Fast-Acting Therapy: Indian Pharma Broadens Focus Beyond Generics

Indian pharma leaders have maintained for some time now that a long-term sustainable growth trajectory for the sector will necessitate exploring strengths beyond generics. While this has been engaging their attention, there seems an added momentum especially over the past year. With forays into medical technology, biologics, Contract Development and Manufacturing Organisation (or more simply the CDMO market), consumer care, OTC and speciality products, leading Indian pharma companies are rewriting their growth prescription and sending out a message on a new preparedness to adapt & change to new market opportunities.

India’s biggest pharmaceutical company, Sun Pharma has been at it with focus on speciality drugs, Dr Reddy’s with OTC (consider the JV with Nestle, for instance) and more recently, Zydus Lifesciences and its foray in medical technology and now into CDMO. It is a space that for instance, Dr Reddy’s saw merit in when in 2020 it created Aurigene, a wholly-owned subsidiary that partnered with global pharmaceutical and biotech companies to advance their molecules from laboratory to market. 

Biosecure & Beyond 

The leap into CDMO today by pharma companies could be seen as a timely and an opportunistic move given the US Biosecure Act, which, starting 2030 is set to create opportunities for Indian contract development and manufacturing organisations (CDMOs). 

There is this and several other drivers feeding into the appeal and logic behind these strategic business diversions by some of leading Indian pharmaceutical companies today. To a large extent, it is triggered by the fact that generics has typically been a very cyclical business. A buyers-market essentially in the US, it is also subject to constant price erosion, competition and margin pressures. For a sustainable business, companies need to look at more sustainable earnings drivers. This seems to have taken the shape and form of the various areas that these companies have chosen to make their presence. For instance, analysts point out that while medical technology may seem as a slightly longer gestation business but tends to be more sticky in terms of returns. For a traditional generics leader, the CDMO space will entail a new line of business that seeks a services perspective.  

Zydus Lifesciences has more recently been in the news for its entry into the global biologics CDMO business with its decision to acquire Agenus’ U.S. manufacturing facilities to accelerate development of innovative therapies” apart from getting exclusive licensing rights for next gen immuno-oncology platforms from the US based entity, Agenus.

Hyderabad-headquartered and NYSE-listed Dr Reddy’s last year clearly embarked on building the OTC piece of business. With the acquisition of the NRT portfolio, a JV with Nestlé in place, then there was the acquisition of MenoLabs business, a leading women’s health and dietary supplement branded portfolio from Amyris, Inc.,.

Business potential 

On the opportunity this entails and the growth potential, Erez Israeli, CEO of the company, explained at an analyst meet that OTC and consumer care, in general, were a focus area of the company. One of the four key spaces for the company - the B2B generics, the branded generics and innovation, OTC and consumer care and finally, biologics. Taken altogether, at US$600 million-plus and growing, the OTC and consumer care is getting to be an important part of the business. He holds out more hope, saying it is “likely that we want to build on the platform of the NRT (Nicotine Replacement Therapy) acquisition (of a Swiss company’s portfolio in this category) and to add more assets in the future. And, in his words, “we see it as, obviously, a business that will speak in billions in the future, but obviously, it will very much depend, both, on the growth as well as our ability to buy more assets…. For the billion-dollar, we will need to buy more.” Analysts who have looked at this also feel, while OTC is an extension of the existing business with non-prescription products getting added to the portfolio, it also happens to be a space that would be more demanding in terms of marketing and advertising.

Innovation 

On the specialty drugs focus by the largest Indian pharma company, Dilip Shanghvi, Chairman and Managing Director of the Company had this to say on the conclusion of the last financial year: "Our businesses delivered a robust performance for the year, driven by improving market share in India and growth in global specialty. The near-term pipeline in global specialty is promising, with products such as Leqselvi and Unloxcyt—the latter through our recently announced Checkpoint acquisition—offering significant improvements in patient care. We look forward to specialty becoming an increasingly important part of our business." 

Biocon chairperson Kiran Mazumdar Shaw, who along with Indian-American oncologist, author Dr Siddhartha Mukherjee and Kush Parmar, managing partner at 5AM Ventures, is on the path to getting the crucial and innovative Chimeric Antigen Receptor (CAR) T-cell therapy for cancer patients in India.