• 15 March 2006
  • News
  • By N Suresh

Serum Institute to invest Rs 1,200 crore in India

Serum Institute to invest Rs 1

Serum Institute to invest Rs 1,200 crore in India's first biotech SEZ in Pune

Dr Cyrus S Poonawalla, chairman, Serum Institute of India Ltd, along with his wife Villoo Poonawalla inaugurating the Serum Bio Pharma Park. Adar Poonawalla, executive director – operations, Serum Institute of India (extreme left) and Zavaray Poonawalla look on.

Dr Cyrus S Poonawalla, chairman and managing director, Serum Institute of India Ltd, inaugurated Serum Bio Pharma Park, the country's first biotech Special Economic Zone (SEZ) at Pune on February 23, 2006. The SEZ, located at Hadapsar, adjoining Serum Institute's existing manufacturing unit, is a sector-specific SEZ meant for biotechnology and pharmaceutical products.

With the inauguration of the Serum Bio Pharma Park, the Serum Institute of India Ltd, India's largest exporter of vaccines and immuno-biologicals and a flagship of the Poonawalla Group of Companies, has entered the real estate business too.

Speaking to mediapersons, Dr Cyrus S Poonawalla said, "Though our focus is on manufacturing vaccines for masses at an affordable price, we are forced to enter this new area. It will facilitate the growth of the niche biotechnology industry. Indian biotechnology today is making rapid strides in research and development. With the inauguration of the first biotech SEZ, development of the biotech industry in India will get the much needed encouragement and support."

The SEZ, which has currently been allocated 55 acres of notified land in the first phase, would, based on availabilities and opportunities, be gradually expanded to 250 acres. The SEZ will stimulate economic activities by offering larger employment opportunities, attract substantial investments for export production and render services abroad to earn more foreign exchange.

Elaborating on the investments, he said, "The investments in the project will be divided in phases. The Phase I investment will be a minimum of Rs 500 crore. The total investment will build to at least Rs 1,200 crore. We are quite sufficient to raise funds through internal accruals of the company."

Giving details about the park, Adar Poonawalla, executive director – operations, Serum Institute of India Ltd said, "Serum Institute will have 5-6 units in the SEZ. Development work on the SEZ has already commenced. A few units would also be commencing production in the next 3-5 months. The project is expected to be completed by 2010."

"About one billion doses of various vaccines are expected to be produced on an annual basis from this SEZ. The new zone would manufacture vaccines for pneumonia, rotavirus, and combination vaccines for the entire range of meningitis, influenza and Hib. Oncological products for the US and EU markets are also expected to be manufactured at the new facility. The premises has already been pre-qualified by the World Health Organization," added Dr Cyrus Poonawalla. Serum Institute of India recorded revenues of Rs 600 crore in 2004-05 and is targeting a turnover of Rs 750 crore this fiscal.

Ernst & Young unveils Health Quotient

India has traditionally been a volume player, accounting for approximately a third of global sales, but a 10 percent share in value terms. "In order to achieve global leadership, Indian companies need to move towards a more value driven model comprising a mixed portfolio of products, targeting both developed and developing countries. This needs to be supplemented with aggressive marketing and cost effective R&D and manufacturing," said Utkarsh Palnitkar, health sciences industry leader, Ernst& Young India.

He was speaking at the release of Health Quotient, an Ernst& Young report on the issues and opportunities in the Indian pharmaceuticals, biotech and healthcare sectors, at BioAsia 2006 in Hyderabad on February 10, 2006.

The report says there is significant opportunity for developing products targeting diseases like malaria, rotavirus, tuberculosis and Japanese encephalitis. The availability of highly skilled research scientists and low cost of operations makes India an ideal location for developing vaccines for these diseases. Besides in the recent times the Indian companies are being able to minimize the fixed manufacturing costs. The report says the changing market dynamics supported by recent government initiatives and setting up of the US FDA approval office in India are expected to further cut the costs. The report also adds that unlike most of the biopharmaceutical markets, vaccines possess certain district facets, which enhance India's competitiveness. These include the presence of large institutional buyers, the generics-driven nature of the market and relatively lesser interest from large multinational players.

Dr Reddy's Lab buys Germany's betapharm for $570 million

Continuing the trend of consolidation in the global generics business, India's pharma major, Dr Reddy's Laboratories has announced a $570 million acquisition of betapharm, Germany's fourth largest generics company. The all-cash deal, facilitated by leading German private equity house, 3i, was announced recently.

Dr Reddy's outbid world's largest generics company, Teva, drug giant Sanofi-Aventis and India's largest pharma company, Ranbaxy to buy betapham. A company statement said the betapharm acquisition formalities will be completed in a month. Dr Reddy's has taken 100 percent stake in betapharm and the acquisition will be funded by internal accruals and debt.

Analysts expect the betapharm acquisition to add $ 200 million to Dr Reddy's topline immediately and the company's shares jumped 9.38 percent to hit its 52-week high price on the Bombay Stock Exchange.

Commenting on the acquisition, Dr Anji Reddy, chairman, Dr Reddy's Laboratories, said, "Today is truly an exciting day for Dr Reddy's. We see our investment in betapharm as a key strategic initiative towards becoming a mid-sized global pharmaceutical company with strong presence in all key pharmaceutical markets. betapharm has created a strong growth platform and is well positioned for the future and we are looking forward to partner with them in building a strategic presence in Europe."

This acquisition of betapharma was on the cards for some time. Utkarsh Palnitkar, director, Ernst & Young, had predicted a $500 million deal in the global generics sector in his special report, Health Quotient, which was released at the BioAsia 2006 conference in Hyderabad.

Dr Wolfgang Niedermaier, CEO of betapharm said, "Dr Reddy's impressive pipeline of generic and innovative products and its high quality standards combined with competitive manufacturing infrastructure will help further develop our position in the German market and offer an entry platform for the European market. It's extensive and well recognized corporate social responsibility activities perfectly fit with our successful corporate philosophy and business model. We see Dr Reddy's as our partner of choice to build a successful joint future and continue betapharm's growth and success story."

Kemwell acquires Pfizer manufacturing facility in Sweden

Kemwell Pvt Ltd, a Bangalore-based formulations contract manufacturer, has acquired Pfizer's manufacturing plant in Uppsala, Sweden, for an undisclosed sum. The production unit manufactures both API and finished drug. Kemwell is the first Indian contract manufacturer to acquire business abroad.

The facility is approved by USFDA, EMEA, and Japan's regulatory authority and will supply to 80 markets, including USA, Europe and Japan. Perake Oldentoft, Kemwell Board Member based in Sweden, said, "We are excited to welcome the dedicated, qualified and skilled team at Uppsala to join our global business. With their support we have judged it possible to continue and hopefully develop our operations in Uppsala."

According to Subhash Bagaria, chairman and managing director of Kemwell, "Kemwell's goal is to be a leading global partner to pharmaceutical and biotechnology industries offering services ranging from formulation development to cGMP compliant commercial manufacturing. This transaction builds on Kemwell's extensive experience in contract manufacturing and demonstrates our commitment to strengthen and broaden our pharmaceutical business through strategic global acquisitions."

Zeibrant Lindqvist, CEO, Pfizer Health AB, said, "By selling the production facility, we believe that the plant and jobs will remain in the region."

Several companies were interested in buying the manufacturing facility at Boländerna. Kemwell was chosen partly because it has the long-term aim of establishing itself in Europe and develop its relations with Pfizer. Kemwell has been clear about its plan to remain in Boländerna: after the purchase, it will take over responsibility for the plant's 170 employees.

The acquisition is expected to be completed by April 2006 and will lead to a significant growth in Kemwell's contract business. The facility will provide access to technology and quality standards on a continuing basis. Kemwell plans to introduce other value-added services such as formulation development and analytical method development and validation to the site.

eClinical trials market to reach $357.4 million by 2011

With life sciences and pharmaceutical companies showing a definite inclination towards electronic technologies and investing substantial amounts in transitioning from paper-based to electronic processes, revenues in the eClinical trials (eCT) market are expected to increase from approximately $210 million in 2004 to $357.4 million in 2011, according to a study from Frost & Sullivan.

The study noted that the adoption of eClinical technologies currently remain largely confined to pilot projects, barring a few implementations by some major pharmaceutical companies. The adoption of these technologies is dependent on the ability of the senior management in an organization to take the electronic revolution to the grassroots level.

"In eCT, it is the human element of resistance to change that is the greatest challenge rather than the technology itself. This is why the majority of adoption, thus far, has been in the form of small pilot projects," observed Raghavendra Chitta, Research Analyst with Frost & Sullivan.

He further said, "The resistance mainly stems from research scientists in life sciences companies since there is great reluctance among them to accept newer electronic processes. Shifting to eCT technologies would not only mean adapting to more technically sophisticated processes, but could also require a complete redistribution of roles and responsibilities."

Moreover, companies need to implement eCT technologies across their organizations for them to be truly successful. Implementing these technologies in isolation in a few clinical research teams will not yield the desired results. Therefore, the major task at hand for eCT technology vendors is to convince all stakeholders in the clinical trials process to adopt and integrate these technologies across all teams within the organization.

Kalam moots nanoscience and technology consortium

President APJ Kalam has exhorted the industry and government to start a focused mission to capture at least five percent of $50 billion nanotechnology market share within 10 years. He suggested to launch vertical missions under an umbrella organization like CII and NASSCOM in partnership with DST, R&D institutions, universities and public-private investment in at least 10 nanotechnology products in water, energy, agriculture, healthcare, space and defense and ICT sectors.

President Kalam was delivering the inaugural address at the two day Indo-US Nanotechnology Conclave organized by the Confederation of Indian Industry (CII) and Indo US science and Technology Forum.

"The next ten years" the President said "will see nanotechnology playing the most dominant global business environment and is expected to go beyond the estimates and cross the figure of one trillion." He urged scientists, industrialists and venture capitalist to work together to provide cost effective quality products using nanotechnology to the global society at the right time. He mentioned that partnership of India and the US in the area of their own core-competencies could benefit the industry on both sides.

Based on the model of Singapore, he advised the ministry of human resources development and DST to launch a major capacity building drive for developing the human resource on convergence of technologies in the bio, info and nano science and technologies.

Kapil Sibal, minister for science and technology, in his address stated that almost every country in the world had started working on nanotechnology and welcomed the conclave as a new set up, a collaboration of the academia and the industry which would lead to the production of concrete commercial products for the country.

Sibal pointed out that the Indian government had taken up this technology on priority basis and presently about 40 universities in the country were working on this. The budget for this could go up substantially from 125 crore to 500 crore in the next five years, he stated.

US Pharmacopeia opens office in India

US Pharmacopeia, the world's leading pharmaceuticals standards organization has ventured out of its Washington DC home for the first time in its 84-year history to set up an office and laboratories in this southern Indian city of Hyderabad. The USP's India site was formally inaugurated by its CEO Roger Williams on February 9, 2006.

"This is a historic occasion and now we have a home in India too," said William. The entire top management team of USP including Darrell Abernethy, president of the USP convention, John Fowler, chief business officer, witnessed the formal inauguration by Andhra Pradesh's industry minister, Dr J Geeta Reddy, herself a well-known child specialist and gynaecologist.

USP's India site is located at the ICICI Knowledge Park, part of the Genome Valley region, one of India's fastest growing bioclusters. From an initial headcount of 17, USP India is set to increase the team size manifold to make quality drugs available around the world at affordable prizes. The USP-India site has been set up in a record time of nine months and is expected to leverage the availability of chemical process and technology experts in India.

" This decision of USP will help Indian pharma companies as well as the industry in the Asian region to get the standardization certificates for their products done by USP-India at more affordable rates and increase their export competitiveness in the world's regulated markets," said a leading pharma expert and former head of AstraZeneca's research center, Dr S Anand Kumar.

Williams emphasized that USP-India site would help it become an integral part of the $8 billion Indian pharma industry. India's pharma sector is the 4th largest in the world in volumes and 13th largest in value. A recent study by leading consultants, McKinsey has projected India's pharma industry to grow to $ 25 billion by the year 2010.

" We have chosen to come to Hyderabad due to the excellent conditions and availability of talent to carry out collaborative research work which will help raise overall standards of medical products in India and the world," said USP-India's vice-president (international), Kumud Sampath.

Emphasizing the importance of the event, US Government's Consul General in southern India, David Hopper said the India office of USP will not only help India but also the US and public health overall. " India has one of the world's fastest growing generics industry and a range of high quality products which are benefiting consumers in the US and rest of the world. USP-India will help in setting high quality standards for these products and counter the growth of counterfeit drugs which endanger public health."

Narayanan Suresh in Hyderabad

HCL ties up with Synchron for clinical trial solutions

HCL Technologies, a leading global IT solutions provider in Information Technology, has entered into a strategic alliance with Synchron Research Services, an Ahmedabad-based CRO, to jointly provide innovative solutions like clinical trial and data management on drugs and devices. This is a path breaking initiative by HCL to become an end-to-end solution provider in clinical trials and data management.

With its extensive domain knowledge and pool of skilled professionals from the Life Sciences sector, HCL will provide software consulting, infrastructure management and BPO services in clinical trials and clinical data management that is run by Synchron across the globe. This symbiotic engagement would enable Synchron to access HCL's customer in the IT services related to clinical trial space and HCL will be able to utilize Synchron's reach in the US, Japan, European and Asia Pacific markets.

"This is the first time Synchron has engaged in a relationship with a leading IT service provider. Our decision to work with HCL signifies that we would put our trust in the leader in this arena. The key factor in choosing HCL as our preferred partner is its revolutionary experience and execution capability in the life sciences space," said Dr Shivprakash, managing director, Synchron Research Services.

Chidambaram ignores biotech industry

The Union Budget presented by the finance minister, PC Chidambaram, on February 28, 2006 lacks the much needed emphasis and thrust to the biotech sector.

"The Indian biotech sector is on the threshold of significant growth opportunities. The biggest being an opportunity to create India as an R&D hub for global biotech companies. The biotech industry had expected support from the Budget on the recommendations as well as fiscal measures to increase domestic and international investment. The biotech industry needed this much need support to mature and grow into leadership position vis-à-vis countries like China, Singapore, Korea and Eastern Europe. The industry is now hopeful that these would be met at the time of the implementation of the much-awaited Biotech Policy during the course of the new financial year," observed Nitin Deshmukh, head, Private Equity, Kotak Mahindra Bank Ltd and director, ABLE.

Dr Ajit Dangi, director general, Organization of Pharmaceutical Producers of India (OPPI), observed, "The thrust of this year's Union Budget is on infrastructure, power, agriculture and education. Although there is reduction in customs duty on anti-AIDS and anti-cancer drugs to 5 percent and removal of free medicine samples given to doctors from the ambit of fringe benefit tax, the Union Budget 2006-07 has fallen short of the expectations of the pharma industry. Even there is no mention about the biotechnology in this Budget. As far as pharma sector is concerned, I will rate it at 4.5/10."

According to Alok Gupta, country head, life sciences and biotechnology, Yes Bank Ltd, the Government has continued its commitment to developing the overall healthcare sector in the country - National Rural Health Mission is one of the eight flagship programs and allocation has been increased by 22 percent from Rs 6,553 crore to Rs.8,207 crore. Research and development also continues to be a focus area and the government announced schemes such as establishing technology business incubators and providing financial assistance to specific institutions such as Universities of Calcutta, Mumbai and Madras and autonomous national institute status provided to Rajiv Gandhi Centre for Biotechnology in Kerala. Financial and business support to these incubators will be crucial for development of the biotechnology industry.

He further pointed out, "Customs duty reduction on 10 anti-AIDS and 14 anti-cancer drugs to 5 percent and on certain life saving drugs, kits and equipment from 15 percent to 5 percent, with these drugs being exempt from excise duty and CVD. FBT to exclude expenses on free samples of medicines and of medical equipment distributed to doctors, which is expected to be a positive for pharmaceutical and medical equipment manufacturers. Withdrawal of 10(23G) will have an impact on capacity building in the healthcare sector." However, the issues relating to increased R&D exemption, constituents of R&D costs such as patent expenses and clinical trials costs were not clarified.

Mahesh Sawant, program manager, healthcare practice, Frost & Sullivan, felt that overall the Budget sounded good for the public and industry with a lot of benefits being offered. "The allocation for healthcare has been increased by 22 percent to Rs 12,546 crore and also the National Health Mission allocation increased to Rs 8,207 crore from Rs 6553 crore, which looks very promising to boost development in this sector."

Utkarsh Palnitkar, director, health sciences, Ernst & Young, said, "The finance minister in his Budget speech reviewed the focus on the National Rural Health Mission by increasing the outlay to Rs 8,270 crore from Rs 6,553 crore. This is indeed a significant move taking into account that the bulk of health care trade rests on the private sector and that the most significant element in health care is the inpatient treatment where the cost of pharmaceutical drugs constitutes only around 20 percent of the total cost of recovery. However, what needs to be examined is the effective implementation of the scheme in a time-bound manner to ensure that the institutions required for the final leg of delivery are in place. The focus on health is evident by the fact that the allocation for health and family welfare has been enhanced by 22 percent to Rs 12,546 crore."

He added, "The only mention in respect of biotechnology was the accordance of the status of autonomous national institute to the Rajiv Gandhi Centre for Biotechnology in Thiruvananthapuram, Kerala. The increasing focus in India, subsequent, to the amendment in the Patent Act will be on innovation and discovery. The present provisions provide for a weighted deduction of 150 percent, as well as, a tax holiday for R&D units set up on or before March 31, 2007. It is hoped that such tax holiday will be extended by at least a period of 5 years to enable India to derive the true benefits of investments in R&D. Another significant cost is the legal cost related to the approval of patents which could also have been granted a higher weighted deduction."

"In the area of pharmaceuticals, non-levy of FBT on free samples of medicines and medical equipment is indeed a very welcome move and this will provide much relief to pharmaceutical formulators. Pharmaceutical companies also have a far more significant proportion of seminars and conferences which will focus on wellness. It would have been beneficial to treat such conferences which are essential for disseminating knowledge on new discoveries, as exempt from FBT. The reduction in customs duty, from 15 percent to 5 percent and exemption from excise and countervailing duty (CVD), on specified anti-aids and anti-cancer drugs is indeed very welcome. However, given the nature of these elements a complete exemption would have been warranted. In addition the reduction of duty on basic inorganic chemicals from 15 percent to 5 percent and on catalysts from 10 percent to 7.5 percent in certain cases is likely to become an encouraging factor for the raw material manufacturers which supply to pharmaceutical/biotech companies," he pointed out.

He further noted, "Entrepreneurial R&D has gathered momentum courtesy the commitment of the government in terms of seed funding and setup assistance for business incubators. The finance minister also proposed to strengthen R&D by providing concessions to the incubatee-entrpreneurs. This will give a fillip to the Indian pharmaceutical and biotech companies which are increasingly looking at product innovation to evolve as global entities."

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