And if they ask any help, let's do that. Shantha embraced partnerships with not only research institutes such as the NIH, but also potential competitors in the form of a multinational pharmaceutical for regulatory guidance. Third, Southern innovators should focus on innovation and quality Shantha invested in innovation from the outset, which yielded the crucial process innovation that allowed its Hepatitis B vaccine to succeed.
This initial focus on process and quality innovation may have delayed Shanvac-B's launch, but it allowed Shantha to become the first Indian firm to receive WHO prequalification, and opened the door to large international contracts [See Table 2 ]. Pfizer was even willing to sell a branded generic version of Shanvac-B HepaShield [ 6 ]. This focus on quality also led Shantha to recognize that for certain types of clinical trials, India's regulatory expertise was insufficient to conduct them at home [ 49 ].
In silico development was conducted in San Diego, while wet lab work was conducted in India. Southern innovators should be realistic about capacity for home-grown manufacturing or clinical trials, and consider if it makes business sense.
Approval processes in India can be slow, which has in the past resulted in uncertain regulatory processes [ 50 ]. However, following the implementation of TRIPS, there was a significant inflow of clinical trial outsourcing to India due to its cost advantage and genetically diverse population [ 51 , 52 ]. Fourth, Southern innovators should realize that integrated business models are still viable in developing countries, and are arguably critical for reaching the base of the pyramid.
Before its acquisition, Shantha was a fully integrated biotech that would not invest in any products for which it did not have internal capacity to execute on a significant part of the project. In the developed world, a popular business model is to become 'virtual', whereby biotechs outsource their clinical trials and even early-stage work to contract research organizations CROs in both mature and emerging markets [ 52 ].
Such virtual biotechs rarely develop a sales force and other downstream capabilities. This model may not make sense for firms like Shantha, because the risks of low quality and delays in outsourcing to another domestic firm are too great.
By maintaining internal development capabilities, firms are able grow from retained earnings generated by contract research work and other revenues, as Shantha did. Marketing and downstream capabilities are also critical for Southern innovators to justify the premium of their drug to potential purchasers, and to distinguish their drug from counterfeits.
While the dataset discussed in this article is limited to a single Indian vaccine firm, there are a few other Indian biotechs that are following a similar trajectory including Bharat Biotech, whose rotavirus vaccine is currently in Phase III trials, Panacea Biotech, with over half a dozen single or combination vaccines against locally relevant diseases such as cholera, encephalitis and meningitis, and Serum Institute of India, which is the world's largest producer of measles and DTP vaccines [ 53 ].
Further case study research on firms like Bharat Biotech, Serum Institute of India and Panacea Biotech may prove useful to deepen the lessons generated from Shantha. Another limitation of the generality of our study may be Shantha's large domestic market in India, which was similarly true for China and Brazil's domestic vaccine innovators. Vaccine innovators in smaller countries will likely have to seek international markets sooner, but this may still be a viable path to success, given that the majority of Shantha's sales occur abroad and that it faces intense competition in the local Indian market that has lowered profit margins.
Shantha's founder, Dr. Varaprasad, emphasizes the importance of Southern innovation [ 54 ]:. My strong claim is in developing countries these initiatives are necessary. Absolutely necessary. And if there was no such initiative, the Indian populace would have remained not using the vaccine, and consumption would have remained at , doses. Today it is possible. The government has not done that - we have created awareness.
We have conducted mass vaccination camps, and we are giving it at 23 cents which made all people buy it from private doctors. Awareness is there, and the children are protected. While initial focus on generics and contract research, as well as reduced patent protection for drugs, has allowed the Indian biotech industry to build expertise and capacity, without incentives and focus on innovation the industry risks falling into the trap of focusing on low risk and profitable drugs rather than important health challenges.
Among biotech firms, this study reported a total of 19 US patents filed from to With the Indian government having adopted the WTO-TRIPS agreement that emphasizes product patents over process patents, Indian firms will be forced to innovate as they may be unable to afford the royalties to Western products while keeping their prices low [ 56 ].
It may become significantly more difficult for new Indian biotechs to emulate Shantha with the higher barriers to innovation for market entry, and existence of a large critical mass of competitors. The cost advantage that India has enjoyed is also diminishing. Home-grown innovative engines like Shantha remain critical; the Global Alliance for Vaccination Initiative GAVI continues to resist requests by countries with generic industries for supporting the transfer of patented vaccine technology [ 13 , 57 ] Varaprasad therefore believes that the Indian biotechnology industry cannot afford to continue along the road of generics, or merely serve as an outsourcing shop for Western biotechs.
Technology transfer is continuing to occur through initiatives such as the Meningitis Vaccine Project, which oversaw the transfer of polysaccharide conjugate technology to local manufacturers, and the Developing Country Vaccine Manufacturers' Network DCVMN [ 59 ]. GAVI financing has also ensured low pricing by guaranteeing markets for suppliers - when it first began there was only one Haemophilus-influenzae type b Hib - containing vaccine available, while there are now four available with three manufactured in emerging markets such as India [ 53 ].
And even if prices of vaccines increased due to the need to absorb the increasing cost of innovation, studies show that vaccine introduction by governments often proceeds independently of moderate price differences, and rather depends on national prioritization based on disease burden, competing priorities, and ability to demonstrate meaningful health impact [ 59 ].
These results suggest that the changing intellectual property environment is unlikely to impede the ability for Indian vaccine manufacturers to innovate, or limit access to vaccines by governments.
The case of Shantha Biotechnics shows that a billion dollar biotech can be built not only in the developing world, but for the developing world. Indeed, increasing interest in emerging markets from multinationals, orphan drug-like legislation and innovation platforms reveal that both global health and global wealth might be pursued in parallel [ 60 ].
Shantha's affordable high-quality vaccines have already reached hundreds of millions of children globally. The open question that Shantha and Varaprasad have always struggled with is balancing the need for affordable solutions for domestic health needs with focusing on what will increase firm valuation. Governments in the developing world similarly struggle in finding the right balance to reward long-term domestic health innovation, while promoting cheaper solutions for the domestic health gap.
The hope is that firm value will align with improving drug access and local health outcomes. Finding a happy medium will be challenging for healthcare innovators in the developing world, but Shantha has shown that it can be done. Google Scholar. Nature Biotechnology. Pharmacological Research. Article PubMed Google Scholar. Ramani SV: Who is interested in biotech? Research Policy. Article Google Scholar. Sanofi Pasteur. Torsoli A: Sanofi agrees to take control of India's Shantha.
Health Res Policy Syst. Government of India. Current Science. World Health Organization. Shantha Biotech: Corporate Presentation. Financial Express. Rao SR: Indian biotechnology developments in public and private sectors - status and opportunities. Asian Biotechnology and Development Review. The Economist: Big drug firms embrace generics: friends for life. Shantha followed Shanvac-B with Shanferon interferon alpha 2b , which it also produced in P.
The company's development of a purification process compliant with International Conference on Harmonization regulations led it to become the first Indian company to have a hepatitis B vaccine prequalified by the World Health Organization WHO; Geneva.
The initial investment in quality control helped accelerate approval for its other products. The company's growing reputation for manufacturing excellence and regulatory expertise in recombinant vaccines also helped to secure business from entities in other developing countries, such as the International Vaccine Institute IVI; South Korea for low-cost oral cholera vaccine, and the Pediatric Dengue Vaccine Initiative South Korea.
The acquisition further bolstered Shantha's reputation internationally as well as opening new markets. Soon after, rumors emerged that multinationals were interested in bidding on Shantha, ultimately culminating in the takeover by Sanofi-Aventis the same year. The case of Shantha shows developing world biotech innovators can maintain a balance between local health impact and financial returns by keeping four principles in mind.
First, identify therapeutic areas where cost efficiencies can be achieved locally and combine this with strong leadership skills. Varaprasad leveraged India's homegrown scientists, lower labor costs, process innovation and a low-margins business strategy to exploit this opportunity. Shantha embraced collaborations with research institutes such as the US National Institutes of Health Bethesda, MD , and with competing multinationals for regulatory guidance.
Third, focus on innovation and reinvestment. This initial focus on process and quality innovation may have delayed Shanvac-B's launch, but it allowed Shantha to become the first WHO-prequalified Indian firm for hepatitis B vaccine, and opened the door to large international contracts, including contract research. However, experience with Shanferon suggested that India's regulatory environment had challenges in conducting complex clinical trials. Other innovators in developing countries should not insist upon home-grown manufacturing or clinical trials if it entails compromise on quality for the sake of patriotism.
Deep Dive Into Cryptocurrency. ET Markets Conclave — Cryptocurrency. Reshape Tomorrow Tomorrow is different. Let's reshape it today. Corning Gorilla Glass TougherTogether. ET India Inc. ET Engage. ET Secure IT. All News Videos Photos. Taxman summons Shanta Biotech top brass on Sanofi deal; Sanofi may challenge retro tax laws Income tax authorities summoned the management of Hyderabad based Shanta Biotechnics in connection with an outstanding tax demand of Rs crores faced by French drug giant Sanofi Aventis.
After Vodafone, taxmen to go snapping at many past deals involving Indian assets I-T authorities will pursue all targeted cases that concern overseas transactions involving Indian assets, said a senior finance ministry official.
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