Drug discovery is fraught with uncertainty, shrugs Ajay Piramal. But the Chairman of the innovation-driven Nicholas Piramal India Ltd (NPIL) appears at ease in such perilous environs. “Our philosophy is: The more risk you can bear, the larger is the reward you can take home,” grins Piramal.
“The day we think we are taking on too much risk, or things are getting too delayed, or our costs are going too high, we may decide to license out our compounds.” For the moment, Piramal is facing few such pressures, even as he clocks roughly $100 million in R&D expenses, some 80 per cent of that on NCE research. Almost all that investment has been made from internal accruals, which have been flowing in through two main lines of businesses—the domestic activities of branded generics and contract research.
But Piramal has found another way to make drug discovery pay for itself, and save costs that come along with it: Collaborative research with Big Pharma, which will provide NPIL leads to work on. Depending on the progress the company makes, it is entitled to milestone payments.
Consider the alliance with Merck, which has given Nicholas two early-stage targets in the field of oncology. The Indian company stands to receive payments of up to $175 million per target, plus royalties on sales if the leads translate into drugs on the market. The first milestone payment would be once NPIL completes Phase II.
Chairman: Ajay Piramal
NCES in the pipeline: 8-10 by March 2008
Therapeutic areas of focus: Oncology, arthritis, anti-infectives
Progress made: Two oncology compounds and one arthritis compound in Phase II
Investments so far in NCE research: $80-90 million (including R&D centre and infrastructure)
Annual investment in R&D: 5 per cent of sales
Likely target date for new drug launch: 2010-2011
CEO-speak: “If you have 8-10 molecules in the pipeline, the chances of one making it to market are high”
Merck has the option to advance the candidates into late-stage clinical trials (Phase III) and to commercialise them. Similarly with Lily, NPIL steps into the picture from Phase II onwards for the development of a drug for metabolic disorders (with an option to take on three more such leads). The payments NPIL stands to gain with this deal work out to $100 million.
Nicholas also benefits by side-stepping the costs that come with pre-clinical studies. By getting leads from Merck, NPIL could be saving up to $10 million, which it would have had to spend on the early stages of R&D, points out Somesh Sharma, Chief Scientific Officer, Nicholas Piramal Research Centre. “And it would have cost me up to $20 million for the work Lily has already done,” he adds.
Competitors privately wonder why Merck and Lily would want to share the spoils with another company if they saw potential in these leads, in the first place. Also, the fact that the last lap of development along with the launch will be taken care of by the Big Pharma firm (although NPIL has the option to do it themselves in the case of the lead from Lily), takes some sheen off the Indian company’s efforts.
Piramal is keen to have many molecules in the NCE pipeline—by 2009, he expects to have 14-15. And he’s focussing on areas where there are huge opportunities. Like cancer, of which there are 10,000 different types.
Similarly, NPIL’s anti-diabetic molecule won’t have the side-effects associated with Glaxo’s best-selling Avandia, and similar compounds in the research pipeline.— Brian Carvalho