Panacea Biotec, one of the country’s significant vaccine manufacturers, recently received an order worth Rs 187.61 crore from the government to supply polio vaccines till May 2013. Dr Rajesh Jain, Joint Managing Director, Panacea Biotec, in conversation with Shalini Gupta, talks about this welcome development, the challenges facing vaccine manufacturers, competition from China and other trends in the industry
What does the recent clearance by WHO mean for India? What are the parameters?
| Dr Rajesh Jain |
The clearance of the National Regulatory Authority (NRA) or the Drug Controller General of India (DCGI) by WHO has a great significance for the Rs 19,000 crore domestic vaccine industry that we have built over the last three decades. It demonstrates the commitment of the domestic vaccine industry to provide vaccines to those who need it in the developing world. Out of the 133 million children born in the whole world, 121 million are born in the developing world. Out of this, 23.5 million children are born in India alone (˜20% within developing world). Vaccine production in India continues to be of good quality which is good news for the developing world. The fact that it is able to reach these children is also significant.
Looking at Indian statistics, of the six vaccines that we have in the programme, only 61 per cent of children born in India get access to the full immunisation schedule. Individually, DPT has 80 per cent coverage and OPV has 70 per cent coverage. That’s the reach of the government programme. India is now catering to 70 per cent of the volumes of vaccines for the developing world that are of good quality and affordable as well, which is the war cry in the developing world.
WHO looks at how strong is the overview and oversight of NRA or DCGI over the manufacturers in terms of continuance and adherence to GMP standards in the overall safety of the patients. The dynamism of the industry and the regulator alongwith the critical review by the DCGI of manufacturing sites and regulatory dossiers generated by the companies before granting them new drug permissions and renewal of manufacturing licenses is also taken into account. A holistic review of how healthcare is managed per se is what is considered.
China has got a nod from the WHO last year. Given that China offers competition to India in the active pharmaceutical ingredients (API) space, do you see it as a competitor in vaccines as well?
Both the businesses are uniquely different, they are dissimilar and have nothing in common. I agree with you that China definitely has a lead in pharma products as far as APIs are concerned, but in the final formulation business India wins hands down. The globalisation of Indian pharma or its genericisation happened in the 90s and by late 90s, Indian pharma majors such as Ranbaxy already started filing dossiers in the US. That said, vaccine manufacturing requires far more greater capabilities. A company which cannot make APIs, can still be in the business of pharmaceuticals, supplying to Europe and the US, sourcing APIs from a third party and then getting it manufactured in the final dosage forms from someone. However, in vaccine there is no concept of third party manufacturing as far as final dosage form is concerned.
Vaccine manufacturing is a biological business which requires competency in both APIs and final dosage forms, China is yet to make a start in the latter. So, China coming up with an NRA is good news for the Chinese industry, but then where’s the industry? There need to be manufacturers producing the vaccine which are either exported to international markets or audited by WHO. It is when these transactions take place that their preparation level and that of the NRA will be assessed. Only then can we truly say if China is in a competitive space with India or not. In our case the industry was prepared lets say 30 years back. NRA had to catch up pace. In their case industry has to catch up pace. That said when China decides, they deliver. They are going to be a formidable force to be tracked. We need to make sure that India which has a lead over them, continues to maintain that in the interest of the healthcare needs of the children of the developing world. It’s not about competition in price, but about delivering good quality healthcare. Quality, quality, quality will be the mantra.
Panacea is manufacturing products both for the pharma and the vaccine industry What are the differences between the vaccine and pharma business?
In pharma, either the insurance companies or the corporations for whom people work, pay for them while most in the developing world pay from their own pocket. In vaccines, 90 per cent of the market is around kids born in the developing world. Global agencies like GAVI, UNICEF, PAHO, WHO, JICA, DFID as donors influence policy to help governments deliver healthcare. Money is largely brought in by donors not by insurance. The entire logistics in vaccines needs controlled temperature conditions, pharmaceuticals don’t need such stringent logistic conditions. Packaging and shipping instructions in pharma are lower in terms of adversity than what a vaccine shipment would face. Though both pharma and vaccines need to abide by GMP standards the overall supply chain management is very tough even at the recipient level for vaccines.
Pharma has multi-purpose plants and the switchability of time between one product and another is few hours, the downtime is very less. In vaccines, there are dedicated plants (80-90 per cent) for one product, even if you are undertaking a second product, the down time is huge, from few weeks to almost a month. The quality control in pharma is two to three days, for vaccines it is 40-45 days. All vaccines can only be released for sale in the market by NRA , in pharma you can do certificate analysis and release the product. In pharma, majority of the products are oral, they do not need aseptic conditions for manufacturing, but vaccines, even if oral, need aseptic conditions. Sterile manufacturing expertise is far more intricate. These hurdles increase risk of failure. Fixed dose combinations (FDC) do not find supporters in pharma, because of a rigid attitude of regulatory bodies, in vaccines multi-dose combination are a norm (five antigens in one shot is an analogue of FDC in pharma). Affordability with these challenges is a different ballgame altogether. I am sure China has to grapple with these challenges too, apart from market driven ones.
With drug pipelines drying up and vaccines hard to replicate as opposed to generics, Big Pharma is now foraying into vaccine business. Your views.
For a long time, companies did not jump into the vaccines business, since it was financially not viable. Companies did not see much potential in the developing world, donors never came forward, governments were not paying for it, also it was difficult to replicate with regulatory standards not being clear. There were few players in the vaccine industry but intervention from donor agencies and organisations such as the Bill and Melinda Gates Foundation helped bring countries, governments, HNIs and NGOs together to donate money to such social causes. New vaccines brought in by other companies and research institutes such as Gardasil, Prevnar, etc. have hit blockbuster status. Vaccines were never known to be billion dollar products and not many came up in the past few years. All these factors have aroused the interest in the industry as well as the investor community about a line of business which can also give returns and have a huge social impact. New companies entering the market need to think about affordability, a differential pricing system for the developing world. Profit can’t be the only motive, there is a need to work with key enabling organisations including developing country vaccine manufacturers to ensure a global reach of the product. Monopolisation is not the way forward for vaccine industry, there has to be a sense of collective responsibility and shared concern that one can move forward in this business and grow in the future.
What are some of the diseases of the Indian population for which we need vaccines?
Vaccines for Malaria, TB, typhoid and cholera are the most needed in India is the next 10 years including epidemic related diseases such as dengue, Japanese encephalitis, chikungunya etc. Of these, dengue has fatal consequences, needs to be taken far more seriously. The concept of a vaccine for flu, needs to pick up in India. A pneumococcal conjugate vaccine is also highly anticipated.
Do you see a shift from paediatric vaccines to vaccines for infectious diseases?
There is huge research being done at academic level as well as applied research at industry level for therapeutic vaccines. They are going to add huge value to the pharma interventions and will grow with time, but to say that they have arrived, would not be the right thing. We haven’t had any great success around therapeutic vaccines, largely because the disease profile is such that pharma need to be given, length of treatment is long and clinical protocols of evaluation are comparative in nature. To evaluate the contributions of a therapeutic vaccine would take more time since real advantages come only in five to seven years, when we talk of chronic diseases like cancer and gastrointestinal diseases like hepatitis B etc. It’s an exciting area but it’s still early days for any meaningful product to come.
Affordable healthcare is the need of the hour. What are the challenges as a vaccine manufacturer to achieve affordability?
Vaccine business aims at keeping healthy people healthy and productive throughout their life cycle. Affordability here is linked with the R&D cost and the manufacturing capacities that you build when it comes to execution. The market is centred around government and UN organisations, who give us the visibility of the disease, whether countries agree to use this vaccine. So we need to work closely with them to make sure that the capacities that we build are in time with upcoming demand. This is very iterative unlike pharma, where the market size is known, along with which drug is going off patent, so the company just needs to put the dossier and cut the market. Here, it is driven by unmet needs, facilitated by enabling organisations and increasing awareness within governments, when they adopt, one has to be ready. However, it is not easy to do so, hence you end up with assets ahead of the demand underutilised. These over the course of time build up cost structures and when the demand comes in, it overshoots the capacities installed. Hence a strong need has been felt for advanced demand planning as compared to what it was 10 years ago. Different models have been worked out to ensure this. For eg. from routine tender inquiries for one or two years, now we have long-term agreements (LTAs) for three years or even four. In some cases advance market commitments (AMC) have worked in, wherein you get commitments ahead of time, they could even be as long as 5-10 years. The whole model from ad hoc demand generation and bidding has moved to more LTAs and advance commitments. Buyers are working on financing mechanisms to reduce cost. Funding technology at a research institute, which can then be followed by manufacturing and supply by some company. This saves R&D cost to a company. Better demand planning can help balance whatever investment you have done in the manufacturing through LTAs and AMCs so that you don’t have an underused asset or a demand that you can’t cater to.
Do you think Indian vaccine manufactures are possible target for MNCs?
Just because one company was acquired, doesn’t make a case for others, but its a good case to be investigated, it might shed light on the challenges that they were facing that made them sell out. Its about bringing up a company and then at some stage continuing with it or selling it out. But looking from outside in – researching, manufacturing and coming to a point of break even and making profits is a long drawn out process, it is absolutely capital intensive. With no clarity about demand, no databases, that such a demand is available, financial crunch, the question is who would come and invest money in such a venture and how much appetite for patience would one have to continue to wait for results. While there could be possible motivations, a company which has crossed those minimum benchmarks of sustaining itself as a business entity whether it is around financial viability, capacities, product pipelines, quality standards or supply chain management will become a potential target for an investor, especially for companies who would have missed that piece of business in their growth journey. While Shantha would have had its own share of challenges to come upto that level, a Sanofi, missed a pentavalent vaccine, it did not have that in its portfolio.
Can innovation and affordability go hand in hand?
They are both different. I feel that it is important for a country like India to pay attention to innovation and play a meaningful role in bringing affordable innovative products. However, I would still like to focus on current products that we procure, because we need to ensure that existing medicines are good quality and affordable, that’s the immediate need. Our immediate goal should be to continue to produce already licensed pharma products at good quality and affordable cost for consumption by large masses and then graduate to a level of innovation in the long term.
Collaborations are seen as a better way of risk sharing. Your views.
The answers would be different from the perspective of each company. A Sun or Zydus Cadila has matured and riding the wave from the front, they don’t need collaborations, as for us, we are follow-on entrants, for us to compete with them and say a Mylan or Teva is a different ballgame. We need to think what new value do we want to create, even if we have the value, do we have the muscle to take it to the market? The latter includes research, financials, execution capability in manufacturing, distribution, in short a full chain of events that come together to make us a vectorial force that moves forward. As a follow on player, I already have a huge task of creating a value proposition. The business plan needs to be differentiated to fight those formidable ones. To us, collaborations was a better way forward. Our partners had certain strengths they missed for e.g. R&D manufacturing, we missed the front end. We needed more expertise on how to be successful in the US in the form of a knowledge partner having financial capability and ground presence who could also help us in research, development and regulatory aspects. They lead, we support. This conjugation, we felt could be a formidable alliance that can help us navigate and deliver that differentiated value faster to the market than we would have been able to ourself . For the next few years, this is going to be our business model because it helps us move with right time first approach. There is no second try, whether it is vaccines or pharma, in India as well as other markets.