Editorial

Unleashing biotech's crouching tiger

Subjects

With a massive expansion in healthcare coverage, biotech's next big boom could occur in India. But this revolution will not be globalized—it will be about serving national needs.

Three months ago, the Indian government announced the launch of the world's largest publicly funded healthcare scheme. Termed 'Modicare' after the country's premier Narendra Modi, the flagship health insurance scheme intends to provide Rs. 500,000 ($7,825) in medical coverage for each of 100 million families annually.

If it comes off, this will be a massive expansion in the healthcare marketplace, in line with India's stated ambition to become one of the “top-three pharmaceutical markets by 2020.”

India has also been bullish about its biotech sector (see p. 380). The outgoing secretary of its Department of Biotechnology (DBT), Krishnaswamy VijayRaghavan, predicted up to “2,000 new biotech companies will be launched in the next five years,” following a raft of government programs to support startup creation.

But intent and achievement are not the same. Launching biotech companies is one thing—sustaining them is another. Many nations have poured soft money into biotech startups only to find, a few years on, that creating a self-sustaining sector is a wholly different matter.

India is giving it a go, of course. Over the past five years, the government has allotted $3.7 billion in funding to biotech, and Modi's party has launched initiatives to promote indigenous manufacturing (Make in India), accelerate early biopharmaceuticals development (Innovate in India) and harmonize tax codes (via the Goods and Services Tax).

The DBT's Biotechnology Industry Research Assistance Council (BIRAC) has introduced Biotech Ignition Grants (to support biotech inventions), the Biotechnology Industry Partnership Program (to stimulate research partnerships between companies and public research) and Early Translation Accelerators (to provide incubators where industry can develop academic assets). In addition, state governments have set up biotech parks and technology incubators. Since 2012, BIRAC has invested, in total, Rs. 187 ($2.8) billion, supporting 650 projects, 500 startups, 150 granted patents (a notably low number in itself) and 100 products and technologies.

According to its industry body, the Association of Biotechnology Led Enterprises, Indian biotech currently has a 5% share of the global biotech industry and comprises around 800 companies valued somewhere north of $11 billion. It is growing fast—57% in 2016 alone, driven by “growing demand, intensive R&D activities and strong government initiatives.”

These Indian biotech cubs, like any seed enterprises, will be shaped by their environment. India's pharma and agriculture markets demand products with high volumes and low prices (although some elite niches exist, too). Domestic industry has capitalized on a lax intellectual property (IP) rights environment to outcompete multinationals. But the Indian biotech ecosystem also lacks risk capital to create sustainable ventures (see p. 397) and is hampered by a crumbling clinical infrastructure and a Byzantine regulatory framework.

And Indian biomedical research is not yet ready to catalyze a globally competitive biotech industry. For the past 20 years, India's R&D spending as a percentage of gross domestic product has been stagnant at 0.7%, well behind Israel (4.3%), South Korea (3.4%), the United States (2.8%), China (1.7%) and Brazil (1.2%). Institutional budgets are low. The country's top-ranking Indian Institute of Science was allocated just $80 million in 2017 (compare, for instance, the University of Pennsylvania's R&D budget of $1.3 billion in 2016). Too few Indian institutions can afford to undertake cutting-edge biological research.

It doesn't help that Indian industry and academia speak different languages. The Indian ivory tower has little interest in applied science, distrusts company collaborations, and prefers publication numbers to patents and products. Conversely, Indian pharma companies are market pragmatists, focused more on reformulation and drug delivery technology rather than on discovery science.

A recent study (ChemMedChem 12, 786–818, 2017) claims that since 1994 only 12 (of 800) Indian firms have engaged in long-term and large-scale innovative drug discovery efforts. More telling still, to date, only one marketed small molecule has been entirely discovered and developed by an Indian company—Zydus Cadila's saroglitazar (Lipaglyn).

Clearly, there are few incentives to develop novel medicines in India. Although greater levels of capital may be devoted to drug development than before, the Indian Patent Act of 1970 continues to dominate and disincentivize innovation. It is the reason that India's drug industry is built largely on generics rather than proprietary drug discovery. And it is the reason that comparatively little commercial effort has centered on discovering innovative medicines.

Thus, the 2,000 biotech startups predicted by the DBT to launch in the next five years are likely to be defined by the Indian market, not the global market.

In this respect, Modi's ambitious universal healthcare program will not only create more hospital infrastructure, but also drive Indian companies to develop more cost-effective ways of reaching patients and medical personnel. Digital health, devices and diagnostics (vaccines and agbiotech) make sense in India; innovative medicines don't.

Similarly, “Innovate in India's” immediate plans are to focus on biosimilar product development. According to consultant Decision Resources, >40 biosimilars are currently in clinical development in the country—far more than in the United States. In India, lax IP protection and less stringent 'similar biologic' regulations simply mean biosimilars take commercial center stage.

That is not to say that the Modi government won't still need to update India's woeful clinical infrastructure and outmoded biotech regulatory system. At some time in the future, companies will pivot to more novel products. And unless the government can streamline and simplify these processes, it will not matter how many startups the DBT brings into the world. All the cubs will be stillborn before the tiger awakes.

Authors