‘Private equity investments take pressure away from bottomline’

Can you explain the strategy behind positioning of your cancer drug for multiple myeloma cancer?

We were doing phase I studies on our cancer molecule in Canada and India. While developing a cancer drug, one needs to screen it for multiple types of cancer. This molecule, P276, showed potential in treatment of multiple myeloma.

The drug market for multiple myeloma is about $3.5 billion. The USFDA has a fast-track programme for this disease, where it approves drugs for this indication rapidly.

There is another advantage in cancer trials. Cancer trials are done on patients directly, unlike in other diseases where phase I trials are done on healthy volunteers.

In a way, phase I and II gets combined. Again, the patient population required in phase III of clinical trials is about 500. In other trials, it go as high as 6,000 - 8,000 patients. These advantages bring down the development cost.

What is the update on your other molecules?

We have two more products in phase II of clinical studies. The studies are being done in India. These are part of our phyto-medicines. One of the molecules is a potential drug to treat fungal related diseases. The other is a potential anti-cancer drug.

What about R&D activities other than the discovery of new drugs?

We are working on developing new delivery methods for two old drugs. These drugs have sideeffects when consumed in their current form.

Changing the delivery method will prevent these sideeffects. These two drugs belong to therapeutic segment of inflammation.

We have over 250 patents over all, including new technologies and processes. Most of these are done in the UK. We prefer to partner with universities and the UK offers many opportunities for working along with universities.

Any new drugs that will enter clinical trials in the near future?

In the next financial year, we will have five more drugs entering clinical trials. Among these are two new delivery drugs I already mentioned. Other three are in the new chemical entities that will enter clinical studies by March next year. These are part of our focus disease area of rheumatoid arthritis, antibiotics, caner and diabetes.

Five drugs in clinical studies next year — two on currently—means bigger research investment. Is this the reason for speculations on your R&D de-merger?

It does call for huge investments, I agree. But success does not come cheap. We have a successful R&D. Many private equity (PE) companies have approached us with proposals. And, de-merger with PE investment is just one idea.
We have not taken a call on anything yet. The management is working on the multiple options available. PE investments have its pros and cons.

What are they?
It is an advantage as it takes away pressure from your balance sheet’s bottomline. Additional money is infused in the business and risks are shared.

De-merging business also leads to marketing and R&D losing synergy. Marketing for proprietary products requires specialised focus.

It cannot be marketed in a bouquet comprising generic drugs. We have seen that many domestic companies are de-merging their R&D assets.

This is because, classically we never had synergy between marketing and research as we never had patents in the country. Market, too, does not value R&D assets sitting inside a manufacturing set-up.

Have you been watching de-mergers?
Yes

What do you think of Sun Pharmaceutical’s listing of R&D entity?

I think it was a good listing and it has got the valuations, too.