Box 1. Case study: Shantha Biotechnics Private

Shantha Biotechnics (Hyderabad, India) is the first Indian biotech company to indigenously produce a recombinant DNA product, Hep-B vaccine. The company was founded in 1993 at Osmania University (Hyderabad) and later moved to the Center for Cellular and Molecular Biology (CCMB, Hyderabad) until an independent R&D facility was built. Currently, it enjoys a strong product portfolio (Table 1) and in August 2005 launched India's first indigenously developed 4-in-1 combination vaccine against diphtheria, tetanus, pertussis and hepatitis B. This year, it expects to launch a pentavalent version of this vaccine that will include protection against H. influenzae type b. Shantha had revenues of $16 million in 2004–2005, an increase of 75% over the same period from the year previous and targets 25% of revenues toward R&D¹⁵.

In 1995, H.E Yusuf Bin Alawi Abdullah, Foreign Minister of Sultanate of Oman, along with other friends, invested in the company, and helped Shantha obtain long-term, low-interest loans from Oman International Bank (Muscat, Oman). In the year 2000, private equity investors Morgan Stanley (New York) and the State Bank of India Mutual Fund (Mumbai, India) entered a small private round of equity raising and invested just over $10 million. Through these investments, bank loans and some loans from the Indian Department of Biotechnology's Technology Development Board, the company has been able to invest $40 million into its facilities and operations thus far. It has grown into an integrated biotech company, involved in all aspects of drug development. Over 60% of its revenues originate from exports, most of which are purchased by the Pan American Health Organization and UNICEF. Shantha has several manufacturing facilities some of which are certified by WHO, EMEA and FDA. At the close of 2006, the French healthcare company Merieux Alliance (Lyon, France) picked up a 60% stake ownership in the company.

Throughout the years, Shantha has adopted a cost-saving strategy through public-private collaborations, necessitated in part by the lack of direct government support for private research. For example, the Hep-B vaccine was developed in collaboration with the CCMB. Other collaborations include working with the International Centre for Genetic Engineering and Biotechnology, Indian Institute of Science, National Institute of Immunology, Indian Institute of Chemical Biology, National Centre for Cell Sciences, Bhabha Atomic Research Centre and some universities (Table 4). The nature of these relationships varies from close collaboration on specific projects to those where Shantha financially supports research with the prospect of identifying novel drug targets or candidates. The company has also entered into several collaborative partnerships with foreign entities (Table 5) in an attempt to accelerate development of novel and proprietary products.