VISUALISE A HONEY-LIKE liquid that is colourless and transparent but with one-fifth its viscosity. An eye surgeon removes the cornea and administers two drops into each eye cavity of a corneal blind person. The liquid spreads, solidifies in a few minutes and helps the person grow a new cornea in less than a year. The product, developed by Bengaluru-based Pandorum Technologies, has worked on hundreds of rabbits. The company is planning human clinical trials at Shroff Eye Hospital, New Delhi, and Northwest University Medical School, Chicago. If approved, it will be the first-of-its-kind product, offering hope to 25 million cornea blind people in the world, say Pandorum’s promoters Tuhin Bhowmick and Arun Chandru.

In June 2021, as part of an early-phase pilot trial, a team of doctors at Tata Memorial Hospital, Mumbai, performed India’s first chimeric antigen receptor (CAR)-T cell therapy using CAR-T cells (which act as a drug and kill specific cancer cells) designed and manufactured by Mumbai-based ImmunoACT, a company promoted by IIT-Bombay professor Rahul Purwar. The company claims that after 13 doses, 50% terminally ill patients suffering from a type of cancer called lymphoma and two children affected by leukaemia, another type of cancer, were cured. This could be the first indigenously designed and developed CAR-T therapy, offered at a fraction of what innovators in developed world charge.

A Bengaluru-based pharmaceutical R&D company, Bugworks Research, has zeroed in on a drug candidate that may treat antibiotic-resistant bacterial infections. Its co-founder, Anand Anandkumar, says if successful, it will be the first novel, broad-spectrum antibiotic developed since 1987. “You can prescribe it for head to toe — chest infection, stomach infection, bladder infection, blood stream infection, sexually transmitted disease, community infection and bioterrorism. It can save millions of lives, but we need to first complete clinical trials successfully.”

These three examples show the spirit of self-reliance rushing through India’s drug research ecosystem. The problems they are trying to solve cover three of the six moonshot sectors for research and development (R&D) — orphan medication (for rare diseases), precision medicine and antibiotics — identified by government think-tank Niti Aayog for Indian life sciences industry (other moonshot areas are biosimilars, complex generics and vaccines). All three potential therapies are being developed in India right from the laboratory stage and will enable the companies to tap global markets with a premium price tag that Indian pharmaceutical industry’s predominantly generic offerings have never been able to command. All have received substantial early-stage financial and technical support from central and state governments.

The projects, like several other pharmaceutical, biotech and med-tech research initiatives over last 10-15 years, point at emergence of a new R&D ecosystem with multiple stakeholders — governments, private investors, start-ups, legacy pharmaceutical players, biotech, vaccine, medical device firms and artificial intelligence (AI) and information technology players. The latest and perhaps the most crucial support from government, a Research Linked Incentive (RLI) Scheme on the lines of Production Linked Incentive Scheme, is also on the way. Thanks to all this, India’s pharmaceutical industry is seeing early signs of responding to government’s call to “Ideate In India, Innovate In India, Make In India and Make For The World.” But given the high risk and huge investments involved, can India recreate its success in generic drugs in innovative medicine, therapy and diagnostic tools? If yes, what is the basis of this confidence?

Multiple Triggers

Money is key. The $45 billion Indian medicine and vaccine industry, which meets over 50% global demand for vaccines, 40% generic drug demand in world’s largest pharmaceutical market U.S., 25% demand in U.K. and supplies almost 20% of all generic medicines (all by volumes) globally, has realised the limits of business-as-usual growth. An EY-Ficci analysis notes that the Indian pharmaceutical industry, which expanded at a compounded annual growth rate (CAGR) of 13% over last two decades, grew at 8.5% CAGR over last decade and 6.2% CAGR over last five years. Returns from Nifty pharma index have been way less than gains from Nifty 50 over last five years, Covid-19 year being an exception (see Can Pharma Index Get Its Mojo Back?). “Developing innovative drugs is important because innovative medicines not only meet healthcare needs but also account for two-thirds of the global pharma market,” says Sharvil P. Patel, managing director, Zydus Lifesciences. “We believe the future of the company will be driven by an innovative portfolio of novel molecules, biologics, vaccines and biosimilars. We have over 1,400 professionals in R&D programme at seven sites. By 2030, it will be entirely about R&D and innovation, and most growth will come from innovative therapies,” he adds. The EY-Ficci report says Niti Aayog’s moonshot sectors alone could add $28 billion to pharmaceutical industry revenues by 2030.

The second factor that has boosted pharma R&D is Covid-19. The pandemic devastated lives and livelihoods but provided a one-off bump in revenues to life sciences companies along with opportunities to accelerate product development, particularly in vaccines and diagnostic tools. For instance, Bharat Biotech’s indigenous Covid-19 vaccine, Covaxin, took less than one-fifth the usual time to hit the market from clinical trial phase. Another example is Pune-based start-up Mylab’s innovative point-of-care diagnostic device. The lessons learnt during Covid-19 are expected to fast-track clinical trials and regulatory clearances. The draft policy of central government “to catalyse R&D and innovation in the pharma and med-tech sector in India,” released in October 2021, calls for further simplification of regulatory processes to enable rapid drug discovery and development and innovation in medical devices. It lists required legislative changes and proposes a differential pricing mechanism to reward innovation. It also advocates global collaboration for a harmonised regulatory system and acknowledges that Covid-19 brought to forefront the role of innovation in expanding scale, access and availability of healthcare products.

The third trigger has been access to finance and incubation centres for early start-ups. “There are more funding opportunities for early stage companies than 10 years ago. Government organisations like Biotechnology Industry Research Assistance Council have pushed innovation across the board — diagnostics, devices, new drugs, etc. They have provided seed funding to individuals and small companies that want to look at out-of-box ideas,” says Shridhar Narayanan, chairman and CEO of Foundation For Neglected Disease Research, Bengaluru. “The R&D ecosystem is developing due to push from innovators and pull from government,” he says.

The Global Opportunity

In 1997, Dr. Reddy’s Laboratories became the first Indian pharmaceutical company to license out a potential anti-diabetic drug candidate, Balaglitazone, to Novo Nordisk at pre-clinical trial stage. Indian companies signed dozens of out-licensing deals with foreign drug majors over next few years. The main reason they let go of new drug candidates without taking them to market on a global scale was prohibitive cost of drug development in developed countries. The situation is improving now. For instance, Aurigene Discovery Technologies (ADTL), a wholly owned subsidiary of Dr. Reddy’s, has developed expertise in cancer and inflammatory disorders and has contributed in delivering 16 small molecule and peptide drug candidates, all of which are under clinical development. In July 2022, ADTL and U.S.-based EQRx announced a collaboration to tap former’s small molecule drug discovery platform and latter’s business model to accelerate development of drug candidates for oncology and immune-inflammatory diseases. While ADTL leads drug discovery and pre-clinical development, EQRx is responsible for clinical development, manufacturing, commercialisation and regulatory efforts.

More examples of the ‘lab-to-market’ route taken by Indian companies in recent years are Biocon’s Nimotuzumab (Biomab) and Itolizumab (Alzumab). While Biocon launched Nimotuzumab, India’s first indigenously produced novel monoclonal antibody for treatment of head and neck cancer, in 2006, Itolizumab, world’s first novel anti-CD6 monoclonal antibody for psoriasis, was launched in 2013.

“Biocon’s pharma innovation journey started in 2000s. Since then, we have introduced two novel biologics, Nimotuzamab and Alzumab (Itolizumab), an immunology product, which was repurposed in 2020 for Covid-19 to treat cytokine storm in patients experiencing ARDS (acute respiratory distress syndrome). Thousands of head and neck cancer patients have benefitted from BioMab. Alzumab saved thousands of lives during the pandemic,” says Kiran Mazumdar Shaw, chairperson, Biocon & Biocon Biologics.

“Biocon is committed to providing affordable access to complex therapies and has, therefore, invested over a billion dollars to develop a strong portfolio of biologics, including eight biosimilars which have been commercialised in many advanced and emerging markets,” says Shaw. Further, to tap global markets, the company has licensed out rights to develop and commercialise Itolizumab to U.S.-based biotechnology company Equillium Inc., which is developing this first-in-class immune modifying monoclonal antibody for multiple immune-inflammatory diseases. Biocon, in collaboration with Equillium, has also initiated a Phase-II clinical study for treating ulcerative colitis with Itolizumab in India.

Wockhardt and Glenmark Pharmaceuticals Ltd are also taking the innovation agenda seriously. Wockhardt has six novel antibiotics under various stages of development. The company says these will manage community or hospital acquired infections caused by resistant bacteria pathogens. All of them have been awarded qualified infectious disease product designation by FDA and hence are eligible for fast-track regulatory approval in U.S.

Glenmark, which claims to have two molecules in its speciality/innovative pipeline and seven in its 100% subsidiary Ichnos Sciences’ innovative biologics pipeline, has already proven its R&D capabilities through outlicensing drug candidates. Ichnos recently entered into a licensing agreement with Spain’s Almirall for first-in-class monoclonal antibody. Almirall has got global rights to develop and commercialise the antibody for autoimmune diseases while Ichnos will retain rights for using it for oncology indications. The global opportunity means several times more revenues than what can be earned from the domestic market.

For instance, Pandorum is looking at a $2 billion market in U.S. alone once it gets limited period monopoly on account of orphan drug status of its potential therapy for growing cornea. An orphan disease is a rare disease or condition that affects fewer than 2,00,000 people in U.S. For India, where around 10 million people are cornea blind, it is planning an off-the-shelf strategy by 3D-printing cornea using the bio-ink, making it more affordable. “Companies world over, including ours, are working on various tissues, from heart, skin, etc. That is called regenerative medicine or tissue engineering. Liver and lung are also in the pipeline,” says Arun Chandru, co-founder and chief technology officer, Pandorum.

Meanwhile, ImmunoACT, the start-up in which Hyderabad-based Laurus Labs has taken 26% stake, is not the only company working on CAR-T cell therapy. Immuneel Therapeutics, founded by Biocon’s Shaw, Pulitzer winning author and U.S.-based cancer physician Siddhartha Mukherjee and Kush M. Parmar, managing partner, 5AM Ventures, is also trying to offer CAR-T cell therapy in India.

Aurigene Technologies, a wholly-owned subsidiary of Dr. Reddy’s Laboratories, is also developing CAR-T cell therapy. “In U.S., the product alone costs about $5,00,000 (approximately ₹3.5 crore). Then there are clinical costs. The total cost can be as high as ₹6 crore. We are aiming to make it available at 10% of the cost in U.S. Our idea is to make in India and take it global,” says Purwar.

New-age firms that have innovative tools to aid drug discovery are also becoming an important part of the ecosystem. For instance, Bengaluru-based Peptris Technologies designs and develops neural network architectures to predict important properties of biological molecules. The company says its AI-based computational platform accelerates the process — discovery, lead optimisation, toxicity and specificity predictions—with precision. Sravathi AI Technologies, also in Bengaluru, focuses on advanced pharma and chemical products by making predictions involving molecules and chemical reactions using proprietary AI algorithms. Mestastop Solutions (again in Bengaluru) has created proprietary platforms to unravel the complexity of metastasis (cancer) drug discovery and predictive diagnostics. The company claims its platforms are ready to be used for novel drug discovery, drug repurposing and profiling anti-cancer leads or candidates for their anti-metastatic effect.

At the other end of the spectrum are companies like Molbio Diagnostics, which introduced Truenat, the world’s first and only point-of-care, multi-disease real-time PCR platform. This Goa-based unicorn recently collaborated with Global Fund, USAID and Stop TB Partnership to expand access to rapid molecular tests for TB globally.

The Constraints

In 2015, World Health Organization’s decision-making body, World Health Assembly, adopted a global action plan on antimicrobial resistance stating it threatens the core of modern medicine and sustainability of an effective public health response to infectious diseases. Since then, several global collaborative efforts have been launched to discover medicines that can tackle disease-causing micro-organisms resistant to current antibiotics. With 45 partners, most of them international, Bugworks is hoping to be among the forerunners to launch a new drug for antimicrobial resistance. However, the company, incubated in Bengaluru, including its key operations, is technically US-headquartered. It also has U.K. and Australia centres. “I shifted headquarters to U.S. for easier access to funds. Similarly, I have a U.K. centre and an Australia centre as I tap talent from all over the world. Slowly, these things are changing,” says Anand Anandkumar, CEO, Bugworks. He says Bugworks’ anti-microbial resistant candidate will first undergo clinical trials in Australia and India. U.S. will be considered once the first two phases in Australia are successful. “We have not done clinical trials in India because for a completely novel molecule, touching humans first, it is better to go to a developed regulatory environment and finish Phase-I. India will be better for Phase-II and Phase-III trials as that is where the patients are,” he says.

Anandkumar says the innovation happened because of incubation support from Indian government. “I am thankful for seed support when it mattered the most. But had it not been for U.S. government, we would not have got the substantial funding to reach where we are today. Almost one-third money that we have raised has come from governments. India has played a role, so has U.S.,” he says.

Though things are changing, lack of enough incentives for private sector investment in life sciences research has been worrying the industry for some time now. A recent CII report, “Roadmap For Indian lifesciences @ 2047,” complains that lack of attention to incentivising innovation and investment via appropriate patent regime and few incentives for expenditure on scientific research have led to stagnation of the pharmaceutical sector in value terms and brought down its contribution to India Inc.’s revenues from 8% in 2018 to 6.6% in 2021. The report also points at absence of funding for R&D projects through tax-free bonds similar to bonds issued by public sector companies NHAI and REC to fund long-gestation projects.

In comparison, the Congressional Budget Office of U.S. Congress said in its 2021 report on R&D in pharmaceutical sector that much of the $700 billion government funding over last two decades supported basic research (in genomics, molecular biology and other life sciences) that identified new disease mechanisms. “Federal support for NIH nearly doubled between 1995 and 2003, rising from $18 billion to about $37 billion. Federal funding for NIH declined (in inflation-adjusted dollars) each year from 2003 to 2015, when that funding was about $33 billion. With real annual increases over subsequent five years, funding for NIH reached $41 billion in 2020. Between 2010 and 2016, every drug approved by FDA was in some way based on biomedical research funded by NIH,” says the report.

Bugworks’ Anandkumar says Indian lifesciences research suffers from inadequate access to capital and large venture capital investments but not seed funding. “Government has invested in 1.0, which means seed money and incubators, but it also needs to step up and see how countries like Korea, Japan, U.S., U.K., Israel, etc, have done well in biotech because their governments have stayed invested in research for decades. I am not saying we have to spend that much money but we have to draw some parallels. Government should say now that instead of putting ₹10 lakh or ₹20 lakh in 1,000 companies, it is time to invest ₹50 crore each in 20 companies because they have already come to the clinical trial stage and need support to solve India’s health problems.”

Incentivising innovation and intellectual property creation can lead to development of first-in-class, innovative drugs that have blockbuster potential, says Biocon’s Shaw. For that to happen, India will need a national innovation ecosystem that puts in place a financing cycle — academia generating ideas, which are incubated to proof of concept through government funding and then taken to market through business intervention backed by venture funding, she says.

What Lies Ahead

The proposed RLI Scheme may make a difference. The CII report says RLI will complement the ongoing PLI and create opportunity by leveraging India’s talent, cost competitiveness and strong pharma manufacturing base. It also says that various countries around the globe continue to incentivise R&D spending to encourage development of intellectual property and, hence, such an incentive by India will attract investments in R&D and create an IP pool.

The draft pharma policy proposes three focus areas. First is creating a regulatory environment that facilitates innovation and research and expanding regulatory objectives of safety and quality. Second is building an ecosystem to support innovation and cross-sector research. The third and most keenly watched is incentives for investment in innovation through fiscal and non-fiscal measures, thereby matching risks with remunerative financing options. However, 15 months after the draft policy was circulated, it is still a draft. The fine print of the RLI Scheme, about which the draft makes a passing mention, is also awaited.

We may not be able to predict if a global blockbuster drug will come from India in next five years, or India will solve its health problems through innovation, but there is an acknowledgement of serious players who will make a difference in this ecosystem. It is time to ensure best possible infrastructure and financial support to help them go up the drug discovery value chain.

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