Bloomberg News

Glenmark Goes West for $250 Billion Drug Market: Corporate India

December 24, 2013

Glenmark Pharmaceuticals Ltd. (GNP), the Indian company that’s reaped more than $200 million selling rights to its drugs, is seeking to introduce its first biotechnology medicine in the U.S. or Europe as early as 2017.

A biologic remedy for ulcerative colitis, a bowel disorder affecting 1.5 million patients globally, is progressing through U.S. trials after being licensed to Paris-based Sanofi and may come to market from 2017 to 2020, according to Glenmark’s Managing Director Glenn Saldanha. Talks with possible licensees for biologic pain and inflammation drugs have begun, he said.

“These are all $1 billion-plus drugs,” Saldanha said in an interview in Mumbai. “The hope is to be the first innovative pharma company coming out of India.”

Glenmark, based in Mumbai, is among the few Indian pharmaceutical businesses focused on discovering biotechnology-based drugs rather than copying existing ones, conducting human trials in Europe and the U.S. to avoid bureaucratic red tape in India. The global market for biologic drugs is forecast by IMS Health to reach as much as $250 billion by 2020, with at most 10 percent accounted for by copied or derivative remedies.

“This is a higher risk, higher return area,” said Bino Pathiparampil, an analyst at India Infoline Ltd. in Mumbai. “They are jumping straight into the technologically most challenging area in the pharmaceutical industry. When something is that challenging, it means there’s that much less of a chance of success. If they succeed, it can be big as well.”

Overseas Sales

Aside from seeking to discover and license drugs, Glenmark has a formulations business and a unit, Glenmark Generics Ltd., that makes copies of non-biological drugs.

The company is on track to grow sales about 20 percent in the 12 months through March 2014, Saldanha said earlier this month. Revenues rose 25 percent in the previous financial year to 50.1 billion rupees ($809 million), while net income increased 34 percent to 6.1 billion rupees.

About 65 percent of sales were outside of India. Glenmark has received $206 million after completing seven licensing deals since 2004, according to a company presentation dated January, 2013.

Biologics can be composed of sugars, proteins, nucleic acids or combinations of these substances, and may also be living entities such as cells and tissues, according to the U.S. Food and Drug Administration. They could eventually offer the most effective remedies for a range of illnesses that presently can’t be cured, according to the FDA.

Share Price

Glenmark’s shares rose as much as 3.9 percent today, the most since August, outpacing the S&P BSE India Healthcare Index, which climbed as much as 1.1 percent. They were trading at 546.75 rupees as of 12:07 p.m. in Mumbai.

The shares are up about 2 percent this year, lagging behind the 23 percent climb in the healthcare index. That’s because investors are awaiting more licensing agreements for the biologic medicines the company is developing, said Surya Patra, an analyst at PhillipCapital (India) Pvt. in Mumbai.

Glenmark, which listed on the stock market in 2000, conducts research and development into biologic treatments at a laboratory in Neuchatel, Switzerland. The center, set up in 2006, has about 70 scientists working on therapies known as monoclonal antibodies.

All the drugs the business works on are “transformational stuff,” Saldanha said, adding that biosimilars, or copies of biotechnology drugs, are not a focus area for Glenmark.

Biosimilar Challenge

That sets the company apart from Indian peers such as Dr. Reddy’s Laboratories Ltd. (DRRD) and Biocon Ltd. (BIOS), which have developed biosimilars of Roche’s cancer drugs Rituxan and Herceptin for the local market. Dr. Reddy’s and larger rivals including Novartis AG (NOVN) and Pfizer Inc. (PFE:US) are among those racing to tap the biosimilar opportunity.

“Our view on biosimilars is it’s going to be a very challenging environment,” Saldanha said. “There are a number of players who are targeting the space. There’s a lot of capacity which has been built out. The regulatory guidelines are still not very clear.”

The treatment for ulcerative colitis is in phase two trials in the U.S., according to Saldanha. That involves assessing its effectiveness and safety when administered to a comparatively small number of people. The remedy must complete a third phase among a larger number of patients before being cleared for sale.

Two drugs for pain and inflammation are going into early stage clinical trials this year, according to Glenmark.

Product Pipeline

“I’m really positive on the pipeline of products they are working on,” said Patra of PhillipCapital. “I don’t find the R&D spend a concern at the moment, and alongside that, the products are progressing,” Patra said, referring to research and development expenditure.

While pre-clinical work, such as animal testing, is undertaken in India to take advantage of lower costs, Saldanha said early-stage human clinical trials are “very difficult” to conduct in Asia’s third-biggest economy.

India’s Supreme Court in October blocked 157 clinical trials previously approved by the Drug Controller General of India, saying the applications would have to be assessed by two additional government committees.

“It’s too difficult to get approvals, and the whole process is very time consuming,” said Saldanha. “On biologics -- again this is my view -- biologics has never been India’s strength. That’s why we set up in Switzerland.”

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net


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