A few years ago, Glenmark Pharmaceuticals began the process of turning convention on its head—and making NCE research more than pay for itself.
The strategy: License out molecules for development to global pharma, and reap the gains by way of upfront and milestone payments, and royalties along with marketing rights in certain markets, if the drug does make it to market. MD and CEO Glenn Saldanha has so far pulled off three such alliances, two for its asthma molecule (which is in Phase II) with Forest Labs of the US and Teijin Pharma of Japan, and one for a diabetes compound, with Merck.
|CEO & MD: Glenn Saldanha|
NCES in the pipeline: 11 (five new biological entities, or NBEs)
Therapeutic areas of focus: Diabetes, asthma, obesity, oncology, inflammation
Progress made: Three NCEs in Phase II, one is set to enter Phase I, and one in pre-clincial. NBEs still in early stage
Investments so far in NCE research: $25-30 million in 8 years
Annual investment in R&D: 6-7 per cent of revenues
Likely target date for new drug launch: 2011-12
CEO-speak: “I feel in the long run, generics and high-end innovation will be the two focus areas. Incremental innovation won’t work”
For Saldanha, the equation is simple: Over the past eight years, he’s pumped $25-30 million in NCE research. He’s already earned almost four times that amount, with the prospects of pocketing another $700 million over the next five years. Not bad for a company that had consultants and skeptics frowning when it decided to focus sharply on innovation a decade back.
If Glenmark has become a favourite of investors— market cap stands at around Rs 14,000 crore, making it India’s fourth-most valued pharma company—it’s clearly because of the upside that lies in research.
That’s prompted Saldanha to go against the trend in the industry and hive off its generics business into a separate subsidiary (even as, at least, 10 Indian drug companies have plans to spin off their R&D/NCE portfolio into separate entities). Glenmark Generics could get listed in the quarters ahead, point out analysts, whilst the NCE and branded business will be housed in the parent company.
The upshot of this restructuring: Even as India’s innovator drug firms are attempting to unlock value from their NCE activities, Glenmark appears to have already done so, and this might just be resulting in the generics play not getting its just desserts. Saldanha’s NCE play, though, faces no such problems, what with Glenmark hoping to have launched two drugs by 2015, by when it also hopes to have 70 per cent of its revenues coming from proprietary drugs. 2015 is long time away, but Glenmark is on course, so far.
— Brian Carvalho