The Hindu Business Line : `Our entry into regulated markets will show results next year'

ORCHID Chemicals & Pharmaceuticals is halfway through transforming itself from a bulk drug company operating largely in the unregulated markets of East Asia to a complete pharmaceutical company selling in Europe and the US.

Mr K. Raghavendra Rao, Managing Director, spoke to Business Line about the nitty-gritty of the transformation process.

Could you take us through the issues associated with moving up from unregulated markets to ones with tight patent and manufacturing norms?

We took the decision to get into regulated markets about four years ago; with benefit of hindsight we should have taken the decision earlier. To do this has been the most challenging parts of work I have personally experienced in this company, and the whole organisation has gone through that.

We have people ahead of us in the business. The challenge was enormous because when we started developing processes (non-infringing ways to make known drugs) two years back, Indian companies like Lupin and Ranbaxy had been in the business in cephalosporin (anti-infective range of drugs) field.

International companies had been in the business. Which meant a lot of roads were blocked. We believed in ourselves. We did a lot of work and multiple processes were developed.

Added to this there is also a concept called black box which means that there is a period of 18 months from the date of our development and it's being known to the market where we don't know who else is doing what and they also don't know what we are doing.

It can as well happen ... 17 months pass and some patent of somebody else covering exactly the same thing either gets published or granted. In all, the work we have done is gone. That is a risk anyone has to take.

Adding this risk to other risks increases total risk enormously. I am happy we have come through that kind of period. Two years back we didn't have a single non-infringing process for any of our molecules. We plan to market about 15 molecules in the US, and we don't have process-related issues for any of them.

First, eight patents out of 33 filings have been granted to us by the US Patent Office covering all our significant molecules. We also have two manufacturing plants, one for oral (bulk drugs) and one for injectibles approved by the USFDA.

We also have a tie-up for eight of the 15 products. From a zero base we have come a long way in the last two years.

The journey has been interesting and at the same time difficult, because it has to be spurred by people. Over the last two years I have taken more than 25 people at various responsible levels especially the US generic opportunity manufacturing, intellectual property development, regulatory affairs department, quality assurance and international marketing to have these tie-ups.

I am sure the benefit out of all these things is going to come from next year. Have they resulted in topline and bottomline for the company? As of now, the answer is no. Will it happen next year? The answer is a more definite yes.

What are the problems you faced when you were looking for a partner before your Apotex deal for the US market? (Apotex is a leading Canadian generic company.) What would a company from India without a presence there have to do?

Different companies have different models. There is nothing like a right model or a wrong model in my opinion. We were clear from the beginning that we have certain strengths.

We have strengths of manufacturing, development, FDA approval and documentation. We are happy to do the backend here with complete ownership of what we develop.

But we don't know the market, the distribution, those nuances in local regulation and things like that. So it is best to tie up with somebody who is big, who has got the reach and size and who has got the pedigree of capturing at least 20 per cent of the market in any product it has entered.

When we look into the market area, we felt Apotex was better placed than most other players. That is why we went to Apotex. It suited them too.

A discussion with Apotex would not have been one among equals. How did you persuade them to allow you to maintain ownership of molecules?

It was a relatively drawn out affair. It took us one year and two months from the date of our first contact to sign the agreement. In the end it was good to have thrashed out all issues because it is a long-term kind of agreement.

Unless the chemistry of dealing with the entire team matched we couldn't have struck a deal. Size wise they are obviously much bigger than us.

From the point of view of what they were looking for there was equality because if you exclude Orchid, who else can give anybody eight injectibles with non-infringing processes, patent protection and FDA approval in one basket?

Orchid has an R&D unit in basic research, but you still entered into a partnership for basic research with Bexel. Was it to reduce the risk in basic research?

In part, yes. The major part was based on the fact that high-growth areas, going into the future, are not only infection or inflammation. CVS (cardiovascular system), CNS (central nervous system), diabetes and obesity are also important areas.

If there were a company or set of people working in any of these fields, we wanted a tie-up. Going forward we should be able to encash. Third dimension, which attracted us, was the way they tried to specialise research on identification of target or molecules.

They have a niche development technology. We wanted to replicate that kind of knowledge into our development processes also.

This is the learning we thought we could have by associating with that kind of scientific team.

More Stories on : Interview | Pharmaceuticals

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page