compete with biotech for funds. For example, building high-quality hospital chains (Apollo or Kovai Medical), developing local versions of Quest Diagnostics (Thyrocare or Dr Lal-Pathlabs), and developing the next medical device companies (BPL) attract more investments from PE and venture funds. That is all within the healthcare and life sciences space. In a growing economy like India, there is also tremendous deployment of capital in developing infrastructure (roads, highways, metro), retail, banks and e-commerce, mobile, specialty chemicals, agrochemicals, and consumer-oriented businesses — all of these offer very good returns considering India has been one of the fastest-growing economies in the world in the last two decades with huge compounding effects.
The entry barriers for biotech are access to top talent, high capital needs for technology and infrastructure, longer gestation periods for product development, and commercialization with respect to small molecule generics. The investors with vision, top talent with deep domain experience, solid differentiation strategies, and flawless execution have done well. Companies have also shared risks wherein one partner develops the R&D and product supply chain and the other partner develops the commercialization and regulatory strategy. Examples are Intas-Apotex, Biocon-Mylan, and Lupin-Yoshindo (Japan).
What should international companies looking to launch biosimilars in India — or partner with Indian companies — keep in mind?
Basak: International companies need to have a local presence, invest research dollars to conduct due diligence in partner selection or India entry strategy, and think long-term. India is $2 trillion economy and expected to grow three times to $6 trillion by 2027 and become one of the top-five world economies. The per capita income will increase to $5,000, which will be an inflection point for a country of 1.3 billion people. There will be a huge paradigm shift in the demand for healthcare and medicines. Top global companies such as Apple, Amazon, GE, IBM, Cisco, Abbott, and Google have invested hugely with frequent CEO visits and made significant strategic progress in their overall global plans.
International companies should conduct a proper study of the market and partners and evaluate various options for the proper India entry strategy and also cultural fit with their own parent organization. Perception and reality gaps are wider than what they are in developed markets. Successful companies have taken a lot of time and effort to understand the local operating environment. For example, international companies should define what they want to accomplish in the country in the next 10 years and their financial and strategic milestones. These will vary greatly from company to company. India is not a country where anyone can come in and make a fast buck.
An entry strategy to India could encompass three possible options. An experienced consultant with both global context and Indian operating experience can help navigate the environment and with each of these options. Successful companies have invested in this and gained tremendously in the last decade.
- Create an independent subsidiary in the country and hire a global/local leader to manage the operations.
- Create a JV with a strong partner and co-invest
- Create a strategic alliance with a local strong player and transfer marketing rights to the partner.
These options need to be supported with top management bandwidth to visit the country and leaders and ensure alignment of culture.
In my experience, the companies which invest in aligning their global culture and syncing with the Indian culture do well in the long run. This includes strategic road map and reviews, succession planning, 360-degree feedback, and leadership training. There are instances in which global leadership that only deals with the Indian CEO — and doesn’t engage with second-line leaders — does not scale up, thanks to a gap between cultures at world headquarters and the India office.
How do you expect the Indian government’s new pharma draft policy to impact biosimilars?
Basak: The government’s pharma draft policy proposes several key changes to streamline pharma operations in India. For example, it is quite common for a single manufacturer to license a single product under different brand names to different marketing partners. This practice is proposed to be changed to make each entity responsible for its own marketing, manufacturing, and distribution. This will encourage only serious players to invest in biotech/biosimilars and remove peripheral players from the market.
This policy is expected to make competition more transparent and technology and R&D focused and level the playing field amongst players with proper caps for margins. The margins made by local distributors, hospitals, and medical doctors and pharma companies will be streamlined so there are no unscrupulous elements in pricing.
Looking five to 10 years down the road, how do you foresee the Indian biosimilar space evolving from a commercialization and/or regulatory standpoint?
Basak: The next five to 10 years are very bright for the Indian biosimilar space. I expect a proliferation of biosimilar products and services based on the increasing R&D focus in the country and also consolidation in the industry. The Indian biosimilar space is undergoing dramatic changes based on government reform, increasing patient awareness via digital and social media, and long-term investments in biotechnology. Already, the government-backed Biotechnology Industry Research Assistance Council (BIRAC) has helped start various research incubators in the country. The government-sponsored venture funds (e.g., Karnataka Information Technology Venture Capital Fund) as well as Ignition Grants are enabling many startups to work on R&D. The regulatory reforms as well as adoption of frameworks for patient rights and education have greatly enabled clinical trial CROs to scale up their operations and prepare them for greater compliance. All of this is giving more confidence to Indian, as well as global, investors. Two examples illustrate this point — global major player Grifols and Russia-based BIOCAD have launched Indian operations.
About Subir Basak:
Subir K. Basak is a management consultant and executive advisor to the biotech, pharmaceutical, life sciences, and medical device industry, with an avid interest in innovation, global strategy and operations, trends, and markets. He helped launch the first biosimilar product in the EU and emerging markets in Latin America, Southeast Asia, Europe, and parts of Middle East and North Africa region. Subir holds an MBA from the Kellogg School of Management (Northwestern University), an M.S. and Ph.D. from Purdue University, and a B.E. from the Indian Institute of Technology (IIT) Roorkee. He was a Merck Fellow and also received advanced management education from the Wharton School of Business.