m Financial crisis

m Application of biotech to all the fields

m Emerging biotech co·s got affected very
badly
m Started working on pay rolls, selling assets
etc.
m Worried about the recovery
m Emergence of ´New Normalµ
m Formulation of new & sutainable business
models
m !risis started to settle after some time
m Financing improved
m India & !hina: least effected by the crisis
m E&Y predicted that there·ll be a sharp
reduction in co·s numbers but that didn·t
happen
m Investors are looking for de-risked
investments and a challenging & healthy
market environment
m !ompanies shrunk only 11% as against
the predictions of 33% decline
m °ost of the US & !anadian co·s had less
cash on hand during the crisis
m Key driver of survival: ability to operate
more efficiently
m Efficient ways to deploy scarce capital,
defray high costs of R&D, share risks &
rewards
m þ!·s have funded portfolios of the
companies that have the potential to
grow into fully integrated, self sustaining
enterprises.
m þ!·s in crisis: capital constraints,
practically non existing IPOs and long
exit options
m Increasing efficiency: funding vs innovation
m Decreasing R&D costs and increasing its
success rate
m Reality: pharma co·s are divesting
m Asset centric model developed by Index
þentures
m Patients need drugs, not the companies
m Investors need efficient ways to deploy
capital
m Pharma co·s are innovating
m Some co·s are sticking to drug discovery
and others are expanding (for ex. from
generics to nutraceuticals)
m !ollaboration between biotech and
pharma companies
m Option based transactions and buying
only if the clinical trial has been
successfully completed
m vovt·s pressurized companies on pricing
policies
m Drivers of this trend
1. vrowing costs
2. Desire to penetrate to greater citizenry
m Budgetary pressures on the vovt due to low
tax revenues
m In US, health insurance is tied to employment
status
m Widespread layoffs -> increased the no. of
people at the risk of losing access to
healthcare
m Drug development is time consuming &
expensive
m Biotech co·s depended majorly on
1. þ!·s
2. Public markets &
3. Pharma companies
m Working with 3rd parties is not just to slash
costs but it also helps in other ways
m Five guiding principles for the new
normal
1. Seize funding opportunities
2. !apital efficiency matters
3. If you build, will they pay?
4. !ollaborate effectively
5. Differentiate your assets
m Innovation in Biotechnology
m Role of public policy
Ex: Protection of IP·s & Stem !ell funding in
Bush·s regime
m FIPNet by Elli Lilly. 3 broad areas
1. Functional outsourcing
2. Novel ways to discover & develop
molecules
3. Equity investments & partnerships
m Opportunities: Western co·s focusing on
reducing head counts and R&D costs
m India & !hina: !entres of the growth
m !hallenges for western co·s:
understanding local market, local
culture, available resources, infra and
vovt policies
m Dominated by T!°s
m Scenario is slowly changing
m vrowth rate of 29% from 2006-09 and
would surpass vermany & France as #3
drug maker by 2011 (I°S Survey)
m Highly attractive outsourcing destination
m Health Reforms: worth $124 billion
insurance for non-employed urban &
rural population
m !hina updated its EDL
m 307 medicines
m 2/3rd : products discovered outside !hina
m 1/3rd : T!°
m vovt regulated pricing
m Biomedicine is their strategic focus as per
11th five year plan
m Spending $9.2 b on technologies
m Accelerated process for new drug
approvals
m IP reforms; Science Parks etc«
m Opportunities:
Liberalized IP regime
Highly skilled work force
Lower manufacturing and R&D costs
vrowing demand for healthcare
Not effected by recession
Less reliant on capital from investors
m NBRA Bill
m Backed by controversial Bt Brinjal issue
m About to be presented in parliament in this
winter session of parliament
m Opposed by a strong lobby of v° seed
manufacturers
m National policy on vaccines being drafted
by I!°R
Equal importance to PSUs
To focus on manufacturing & affordability of
vaccines
!ROs require D!vIs approval
m Bt Brinjal would have been the first ever v°
food crop to be grown on a large scale in the
world
m India is working on rice, mustard, cauliflower
and peas
m Bt Brinjal failure could hinder 40 applications in
the process
m D!vI approved stem cell induced clinical trials
by StemPeutics in India (2nd after US)
m !ordLife established cord cell banks in India
m Fortis tied up with Biek Biotech to conduct
clinical trials for a stem cell therapy
m Infra Development:
PPP models in establishing Biotech Parks &
!lusters
3 Biotech clusters @ °ohali, Faridabad &
Bangalore
°arine biotech research institute @ Kerala with
@$45million
Biotech SEZs in AP
Karnataka: °illenium Biotech Policy II
5 biotech parks
Himachal Pradesh & voa are also considering under PPP
models
m Financing: Not by þ!s & PE Funds
m In US, þ! funding was reduced from
$120m to $24million during recession
m Avasthagen planned an IPO in 2010 in
India; expected to raise $13-15 million
m Investments: US based, Biogen Idec
announced to enter with its complete
drug portfolio into India
m Deals:
Sanofi Aventis bought Shantha Biotechnics for
$660million
°erck acquired Bangalore genei for $8.8million
Daiichi Sankyo acquired Ranbaxy & Biovel Life
Sciences
Advanta India acquired US based, !rossbyton
Seed !o
Transgene Biotek entered a licensing agreement
with DRL on obesity management drug
Bristol °yers Squibb along with Syngene had setup
a integrated drug discovery center @ Biocon Park
And several other deals
m Biosimilars: The next big opportunity
Reliance Life Sciences, Shantha, Panacea,
Biocon, Wockhardt and Intas Pharma have
been developing new arenas in this area
Oral Insulin by Biocon; to be US market by 2011
!ipla formed a Jþ with !hinese firm for
research in this field
m After financial crisis, US companies are
looking to acquire the companies in new
geographies in niche segments
m To move up the value chain Indian co·s
has to continuously improve novel drugs
& diversify its portfolio
m 4A·s and 3P·s strategy
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